The 2010 Arizona law giving police broad authority to detain suspected undocumented individuals (S.B. 1070) was only the latest attempt to infringe upon federal immigration law and enforcement. In 2007, the Legal Arizona Workers Act (LAWA) created “licensing” laws that impose sanctions on companies who employ unauthorized aliens. While S.B 1070 makes its way through the courts, the US Supreme Court (USSC) ruled on LAWA just 2 weeks ago.

In a 5-3 decision the USSC gave states the go-ahead to legislate on immigration enforcement (Chamber of Commerce of United States of America et al. v. Whiting et al.) through the use of licensing laws, stating that there is no expressed or implied preemption by the federal IRCA (Immigration Reform and Control Act of 1986). What affect this decision will have on the validity of S.B. 1070 is yet unclear. Our focus here is to discuss the practical business implications of the USSC decision.

The state law – LAWA – provides that the licenses of employers and businesses may be subject to (mandatory) suspension or revocation if the employer knowingly or intentionally employed an unauthorized alien (affectionately called the “business death penalty”). LAWA also provides for the mandatory use of the E-Verify program by all Arizona employers.

Similar bills are currently making their way through other state legislatures (i.e.: Alabama). On a local level, several municipalities have implemented comparable regulations. In California several municipalities have passed ordinances that require local businesses to use the E-Verify program, and makes participation in the program a condition of obtaining a business license (including Temecula, Lancaster and Lake Elsinore). As a result, we recommend that businesses check municipal ordinances in their area to ensure compliance and avoid difficulties in the future.

It is important to note that E-Verify is still a “pilot program” and, consequently, does have its faults. In the dissenting opinion of Chamber of Commerce of United States of America v. Whiting, Justice Breyer provided statistics on the margin of error rates for misidentifying naturalized citizens as being unauthorized aliens.  One such statistic provides that “nearly one-in-five [20%] times that the E-Verify system suggested that an individual was not lawfully employable … the system was wrong.” (Breyer J. dissent, p.8)

As a result, employers should be aware that a negative assessment from E-Verify may not be determinative and that employees have recourse to the federal administrative process. This is important to note as the federal process is run by officials who are well versed in these laws, as opposed to state officials who do not have the experience or background to deal with such immigration laws.

Equally important are the efforts of businesses and employers to avoid discriminatory practices under the guise of implementing the E-Verify system. While use of the E-Verify program provides a safe harbor against anti-discrimination sanctions, employees should be made aware of recourse to federal law. The federal Immigration Reform and Control Act (IRCA) provides a (monetary) fine system for businesses that hire unauthorized individuals as well as creates a complementary system of anti-discriminatory fines.

On a practical level what does this mean for businesses and business owners? Should additional steps be taken in the hiring process? What are those steps? While there is no California state law similar to LAWA, California employers should consider implementing certain business practices relating to the E-Verify program. First, enroll in E-Verify ( Second, ensure that the management team and relevant departments are familiar with I-9 rules and that the most recent I-9 forms are being used. Finally, businesses are encouraged to create an E-Verify policy, to be incorporated into the company’s Employee Handbook. For assistance with I-9 compliance matters, E-Verify or other related legal questions please contact us.

Zoe Kevork, Principal Attorney.