May 27, 2011

Supreme Court Rules Arizona's Immigration Law Is Not In Conflict With Federal Law

 

Submitted by Shaun Haley, Of Counsel with the Las Vegas office of Ogletree Deakins. The article was drafted by the attorneys of Ogletree Deakins, a national labor and employment law firm that represents management. This information should not be relied upon as legal advice.

 

On May 26, 2011, with Chief Justice John Roberts writing for the 5-3 majority, in part joined by Justices Scalia, Kennedy and Alito, the U.S. Supreme Court concluded that federal immigration law does not preempt or invalidate an Arizona law, which subjected state employers to sanctions for knowingly or intentionally employing unauthorized aliens and which required that all Arizona employers use E-Verify. According to the high court, in enacting its law, "Arizona has taken the route least likely to cause tension with federal law." "If even this gives rise to impermissible conflicts with federal law," the Court noted, "then there really is no way for the State to implement licensing sanctions, contrary to the express terms of the savings clause." Chamber of Commerce of the United States of America v. Whiting, No. 09-115, U.S. Supreme Court (May 26, 2011).

 

Factual Background

 

Arizona enacted the Legal Arizona Workers Act (LAWA) in 2007. The Act allows the superior courts of Arizona to suspend or revoke the business licenses of employers that knowingly or intentionally hire unauthorized aliens. It also requires employers to use E-Verify, the electronic verification system, to check the work authorization status of employees through federal records.

 

Various business and civil rights organizations filed suit against those charged with administering the Arizona law arguing that the law is expressly and impliedly preempted by the federal Immigration Reform and Control Act (IRCA), which preempts any state or local law "imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens." They further argued that even if the entire Act is not expressly preempted, the mandatory requirement to use E-Verify is impliedly preempted because it conflicts with the voluntary program in the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA).

 

The trial court held that the law was not expressly or impliedly preempted by IRCA. The Ninth Circuit Court of Appeals affirmed the trial court's determination that the Act was a "licensing" law within the meaning of IRCA and therefore was not expressly preempted. The Ninth Circuit also held that the law's requirement to use E-Verify is not expressly or impliedly preempted by IIRIRA, which specifically makes use of E-Verify voluntary. The case eventually reached the U.S. Supreme Court.

 

Legal Analysis

 

The Court first ruled that Arizona's law is not expressly preempted by IRCA. Chief Justice Roberts noted that IRCA expressly preempts states from imposing sanctions "other than through licensing and similar laws" while the "Arizona law, on its face, purports to impose sanctions through licensing laws." Thus, the Court concluded that Arizona's law falls within the plain text of IRCA's savings clause. In so finding, the Court rejected the argument that the Arizona law is not a "licensing" law because it operates only to suspend and revoke licenses rather than to grant them. "[T]his construction of the term runs contrary to the definition that Congress itself has codified," the Court found, and also is contrary to common sense. According to the Court, "[t]here is no basis in law, fact, or logic for deeming a law that grants licenses a licensing law, but a law that suspends or revokes those very licenses something else altogether." Thus, the Court held that "Arizona's licensing law falls well within the confines of the authority Congress chose to leave to the States and therefore is not expressly preempted."

 

Chief Justice Roberts next turned to the issue of whether Arizona's law is impliedly preempted because it conflicts with federal law. The Court rejected the argument that Congress "intended the federal system to be exclusive," and that, therefore, any state system necessarily conflicts with federal law. According to the Court, Congress specifically preserved the authority to implement sanctions through licensing laws for the states. "It stands to reason," the Court concluded, "that Congress did not intend to prevent the States from using appropriate tools to exercise that authority."

 

In arriving at this conclusion, the Court found it significant that Arizona's law "closely tracks IRCA's provisions in all material respects." The high court also considered it relevant that Arizona's law requires state investigators to verify the work authorization of an allegedly unauthorized alien with the federal government and prohibits them from independently making a final determination on whether an alien is authorized to work in the United States. Moreover, the Supreme Court found that a state court deciding whether an employee is an unauthorized alien "shall consider only the federal government's determination." Thus, "there can by definition be no conflict between state and federal law as to worker authorization, either at the investigatory or adjudicatory stage." The Court therefore rejected the argument that Arizona's law is impliedly preempted by federal law.

 

Finally, the Court turned to the argument that Arizona's requirement that employers use the federal E-Verify system is impliedly preempted. The Court found that the plain language of IIRIRA, which established the program that includes E-Verify, does not contain any language circumscribing state action. Arizona's requirement that employers use E-Verify, the Court continued, does not obstruct the achievement of Congress' objective in authorizing the development of E-Verify, namely "to ensure reliability in employment authorization verification, combat counterfeiting of identity documents, and protect employee privacy." Thus, the Court concluded that the requirement to use E-Verify in the Arizona law is consistent with federal law.

 

Holding therefore that Arizona's law fits within the confines of IRCA's savings clause and does not conflict with federal immigration law, the U.S. Supreme Court affirmed the judgment of the Ninth Circuit.

 

Practical Impact

 

According to Jay Ruby, a shareholder in Ogletree Deakins' Atlanta office: "The Court's decision bodes well for other states that have either passed or have considered passage of legislation requiring employers to enroll in E-Verify. Likely, other states will follow Arizona's lead and pass similar laws with some level of confidence that the law will survive constitutional challenges. Mississippi and Georgia have passed laws similar to Arizona's LAWA, requiring all employers to register with E-Verify either in connection with receiving or retaining a business license. Georgia recently signed into law HB 87 (The Illegal Immigration Reform and Enforcement Act of 2011) on May 12, 2011 that will require most Georgia employers to use the federal E-Verify employment eligibility verification system for all newly-hired employees by the end of 2012."

 

Ruby continued: "While the Court's decision will make it likely that more states will introduce and pass similar bills, certainly the potential negative impact to the state's economy will be a central consideration. Despite threats of boycotts and lawsuits, the Georgia legislature passed the tough law during the final hours of the legislative session. In the months following Arizona's passage of tough immigration bills in 2007 (LAWA) and 2010 (SB 1070), many Arizona businesses shared these same fears. And of course, these fears were realized. An estimated 100,000 undocumented immigrants departed Arizona in 2008 (following the passage of LAWA, requiring employers to E-Verify new hires). The Washington-based Center for American Progress completed a study in November 2010 that estimated Arizona had $490 million in lost tourism revenues, $141 million from cancelled business conferences, and $250 million in lost economic output — and projected that over the next three years Arizona will suffer $86 million in lost wages and a loss of approximately 2,800 jobs."

 

According to Tibor Nagy, Jr., a shareholder in Ogletree Deakins' Tucson and Phoenix offices: "The Supreme Court's decision fully affirms a law to which Arizona employers have been subject since January 1, 2008. So today's ruling doesn't change the status quo, but should remind employers to reevaluate their current LAWA compliance efforts. For example, LAWA mandates E-Verify enrollment, yet as many as one-third of all Arizona employers still have not enrolled. Ironically, LAWA's E-Verify component may be its best feature, as employers that use it to screen new hires have a 'rebuttable presumption' that they 'did not intentionally or knowingly employ an unauthorized alien.' Indeed, Chief Justice Roberts touted this safe harbor feature as a key justification for countering Justice Breyer's concern that LAWA's 'business death penalty' risk will induce employers to unlawfully discriminate against foreign-born or 'foreign-looking' applicants. Of course, E-Verify remains a less than perfect screening tool, with as many as one-fifth of all initial screens coming back as 'not lawfully employable.' Nevertheless, the Supreme Court's vigorous approval of LAWA's E-Verify requirement should remind employers that aren't using E-Verify that a LAWA enforcement action against them will be less likely, and far less likely to succeed, if they have been screening their new hires through the program."

 

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