THE NEW LAW ON HIRING ILLEGALS:

             On July 2, 2007, Governor Janet Napolitano signed the Fair and Legal Employment Act (HB2779), which requires that an employer verify the employment eligibility of a worker prior to hiring that worker, and imposes a range of sanctions on employers who hire undocumented workers.  While at least 40 other states throughout the country have enacted similar restrictions on the hiring of undocumented workers this past year, Arizona’s Act, which is scheduled to take effect January 1, 2008, is widely considered among the strictest in the country. So what does the Fair and Legal Employment Act say, and what is the true effect of this Act on Arizona employers?

 Requirements of the Fair and Legal Employment Act

             As written, the Act prohibits employers from “intentionally” or “knowingly” employing an unauthorized alien. For purposes of the Act, employers are deemed to be any individual or organization that transacts business in Arizona, has a license issued by an agency in Arizona (i.e. Articles of Incorporation, Certificates or Partnership, etc.) and employs one or more individuals who perform employment services in Arizona. If you have a place of business in this state where you employ workers and transact business, you will likely be subject to the requirements of this Act.

             The Act adopts the definition of “knowingly” already found in existing federal law. 8 USC § 1324(a) defines “knowingly” as “recruiting or hiring for employment an individual knowing that the person is an unauthorized alien.” Furthermore, under the Act, “intentionally” is defined as “a person’s objective is to cause that result or to engage in that conduct.” See 13 A.R.S. §13-105.  As such, an employer will only violate the Act if an employer either hired an alien knowing they were unauthorized or failed to investigate the status of an individual before hiring and that individual is an unauthorized alien.

             In order to meet the requirements of the Act, beginning January 1, 2008, all Arizona employers will be required to verify the employment authorization of all newly hired employees through the federal Basic Pilot Program (also known as E-Verify). The Basic Pilot Program is an online system available at no charge to employers in all 50 states that compares an employee’s information to the federal Social Security Administration database to determine the employee’s employment authorization. Under the Act, an employer’s verification of the employee’s employment authorization under the Basic Pilot Program creates a rebuttable presumption that the employee is authorized to work. More importantly from the perspective of the employer, an employer’s good faith use of the Basic Pilot Program creates an affirmative defense that the employer did not knowingly or intentionally hire an unauthorized alien.

 To use the Basic Pilot Program, an employer must enroll in the program online, and sign the required Memorandum of Understanding. Employers can register for the Basic Pilot Program at https://www.vis-dhs.com/EmployerRegistration. Once registered, an employer would be able to use the system to check a potential employee’s status by submitting the employee’s I-9 Form information into the online system. If there is a match between the employee’s information and the Social Security Administration database (and/or other Department of Homeland Security Databases used by an Immigration Status Verifier), then the employee is deemed authorized to work. If there is no match, then an employer must notify the employee of his ineligibility for hire, and the employee can then decide whether to contest the findings on his own.

             An employer generally will meet the requirements of the Act if the employer submits the I-9 Form information of the prospective employee into the Basic Pilot Program and that employee is verified to work. Because an employer is already currently required to fill out the I-9 Form for every worker an employer hires, the Act does not impose any significant additional requirement on the employer. Furthermore, as long an employer uses the Basic Pilot Program in good faith, the employer will have an affirmative defense that the employer did not “knowingly” or “intentionally” violate the Act, even if it is later shown that the individual was in fact an unauthorized alien.        

Penalties Under the Fair and Legal Employment Act

 If an employer is deemed to have violated the Act as a first offense by knowingly hiring an unauthorized worker, the following would occur:

·        The County Attorney may elect to suspend the employer’s business licenses up to 10 days.

·        Within 3 business days after finding of guilt, the employer must sign an affidavit stating that employer has terminated all unauthorized workers and will not hire an unauthorized workers in the future.

·        The employer will be placed on a 3-year probationary period during which time the employer must file quarterly reports with the County Attorney for each new employee hired during this period.

 If an employer is deemed to have violated the Act as a first offense by intentionally hiring an unauthorized worker, the following would occur:

·        The County Attorney shall suspend the employer’s business licenses for a minimum of 10 days.

·        Within 3 business days after finding of guilt, the employer must sign sworn affidavit stating that employer has terminated all unauthorized workers and will not hire an unauthorized workers in the future.

·        The employer will be placed on a 5-year probationary period during which time the employer must file quarterly reports with the County Attorney for each new employee hired during this period.

 If an employer is deemed to have violated the Act as a second offense by knowingly or intentionally hiring an unauthorized worker after already being found guilty of violating the Act in the past, the following would occur:

·        The County Attorney shall permanently revoke the employer’s business licenses.

 While much press has been given to the penalty of suspension of a business license and the detriment that this will place on local business owners, there are a couple of important facts to keep in mind. 

 First, regardless of whether the violation is knowingly or intentionally or a first or subsequent offense, the County Attorney may only suspend or revoke the business licenses of the business location where the employment violation occurred. Only if there are no licenses required for a particular location may the County Attorney suspend the licenses of the primary place of business for the employer. This is an important distinction since it means that an employer will not necessarily be forced to shut its doors for its entire company, but only for the location where the unauthorized alien worked.

 Second, the County Attorney is mandated to consider a variety of factors when determining whether to suspend a license (in the case of a first offense for knowingly hiring) and the length of the suspension (in the case of a first offense for intentionally hiring). These factors include (i) the prior misconduct of the employer, (ii) the number of unauthorized aliens hired by the employer, (iii) the degree of harm resulting from the unauthorized hire, (iv) the employer’s good faith effort to comply with the Act, (v) the duration of the violation, and (vi) the role, if any, of the officers, directors and principals of the company in the violation. There is no black line rule  regarding the extent of a suspension for a first time violation; the circumstances surrounding the violation and the actions of the employer play an important role in determining what suspension, if any, an employer will suffer for a first time violation.

 General Impact on the Employer

Generally speaking, the Act should have little impact on employers who are already meeting the existing hiring requirements. Because an employer is already required to fill out an I-9 Form for each new employee, the use of the Basic Pilot Program will require little, if any, additional employment information. Furthermore, because the Basic Pilot Program is online and provides immediate feedback in most instances, there should be minimum inconvenience to the employer. It is recommended that as of January 1, 2008, employers keep written documentation showing that they have reviewed the status of each newly hired employee through the Basic Pilot Program. This will help prove good faith compliance if an employer is accused of violating the terms of the Act.

 As employers prepare for the implementation of the Act, they need to keep in mind that changes to the Act may be forthcoming. The Act is being challenged in court both by local businesses and the US Chamber of Commerce, and this proceeding may have an effect on both the effective date of the Act as well as particular Act provisions. Additionally, a special committee may convene in Fall 2007 to review the terms of the Act and “tweak” certain provisions.

             If you have any questions or comments regarding this article, the Fair and Legal Employment Act (HB2779) and/or the Act’s effect on your business practices, please contact us directly at 480-483-9600.

Previously posted articles:

"What's New in the Law"

"Lawyers without Borders"

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