High Court’s ruling on mandatory E-Verify use may spawn more problems as states follow Arizona’s lead

The Supreme Court’s recent ruling that the Legal Arizona Workers Act (LAWA) is not preempted by federal law may give rise to significant challenges should states follow suit by requiring employers to use the federal E-Verify system to confirm workers’ employment eligibility. Increased identity theft, and in some industries, increased costs to consumers, are two of those potential challenges.

The High Court, in a 5-3 decision, ruled that the LAWA, which provides for the revocation or suspension of the business license of employers in the state that knowingly or intentionally employ unauthorized aliens, was not expressly or impliedly preempted by federal immigration law (Chamber of Commerce v Whiting). The Court also held that the statute’s provision mandating the use of the federal E-Verify system was not impliedly preempted by federal immigration law.

Undoubtedly, the decision will have a strong impact on the emerging trend of state legislation targeted to the employment of illegal aliens. To find out exactly how the Court’s ruling on the E-Verify provision will affect this trend, CCH reached out to its Labor and Employment Law Advisory Board Member David C. Whitlock, a partner in the Atlanta law firm of Elarbee, Thompson, Sapp & Wilson LLP.

Ruling not a surprise. According to Whitlock, the decision was not surprising for most legal scholars. The preemption doctrine, he noted, dictates that states cannot enact legislation when the federal government has already done so. In this case, the federal law in question is the Immigration Reform and Control Act of 1986, which requires that all employers verify the identity and employment eligibility of persons hired after November 6, 1986. Employers use the I-9 form to document that they have verified the new hire’s identity and employment eligibility. “The 1986 federal legislation explicitly preempts state laws regarding verification of employment eligibility, but it does not explicitly preempt state licensing schemes,” Whitlock advised.

The LAWA “was drafted as a licensing scheme because the penalty for not enrolling in E-Verify is suspension or forfeiture of a license to do business in Arizona,” Whitlock pointed out. “The Supreme Court seized upon this feature of the Arizona legislation and held that such a licensing scheme survives a preemption challenge,” he said.

What is the likely impact? Whitlock identified several likely results that will flow from the Court’s ruling on the E-Verify statute, predicting first, that “while the federal government remains unable to forge a compromise on comprehensive immigration reform legislation, more and more states will enter the fray.” He believes it likely that several states will enact mandatory E-Verify legislation requiring all, or nearly all, employers doing business in the state to enroll in the federal verification system.

According to Whitlock, “as more states enact legislation and increasing numbers of employers enroll in E-Verify, the system’s integrity and stability will likely be challenged.” He pointed out that critics have already expressed concerns about how many inquiries the E-Verify system can handle and whether the existing E-Verify infrastructure is adequate to resolve substantial increases in the number of tentative nonconfirmations.

Moreover, because E-Verify cannot confirm that the documents presented actually belong to the person presenting them, Whitlock predicts that “the incidence and consequences of identity theft will become more severe.”

Whitlock also suggested that in industries that historically have relied heavily on immigrant workers, “there will likely be significant cost increases to consumers that result from higher labor costs to find and keep legal workers.” He also observed that “marginally profitable employers in these industries will be more likely to skirt the law, which may increase the number of exploited workers and simultaneously reduce tax revenues.”