AZ Employer Sanctions Law Clears Court Challenge for Implementation; Which State is Next?

Arizona employers are coming closer to being forced to use a maligned federal government database to verify the work eligibility of all hires or risk their business licenses under a controversial new state law.

The law called the “Legal Arizona Workers Act,” a.k.a. the “Employer Sanctions Law,” is set to go into effect Jan. 1, 2008 unless opponents can come up with a successful court challenge to it this week.

The law received the green light for implementation Saturday when federal courts denied opponents’ attempts to block it, according to U.S. newspapers, including the New York Times and the Arizona Republic.

Arizona county prosecutors told the federal court that realistically they could not begin implementing enforcement actions under the law until at least February, 2008, which gives employers some leeway to wait for the results of a U.S. District Court hearing on the merits of the new law, which is scheduled for Jan. 16, 2008.

The law requires employers to check the validity of new hires’ identities against a federal database, known as the E-Verify system. This database holds information maintained by the Social Security Administration and the Department of Homeland Security. The system is computer based and free to use.

The law imposes penalties against Arizona employers who knowingly or intentionally hire illegal workers. Sanctions range from probation to suspension of business licenses to permanent revocation of the licenses for a second offense.

Opponents, including business and Latino groups, have challenged the law in court, arguing among other points that it is unconstitutional. They say the government’s database is plagued by inaccuracies, meaning properly documented workers could be denied employment based on an erroneous response from the E-Verify system. They say this situation will result in discrimination against all foreigners, including those authorized to work. They also argue the new law imposes excessive penalties on employers found to have hired undocumented workers. See articles on ACLU’s participation in this lawsuit.

This law effectively is a stricter version of the federal government’s similarly controversial new regulation requiring employers to resolve mismatches between employer social security numbers and the government’s records. Under that regulation, entitled Safe-Harbor Procedures for Employers Who Receive A No-Match Letter, employers have three months to resolve discrepancies or be forced to fire the employee to avoid criminal or civil penalties for hiring undocumented workers.

A federal lawsuit in California challenging this regulation resulted in a preliminary injunction followed by the government’s decision to revise the rule to analyze its economic impact on small businesses. (See our related article DHS to Revise Controversial Social Security No-Match Regulation in Response to Lawsuit).

Employers across the U.S. will want to watch the progression of this lawsuit and any implementation of the regulation as it may be an indication of what other states will do, especially those with a history of being tough on undocumented workers.

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