Home > Legal Updates >

Efforts to Halt "Legal Arizona Workers Act" Fails

The Legal Arizona Workers Act, which requires employers to use the federal employment eligibility verification system, E-Verify, and imposes sanctions on employers that hire unauthorized workers, will go into effect, as scheduled, on January 1, 2008.

District Court Denies Motion for Temporary Restraining Order

On December 7, 2007, Judge Neil Wake of the U.S. District Court for the District of Arizona dismissed a lawsuit filed by a number of business and community groups challenging the Legal Arizona Workers Act. Judge Wake ruled that plaintiffs in Arizona Contractors Ass'n, Inc. v. Napolitano ("Arizona Contractors I") failed to show an "imminent threat" that an enforcement proceeding would be initiated against them by the named defendants. The court also ruled that the named defendants – the Governor, the Attorney General, and the Director of the Department of Revenue – were the wrong defendants. Instead of suing the Governor and the Attorney General, the court held plaintiffs should have sued the 15 Arizona county attorneys whom the Act vests with enforcement responsibilities.

Just two days after the dismissal of the first lawsuit, the same group of plaintiffs filed a new lawsuit naming as defendants Arizona's 15 county attorneys, the Director of the Arizona Registrar of Contractors, and the Attorney General. As with the original lawsuit, plaintiffs in Arizona Contractors Assoc., Inc., et al. v. Candelaria, et al. ("Arizona Contractors II") argue that the Act violates both the U.S. and Arizona Constitutions. Along with their complaint, plaintiffs filed a motion asking the court to stop the Act from taking effect on January 1, 2008.

The court held a hearing on the plaintiffs' Motion for Temporary Restraining Order on December 18, 2007. At the hearing, the court questioned plaintiffs' need for immediate relief concerning the Act's enforcement provisions since there was no evidence that the county attorneys would be in a position to initiate enforcement proceedings any time in the near future. The court then had the county attorney defendants avow that they would not commence enforcement proceedings before February 1, 2008, except in extraordinary circumstances and then only after providing notice to the court and to plaintiffs, so that plaintiffs would have the opportunity to seek emergency relief. At the hearing, plaintiffs also pushed for a temporary restraining order preventing the E-Verify component of the Act from taking effect on January 1.

On December 21, 2007, Judge Wake denied plaintiff's Motion for Temporary Injunction. In denying the temporary restraining order, the court held that "Plaintiffs' injury from complying with the law is far less than the harm that a pre-trial declaratory judgment, styled as a temporary restraining order, would impose on others and the public interest." The court concluded that plaintiffs have "not shown a likelihood of success on the merits, much less a strong likelihood."

The court has also set a hearing for plaintiffs' Motion for Preliminary Injunction. Because the court had concerns about the new defendants' ability to adequately prepare for the hearing, the court decided that the hearing could not take place before January 1, 2008 – the Act's effective date. The court set the hearing for two days on January 16^th and 17^th.

Plaintiffs' Appeal to the Ninth Circuit Court of Appeals

In addition to filing the new lawsuit, plaintiffs have also appealed the District Court's dismissal of the original lawsuit, Arizona Contractors I, to the Ninth Circuit Court of Appeals. Along with the appeal, plaintiffs filed an emergency Motion for Injunction Pending Appeal with both the District Court and the Ninth Circuit. The District Court denied the motion on December 21, 2007.

The Ninth Circuit Court of Appeals has deferred its decision on plaintiffs' emergency motion for injunction pending appeal because of the County Attorneys' statements to the District Court avowing that there would be no enforcement proceedings until February 2008, as well as the fact that a hearing has been scheduled on Plaintiffs' preliminary injunction for January 16 and 17, 2008. The Ninth Circuit stated that it would not rule on plaintiffs' emergency motion until the District Court has issued a decision on the motion for preliminary injunction in Arizona Contractors II, "provided that decision is reached with reasonable promptness."

Jackson Lewis will continue to monitor plaintiffs' efforts to invalidate the Act. However, at this time, Arizona employers should prepare to comply with the Act's provisions. It is critical for employers to understand their obligations under the Act before the Act becomes effective next week. Therefore, Jackson Lewis provides the following overview of the Act's provisions.

Overview of the Legal Arizona Workers Act

The Act requires the Attorney General or County Attorney to investigate all complaints made by anyone against an employer relating to the employment of unauthorized aliens.¹ If the complaint is not frivolous, the Attorney General or County Attorney must inform the Immigration and Customs Enforcement (ICE) agency and local enforcement, and the County Attorneys may file charges against the employer. The Act also provides for a progressive penalty system that differs depending on whether the employer "knowingly" or "intentionally" employed the unauthorized alien. The Act applies to Arizona employers of all sizes.

Under the Act, the term "knowingly" is defined as it is under federal immigration law, which permits violations to be based on the employer's constructive knowledge of a person's lack of legal status, other than the person's appearance or accent. If a court finds that an employer "knowingly" employed an unauthorized alien:

• The employer must immediately terminate the unauthorized alien's employment.
• The employer must file a signed affidavit with the County Attorney's office that employment of the unauthorized alien has been terminated and the employer will not knowingly or intentionally employ an unauthorized alien. Failure to file the affidavit within three business days of the court's order will result in the suspension of the employer's business license(s).
• The employer will be placed on probation for three years during which time the employer must file quarterly reports with the County Attorney listing each new employee who is hired by the employer at the specific location where the unauthorized alien was previously employed.

The penalties are even harsher for employers who are found to have
"intentionally" hired an unauthorized alien. For purposes of the Act, "intentionally" means that the employer had knowledge of the circumstances that made its conduct illegal, even if it did not know that its conduct actually violated the law. In such cases, the court shall require all of the following:

• The employer must immediately terminate the unauthorized alien's employment.
• The employer must sign a sworn affidavit that it has terminated the employee and will not knowingly or intentionally hire unauthorized aliens in the future.
• The employer's business license(s) must be suspended for a minimum of ten days.
• The employer will be placed on probation for a period of five years during which time the employer must file quarterly reports with the County Attorney listing each new employee who is hired by the employer at the specific location where the unauthorized alien was employed.
• If the employer knowingly or intentionally employs an unauthorized alien at anytime during the probationary period, all business licenses of the employer necessary to operate its business will be permanently revoked.

Additionally, beginning January 1, 2008, Arizona employers must use the federal E-Verify System to verify the employment eligibility of all new hires. E-Verify allows employers to verify social security numbers and employment authorization for new employees. A major concern for employers is that because of the high error rate in the Social Security Administration ("SSA") database (SSA thinks it may be as high as 20% to 30%), a fairly high percentage of new employees who, in fact, are work-authorized may be deemed to be ineligible for employment by E-Verify.  While the system offers the employee an opportunity to contest a determination that he or she is not work authorized, and provides a procedure for doing so, it is not clear that the system will be able to deal with such challenges in a timely manner if the volume of users suddenly increases significantly.

To participate in E-Verify, employers must sign a Memorandum of Understanding ("MOU") in which the employer consents to the inspection of its employment records by the Department of Homeland Security and Social Security Administration. The MOU may only be terminated on 30 days' written notice by the employer.

While the Act requires employers use E-Verify, there is no specific penalty for an employer's failure to do so. Significantly, however, use of the E-Verify entitles the employer to a rebuttable presumption that it did not knowingly or intentionally employ an unauthorized alien.

Taking Action Now to Protect Yourself

We recommend Arizona employers that will be hiring new employees in January begin to register for E-Verify so they are prepared when the Act takes effect next week on January 1, 2008. Registration and training for E-Verify takes at least two hours. E-Verify can only be used to verify the work authorization of newly hired employees. It cannot be used for current employees. Therefore, if you will not be hiring any new employees at all in January 2008, you should consider waiting to register for E-Verify until after the court rules on plaintiffs' request for a preliminary injunction.

Significantly, employers should also review their Form I-9 procedures to make certain that they are in full compliance with federal immigration law. Ensuring that I-9 forms are properly completed and maintained by your company remains important. Under the Act, an employer that complies in good faith with the federal I-9 requirements is entitled to an affirmative defense.

Jackson Lewis attorneys are available to assist you in developing a strategy to aid you in complying with the law.

---