High Court Case Tests Ariz. Law Targeting Employers

The U.S. Supreme Court hears arguments Wednesday in a case testing a 2007 Arizona law that imposes harsh penalties on businesses that hire illegal immigrants.

Three years ago, Arizona became the first state to try to assume control of a function previously reserved for the federal government — namely, punishing businesses, large and small, for hiring illegal immigrants. Since then, some 44 state and local governments have enacted similar laws.

In order to establish a single uniform immigration law for employers nationwide, Congress in 1986 made it a federal crime to hire illegal immigrants and barred any state or local government from imposing civil or criminal penalties.

The law was aimed at eliminating the patchwork of state immigration laws, but it did provide one caveat: States were allowed to revoke licenses and other similar permits from employers who hired illegal immigrants.

Arizona has defined "licenses" as including virtually all business permits — from incorporation documents to partnership agreements. Under the state law, one violation means a fine, and a second can mean you lose the right to do business in the state. The Chamber of Commerce, calling that the "death penalty," challenged the law and lost in the lower courts.

'Shadow' Proceedings?

On Wednesday, lawyer Carter Phillips, representing the chamber, will tell the Supreme Court that the state improperly detached the term "license" from its usual meaning and transformed it into the primary immigration enforcement mechanism for employers in Arizona.

"Having an entire shadow set of proceedings created at the state level," says Phillips, means "that you have a whole different enforcement mechanism in place" and that "you're subject to significantly greater sanctions and, indeed, in Arizona, the death penalty for businesses, which is the loss or forfeiture of their license to do business."

It cannot be, Phillips argues, that Congress imposes a $500 fine for hiring a single illegal worker, but that in Arizona, "you can get kicked out of being able to do business and, therefore, deprived of literally millions of dollars under those circumstances."

Arizona Solicitor General Mary O'Grady recognizes that the state's law may be severe but says "that's the nature of a licensing sanction. Typically, it is a serious sanction."

She acknowledges, too, that just about any business could be shut down under the state law, regardless of where the company's home base is. Congress didn't define the term licensing, she notes, so the state defined the term in its broadest way.

A System There To Be Used?

Arizona's law also mandates that employers use a federal system called E-Verify to make sure that employees are in the country legally. Congress set up the program as a voluntary system and has consistently refused to make it mandatory because of problems with its accuracy. A 2009 Department of Homeland Security study found that foreign-born legal residents and naturalized citizens were 20 times more likely to be erroneously rejected by the system than native-born U.S. citizens. But Arizona maintains the system is there to be used.

"Just because Congress has not mandated this program nationally doesn't mean that a state can't decide that they want to use it within their jurisdiction," says Arizona's O'Grady. "This is a program that the federal government developed. They want it to be used. They're encouraging it to be used."

Lawyer Phillips counters that Congress specifically rejected making the system mandatory at this stage because of its inaccuracies and because Congress feared that the system, if exclusively relied on, would lead to discrimination against those not born in the United States.

Wednesday's case presents more than a few strange bedfellows. Joining with the business community in attacking the Arizona law is a broad coalition of civil rights and civil liberties groups.

The federal government also contends that the state law conflicts with the federal government's exclusive control over immigration enforcement — enforcement that is run by the Justice Department and the Department of Homeland Security. The irony is that the secretary of homeland security, Janet Napolitano, signed Arizona's employer-sanction bill into law when she was governor of the state. She said then that she was signing the bill because Congress had proved itself incapable of stemming the flow of unauthorized workers into the state.

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