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U.S. Supreme Court Upholds the Legal Arizona Workers Act

Commercial Litigation Law Alert Lisa D. Duran, Andrea S. Tazioli

On May 26, 2011, the United States Supreme Court issued its decision in Chamber of Commerce of the United States of America v. Whiting, et. al. In a 5-3 decision, with Chief Justice Roberts writing for the majority, the Court affirmed a prior Ninth Circuit decision upholding the Legal Arizona Worker's Act (commonly referred to as the "Arizona Employer Sanctions law").

Under the Legal Arizona Workers Act ("LAWA"), the licenses of employers found to have knowingly or intentionally employed unauthorized workers may be suspended or revoked. LAWA also requires all Arizona employers to enroll in and use E-Verify, an internet-based system allowing employers to check the work authorization status of new hires. The Chamber of Commerce of the United States (the "Chamber") and civil rights organizations filed a pre-enforcement suit in federal court against the Arizona state officials responsible for administering LAWA. The Chamber argued that: (i) the provisions of LAWA that allow for the suspension and revocation of the business licenses of employers found to have knowingly or intentionally employed unauthorized workers were both expressly and impliedly preempted by federal immigration law; and (ii) that LAWA's mandate that Arizona employers use E-Verify was impliedly preempted. After addressing each argument, the Supreme Court held that LAWA is not preempted by federal immigration law.

First, the Supreme Court reviewed the express language of the Immigration Reform and Control Act ("IRCA"), the federal law that governs employers' employment eligibility verification obligations. IRCA prohibits states from imposing civil or criminal sanctions on those who employ unauthorized workers; however, it expressly allows states to impose sanctions on such employers "through licensing and similar laws." 8 U.S.C. § 1324a(h)(2). The Supreme Court relied on this "savings clause" to hold that the portion of LAWA that authorizes state courts to suspend or revoke the business licenses of employers found to have knowingly or intentionally employed unauthorized workers is a licensing law that falls within the authority Congress delegated to the states. The Supreme Court emphasized that license termination takes place only after an employer is found to have knowingly or intentionally employed an unauthorized worker. The Supreme Court reasoned that as long as an employer acts in good faith when hiring an employee and refrains from knowingly or intentionally violating the law, the employer will avoid sanctions.

Second, the Supreme Court held that LAWA's requirement that all Arizona employers enroll in and use E-Verify does not conflict with federal law. LAWA provides that "every employer, after hiring an employee, shall verify the employment eligibility of the employee" through E-Verify, which is consistent with federal law. A.R.S. § 23-214(A). Additionally, the Supreme Court noted that the consequences of not using E-Verify are exactly the same under Arizona and federal law: An employer who fails to use E-Verify forfeits a rebuttable presumption of compliance with the laws regarding employment eligibility verification.

For more details, or if you have any questions, please contact Lisa Duran at (602) 229-5225 / lisa.duran@quarles.com, Andrea Tazioli at (602) 229-5710 / andrea.tazioli@quarles.com or your local Quarles & Brady LLP attorney.