Vol. 85, No. 7, July 2012
E-Verify is a federal electronic system that helps employers confirm the employment eligibility of new employees. It is separate from the Employee Information and Verification Form I-9 that all employers must ensure their employees complete at the time of hire. Although completing a Form I-9 form is mandatory, enrollment in E-Verify was strictly voluntary until recently.
In Chamber of Commerce v. Whiting, the U.S. Supreme Court upheld the constitutionality of an Arizona law requiring all employers to enroll in E-Verify or face revocation of their state business licenses.1 Wisconsin companies that are licensed in Arizona or the handful of other states that also mandate E-Verify must use the program in those jurisdictions. The Whiting decision also resolved the constitutionality of a Green Bay ordinance that, similar to the Arizona law, permits the city of Green Bay to revoke the business licenses of employers that knowingly hire unauthorized workers.
In addition to analyzing Whiting and its impact in Wisconsin, this article explains how E-Verify operates and gives practice tips for Wisconsin employers that voluntarily enroll in E-Verify or that must do so in wake of the Whiting decision. Employers should be aware of the benefits and costs of using E-Verify.
Chamber of Commerce v. Whiting
In response to concerns regarding undocumented immigrants, in 2007 Arizona enacted the Legal Arizona Workers Act (LAWA), which requires state courts to suspend or revoke the business licenses of employers that knowingly or intentionally hire unauthorized workers. LAWA has three major components. First, an individual can file a complaint alleging that an employer has hired an unauthorized worker, and the attorney general or county attorney must then verify the employee's work authorization through the federal government. The law specifically prohibits state, county, and local officials from attempting "to independently make a final determination" on work authorization. If the inquiry reveals that the worker is unauthorized, the attorney general or county attorney must notify Immigration and Customs Enforcement (ICE) and local law enforcement.
Second, the state also must bring an action against the employer. Good-faith compliance with the Form I-9 process provides the employer with an affirmative defense. That is, if the employer demonstrates that at the time of hire it reviewed identification documents from the employee (such as a U.S. passport or a permanent resident card), reasonably concluded those documents to be valid, and properly completed Form I-9, then the employer can use its compliance with the Form I-9 process as an affirmative defense under LAWA.
If the state determines there has been a knowing or intentional violation, it must order the employer to fire all unauthorized workers and must suspend all business licenses for a minimum of 10 days. A second violation results in permanent revocation of all business licenses.2
Third, the law requires that "every employer, after hiring an employee, shall verify the employment eligibility of the employee" by using E-Verify.3 LAWA further provides that using E-Verify "creates a rebuttable presumption that an employer did not knowingly employ an unauthorized alien."4 This rebuttable presumption mirrors federal law.
Several business and civil rights organizations challenged the constitutionality of LAWA. The Ninth Circuit Court of Appeals concluded that the Arizona law was not preempted by federal law.5 The Third Circuit Court of Appeals previously ruled that a similar ordinance in Pennsylvania was preempted under federal law.6 Thus, the Supreme Court decided to resolve the circuit split.
The Court first addressed whether federal law expressly preempted LAWA. In 1986, Congress enacted the Immigration Reform and Control Act (IRCA), which made it unlawful for employers to knowingly hire illegal immigrants.7 The law also defined the civil and criminal penalties for violating IRCA's provisions regarding unauthorized workers. IRCA expressly preempted the states from imposing "civil or criminal sanctions" on employers that hire unauthorized workers "other than through licensing and similar laws."8
This IRCA savings clause is the key to the Court's holding. The Court noted that LAWA, "on its face, purports to impose sanctions through licensing laws" by authorizing state courts "to suspend or revoke an employer's business licenses if that employer knowingly or intentionally employs an unauthorized alien."9 The Court concluded that the Arizona law "falls within the plain text of IRCA's savings clause" and thus is not preempted by federal law.10
The Court also rejected the argument that LAWA "is impliedly preempted because it conflicts with federal law." The Court found that Arizona "went the extra mile in ensuring that its law closely tracks IRCA's provisions in all material respects." For example, LAWA adopted the federal definition of an "unauthorized alien" and requires that state investigators "verify the work authorization of an allegedly unauthorized alien with the Federal Government." Consequently, "there can by definition be no conflict between state and federal law as to worker authorization."11
The Court likewise ruled that the mandatory E-Verify provision was not impliedly preempted by federal law. E-Verify was created in 1996 as part of the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) "in an attempt to improve IRCA's employment verification system."12 The Court noted that IIRIRA's provisions regarding E-Verify "contain no language circumscribing state action."13 The Court concluded that LAWA's requirement that employers use E-Verify in Arizona does not conflict with the express aims of IIRIRA's creation of the program. The Court therefore rejected the argument that Congress intended E-Verify to be voluntary only.
Whiting's Impact on Wisconsin Employers
Wisconsin firms that have a business presence or employees in states mandating E-Verify will be directly affected by the Whiting ruling. Presently, 17 states require E-Verify, although many of these states limit the requirement to state or public agencies, or state contractors and subcontractors. Colorado, Florida, Idaho, Indiana, Louisiana, Missouri, Nebraska, North Carolina, Oklahoma, and Virginia mandate E-Verify only for state agencies or contractors, not private employers.14
In contrast, Alabama, Arizona, Georgia, Mississippi, South Carolina, Tennessee, and Utah presently require, or will be requiring, private employers to use E-Verify.15 Wisconsin firms that are licensed and have employees in these states will be required to use E-Verify in those jurisdictions.
In addition, Wisconsin businesses that hold a license in the city of Green Bay, or do contracting work for the city, should be aware of a Green Bay ordinance, enacted in 2007, that relates to undocumented employees. Although the ordinance only "strongly encourages" E-Verify instead of mandating it, it is similar to the Arizona law in that it permits the city to revoke the business license of a company that knowingly hires an unauthorized worker. The ordinance affords a license holder an evidentiary hearing, and a license cannot be revoked "until after a Federal determination of an alien's unlawful status is received."16 Thus, the Green Bay ordinance is very similar to LAWA in that both require a federal determination of the employee's immigration status. Like the Arizona law, the ordinance closely tracks IRCA's provisions.
According to the city's records, there has been no enforcement action taken with respect to the ordinance.17 The authors are not aware of any legal challenge to the Green Bay ordinance. However, any future challenges will likely involve whether the Whiting holding extends to municipal ordinances as well as state laws. Because the express language of IRCA includes "local law" as part of the licensing exception, it is likely that the holding in Whiting would apply to the Green Bay ordinance.
A recent decision from a Nebraska federal court is instructive. In that case, the district court relied on Whiting to uphold a city ordinance requiring employers to enroll in E-Verify to maintain their business licenses.18 The district court found that like the "Arizona law at issue in Whiting," the city ordinance is a "licensing" or "similar law" and thus falls squarely within IRCA's savings clause. Thus, Whiting should apply to both local ordinances and state laws that replicate the provisions in the Arizona law.
Obviously, Whiting's impact will remain limited in Wisconsin unless the state or additional municipalities follow Arizona's lead. Any future legislation will have a significant impact on a key industry, Wisconsin's dairy farms. In 2010, Wisconsin had approximately 65,000 unauthorized workers.19 Although these workers represent only 2 percent of the state's workforce, they are concentrated in key segments of the economy. Research from the University of Wisconsin-Madison estimates that immigrants represent more than 40 percent of all hired laborers in the dairy industry.20 While it is unclear precisely how many of these immigrant workers are unauthorized, anecdotal evidence indicates that the number is substantial.21 Several dairy farmers have bluntly warned that if E-Verify were to be mandatory, "it will kill the dairy industry in Wisconsin."22
Additionally, Wisconsin legislators should be aware of the potential cost of mandatory E-Verify to both employers and the state. Although E-Verify is a free program, one study found substantial hidden costs, especially for small businesses. Because using E-Verify requires training and staff time, the study found that in 2010 it cost small businesses (companies with fewer than 500 employees) about $147 to run a new-hire query on E-Verify, as opposed to $73 per query for large firms.23
17 States Require E-Verify
Wisconsin firms that have a business presence or employees in states mandating E-Verify are required to use E-Verify in those jurisdictions.
States in which Only State Agencies and State Contractors Must Use E-Verify
- North Carolina
States in which Private Employers Must Use E-Verify
- South Carolina
Furthermore, news reports from mandatory E-Verify states suggest that many employers have not complied with the new laws or have found ways to circumvent them. In Alabama, for example, tens of thousands of employers missed the deadline to enroll in E-Verify, and it was reported that only a small percentage of businesses had complied with the law.24 In Arizona, mandatory E-Verify enlarged the underground economy (that is, cash payments) and thereby worsened the state's "economic problems by further deflating income-tax revenues."25 Any legislation requiring E-Verify must take into account the costs to government and businesses of enforcing and complying with the law.
Opening the Door to More State Immigration Laws
Because Whiting is limited to the licensing exception in IRCA, its holding will not extend beyond the issue of unauthorized employment. In one case challenging an Alabama law that bars from residing in manufactured homes individuals who cannot prove citizenship or immigration status, the district court found Whiting was "silent on housing issues." The district court further noted that unlike the issue of unauthorized employment, "[n]o similar savings clause exists for state regulation of immigration residency requirements."26
The defendant sought to rely on Whiting by arguing that the state has "licensing authority" over manufactured homes, but the district court rejected that interpretation, noting that "[p]reemption cannot be escaped by recasting this prohibition as a universal licensing requirement."27
In another case, a district court rejected a South Carolina immigration law by quoting Whiting: "power to regulate immigration is unquestionably … a federal power."28 Recently, the Fifth Circuit Court of Appeals struck down on preemption grounds an ordinance requiring adults living in rental housing to prove lawful immigration status. The Fifth Circuit distinguished Whiting, finding that the Supreme Court "was not faced with regulations affecting immigration in the housing context."29
Whiting left intact many years' worth of cases holding that state or local laws relating to immigration enforcement are preempted by federal law. For that reason, the Court's decision is unlikely to support state immigration laws that go beyond IRCA's licensing exception.
How E-Verify Works
A majority of Wisconsin employers enrolled in E-Verify use the program voluntarily. Other businesses are required to use E-Verify because they are federal contractors or were previously found to have violated IRCA.30 To use E-Verify, an employer must first review and sign a memorandum of understanding (MOU). By signing the MOU, the employer agrees, among other things, to comply with all the rules governing E-Verify. In particular, employers must limit E-Verify's use to newly hired employees, notify each job applicant of E-Verify participation, display E-Verify posters at the workplace, and ensure all personal identification is safeguarded. An employer cannot use E-Verify to check the employment eligibility of individuals hired before the MOU was executed and cannot use E-Verify to prescreen an applicant for employment.31
E-Verify is an Internet-based system, so an employer must have access to a computer. The employer must input the exact information provided by a new hire on Form I-9. Specifically, the employer must enter the employee's name, birth date, Social Security number, and alien registration number (if the employee is a noncitizen) in the E-Verify system. The information entered on E-Verify is then cross-checked with the records in databases maintained by the Department of Homeland Security (DHS) and the Social Security Administration (SSA).
If the information on the Form I-9 matches DHS or SSA records, then the employer will instantaneously receive an "Employment Authorized" result from E-Verify. An employer that elects to use E-Verify should print out and attach the result to the employee's Form I-9.
If the employee's information does not match the government's records, then E-Verify will send a "tentative nonconfirmation" (TNC) result, which "means that the information entered into E-Verify from Form I-9 differs from either SSA or DHS records." If there is a TNC response, an employer must notify the employee and determine whether the employee intends to contest the result. Once the employer explains to the employee what a TNC result means, the employee has eight days to contact either the DHS or the SSA to resolve the discrepancy.32
An employer cannot terminate an employee who is issued a TNC or take any other adverse action, such as suspension, delay of training, or withholding or lowering of pay, if the employee contests a TNC. If an employee does not contest a TNC, or is otherwise unable to demonstrate employment authorization, then a "final nonconfirmation" notice (FNC) is issued by E-Verify. Once an FNC is issued, the employer must terminate the employee, without any civil or criminal liability under IRCA.33
DHS records show that in 2010, for those employers using E-Verify, 98.3 percent of employees were automatically confirmed as employment eligible. In the remaining 1.7 percent of cases (approximately 224,000 employees), TNCs were issued.34
E-Verify Practice Tips
The DHS touts E-Verify as a fast and accurate way to determine the employment eligibility of a new hire. E-Verify can assist employers in ascertaining whether a new employee's Social Security number or alien registration number is incorrect. Because E-Verify uses both SSA and DHS databases, a person with a false Social Security number or a false alien registration number will be issued a TNC.
From a legal standpoint, businesses with perhaps the most compelling reason to use E-Verify are those businesses that have a higher risk of being subject to Form I-9 audits from ICE. There is a rebuttable presumption of compliance with IRCA's rules for employers that enroll in E-Verify.35 Therefore, a business using E-Verify may be able to more easily respond to a Form I-9 audit from ICE.
Nonetheless, the government itself has acknowledged that E-Verify is far from perfect. A lengthy report in 2010 from the U.S. Government Accountability Office (GAO) outlined significant problems with E-Verify. A Wisconsin employer that either voluntarily uses E-Verify or is required to enroll should be prepared to address these problems.
1) Responding to False TNCs. An employer should not assume that a TNC result means that the new employee is an undocumented immigrant. Although the GAO acknowledged that E-Verify's accuracy has improved, the program continues to erroneously generate TNCs for employees who are U.S. citizens or otherwise eligible to work. An erroneous TNC may result if the employer makes a mistake when inputting the employee information on E-Verify or the employee makes a mistake on the Form I-9. E-Verify simply compares the information provided by the employer with the records maintained by the DHS and the SSA. To avoid an erroneous TNC, employers should ensure the information on the Form I-9 is correct before entering it on E-Verify.
Even if the information on the Form I-9 is correctly entered on E-Verify, TNCs may occur "because [of] how information is recorded" in DHS and SSA databases. When employees become citizens, marry, or divorce, their names may change without DHS or SSA records being updated. Even more troubling is that the GAO found that "individuals from certain cultural groups, such as those of Hispanic or Arab origin, may have multiple surnames that are recorded differently on their naturalization documents than on their Social Security cards." The GAO estimates that if E-Verify becomes mandatory nationwide, each year approximately 164,000 U.S. citizens and lawful immigrants would receive TNCs because of name-related mistakes.36
2) Help Employees Respond to TNCs. Once a TNC is issued, an employer must promptly inform the employee and provide the contact information for the DHS and the SSA. It remains, however, the employee's responsibility to resolve the TNC. If the employee fails to contest the TNC within eight days, then the employee must be terminated.
The GAO reported that resolving TNCs "can be difficult because the E-Verify program does not have a process in place for employees to identify and access personal information that was the source of the erroneous TNCs." The GAO cited senior DHS officials who found that "if there is an error in a DHS database, individuals face formidable challenges in getting the inaccuracy or inconsistency corrected because, among other things, they have little information about what database led to the decision."37
Navigating the DHS and SSA bureaucracies is even harder for employees whose first language is not English. Employers should be aware that substantial bureaucratic delays may occur if an erroneous TNC is issued and be willing to assist new hires in resolving the issue. Employers cannot take any adverse action against employees who contest a TNC result from E-Verify.
3) Avoid Discrimination Claims. Employers should be aware of the possibility of discrimination claims based on errors made by E-Verify, especially errors involving noncitizen employees. The Whiting dissent was concerned about the Arizona law undermining IRCA's employment discrimination protections for "workers who look or sound foreign."38 The GAO cited a 2009 report that found that the erroneous-TNC rate for employees later found to be eligible for employment was approximately 20 times higher for foreign-born employees than for U.S.-born employees.39
The GAO expressed concern that employees may be vulnerable to discrimination "if employers engage in practices prohibited by E-Verify, such as limiting the pay of or terminating employees who receive TNCs, or prescreening job applicants." A survey of employers using E-Verify showed that a substantial number acknowledged engaging in such unlawful practices. The GAO further stated that it is difficult to identify discrimination within E-Verify because the program "does not capture certain employer behaviors that are indicative of discrimination, such as denying employment based on citizenship status or national origin."40
To avoid discrimination claims, employers should not misuse E-Verify by unlawfully checking the eligibility of job applicants or existing employees. Most important, employers should not selectively use E-Verify for new employees. If a business decides to enroll in E-Verify, then it must use the program for all new hires.
4) Follow the Form I-9 Process. It must be emphasized that E-Verify is not a substitute for complying with the Form I-9 verification process. Although employers do enjoy a rebuttable presumption by using E-Verify, enrolling in the program will not shield from liability employers that either disregard the Form I-9 requirements or knowingly hire unauthorized workers.
Erich C. Straub, Marquette 1994, is an immigration attorney concentrating in deportation defense and family and employment-based immigration. Combining his immigration expertise with nearly a decade of experience in criminal defense, he also represents employers in Form I-9 audits by the federal government. email@example.com.
Davorin J. Odrcic, Notre Dame 2001, practices immigration law exclusively and focuses in deportation defense, family-based immigration, and postconviction relief in Wisconsin courts for noncitizen clients. Before practicing immigration law, he represented several Fortune 500 companies in commercial litigation matters. firstname.lastname@example.org.
The GAO found that E-Verify is still vulnerable to fraud "because employers may not be able to determine if employees are presenting genuine identity and employment eligibility documents that are borrowed or stolen."41 In one notorious case from 2006, ICE raided a meat processing plant and found that 1,340 workers, all of whom were verified to work through E-Verify, were in fact not authorized to work in the United States.42 In another case, Howard Industries from Mississippi was convicted in February 2011 of hiring and harboring approximately 600 unauthorized workers despite enrolling in E-Verify in 2007.43
The U.S. Supreme Court's decision in Whiting opens the door for additional states and municipalities to mandate E-Verify as part of a licensing scheme. Even if the Court had struck down the Arizona law, it is likely that more employers will be required to enroll in E-Verify in the future. If Congress enacts immigration reform legislation, it is likely that any change will require E-Verify. Several bills introduced in the most recent Congress included a mandatory E-Verify provision.44
Since the Arizona law is likely a harbinger, Wisconsin businesses may have no choice but to enroll in E-Verify. In the meantime, Wisconsin employers should evaluate E-Verify's strengths and weaknesses, and determine whether the program is right for their business. An employer that decides to use E-Verify must take care to administer the program lawfully to ensure fair and nondiscriminatory employment practices.
1 Chamber of Commerce v. Whiting, 131 S. Ct. 1968 (2011).
2 Id. at 1976.
4 Id. at 1977.
5 Chicanos Por La Causa Inc. v. Napolitano, 558 F.3d 856 (9th Cir. 2009).
6 Lozano v. City of Hazelton, 620 F.3d 170 (3d Cir. 2010).
7 8 U.S.C. § 1324a(a)(1)(A).
8 8 U.S.C. § 1324a(h)(2).
9 Whiting, 131 S. Ct. at 1977-78.
10 Id. at 1980.
11 Id. at 1981.
12 Id. at 1975.
13 Id. at 1985.
14 The National Conference of State Legislatures (NCSL) provided a summary report on all state laws mandating E-Verify, available at www.ncsl.org/issues-research/immigration/e-verify-faq.aspx.
16 Green Bay, Wis., Code § 6.025 (2007).
17 In response to an open records request, the Green Bay City Attorney's Office stated, in a letter dated April 30, 2012, that there has been no enforcement of the Green Bay ordinance.
18 Keller v. City of Fremont, No. 8:10-CV-270, 2012 U.S. Dist. LEXIS 20908, at *25-26 (D. Neb. Feb. 20, 2012).
19 Unauthorized Immigrant Population: National and State Trends, 2010, at 24 (Feb. 1, 2011).
20 Jill Harrison, Sarah Lloyd & Trish O'Kane, Overview of Immigrant Workers On Wisconsin Dairy Farms 2, Program on Agricultural Technology Studies (Feb. 2009).
21 See, e.g., Jacob Kushner, Immigrants Now 40 Percent of State's Dairy Workforce, Wis. Ctr. Investigative J., available at www.wisconsinwatch.org/2009/11/04/immigrants-now-40-of-states-dairy-workforce/.
22 Georgia Pabst, Dairy Farmers Worry That Proposed E-Verify Law Will Kill Industry, Milw. J. Sentinel, July 30, 2011.
23 Jason Arvelo, Bloomberg Brief: Assessing E-Verify Costs for Employers, Taxpayers, Bloomberg Gov't (Jan. 2011).
24 Jay Reeves, Most Alabama Firms Missing Immigration Goal, Associated Press, April 4, 2012.
25 See, e.g., Daniel Gonzalez, Illegal Workers Manage to Skirt Arizona Employer-Sanctions Law, Ariz. Republic, Nov. 30, 2008.
26 Central Ala. Fair Housing Ctr. v. Magee, No. 2:11cv982-MHT, 2011 U.S. Dist. LEXIS 142788, at *24 n.7, *48 (M.D. Ala. Dec. 12, 2011).
28 United States v. South Carolina, No. 2:11-cv-29582011, U.S. Dist. LEXIS 151549, at *64 (D.S.C. Dec. 22, 2011).
29 Villas at Parkside Partners v. City of Farmers Branch, No. 10-10751, 2012 U.S. App. LEXIS 6043, at *22 n.35 (5th Cir. Mar. 21, 2012).
30 In 2008, President George W. Bush signed an executive order mandating the use of E-Verify for all federal contractors and subcontractors. See Exec. Order No. 13465, 73 Fed. Reg. 33,286 (2008).
31 See E-Verify User Manual for Employers 10, U.S. Citizenship & Immigration Services, May 2011. The manual and the memorandum of understanding may be accessed at www.dhs.gov/E-Verify.
32 Id. at 25, 28.
33 Id. at 31, 45
34 Access these statistics at www.uscis.gov.
35 IIRIRA § 402(b), 110 Stat. 3009-656 to 3009-657.
36Government Accountability Office, Employment Verification: Federal Agencies Have Taken Steps to Improve E-Verify, But Significant Challenges Remain, GAO-11-146, at 19 (Dec. 2010).
37 Id. at 34.
38 Whiting, 131 S. Ct. at 1993 (Breyer, J., dissenting).
39 GAO Report, supra note 35, at 40.
40 Id. at 41.
41 Id. at 21.
42 Id. at 24.
43 Marc Rosenblum & Lang Hoyt, Basics of E-Verify, the US Employer Verification System, Migration Pol'y Inst. (July 2011), available at www.migrationinformation.org/Feature/display.cfm?ID=846.
44 Id. at 2. In particular, passage of the Secure America Through Verification and Enforcement Act would require mandatory E-Verify participation for all U.S. employers.