Employer sanctions law upheld by federal court

PHOENIX - A federal appeals court upheld the legality Wednesday of Arizona's nearly 9-month-old employer sanctions law.

Without dissent, a three-judge panel of the 9th U.S. Circuit Court of Appeals rejected challenges brought by business groups, employers and Hispanic rights advocates to the law which allows a judge to suspend or revoke the business licenses of any firm found guilty of knowingly hiring undocumented workers.

The judges rejected arguments that the law infringes on the exclusive right of the federal government to control immigration.

Judge Mary Schroeder, writing for the unanimous three-judge panel, said Congress specifically allowed states to enact exactly the kind of laws that Arizona has passed - and to impose the kind of penalties the state law allows.

Schroeder also rejected the contention that state lawmakers acted illegally in requiring employers to check the immigration status of all new workers through the federal government's E-Verify system and fire those found not to be in this country legally.

Finally, the court said there are sufficient legal protections in the law for companies charged with hiring undocumented workers to allow them to argue to a judge that they did not, in fact, violate the law.

The ruling - and the last finding in particular - could have fallout at the ballot in November: A business-financed campaign is asking voters to approve Proposition 202 which would ease many of the key provisions of the existing law. Backers contend the law that was upheld on Wednesday is unfair to employers.

Conversely, if Proposition 202 is approved, the law - and the legal challenge - disappear.

Wednesday's ruling does have one potential bright spot for challengers.

Schroeder pointed out that, to date, no Arizona employer has actually been charged with violating the law since it took effect Jan. 1. It allows a judge to suspend a company's right to do business in Arizona for a first offense; a second conviction of knowingly hiring an undocumented worker within three years puts the company out of business, at least at the location where the violation occurred.

The judge said the court could reach a different conclusion if a company facing actual punishment can prove that the law, as it is being applied, is unfair or illegal.

Central to the challenge mounted by foes of the law is who gets to punish companies that hire people not in this country legally.

The 1986 Immigration Reform and Control Act, approved by Congress in 1986, specifically precludes states and cities from imposing any civil or criminal penalties on companies for their hiring practices.

Schroeder noted, however, that law contains an exemption for "licensing and similar laws.'' And she said the federal law does reserve to states the power to decide a company's "fitness to do business'' based on whether it hires undocumented workers.

David Jones, president of the Arizona Contractors Association, said Wednesday's ruling is disappointing but not surprising. Jones said his association and other groups that challenged the law may ask the full 9th Circuit to review the ruling - and, if necessary, go to the U.S. Supreme Court.

But Rep. Russell Pearce, R-Mesa, said he believes the statute he crafted will withstand future challenges. "I very carefully wrote the law to comply with federal law."

Pearce said the law has safeguards for companies, starting with the requirement that prosecutors prove that an employer knowingly broke the law in order to obtain a conviction. He said that protects them against prosecution for innocent mistakes.

And he said the law also gives a "rebuttable presumption'' of innocence to any firm that used the E-Verify system to check on new workers.

Pearce praised the appellate decision, saying it is good for the state's economy - and not just because it preserves jobs for legal U.S. residents.

"We've already saved millions of dollars in K-12,'' he said, referring to figures from the Arizona Department of Education that enrollment growth in public schools has been far lower than expected. "Every student that doesn't show up that was here illegally is an $8,500 to $10,000 savings to the taxpayer.''

But Glenn Hamer, president of the Arizona Chamber of Commerce and Industry, said the law is hurting the state.

"It's created an environment that's diminished business investment,'' he said, one factor Hamer believes has led to the decline in state tax revenues. And Hamer said while much of the economic problems facing Arizona are national and international in scope, "this certainly doesn't help.''

The ruling comes as proponents of Proposition 202 are trying to make their case to voters that the existing law is too onerous.

That measure contains the same penalties as the state law. But prosecutors would have to prove that an owner or an officer of the company had "actual knowledge'' a worker is here illegally.

The fact that an underling has deliberately hired the undocumented worker and the owner may have reason to believe the person is illegal would not be enough.

Potentially more significant, it provides absolute immunity to firms that either use the E-Verify system or simply comply with existing federal laws about checking the identity of new workers.

That law requires only that employers attest on the I-9 form that the applicant "is eligible to work in the United States," and, if documents have been presented, that they have been examined and "appear to be genuine and relate to the individual."

Pearce has called Proposition 202 "employer amnesty.''