Justices Uphold Arizona Employer-Sanctions Law

By Kenneth Jost
Supreme Court Editor, CQ Press

States are free to use licensing laws to penalize employers or even put them out of business for hiring illegal aliens, the Supreme Court ruled on Thursday.

The 5-3 decision upholds an Arizona law enacted in 2007 out of frustration with the federal government’s lagging enforcement record under the employer- sanctions provision enacted as part of a 1986 immigration law. The Arizona law requires the state to revoke the license of any business found guilty a second time of intentionally hiring an unauthorized immigrant worker.

At least eight other states have passed laws with provisions that go beyond the terms of the federal law, known as the Immigration Reform and Control Act or IRCA.

The case is separate from a challenge pending in lower federal courts to an Arizona law enacted in April 2010 that makes it a state crime to be in the country illegally. A federal judge in Arizona has blocked the law from going into effect, and the Ninth U.S. Circuit Court of Appeals upheld the injunction pending further proceedings.

The Arizona employer-sanctions law had been challenged by business groups led by the U.S. Chamber of Commerce, by civil rights and immigrant-rights organizations and by the Obama administration. In legal terms, they argued that the federal statute preempted Arizona’s law. In effect, they said, Arizona could not go beyond what the federal law provides.

In practical terms, business groups argued that the Arizona law would burden employers by subjecting them to overlapping, potentially conflicting federal and state enforcement schemes. The civil rights groups and the Obama administration warned that the stiff penalties imposed by the Arizona law would likely lead to discrimination against workers who look or sound “foreign.”

Justices in the majority in Thursday’s decision, Chamber of Commerce v. Whiting, 09-115, gave little weight to those policy concerns. Instead, the court held that the federal law expressly permits states to use licensing laws to penalize employers for hiring undocumented workers and that Arizona’s statute does not conflict with the federal scheme.

“Arizona’s licensing law falls well within the confines of the authority Congress chose to leave to the States,” Chief Justice John G. Roberts Jr. wrote, “and therefore is not expressly preempted.”

The ruling pitted the court’s conservative majority against its liberal bloc. Justices Antonin Scalia, Anthony M. Kennedy and Samuel A. Alito Jr. joined all of Roberts’ opinion; Justice Clarence Thomas joined most of it. Liberal justices Stephen G. Breyer, Ruth Bader Ginsburg and Sonia Sotomayor dissented. Justice Elena Kagan was recused because she was solicitor general during earlier proceedings.

The case turned on a provision in IRCA that bars “any State or local law imposing civil or criminal sanctions” against employers for hiring unauthorized aliens “other than through licensing and similar laws.” Summarizing the ruling from the bench, Roberts underscored the exception for licensing laws as an “important” phrase. He went on to conclude that the exception authorizes a state to go so far as to revoke a company’s corporate charter or license to operate within the state.

The ruling also upheld a second provision that requires Arizona employers to use the federal government’s pilot Internet-based system known as “E-verify” to verify the work status of job applicants before they are hired. In setting up the program in 1996, Congress made participation voluntary. The business and civil rights groups – but not the federal government – say the program has too many bugs for employers to be required to use it to avoid liability for hiring an undocumented worker.

In his dissent, Breyer argued that Congress did not intend the broad reading that the majority gave to the exemption for state licensing laws. The ruling, he said, risked “undermining Congress’s efforts (1) to protect lawful workers from national-origin-based discrimination and (2) to protect lawful employers against erroneous prosecution or punishment.” Ginsburg joined his opinion.

Separately, Sotomayor argued that the federal law should be read to require a federal adjudication of an employer’s liability for hiring illegal aliens before any state penalties could kick in. In a footnote, Roberts chided the dissenters for failing to agree on a single rationale for striking down the Arizona law.

The Chamber of Commerce said it was "disappointed" with Thursday’s ruling, but said the decision does not give state and local governments "a blank check to pass any and every immigration law." Separately, the American Civil Liberties Union also voiced disappointment, but emphasized that the ruling did not directly bear on the other Arizona law -- known as SB 1070 -- being challenged in lower federal courts.

Arizona's employer-sanctions measure was signed into law by the state's Democratic governor, Janet Napolitano, who is now the Obama administration's secretary for Homeland Security, and vigorously defended by her Republican successor, Jan Brewer. In signing the law in 2007, Napolitano said the state had to act because Congress was "incapable of coping with the comprehensive immigration reforms” the country needed.

For background, see Alan Greenblatt, “Immigration Debate: Update,” [subscription required] CQ Researcher, Dec. 10, 2010; Kenneth Jost, “States and Federalism,” [subscription required] CQ Researcher, Oct. 15, 2010.