The “Business Death Penalty”

The Supreme Court on Thursday upheld an Arizona law that imposes harsh penalties on businesses that hire illegal immigrants.

On May 26, in a 5-3 decision, the Supreme Court upheld a controversial Arizonan immigration law that critics believe amounts to a “business death penalty.”  The Court’s decision in Chamber of Commerce v. Whiting is part of the wider debate in the effort of states to regulate immigration law.

The Legal Arizona Workers Act, passed in 2007, bars employers from knowingly or intentionally hiring illegal immigrants.  If an employer in Arizona repeatedly violates this law, it may lose its license to conduct business in the state.  Additionally, the law also requires Arizonan employers to use the federal government’s E-Verify system.  E-Verify is a new electronic database that attempts to authenticate employee’s social security numbers with information contained in government records.

In its decision, which divided the court on conservative and liberal lines, the primary issue was a proper interpretation of the meaning of “license” in the 1986 Immigration Reform and Control Act (“IRCA”).  Although IRCA is supposed to override any state laws imposing criminal and civil sanctions on businesses that recruit or hire unauthorized aliens, IRCA granted an exemption for state licensing laws that attempt to impose such sanctions.  A coalition of civil liberty groups and business organizations, with the support of the Obama administration, challenged the Arizonan law as a violation of IRCA.  Their argument, supported by Justice Breyer in his dissent, was that the Arizona’s law went beyond the licensing exemption allowed in IRCA and that Congress did not intend to create such a far-reaching licensing statute.  Justice Breyer also worried that the law did not properly address anti-discrimination issues.  Additionally, Breyer believed that the E-Verify system was a “pilot program” and “prone to error.”

The majority however supported a broad meaning of the licensing exemption of IRCA and upheld Arizona’s law.  Writing for the majority, Justice Roberts believed that if Congress intended to limit the licensing exemption of IRCA, it could easily have done so.  Roberts also cautioned that licensing sanctions will only be implemented when “an employer’s conduct fully justifies them.”

Although Immigrant Rights advocates were disappointed with the Court’s decision, Linton Joaqin, general counsel for the National Immigration Law Council noted, “State legislators considering this decision a free pass to enact legislation targeting immigrants are gravely mistaken.” Peter Spiro, an Immigration Law Professor at Temple University, believed however that, “This is definitely a victory for those who are pushing restrictive immigration measures in state houses.” The National Immigration Forum stressed that the E-Verify system was “doomed to failure” as employers in Arizona will find a way around the system.

The Court’s decision on Thursday paves the way for an even great battle over Arizona’s more controversial SB 1070, which gives police in Arizona the mandate for detention of people they suspect are in the US illegally.

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