by
Robert
C. Divine
Another federal appeals court has
cleared a state's ability to require state government contractors to use the
"E-Verify" system to electronically verify the employment eligibility of their
workers. Various business interests challenged an Oklahoma law designed to
reduce employment of unauthorized workers. The district court granted an
injunction against all challenged aspects of the law. A divided appeals court
reversed the district court concerning the "E-Verify" requirement for state
government contractors but maintained the injunction against the other two
provisions, finding them preempted by federal law. So far, all challenges
against laws and executive orders requiring federal and state government
contractors to use E-Verify have been unsuccessful. Other parts of the Oklahoma
law were still enjoined, and the decision shows how complicated American law can
be.
The case was Chamber of
Commerce of the United States of America v. Edmondson, Nos. 08-6127 &
08-6128 (8th Cir., Feb. 2, 2010).
Two of the three judges found that
federal law does not even impliedly preempt Oklahoma's requirement that state
contractors use the "E-Verify" system to electronically verify the employment
eligibility of their workers. This state requirement is similar to requirements
enacted by many state and local governments as well as by the federal government
through an executive order. This is in keeping with earlier appeals court
decisions arising from challenges to an Arizona law and to the federal executive
order. One judge dissented in the Oklahoma case, finding that a requirement to
use E-Verify upsets the balance that Congress enacted in making the use of
E-Verify voluntary for employers, but almost all courts have been ruling
otherwise, and we do not expect the Supreme Court to take up the issue. The
other two judges disagreed, for different reasons. One judge said that
Oklahoma's requirement for federal contractors is in keeping with the federal
scheme. The other judge based his decision on technical rules about "standing"
to challenge a law.
Two appeals court judges found that
federal law probably "impliedly" preempts Oklahoma's requirement that employers
withhold taxes from payments to individual independent contractors who have not
presented proof of their authorization to work. The two judges found that
Congress intentionally excluded independent contractors from verification
obligations, and Oklahoma's tax requirements on employers who did not verify
independent contractors would impermissibly subject those employers to possible
liability for unlawful discrimination. The third judge found that the federal
Tax Injunction Act takes away federal courts' jurisdiction to hear challenges to
this provision.
All three federal appeals court
judges found that federal law probably "expressly" preempts Oklahoma's treatment
as an unlawful employment practice any adverse employment actions against U.S.
workers while retaining workers the employer knew or should have known were not
authorized to work. Federal law expressly prohibits any state law "sanctions"
for employment of unauthorized workers on top of the existing federal penalties
for I-9 violations.
The judges designated their decision
to be published, suggesting that the full court might not be willing to re-hear
the case. It seems unlikely that the Supreme Court would decide to hear the case
at this stage
How We Can Help
Baker Donelson’s Immigration Group regularly counsels employers on I-9
compliance. We perform private audits of I-9 documents, prepare compliance
programs, and train managers and workers in implementing those programs. We
evaluate particular questionable documents and situations. We help employers
decide whether and how to create or store I-9 forms electronically, to use
Social Security Administration's Number Verification System, or to participate
in the Department of Homeland Security's "E-Verify" program. We defend sanctions
actions by ICE for paperwork and “knowingly hire” violations of I-9 rules. We
work with our strong
Litigation Department to bring
and defend claims against competitors based on employment of unauthorized
aliens. We advise and defend employers and managers in the increasingly common
criminal investigations and proceedings relating to employment of aliens. We
coordinate our Team’s services closely with our firm’s well-respected
Labor and Employment Law Group
and with our firm’s
White Collar Crime Group. We
provide advice and coordinate with U.S. and foreign preparers concerning U.S.
taxation of international companies doing business in the U.S., and concerning
the U.S. taxation of international workers placed in the U.S. and abroad.
