Ground zero for the war of words over the future of America's millions of illegal workers was supposed to be the U.S. Capitol in Washington, D.C. Instead, it's turning out to be city halls and state capitols across the country.

As the House and Senate reached a stalemate this spring over competing immigration bills, local politicians jumped into the fray, proposing and passing laws and ordinances that attempt to stem the flow of illegal immigrants by cutting off opportunities for jobs, government benefits and housing. Most of the legislation includes penalties for hiring illegals, including fines and disqualification from government contracts.

While many experts predict the new laws will be pre-empted, employers operating in jurisdictions with new immigrant hiring restrictions will feel an immediate impact. And the laws and ordinances take effect at a time when employers are already nervous over highly publicized workplace raids by federal Immigration and Customs Enforcement (ICE) agents and new rules putting pressure on employers that receive Social Security mismatch letters.

“I'm terribly concerned about the direction this is taking,” says Jennifer Brown, partner with Ice Miller. “It's a hardship for employers to muddle through this.”

States Step In

Attorneys who represent companies that depend on immigrant workers say the crackdown by states, localities and ICE puts employers in an untenable situation because they have no way to sponsor existing workers into citizenship.

Laws passed in Colorado, Georgia, Louisiana, Pennsylvania and Tennessee this year, for example, prohibit illegal immigrants from working on state contracts. Several states barred illegals from collecting unemployment and worker's compensation, which means employers could be sued for injuries those employees incur on the job.

“Companies didn't see this coming,” says Mary Pivec, partner in Sheppard, Mullin, Richter & Hampton. “It's blatantly illegal to engage in this kind of legislation. It's pre-empted by federal law.”

New Colorado laws require companies that have contracts with the state and other governmental units to join the ICE Basic Pilot program, a voluntary federal immigration status verification database that has been criticized for its high error rate. Violators face having their contracts cancelled, with liability for any damages the state may incur as a result, and fines of $5,000 per worker for the first violation and $25,000 per worker for repeat violations.

“You can see they are trying to look toward being challenged on pre-emption, which is why they limited it to workers on state contracts, but at the end of the day they are trying to mandate participation in a program the federal government says is voluntary,” says Tanya Lee, a member of Littler Mendelson's corporate migration law group.

For contractors, that means making tough decisions between risking losing employees whose immigration status can't be verified, pulling out of the contract or taking the state to court.

“I would sue,” Pivec says, “but not everyone has the resources to do that.”

The Georgia law requiring state contractors to verify employees through Basic Pilot also is riddled with holes, says David Whitlock, partner at Fisher & Phillips. Those include the lack of an enforcement provision and requiring compliance by companies with 500 employees without saying whether that means 500 in Georgia, 500 in the country or 500 working on the contract.

Problematic Ordinances

Even more problematic are local immigration ordinances, which began popping up on municipal governments' agendas soon after Hazleton, Penn., passed one in July. Hazleton officials designed the ordinance to drive aliens out of the town of 22,000 people by denying business permits and city contracts to employers found to have illegals in their workforce. Hazleton's population is about one-third Hispanic. Riverside, N.J.–population 8,000–quickly followed Hazleton's lead with a similar ordinance.

Both ordinances were challenged in separate federal suits filed Aug. 15. The Puerto Rican Legal Defense and Education Fund and the ACLU filed suit on behalf of 11 Hazleton residents and business owners.

“The fundamental argument is that no political subdivision can enact laws that affect immigration,” says David Vaida, an Allentown, Pa., attorney who helped draft the suit. “That is the federal government's exclusive province.”

Vaida says the ordinance, if allowed to stand, would have a chilling effect on businesses in Hazleton, because a substantial portion of the labor force would leave town.

The National Coalition of Latino Clergy and Christian Leaders and a local church challenged the Riverside ordinance. Citing a 1976 case, Delanas v. Bica, the plaintiffs argued, “The Supreme Court has long recognized that the regulation of immigration 'is unquestionably exclusively a federal power.'” They also cited federal law that “expressly pre-empts any state or local law imposing civil or criminal sanctions upon those who employ ?? 1/2 unauthorized aliens.”

At press time, local ordinances modeled on Hazleton's were pending in Palm Bay, Fla.; San Bernadino and Escondido, Calif.; and the Pennsylvania towns of Allentown, Shenandoah and Mount Pocono. In Suffolk County, N.Y., proposed legislation calls for fines and up to six months in jail for county contractors that hire illegal aliens.

“These ordinances are being passed without a lot of thought but with a lot of politics,” says Jorge Lopez, partner at Jackson Lewis. “What the statutes leave vague is who is illegal and how you determine it.”

Increase Vigilance

Until the courts act on challenges to the local laws or Congress enacts a new federal policy (see SIDEBAR), employers should be more vigilant about hiring procedures, and audit their I-9 forms. This will be especially important for companies in states and localities that mandate employment verification, but should be a priority for all employers that hire immigrants.

“Our word to employers is that you need to get your house in order,” Whitlock says.

Brown says I-9 audits frequently turn up minor errors, such as failure to date the form, that create unnecessary liabilities. Training is key to ensure employees with responsibility for completing I-9s for new hires understand the rules.

“The first thing an employer should do is make sure its I-9s are as complete as possible,” Brown says.

——

[SIDEBAR]

Legislative Logjam

Congress' inability thus far to pass a federal immigration bill is the impetus behind the state and local laws that seek to control the hiring of illegal immigrants. Washington insiders warn that the impasse will likely continue through the end of the year.

More troubling still is the likelihood that when a federal bill passes, it may order deportation of the illegal aliens already working here. The House passed such an “enforcement-only” bill in December 2005, and House leaders won't compromise with the Senate, which adopted a bill that included a guest worker program in May. That program would offer undocumented workers legalized status if they pay a fine and back taxes and learn English.

Mary Pivec, partner in Sheppard, Mullin, Richter & Hampton, says the “smart money” in Washington is on passage of an enforcement-only bill in the session after the November election. But others doubt this Congress will act. “Nothing will happen this year at the federal level,” says David Whitlock, partner in Fisher & Phillips. “I don't think it's possible to get a compromise.”

Ground zero for the war of words over the future of America's millions of illegal workers was supposed to be the U.S. Capitol in Washington, D.C. Instead, it's turning out to be city halls and state capitols across the country.

As the House and Senate reached a stalemate this spring over competing immigration bills, local politicians jumped into the fray, proposing and passing laws and ordinances that attempt to stem the flow of illegal immigrants by cutting off opportunities for jobs, government benefits and housing. Most of the legislation includes penalties for hiring illegals, including fines and disqualification from government contracts.

While many experts predict the new laws will be pre-empted, employers operating in jurisdictions with new immigrant hiring restrictions will feel an immediate impact. And the laws and ordinances take effect at a time when employers are already nervous over highly publicized workplace raids by federal Immigration and Customs Enforcement (ICE) agents and new rules putting pressure on employers that receive Social Security mismatch letters.

“I'm terribly concerned about the direction this is taking,” says Jennifer Brown, partner with Ice Miller. “It's a hardship for employers to muddle through this.”

States Step In

Attorneys who represent companies that depend on immigrant workers say the crackdown by states, localities and ICE puts employers in an untenable situation because they have no way to sponsor existing workers into citizenship.

Laws passed in Colorado, Georgia, Louisiana, Pennsylvania and Tennessee this year, for example, prohibit illegal immigrants from working on state contracts. Several states barred illegals from collecting unemployment and worker's compensation, which means employers could be sued for injuries those employees incur on the job.

“Companies didn't see this coming,” says Mary Pivec, partner in Sheppard, Mullin, Richter & Hampton. “It's blatantly illegal to engage in this kind of legislation. It's pre-empted by federal law.”

New Colorado laws require companies that have contracts with the state and other governmental units to join the ICE Basic Pilot program, a voluntary federal immigration status verification database that has been criticized for its high error rate. Violators face having their contracts cancelled, with liability for any damages the state may incur as a result, and fines of $5,000 per worker for the first violation and $25,000 per worker for repeat violations.

“You can see they are trying to look toward being challenged on pre-emption, which is why they limited it to workers on state contracts, but at the end of the day they are trying to mandate participation in a program the federal government says is voluntary,” says Tanya Lee, a member of Littler Mendelson's corporate migration law group.

For contractors, that means making tough decisions between risking losing employees whose immigration status can't be verified, pulling out of the contract or taking the state to court.

“I would sue,” Pivec says, “but not everyone has the resources to do that.”

The Georgia law requiring state contractors to verify employees through Basic Pilot also is riddled with holes, says David Whitlock, partner at Fisher & Phillips. Those include the lack of an enforcement provision and requiring compliance by companies with 500 employees without saying whether that means 500 in Georgia, 500 in the country or 500 working on the contract.

Problematic Ordinances

Even more problematic are local immigration ordinances, which began popping up on municipal governments' agendas soon after Hazleton, Penn., passed one in July. Hazleton officials designed the ordinance to drive aliens out of the town of 22,000 people by denying business permits and city contracts to employers found to have illegals in their workforce. Hazleton's population is about one-third Hispanic. Riverside, N.J.–population 8,000–quickly followed Hazleton's lead with a similar ordinance.

Both ordinances were challenged in separate federal suits filed Aug. 15. The Puerto Rican Legal Defense and Education Fund and the ACLU filed suit on behalf of 11 Hazleton residents and business owners.

“The fundamental argument is that no political subdivision can enact laws that affect immigration,” says David Vaida, an Allentown, Pa., attorney who helped draft the suit. “That is the federal government's exclusive province.”

Vaida says the ordinance, if allowed to stand, would have a chilling effect on businesses in Hazleton, because a substantial portion of the labor force would leave town.

The National Coalition of Latino Clergy and Christian Leaders and a local church challenged the Riverside ordinance. Citing a 1976 case, Delanas v. Bica, the plaintiffs argued, “The Supreme Court has long recognized that the regulation of immigration 'is unquestionably exclusively a federal power.'” They also cited federal law that “expressly pre-empts any state or local law imposing civil or criminal sanctions upon those who employ ?? 1/2 unauthorized aliens.”

At press time, local ordinances modeled on Hazleton's were pending in Palm Bay, Fla.; San Bernadino and Escondido, Calif.; and the Pennsylvania towns of Allentown, Shenandoah and Mount Pocono. In Suffolk County, N.Y., proposed legislation calls for fines and up to six months in jail for county contractors that hire illegal aliens.

“These ordinances are being passed without a lot of thought but with a lot of politics,” says Jorge Lopez, partner at Jackson Lewis. “What the statutes leave vague is who is illegal and how you determine it.”

Increase Vigilance

Until the courts act on challenges to the local laws or Congress enacts a new federal policy (see SIDEBAR), employers should be more vigilant about hiring procedures, and audit their I-9 forms. This will be especially important for companies in states and localities that mandate employment verification, but should be a priority for all employers that hire immigrants.

“Our word to employers is that you need to get your house in order,” Whitlock says.

Brown says I-9 audits frequently turn up minor errors, such as failure to date the form, that create unnecessary liabilities. Training is key to ensure employees with responsibility for completing I-9s for new hires understand the rules.

“The first thing an employer should do is make sure its I-9s are as complete as possible,” Brown says.

——

[SIDEBAR]

Legislative Logjam

Congress' inability thus far to pass a federal immigration bill is the impetus behind the state and local laws that seek to control the hiring of illegal immigrants. Washington insiders warn that the impasse will likely continue through the end of the year.

More troubling still is the likelihood that when a federal bill passes, it may order deportation of the illegal aliens already working here. The House passed such an “enforcement-only” bill in December 2005, and House leaders won't compromise with the Senate, which adopted a bill that included a guest worker program in May. That program would offer undocumented workers legalized status if they pay a fine and back taxes and learn English.

Mary Pivec, partner in Sheppard, Mullin, Richter & Hampton, says the “smart money” in Washington is on passage of an enforcement-only bill in the session after the November election. But others doubt this Congress will act. “Nothing will happen this year at the federal level,” says David Whitlock, partner in Fisher & Phillips. “I don't think it's possible to get a compromise.”