Update from Alabama: Attorney General Posts Guidance on the Toughest Immigration Law in the Nation
[Editor’s Note: today’s blog is courtesy of Wendy Padilla-Madden from Balch & Bingham LLP.]
Today, Alabama Attorney General Luther Strange announced that he has established a special webpage for providing updates and information on Alabama’s new immigration law, Act No. 2011-535, which is widely considered to be the toughest in the nation. Signed into law on June 9, 2011, the Beason-Hammon Alabama Taxpayer and Citizen Protection Act weighs in at more than 70 pages and is nuanced and complex. To complicate matters, various provisions of the bill will be phased in next year, while many others are already in effect or temporarily enjoined due to litigation.
The attorney general’s website currently features a copy of the law (as enacted) plus a highlighted version which shows which sections are in effect, which have been placed on hold by the courts, and which will be phased in next year. The page also includes a list of frequently asked questions (FAQs) and a summary of both state and federal litigation surrounding the Act. Attorney General Strange said today that state law prohibits him from issuing formal opinions on specific questions about the law due to the litigation. His office will, however, develop guidance that will be posted on the website periodically as it becomes available, in order to assist state and local agencies in their interpretation and enforcement of the controversial new law.
In the meantime, Alabama employers must brace themselves for these new requirements, most of which are likely to survive legal challenges. So how exactly does this law affect employers, and what can be done now to prepare for the inevitable enforcement scrutiny? Let’s take a quick look at the major employer provisions.
Prohibition on Employing Unauthorized Aliens
The Act prohibits any employer doing business in the State of Alabama from hiring or continuing to employ unauthorized aliens in Alabama. An employer that has “complied in good faith” with the I-9 requirements found in 8 U.S.C. § 1324a(b) will have an affirmative defense that it did not knowingly hire or employ an unauthorized alien.
The Act also requires that all Alabama employers register and use E-Verify no later than April 1, 2012. For employers doing business (contract, grant or incentive) with the State, a municipality, or a State-funded entity, the E-Verify mandate takes effect January 1, 2012. The January 1, 2012 date probably applies to banks that accept SAFE deposits or have other contracts with the State, a municipality, or a State-funded entity. Small businesses with 25 or fewer employees will be able to register to use E-Verify through the Alabama Department of Homeland Security (ADHS). It remains unclear, however, what the process will be for utilizing the ADHS E-Verify program or if it will require that small employers provide ADHS with copies of their I-9 forms in order to query employees through the system. For purposes of employment, E-Verify serves as a limited safe harbor under the Act. There is no similar safe harbor under Federal law.
Penalties for Violations of the Employment Provisions of the Act
Penalties for hiring unauthorized aliens are severe. The penalties can range from temporary suspension of business licenses and permits for the first violation to permanent revocation of the business licenses statewide for multiple violations. Furthermore, employers that are found to have violated the law will have to comply with additional reporting requirements for up to three years after discovery of a violation. The enforcement provisions in the employment provisions of the Act are complex and involve various state agencies including the Attorney General, local district attorneys, the Alabama Department of Homeland Security, and ultimately, the state courts.
One particularly onerous provision of the law will enable any resident of Alabama to petition the Attorney General to bring an enforcement action against a specific business entity or employer. To be valid, the petition must include an allegation describing the alleged violation, the action constituting the violation (the hire or continued employment of unauthorized workers) the date and location where the violation occurred. Within 60 days of receiving the written/signed petition, the Attorney General must then respond, either by filing a civil complaint or by informing the petitioner in writing that the civil complaint is not warranted. Either way, it seems that the AG will need to investigate these claims in order to make a determination.
The Act generally does not impose liability on employers for violations committed by their independent contractors. However, under Federal law, an employer may face liability for violations of independent contractors if it has actual or constructive knowledge that the independent contractor’s employees are unauthorized. The Act also exempts “casual domestic labor performed in a household” from its provisions.
Disallowance of Tax Deductions (Stayed by Federal Court)
This provision, now stayed by Federal court order, provided that employers may not take deductions for wages, salaries or compensation of any kind paid to an unauthorized alien. If an employer knowingly claims a tax deduction that is disallowed under this provision of the Act, the Act imposes a penalty of up to 10 times the claimed deduction.
Discrimination and Wrongful Termination Claims (Stayed by Federal Court)
This provision, now stayed by Federal court order, made it “a discriminatory practice” for an employer to refuse to hire or to discharge a U.S. citizen or authorized alien while retaining an alien the employer knows or should know is an unauthorized alien. The U.S. citizen or authorized worker aggrieved by the “discriminatory practice” could have collected compensatory damages, costs, and attorney’s fees in a state-court civil action.
Employers who terminate unauthorized employees in compliance with the Act are immune from wrongful termination and retaliation claims arising under Alabama law. This immunity does not apply, however, to any claim arising under Federal law, including claims of discrimination based on national origin.
The Act imposes on all state contractors the same prohibition against hiring or continuing to employ unauthorized aliens in Alabama that it applies against private employers. In addition, state contractors are required to attest to their compliance by sworn affidavit signed before a notary. State contractors also have to provide proof of E-Verify enrollment before a contract, grant or incentive may be awarded.
These same requirements are applicable to subcontractors on projects paid for by recipients of contracts, grants or incentives from the state, any political subdivision thereof, or any state-funded-entity. Further, the Act requires any recipient of state funds, including contract grantees and incentive recipients, to require an affidavit of compliance with the Act and proof of E-Verify enrollment from all business entities or employers with whom it enters into contracts. The Act allows state authorities and law enforcement to verify compliance with the requirements imposed on state contractors at any time.
The penalties for a contractor or subcontractor failing to comply with are the Act are significant, including loss of state contracts and possible suspension of business license.
Contracts with Unlawfully Present Aliens
The Act declares most contracts entered into by unlawfully present aliens to be void and unenforceable in Alabama courts if the other party to the contract had knowledge that the alien was unlawfully present in the United States and the contract requires “the alien to remain unlawfully present in the United States for more than 24 hours after the time the contract was entered into or performance could not reasonably be expected to occur without such remaining.”
State Employee’s Duty to Report
The Act makes it the obligation of every person working for the State or a political subdivision of the State to report any violation of the Act. Any person who willfully fails to report violations may be found guilty of obstructing governmental operations as defined in Section 13A-10-2 of the Alabama Code.
State Officials Obligated to Comply with and Enforce the Act
Any official or agency of the State or a political subdivision of the State may be liable in a civil suit substantial for civil penalties if the official adopts a policy or practice that limits or restricts the enforcement of the Act.
Registration of Motor Vehicles, Driver’s Licenses, Business Licenses; Business Transactions with the State.
Section 30 of the Act prohibits any alien who is unlawfully present in the United States from entering into any business transaction with the State or political subdivision of the State. This prohibition applies to registration of motor vehicles, renewing motor vehicles license plates, applying for or renewing driver’s licenses or applying for or renewing a business license. Complying with these requirements is expected to create significant additional work for licensing authorities and significantly slow down the licensing process. The Act does not define “business transactions”. It should be anticipated that the interpretation of “business transactions” will be the subject of future questions and resolution.
The Act imposes several new obligations on employers doing business in Alabama and imposes severe penalties for noncompliance. The primary employment provisions of the Act, including the E-Verify requirement, become effective on January 1, 2012 or April 1, 2012. Many of the other relevant provisions are effective now.
While some parts of the law have drawn legal challenges, most of the provisions relating directly to employers likely are to survive these challenges. Many other questions arising under the Act are likely to be litigated in the courts for years to come. Despite these uncertainties, some things are clear: Alabama employers should promptly take steps to implement an immigration compliance program. Such a program, which should include the employment eligibility verification (I-9 Form) process and E-Verify, among other measures, can help ensure that the employer remains in compliance with the Act. It is recommended that all employers engage an experienced immigration compliance attorney to conduct an audit of the employer’s Form I-9s and immigration practices.