Current Analysis from the Arizona Business Lawyer Concerning the New Arizona “Employer Sanctions Law”

By Paul J. Buser / Editor-in-Chief

Dear Business Law Section Members:

Beginning with this month’s issue of The Arizona Business Lawyer – now in its 5th year as the official “on-line” & “hardcopy” publication of the Business Law Section of the Arizona State Bar Association – we are changing from our former quarterly format to a new monthly format.

We have received kudos concerning the Business Lawyer’s prior quarterly format. Nonetheless, after discussion by the Business Law Section’s Executive Council – at two of its recent sessions – about the ever- and rapidly changing business law environment in Arizona, there was no disagreement that the most current business law and policy issues should be brought to the attention of our membership. Thus, the change to a monthly issue.

For our first monthly issue we are proud to publish a superb narrative, easy to read and yet a very thorough analysis of “The New Arizona Employer Sanctions Bill, the Competing Ballot Initiative, and the ‘Business Death Penalty’.”

This excellent co-authored article for your reading enjoyment is appended to this editor’s note.

The article is the product of more than a month’s worth of research, review, writing and final editing by Scott DeWald, who serves as Chair of the Business Law Section’s Business Entity Legislation Committee, and Benjamin Graff. Mr. DeWald is a partner and leader of the Corporate Practice Group at Lewis and Roca LLP. Mr. Graff, who has prior legislative experience with the Legislative Council”s Office of the Arizona State Legislature, is an associate at Lewis and Roca.

Next month be sure to look for another Business Lawyer special publication of interest to section members!

THE ARIZONA BUSINESS LAWYER

editor’s note

Volume 5 September 2007 #1Volume 5 September 2007 #1

Editor-in-Chief, Paul J. BuserScottsdale

arizonalaw@paulbuserlaw.bizPhone: (480) 951-1222

Fax: (480) 951-2568

Contributing Editor, William D. BlackPhoenix

william@bblaw.com

Production Manager, Michael Peelmichael.peel@staff.azbar.org

© Copyright 2007 State Bar of Arizona. This newsletter is published by the Business Law Section of the State Bar of Arizona.Statements or opinions expressed herein are those of the authors and do not necessarily reflect those of the State Bar of Arizona, its officers, Board of Governors, Business Law Executive Council or the Editorial Staff.

1861257.13

THE NEW ARIZONA EMPLOYER

SANCTIONS BILL,

THE COMPETING BALLOT INITIATIVE,

AND THE

“BUSINESS DEATH PENALTY” A Briefing for the Business Lawyer By Scott D. DeWald Chair, Business Entity Legislation Committee of Business Law Section sdewald@lrlaw.com and Benjamin W. Graff bgraff@lrlaw.com Lewis and Roca LLP Phoenix, Arizona

Scott DeWald, a business, M&A and financing lawyer, is a partner and leader of the Corporate Practice Group at Lewis and Roca LLP and serves on the Executive Council of the State Bar Business Law Section.

Benjamin Graff, a government relations, telecommunications and environmental lawyer with prior experience at the Legislative Council’s Office of the Arizona State Legislature, is an associate at Lewis and Roca LLP.

In the void left by Congressional stalemate

over federal immigration reform, in July 2007 the Arizona State Legislature passed House Bill 2779, The Fair and Legal Employment Act (or Legal

Arizona Workers Act) (the “Act”), requiring all newly hired employees to submit to a federal database search (“E-Verify”) and creating the nation’s most aggressive sanctions against Arizona employers who knowingly or intentionally hire unauthorized aliens. This new state law inhabits a limited space carved out of a field preempted by the federal immigration law that expressly prohibits state laws from imposing civil or criminal sanctions on those who employ unauthorized aliens unless the state does so “through licensing and similar laws.”

"The provisions of this section preempt any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens." 8 U.S.C. § 1324a(h)(2) of the Immigration Reform and Control Act of 1986 (the “Federal Immigration Preemption Clause”).

It is this preemption of criminal or civil sanctions that led our legislature to create employer sanctions that suspend and revoke employers’ licenses, rather than send our state’s business owners to jail or subject them to monetary penalties. However, it is unclear how broadly to construe “licensing and similar laws.” Clearly, it applies to occupational licenses such as contracting, food handling and hospital licenses, and in this regard many believe that the license-revocation consequences of the Act will be devastating to Arizona’s economy. But does state “licensing” under the Federal Preemption Clause also include the articles of incorporation approved by the state’s corporation commission, or a city’s “privilege tax license” where the license is nothing more than a tax identification number? Under the Act, “license” is defined broadly to include these nonoccupational state charters, and the law provides that all “licenses” will be revoked permanently after a second violation. Does the Act contemplate that, by revoking a corporation’s articles of incorporation or its transaction privilege tax license, the business could no longer operate and would have to shut down? The legislature may have intended this result, but the Act does not expressly permit or require county sheriff or local

1861257.13 2

police enforcement of injunctions against doing business where these non-occupational licenses have been revoked. Absent such enforcement, the authors believe the businesses could continue to operate after revocation, without the statutory liability shield afforded by incorporated status. What the New Law Will Require

On January 1, 2008, when the Act becomes effective, it will prohibit hiring an unauthorized alien, “intentionally” (meaning it was actually the employer’s objective to hire an unauthorized alien—not easy to prove), or “knowingly” (either without verifying status or knowing that the alien was unauthorized).

Does “hire” include “continue to

employ”? There is some ambiguity about the operative language, “knowingly employ,” which is defined in the Act by reference to actions listed in the federal immigration law. The federal list includes not only hiring but also recruiting, referring and continuing to employ, which could arguably lead to a violation of the Act merely by recruiting, referring or continuing to employ an unauthorized alien. Such an interpretation seems inconsistent with other provisions of the Act, which focus only on new hires cleared through a federal database that prohibits submitting names of existing employees.

What does an Employer “know”? Federal

law states that “knowing” includes not only actual knowledge, but also constructive knowledge or knowledge that may fairly be inferred through notice of certain facts and circumstances that would lead a person, through the exercise of reasonable care, to know about a certain condition. The Act might be interpreted to incorporate this federal notion of constructive knowledge. (Note: a new regulation prescribing an employer’s duties when it receives a “no-match” letter from the Social Security Administration can result in the employer having constructive knowledge that an employee is an unauthorized alien if the employer does not take steps to fit into a “safe harbor.” (http://www.ssa.gov/legislation/DHS%20Regulation%20No-Match.pdf ).

E-Verify (Basic Pilot) Database. The Act

also requires all Arizona employers to verify that newly hired employees (but not existing employees) are not unauthorized aliens by submitting their names into the federal E-Verify Program (“E-Verify”) (formerly known as the Basic Employment Verification Pilot Program or the EEV), which uses Social Security numbers, alien registration numbers, and I-9 numbers to perform verification checks. If the feedback from E-Verify fails to verify a match, the results can be used by a court to issue sanctions against the employer unless the newly hired employee is terminated, although the E-Verify procedures do permit the employee to prove E-Verify was wrong. In general, however, an employee who flunks E-Verify will be terminated. Employers are prohibited from using E-Verify to prescreen applicants for employment or to back-check the employment eligibility of current employees: it must be used only for newly-hired employees. E-Verify, which is available to employers in all 50 states and currently is free of charge, requires all users to register, agree to a Memorandum of Understanding and complete a web-based tutorial. (https://www.vis-dhs.com/EmployerRegistration). Critics point out that the E-Verify database can include information from fraudulent documents.

Using E-Verify creates a “rebuttable presumption” that the employer did not “knowingly” employ an unauthorized alien. Proof of compliance with federal I-9 review requirements establishes an “affirmative defense” to an alleged violation.

Sanctions The county attorney must investigate all

allegations of violations of the Act (unless “frivolous”), then sue the employer in court if it determines a violation has occurred. The court will impose different sanctions against employers, depending on whether the employer intentionally or knowingly hired an unauthorized alien. On a first violation, a court: • must order the employer to terminate the

employment of all unauthorized aliens;

1861257.13 3

• may suspend the employer’s licenses for up to 10 days and must suspend such licenses if the employer fails to file a signed sworn affidavit with the county attorney within three business days stating that the employer has terminated the employment of all unauthorized aliens and that the employer will not intentionally or knowingly employ an unauthorized alien (or, for an “intentional” violation, the court must suspend the employer’s licenses a minimum of 10 days, but can also impose a longer suspension);

• must impose probation for three years (five years for “intentional” violation);

• must require the employer to file quarterly reports with the county attorney of new employees hired at the location where the unauthorized alien performed work.

Upon a second violation during a probationary period, in a lawsuit brought by the county attorney, the court must permanently revoke an employer’s licenses. The permanent revocation of licenses has become known as the “business death penalty.” Licenses include articles of incorporation, transaction privilege tax licenses and occupational licenses as issued by any state or local government, but not professional licenses (i.e., doctors, dentists and lawyers) and not licenses issued to waste water treatment plants or some environmental licenses under Titles 45 and 49 of the Arizona Revised Statutes.

The Arizona business community has been concerned with the effect of the business death penalty on businesses with multiple locations in Arizona. The Act states that licenses will be revoked at the employer’s business location where the unauthorized alien performed work. However, if a license is not necessary to operate at the specific location, but a license is necessary to operate the employer's business in general, a court must revoke licenses that are held by the employer at the employer’s primary place of business. Thus, in most cases license revocation will affect all of an employer’s locations within Arizona. Critics warn of significant damage to both the economy and the countless law-abiding employees who will lose their jobs.

The Politics of Amending HB 2779

Chambers of commerce oppose the Act; however, business groups appear to have underestimated the public’s support for strong sanctions against business on immigration issues. Many believe that there is little political support for abolishing the “business death penalty” entirely and that only a court action can prevent the Act from taking effect as drafted.

The Governor’s office is encouraging the

business community to talk to legislators about problems with the Act. We believe the Governor will not call a special session unless she is convinced that any new legislative amendments have achieved consensus in advance. Other than the Governor, only the Speaker of the House or the President of the Senate can call a special session, and neither has indicated he will do so.

The Speaker of the House, Jim Wiers, recently announced the creation of the Ad Hoc Committee on Arizona Businesses and Illegal Immigration, charged with discussing the business community’s concerns with the Act and what can be done to make sure the law does not negatively impact law-abiding businesses. Mr. Wiers has stated that he will be resistant to attempts to weaken the law. The legislature will announce the committee’s final membership early this month, which will be comprised of Arizona business owners, human resource personnel, and law enforcement officers. The committee will hold its first meeting by the end of September. (http://www.azleg.gov/FormatDocument.asp?inDoc=/press/House/48leg/1R/SPEAKER%2EAD+HOC%2EDOC.htm) The Ballot Initiative

Don Goldwater has announced his intention to lead a drive for signatures for an initiative, to be placed on the ballot in November 2008, that is even more aggressive than the Act. We understand he will do so regardless of what actions might be taken to amend the Act. In contrast to the Act, the initiative, which has been filed with the Secretary of State:

1861257.13 4

• applies the “business death penalty” the first time a business “knowingly” employs a single unauthorized alien (“first strike, you’re out”);

• lacks an “intentionally” standard, meaning an employer only has to “knowingly” employ a single unauthorized alien in order to have its licenses permanently revoked;

• provides even fewer procedural steps and notice to the employer before permanently revoking all licenses; and

• does not provide an affirmative defense to employers who establish that they have complied in good faith with 8 U.S.C. § 1324a(b) (the federal I-9 documentation review requirements).

A Critical Analysis of House Bill 2779 and Possible Fixes

Immigration reforms are necessary, and employers should be required to stop hiring unauthorized aliens. (Federal immigration reform—including any changes to who may legally work in the U.S. and who is an “unauthorized alien”—is beyond the scope of this article.) However, many believe the Act has serious flaws that should be fixed before the Act becomes effective on January 1, 2008 (assuming a court does not strike some or all of the Act before that time). This section summarizes those aspects that are, in the judgment of the authors, the most serious flaws or defects, but the characterization of “flaws” and the efficacy of possible amendments as “fixes” is a matter of judgment, political orientation, and philosophy. Different members of the business community may differ in their assessment of the importance of flaws and the efficacy of fixes, in some cases depending on their industry. The following should be considered a menu of choices that could be used to advocate for or debate changes in the Act. So-called “flaws” differ in significance and impact, and some of the “fixes” might only make an objectionable statute a little less objectionable and therefore may not be worth the political price of the fix. Politics aside, an amendment that at least clarifies the ambiguities raised by the Act seems necessary. Any proposed amendments will need to take into account (1) the likelihood of political support, (2)

the possibility that amendments to the law to make sanctions less harsh might increase the likelihood of passage of the initiative, which is harsher than the law (and the initiative would not be subject to amendment by the legislature) and (3) the preemption by the Federal Preemption Clause of state civil and criminal sanctions that are not part of “licensing or similar laws,” which would invalidate such state sanctions. 1. The “death penalty” provisions will hurt innocent employees, the economy, and possibly public safety. As the Governor has acknowledged, the law would revoke licenses for critical businesses, such as hospitals and power plants, and the license revocation provisions are so broad they could require the closure of multiple locations of a business based solely on the wrongful hiring practices of one location. But the basic problem with license revocation in principle is that many innocent employees can lose their jobs because of only two wrongful hiring decisions over which they had no control.

POSSIBLE FIXES: Use sanctions other than permanent revocation: (1) Suspend licenses only until payment of a substantial “reinstatement fee” (as opposed to a “civil sanction” or fine) after all violations of illegal hiring have been corrected; or (2) limit other state privileges, such as banning the employer from public contracts for some period and requiring state loans to be repaid (this is the approach taken by Pennsylvania’s new law).

2. The “death penalty” provisions should not apply to licenses other than occupational licenses because the revocation sanction cannot work as intended on businesses that have no occupational licenses but only have Arizona Corporation Commission and Secretary of State authorizations. Revocation of corporations' articles of incorporation, limited liability companies' articles of organization, limited partnerships' certificates of limited partnership, and revocation of Arizona qualification of out-of-state businesses, will not have the effect of shutting down these businesses. The precise effect of revocation is legally unclear (and this lack of clarity is itself a flaw): For business entities

1861257.13 5

formed in other states, revocation of their qualification to do business in Arizona would result in their inability to sue in Arizona courts; for entities formed under Arizona law, revocation would probably eliminate the legal shield against owners’ personal liability for the debts and liabilities of the business. In other words, these entities would be turned into sole proprietorships or general partnerships, or possibly unincorporated associations, the principals of which would be individually liable for the obligations of the business. However, these businesses would not be under any prohibition against continuing in business in a different form. They could choose to reincorporate to regain the liability shield because there is no prohibition in the Act against forming a new corporation, LLC or limited partnership, in another state or even in Arizona. Under existing Arizona law, a new entity formed in another state could apply for qualification as a foreign entity in Arizona (the new law does not forbid it, and, even if denied, the only express penalties for failing to qualify as a foreign entity are the inability to sue in Arizona courts and the requirement to pay annual fees for foreign qualification plus penalties). Another ambiguity: the meaning of “suspension” of articles of incorporation (not defined under the corporate laws.) Unless ambiguities are resolved, new businesses may avoid uncertainty by incorporating in other states, with the result that Arizona corporate law will not govern the relationship between shareholders and corporations (Nevada or Delaware law will), meaning Arizona corporate law will be irrelevant and the legislature will be ceding its influence over corporate governance to the legislatures of Nevada or Delaware. POSSIBLE FIX: Delete articles of incorporation, limited liability companies' articles of organization, and limited partnerships' certificates of limited partnership from the definition of “license” under the bill. Rely exclusively on occupational licenses for enforcement, because this is all that was contemplated by Congress in the Federal Immigration Preemption Clause. 3. A transaction privilege tax (“TPT”) license is not a license under common

understanding and should not be revocable. The TPT license is not a true "license," but is simply a taxpayer identification number for purposes of the sales tax levied by the state on sales of thirteen categories of goods and services. Arizona’s revocation of a TPT license should be preempted by federal law because it falls outside the licensing sanctions contemplated by the Federal Immigration Preemption Clause, so the provision permitting a revocation of a TPT license is preempted and invalid.

POSSIBLE FIX: Delete transaction privilege tax license from the definition of license under the bill. 4. The law is unconstitutional. Multiple parties have joined together to file two separate lawsuits challenging the Act: (1) Arizona Contractors Association, Inc. v. Janet Napolitano (http://www.azeir.org/pdf/aca-azeir_v_napolitano_hb-2779.pdf) filed July 13, 2007, and (2) Chicanos Por La Causa, Inc. v. Janet Napolitano (http://www.bibdaily.com/pdfs/Chicanos.pdf), filed September 4, 2007. The main constitutional arguments, many of which are stated in the lawsuits, are:

a. The Definition of “Knowingly Employ” is Overly Broad: Under the definitions in the Act, to “knowingly employ an unauthorized alien” means to commit any of the “actions” described in 8 U.S.C. § 1324a, including (1) hiring, (2) recruiting, or (3) referring for a fee an alien knowing the alien is an unauthorized alien. 8 U.S.C. § 1324a(a)(1)(A). Other “actions” also include (4) hiring, recruiting, or referring for a fee an individual without complying with I-9 documentation verification requirements (but prohibitions against recruiting or referring for a fee an individual without verifying I-9 documentation only apply to agricultural employers or farm labor contractors), (5) continuing to employ an alien knowing the alien is or has become an unauthorized alien, and (6) using a contract to obtain the labor of an alien knowing that the alien is an unauthorized alien. 8 U.S.C. § 1324a(a)(2). Does the Act cover all this?

1861257.13 6

Several factors lead to the conclusion that the legislature intended to limit “knowingly employ” to the act of hiring, not continuing to employ. First, the Act states that the use of E-Verify provides a rebuttable presumption that the employer did not “knowingly employ an unauthorized alien.” Act, § 23-212(I). E-Verify can’t be used to search existing employees, or to recruit or refer an individual prior to employing the individual, so using E-Verify could not logically create the Act’s rebuttable presumption with respect to these categories. Accordingly, it seems likely that the legislature intended the Act to regulate only the act of hiring an unauthorized alien and not the other “actions” described in 8 U.S.C. § 1324a, yet the incorporation by reference of that federal provision creates an ambiguity that the Act might not be limited to hiring an unauthorized alien.

POSSIBLE FIX: Limit the definition of “knowingly employing an unauthorized alien” to hiring an alien knowing the alien is an unauthorized alien.

b. Commerce Clause: By defining "employee" to include employees hired in other states, by not restricting enforcement to employees and worksites in Arizona, and by apparently requiring employers to use the federal E-Verify Program database to verify employees newly hired in other states, the Act violates the commerce clause due to its effects outside the borders of Arizona.

POSSIBLE FIX: Restrict the scope of the Act so that it only governs employees and worksites in Arizona.

c. Procedural Due Process: First, the Act violates the 14th Amendment because employers may fire or fail to hire persons who are not unauthorized aliens as a result of overzealous adherence to the Act’s requirements, thereby depriving employees and prospective employees of liberty and property without due process of law. Second, by suspending or revoking business licenses or permits (which constitute property) without notice of the initiation of an investigation,

the Act violates "procedural" due process of law under the 14th Amendment and Article II of the Arizona Constitution. The Act also violates the due process rights of employers by preventing a Court from hearing key testimony and evidence. Section 23-212(H) of the Act provides in part, “On determining whether an employee is an unauthorized alien, the Court shall consider only the federal government’s determination pursuant to 8 U.S.C. § 1373(c).” The Act’s use of the word “only” may deprive employers of their due process rights to challenge erroneous “determinations” of immigration status by the federal government, by calling and cross-examining the witnesses and presenting other evidence in support of their case.

POSSIBLE FIX: Require notice of the initiation of an investigation and remove the word “only” from Section 23-212(H) so that a court is entitled to look at all the facts, circumstances, and evidence needed to guide its determination, and preserve the due process rights of employers to present evidence and examine witnesses.

d. Equal Protection Clause: The Act revokes licenses of employers who have licenses, while allowing businesses without licenses to avoid any sanctions. The Act violates the equal protection clause by penalizing only those businesses that need licenses from the state. An individual or general partnership or sole proprietorship might have no governmental license and hire unauthorized aliens, without sanction, while a corporation hiring the same unauthorized aliens would have its licenses revoked and might no longer be able to conduct a licensed business in Arizona.

POSSIBLE FIX: No fix is apparent. Unequal treatment seems to be required by the wording of the Federal Immigration Preemption Clause. A claim based on a violation of the equal protection clause is a strong challenge against the Act. (The Act is probably less vulnerable to attack if the only licenses that are subject to revocation are occupational licenses, since the state arguably has a greater interest in those businesses.)

1861257.13 7

e. Federal Preemption of Penalties for False Affidavits: Arizona’s ability to impose criminal penalties for false statements made in the employer affidavit or periodic reporting requirements of the Act are preempted by federal law. State laws that impose criminal and civil penalties (fines) associated with employing unauthorized aliens are expressly barred by the Federal Immigration Preemption Clause.

POSSIBLE FIX: Clarify the Act so that no criminal or civil penalties, beyond revocation of licenses, can be used to enforce it, even for false affidavits.

f. Additional Federal Preemption Argument: The Federal Preemption Clause should be interpreted to permit states to take action against business licenses only after the employer has been found to violate federal law.

POSSIBLE FIX: Require a specific finding of violation of federal law (by federal authorities or a court) before sanctions can be imposed by an Arizona court. g. Separation of Powers Clause: By legislatively outlining the manner in which the Executive Branch must investigate claims of employing an unauthorized alien (i.e., restricting the evidence that can be considered and requiring prosecution of each complaint that is "not frivolous"), the law violates the separation of powers clause of the Arizona constitution.

POSSIBLE FIX: Allow the exercise of discretion by the Executive Branch in enforcing the law. h. Substantive Due Process: Because the Act is so broad and vague, it arbitrarily and capriciously deprives persons and corporations of the fundamental right to associate and the right not to have the state interfere with interstate commerce and therefore violates "substantive" due process of law under the 14th Amendment and the Arizona constitution.

POSSIBLE FIX: No specific fix would cure this defect. A combination of the amendments or

clarifications described in this article could make the law less vague and broad. At the least, the Act should be more specific about what is required and what is permitted in enforcement of license revocation (e.g., does the legislature want the sheriff or the police to bar the employer from doing business?).

5. The E-Verify Program may not be able to handle the volume of inquiries required by the Act, might begin to charge high fees, and might not be available. The E-Verify Program Extension and Expansion Act of 2003 expanded the availability of the program to all fifty states through 2008. In reaction to this expansion, U.S. Citizenship and Immigration Services stated that “if significantly more employers than anticipated choose to participate in the Basic Pilot Program, USCIS may have to limit the number of participants.” (This quote was recently removed from the USCIS Website). Less than 20,000 employers nationwide are currently registered to use E-Verify, and less than half use the program. The Act will require an additional 130,000 Arizona employers to use E-Verify. POSSIBLE FIX: Obtain assurances from Congress and the administrators of E-Verify, including the Department of Homeland Security and the Social Security Administration about capacity. In addition, the legislature may be willing to amend the Act so that if E-Verify becomes unavailable, an employer may rely solely on the employer’s determination of citizenship status based on a review of I-9 documentation, and still maintain an affirmative defense.

6. Conflict between federal and state law: It is not possible for employers to comply with the new state law without violating the federal E-Verify Program. The E-Verify Program prohibits prescreening prospective employees on E-Verify, so an employer must first hire the employee (who might be deemed an unauthorized alien in E-Verify records, despite acceptable I-9 forms), then search on E-Verify, then fire that employee if E-Verify indicates he or she is not authorized. But under the Act, the initial hiring of an unauthorized alien is a violation. The employer

1861257.13 8

would have only a presumption that it didn’t violate the law, which could be rebutted.

POSSIBLE FIX: Make clear that the initial hiring is not a violation if the employee is terminated based on results of E-Verify.

7. The Act lacks an antidiscrimination clause to ensure that it is enforced in a fair and non-discriminatory manner. The Governor has identified the lack of antidiscrimination protections as one of the Act’s central flaws, even though federal and state law already precludes employment discrimination against employees on the basis of race or national origin.

POSSIBLE FIX: Add an express antidiscrimination provision mirroring the language found in 8 U.S.C. Section 1324b, which outlines all "unfair immigration-related employment practices." 8. Technical Flaw: HB 2779 cites the wrong federal provision. The Governors’ letter states that Section 23-212(J) of the Act incorrectly cites 8 U.S.C. § 1324b for the purposes of establishing an affirmative defense for employers who comply with federal employment verification procedures regarding review of citizenship documentation, and that the correct citation should be to 8 U.S.C. § 1324a(b). Some are unsure. If this is a typographical error, it can probably be fixed without a Special Session by Arizona Legislative Council under A.R.S. § 41-1304.02(7).

Conclusion

Immigration reforms are necessary, and employers should be required to stop hiring unauthorized aliens. However, the Act creates many uncertainties because of provisions that are subject to judicial challenge and, perhaps most important to business lawyers, because of the permanent revocation of articles of incorporation and articles of organization without a clear indication of the consequences of such revocation. Clarification should be provided before the Act becomes effective on January 1, 2008.

Warning: Employers Who Are Too Aggressive In Attempts to Comply with the Act Could Violate Existing Anti-Discrimination Prohibitions in these laws:

• Title VII of the Civil Rights Act • Arizona Civil Rights Act • 42 U.S.C. Section 1981 • 42 U.S.C. Section 1983 • City Codes

Assistance from the leaders of Lewis and Roca’s Employment Law Practice Group (pictured below) is gratefully acknowledged.

Todd Hale, thale@lrlaw.com, a partner in Lewis and Roca’s Tucson office, counsels public and private employers and frequently lectures on employment discrimination. He is an experienced commercial trial lawyer and an Adjunct Professor of Law at the University of Arizona.

Mary Ellen Simonson, msimonson@lrlaw.com, an employment lawyer with a substantial practice in commercial litigation and appeals, was recipient of the 2005 Business Woman of the Year Athena Award from the Greater Phoenix Chamber of Commerce, and is a partner at Lewis and Roca.