State and Local Restrictions on Employing Unauthorized Aliens
Released: 2013-05-16T00:00:00

Summary: In May 2011, the Supreme Court ruled in Chamber of Commerce of the United States of America v. Whiting that federal immigration law did not preempt an Arizona statute that authorized or required the suspension or termination of the licenses of businesses that knowingly or intentionally hire unauthorized aliens, and also required that employers within Arizona use the federal government's E-Verify database to check employees' work authorization.

The doctrine of preemption derives from the Supremacy Clause of the U.S. Constitution, which establishes that federal law, treaties, and the Constitution itself are "the supreme Law of the Land." Thus, one essential aspect of the federal structure of government is that states can be precluded from taking actions that are otherwise within their authority if federal law is thereby thwarted. An act of Congress may preempt state or local action in a given area in any one of three ways: (1) the statute expressly states preemptive intent (express preemption); (2) a court concludes that Congress intended to occupy the regulatory field, thereby implicitly precluding state or local action in that area (field preemption); or (3) state or local action directly conflicts with or otherwise frustrates the purpose of the federal scheme (conflict preemption).

When it was enacted in 1952, the Immigration and Nationality Act (INA) did not regulate the employment of unauthorized aliens, and several states subsequently enacted measures prohibiting the employment of individuals who were not lawful residents of the United States. In a 1976 decision declining to find one such measure preempted, the Supreme Court recognized that it was "within the mainstream of [a state's] police power" to restrict the employment of aliens within their jurisdiction whose presence in the United States was not authorized by the federal government. However, in 1986, Congress enacted the Immigration Reform and Control Act (IRCA), which amended the INA to sanction employers of unauthorized aliens and expressly preempt states and localities from sanctioning employers other than through "licensing and similar laws." Then, in 1996, Congress enacted the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), which authorized the creation of a pilot program for verifying work authorization that ultimately developed into the program known as E-Verify. Under federal law, use of E-Verify by private entities is generally voluntary, and the Secretary of Homeland Security may not require persons or entities not specified in IIRIRA to participate.

Prior to Whiting, the federal courts of appeals had disagreed as to whether IRCA and IIRIRA preempted state and local measures like the Arizona statute. Some found that state licensing measures were within IRCA's "savings clause" even when the state independently determined whether an employer employed unauthorized aliens, and that IIRIRA did not prohibit states from requiring E-Verify use. Others found that licensing provisions disrupted the balance struck by Congress between deterring illegal immigration, minimizing burdens on employers, and preventing discrimination, and Congress did not want use of E-Verify to be mandatory.

The majority in Whiting relied primarily upon the "plain meaning" of IRCA and IIRIRA, while two dissents relied more heavily upon the legislative history and overall purpose of IRCA. The majority's decision apparently opens the door to additional state and local restrictions upon employing unauthorized aliens. However, several lower court decisions subsequent to Whiting suggest that any state and local E-Verify measures, in particular, may need to parallel federal law to avoid being found to be preempted. Measures that would criminalize the seeking or performance of work by unauthorized aliens were not at issue in Whiting, but were later found to be preempted in the Supreme Court's June 25, 2012, decision in Arizona v. United States.


subsections: section_title: Introduction
paragraphs: This report discusses state and local restrictions upon employing unauthorized aliens in light of the May 26, 2011, decision by the Supreme Court in Chamber of Commerce of the United States of America v. Whiting . The Court's decision in Whiting arose from a facial challenge to the Legal Arizona Workers Act (LAWA), a predecessor of S.B. 1070, which authorized or required the suspension or termination of the licenses of businesses that knowingly or intentionally hire unauthorized aliens, as well as required that employers in Arizona use the federal government's E-Verify database to check employees' work authorization. Business, labor, and civil rights organizations had asserted that LAWA's licensing provisions were expressly and impliedly preempted by federal law and that its E-Verify provision was impliedly preempted. 

The doctrine of preemption derives from the Supremacy Clause of the Constitution, which establishes that federal law, treaties, and the Constitution itself are "the supreme Law of the Land." Thus, one essential aspect of the federal structure of government is that states can be precluded from taking actions that are otherwise within their authority if federal law is thereby thwarted. An act of Congress may preempt state or local action in a given area in any one of three ways: (1) the statute expressly states preemptive intent (express preemption); (2) a court concludes that Congress intended to occupy the regulatory field, thereby implicitly precluding state or local action in that area (field preemption); or (3) state or local action directly conflicts with or otherwise frustrates the purpose of the federal scheme (conflict preemption).

In finding that LAWA was not preempted by federal immigration law, a majority of the Court apparently opens the door to additional state and local restrictions upon employing unauthorized aliens. However, several lower court decisions subsequent to Whiting suggest that any state and local E-Verify measures, in particular, may need to parallel federal law to avoid being found to be preempted. Measures that would criminalize the seeking or performance of work by unauthorized aliens were not at issue in Whiting , but were found to be preempted in the Supreme Court's June 25, 2012, decision in Arizona v. United States .

This report does not address state and local authority to enforce federal immigration law, or state and local measures designed to deter unauthorized aliens from entering into or settling within a jurisdiction by restricting their ability to obtain housing, perform work, or receive state or local public benefits. These topics are addressed in other CRS Reports, including CRS Report R42719, Arizona v. United States: A Limited Role for States in Immigration Enforcement , by [author name scrubbed] and [author name scrubbed], and CRS Report R41423, Authority of State and Local Police to Enforce Federal Immigration Law , by [author name scrubbed] and [author name scrubbed]. The report also does not address potential due process or other issues that could be raised by state and local measures restricting the employment of unauthorized aliens.

section_title: Background
paragraphs: The Immigration and Nationality Act (INA) of 1952 established a "comprehensive federal statutory scheme for regulation of immigration and naturalization" and set "the terms and conditions of admission to the country and the subsequent treatment of aliens lawfully in the country." However, the INA did not originally regulate employment of unauthorized aliens. A number of states subsequently enacted measures prohibiting the employment of individuals who were not lawful residents of the United States. The constitutionality of one such measure—a California law providing that "[n]o employer shall knowingly employ an alien who is not entitled to lawful residence in the United States if such employment would have an adverse effect on lawful resident workers"—was at issue in the Supreme Court's 1976 decision in De Canas v. Bica . There, in declining to hold that the California statute was preempted by federal immigration law, the Court noted that 

Power to regulate immigration is unquestionably exclusively a federal power. But the Court has never held that every state enactment which in any way deals with aliens is a regulation of immigration and thus per se pre-empted by this constitutional power, whether latent or exercised. 

Further, the Court characterized prohibiting the employment of persons not entitled to work in the United States as "within the mainstream of [the State's] police power," and observed that the federal government had "at best" expressed a "peripheral concern" with the employment of unlawfully present aliens.

Federal regulation of the employment of unauthorized aliens expanded significantly in 1986, when the Immigration Reform and Control Act (IRCA) was enacted. IRCA amended the INA to make it unlawful for a person or other entity to hire, or to recruit or refer for a fee for employment in the United States, an alien, knowing that the alien is unauthorized. IRCA also required employees to attest their eligibility to work and present specified identification documents, which employers are to examine and attest that they appear to be genuine. The employer and employee attestations are accomplished through "I-9 forms," which are key to the verification process under IRCA. Employers who attempt to comply in good faith with these requirements are generally deemed to have complied notwithstanding technical or procedural failures to comply. Employers who violate IRCA's prohibitions on the unlawful employment of aliens may be subject to civil and/or criminal penalties under federal law. However, IRCA provides that, "[t]he 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." The language within the parentheses is commonly referred to as the "savings clause" because it potentially saves state and local "licensing and similar laws" from preemption. However, even when a state and local measure is not expressly preempted, as is the case here, the possibility of implied preemption remains.

Ten years later, Congress expanded upon IRCA's employment verification regime when it enacted the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA). IIRIRA directed the Attorney General (later the Secretary of Homeland Security) to conduct three pilot programs for electronic employment eligibility confirmation, one of which, the Basic Pilot Program, ultimately developed into the E-Verify program. IIRIRA also provided that participation by private parties in the pilot programs is generally voluntary, and the Secretary of Homeland Security "may not require any person or other entity to participate." However, as an incentive for participation, IIRIRA provides that entities which opt to participate and obtain confirmation of the identify and employment eligibility of employees establish a rebuttable presumption that they have not violated IRCA. 

Despite the enactment of IRCA and IIRIRA, concerns about the employment of unauthorized aliens persisted, particularly in states and localities that are significantly affected by unauthorized immigration. Beginning in 2006, several of these states and localities enacted or considered measures that would deter unauthorized aliens from entering or settling in their jurisdiction by restricting access to work, housing, and benefits. Those measures seeking to limit unauthorized aliens' ability to obtain work typically sanctioned employers of unauthorized aliens and/or required employers to use E-Verify to verify employees' work authorization. 

As discussed below, the federal courts of appeals reached differing conclusions as to whether these measures were preempted by federal immigration law before the Supreme Court issued its decision in Whiting . Some courts found that state licensing measures were within IRCA's "savings clause" even when the state independently determined whether an employer employed unauthorized aliens, and that IIRIRA did not prohibit a state from requiring use of E-Verify. Others found that such measures were preempted because the licensing provisions disrupted the balance struck by Congress between deterring illegal immigration, minimizing burdens on employers, and preventing discrimination against those perceived as "foreign," and Congress did not want use of E-Verify to be mandatory. The Supreme Court granted certiorari in Whiting , in part, because of these differences among the courts of appeals.

section_title: Pre-Whiting Jurisprudence
paragraphs: Prior to the Supreme Court's decision in Whiting , some reviewing federal and state courts found that state and local measures suspending or revoking the licenses of businesses found to have employed unauthorized aliens and/or requiring employers within the jurisdiction to use E-Verify were not preempted by federal immigration law. For example, in Chicanos por la Causa v. Napolitano , the U.S. Court of Appeals for the Ninth Circuit unanimously rejected the plaintiffs' argument that the Legal Arizona Workers Act was expressly preempted because it provided for the suspension and termination of licenses of employers whom state officers determined had hired unauthorized aliens. The plaintiffs had asserted both that LAWA's savings clause "encompass[es] only licenses to engage in specific professions, such as medicine or law," and that Congress intended to permit revocation of the licenses of only those entities whom the federal government had determined violated IRCA. However, in an opinion that gave rise to the Supreme Court's decision in Whiting , the Ninth Circuit rejected these arguments based on the "plain" or dictionary meaning of "license," as well as the legislative history of IRCA. The Ninth Circuit also declined to find that LAWA's licensing provisions were impliedly preempted because of a "speculative, hypothetical possibility" of conflict in the practical operation of state and federal laws. The Ninth Circuit similarly found that LAWA's E-Verify requirements are not impliedly preempted by IIRIRA since Congress's making E-Verify voluntary at the federal level "did not in and of itself" indicate that Congress intended to prohibit states from requiring participation. A majority of the U.S. Court of Appeals for the Tenth Circuit also concluded that the E-Verify requirement of the Oklahoma Taxpayer and Citizen Protection Act of 2007 was not impliedly preempted in its decision in Chamber of Commerce of the United States of America v. Edmondson .

Other courts reached contrary conclusions, finding that state and local licensing measures and/or E-Verify requirements are preempted by federal immigration law. In particular, in Lozano v. City of Hazleton , the U.S. Court of Appeals for the Third Circuit unanimously found that a city ordinance with licensing provisions and an E-Verify requirement like those in LAWA was impliedly preempted. Although it reversed the district court's finding that the ordinance's licensing provisions were expressly preempted because they constituted "sanctions" under IRCA, the Third Circuit nonetheless found that the provisions impermissibly conflicted with IRCA because they disrupted the balance that Congress had crafted between the "competing policy objectives of effectively deterring employment of unauthorized aliens, minimizing the resulting burden on employers, and protecting unauthorized aliens and citizens perceived as 'foreign' from discrimination." According to the Third Circuit, the ordinance "substantially undermine[d]" this balance by prioritizing deterring the employment of unauthorized aliens over Congress's other objectives. The Third Circuit further found that the ordinance "contravene[d] congressional objectives by requiring the use of E-Verify when Congress had declined to do so." In so doing, the Third Circuit noted that other courts, including the Ninth Circuit, had found otherwise, but suggested that these decisions "fail[ed] to afford proper weight to the purposes underlying Congress's decision to retain E-Verify as a voluntary program."

section_title: Supreme Court's Decision in Whiting
paragraphs: In Whiting , the Supreme Court upheld LAWA's licensing provisions and E-Verify requirements in a 5-3 decision authored by Chief Justice Roberts. Justice Thomas concurred in the outcome and in those parts of the opinion which found that the statute's licensing provisions are not expressly preempted given the plain meaning of the relevant passages of IRCA and LAWA, and that the statute's E-Verify requirement is not impliedly preempted because it does not conflict with federal law. Three Justices dissented in two separate opinions which would have found LAWA's licensing provisions expressly preempted and its E-Verify requirements impliedly preempted. Justice Kagan recused herself.
subsections: section_title: Controlling Opinion
paragraphs: The controlling opinion, written by Chief Justice Roberts, focused first upon the "plain wording" of IRCA's savings clause and the Arizona statute, noting that federal law saves from express preemption "licensing and similar laws" and that the Arizona law, "on its face, purports to impose sanctions through licensing laws." The petitioners had argued that LAWA does not constitute a licensing law under IRCA because LAWA defines "license" broadly, to include "any agency permit, certificate, approval, registration, charter or similar form of authorization," and governs only the suspension or termination of licenses, not their issuance. However, the Court rejected both arguments. It found that LAWA was a licensing law, in part, because LAWA's definition of "license" largely "parroted" the definition of "license" given in the Administrative Procedure Act (APA). The Court also found that laws which do not purport to govern the issuance of licenses constitute "licensing laws" under IRCA because a contrary construction would "run[] contrary to the definition [of license] that Congress itself has codified" in the APA, and "is also contrary to common sense." Further, the Court suggested that even if LAWA were not a "licensing law" for purposes of IRCA, IRCA's savings clause also encompasses "similar laws." While the petitioners had also asserted that the legislative history of IRCA supported a narrow interpretation of the savings clause, the Court found these arguments unpersuasive given that 

no such limit is remotely discernible in the statutory text. Absent any textual basis, we are not inclined to limit so markedly the otherwise broad phrasing of the savings clause.... Congress's authoritative statement is the statutory text, not the legislative history. 

The controlling opinion also found that LAWA's licensing provisions are not impliedly preempted by IRCA. In so finding, the Court noted that IRCA "specifically preserved authority for states" to impose sanctions through licensing and similar laws upon persons who employ unauthorized aliens. According to the Court, because Congress specifically preserved this authority, "it stands to reason" that Congress did not intend that the federal system would be exclusive and necessarily conflict with any state system. The Court further noted that Arizona's system, in particular, did not conflict with federal law, but rather "closely tracks IRCA's provisions in all material respects," adopting IRCA's definition of "unauthorized alien" and prohibiting state investigators from independently determining aliens' work authorization. The Court also cited 8 U.S.C. §1373(c), which requires federal officials to respond to state and local inquiries regarding persons' immigration status, as evidence that Congress did not intend for the federal system to be exclusive. In addition, the Court rejected petitioners' argument that LAWA upsets the balance that Congress sought to strike when enacting IRCA. It did so, in part, because "[r]egulating in-state businesses through licensing laws has never been ... an area of dominant federal concern," and LAWA does not "directly interefere[] with the operation of [any federal] program." It also rejected petitioners' assertion that LAWA's penalties for licensing violations, which the petitioners and Justice Breyer characterized as a "business death penalty," are such significant sanctions that they disrupt the balance struck by Congress. Instead, the Court viewed these sanctions as "typical attributes of a licensing regime," and noted that IRCA sought to balance state and federal interests, not just deterring unauthorized immigration, minimizing burdens on employers, and preventing discrimination against those perceived as "foreign." According to the Court, in enacting IRCA,

The principle that Congress adopted was not that the Federal Government can impose large sanctions, and the States only small ones.... [I]n preserving to the States the authority to impose sanctions through licensing laws, Congress did not intend to preserve only those state laws that would have no effect.

The Court further found that LAWA's E-Verify requirements were not impliedly preempted by federal law. The petitioners had asserted that these requirements conflicted with federal law because mandatory use of E-Verify impedes Congress's purpose in establishing a reliable and non-burdensome system of work authorization. However, the Court found that Arizona's requiring the use of E-Verify does not conflict with federal law because the text of IIRIRA only prohibits the Secretary of Homeland Security from requiring the use of E-Verify, not anyone else. The Court also emphasized that LAWA's E-Verify requirement is "entirely consistent" with federal law given that the consequences of using E-Verify were the same under federal and state law (i.e., the person was not entitled to a presumption that they had not violated IRCA). The Court further found that "the Federal Government has consistently expanded and encouraged the use of E-Verify." In addition, the Court noted that even the federal government disagreed with the petitioners' assertion that the E-Verify system would be overwhelmed—and Congress's purposes defeated—if other jurisdictions also required use of E-Verify.

section_title: Dissenting Opinions
paragraphs: Three Justices dissented in two separate opinions. Justice Breyer, in an opinion which Justice Ginsburg joined, rejected the majority's characterization of LAWA as a "licensing law" falling within IRCA's savings clause. According to this dissent, LAWA should be found to be expressly preempted because the legislative history of IRCA, coupled with the balance that IRCA established between deterring unauthorized immigration, minimizing burdens on employers, and preventing discrimination against those perceived as "foreign," demonstrate that Congress intended to exempt from preemption only a narrow class of state laws, such as those governing the licensing of agricultural labor contractors. Justice Breyer specifically objected to the majority's resort to the plain meaning of "license" in determining Congress's intent, asserting that the "statutory context" of the phrase, not its dictionary meaning, should be used to ascertain its meaning. He also criticized the majority opinion on the grounds that the opinion would create obstacles to the accomplishment and execution of the full purposes and objectives of Congress by "permit[ing] States to turn virtually every permission-related state law into an employment-related 'licensing' law." The dissent similarly would have found LAWA's E-Verify requirements preempted because, "[b]y making mandatory that which federal law seeks to make voluntary, the state provision stands as a significant 'obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" In particular, Justice Breyer suggested that the majority was mistaken in inferring permission for states to make the program mandatory from language in IIRIRA prohibiting the Secretary of Homeland Security from requiring the use of E-Verify. 

Justice Sotomayor would also have found LAWA's licensing provisions expressly preempted. However, unlike Justice Breyer, she would have done so on the grounds that IRCA expressly preempts laws that permit states and localities to determine whether an employer has violated IRCA. Her dissent reached this conclusion primarily because the legislative history of IRCA evidenced Congress's desire to replace the pre-IRCA "patchwork" of state laws prohibiting the employment of unauthorized aliens with a "uniformly" enforced federal law. Accordingly, the dissent would find that states and localities are preempted from independently adjudicating whether an employer has employed an unauthorized alien. In support of this conclusion, the dissent also noted the limitations on use of I-9 forms under federal law, as well as the fact that federal law provides no mechanism for states to access information regarding aliens' work authorization. The dissent similarly would have found LAWA's E-Verify requirement impliedly preempted because it is "in contravention of the significant policy objectives motivating Congress' decision to make participation in the E-Verify program voluntary." While noting that the fact that state law makes mandatory something Congress made voluntary does not, per se , result in preemption, Justice Sotomayor emphasized that LAWA differs from other state laws in that it directly regulates the relationship between the federal government and private parties by requiring private employers to use the federal E-Verify database. The dissent also noted the U.S. government's "uniquely federal interest" in managing the use of the E-Verify database, and that Congress's decision not to create a mandatory program was based, in part, on the costs of such a program. 

section_title: Implications
paragraphs: The Supreme Court's decision in Whiting apparently opens the door to the enactment of additional state and local measures restricting the employment of unauthorized aliens. However, several lower court decisions subsequent to Whiting suggest that any state and local E-Verify measures, in particular, may need to parallel federal law to avoid being found to be preempted. For example, a state court in Louisiana struck down a state statute that required employers to use E-Verify to verify the work authorization of all employees after finding that it was preempted by federal rules and regulations, which generally provide that E-Verify may only be used to verify the employment eligibility of new hires, not current employees. In another case, a federal district court in Missouri found that a municipal ordinance which would have fined employers who did not use E-Verify was preempted because it imposed sanctions that were not contemplated by federal law. Under federal law, use of E-Verify is generally voluntary, although those who do use E-Verify are generally entitled to a presumption that they have not employed an unauthorized alien. There do not appear to be any similar, post- Whiting decisions finding state or local licensing measures to be preempted because they differ significantly from the provisions of federal law. However, the controlling opinion in Whiting repeatedly emphasized how closely LAWA "tracks IRCA's provisions in all material respects," and reviewing courts could potentially find that state and local measures that "track" IRCA less closely are preempted, as they have with state E-Verify measures. 

There have been calls for Congress to preempt state and local E-Verify requirements, in particular, because of the burdens that complying with various state and local requirements could impose on employers. Legislation has been introduced in recent Congresses that would do this. Legislation has also been introduced in recent Congresses that would expressly preempt state and local measures that prohibit employers from verifying new hires or current employees through E-Verify, as well as amend the employer sanctions provisions of the INA to establish that neither they nor any other federal law preempt state or local measures imposing civil or criminal sanctions upon those who employ unauthorized aliens. Along with the Supreme Court's decision in Whiting , the enactment of such legislation could also potentially shape the extent and nature of state and local restrictions on employing unauthorized aliens.


Question-summary annotations: questions: question: What was the initial impact of INA?
answer: When it was enacted in 1952, the Immigration and Nationality Act (INA) did not regulate the employment of unauthorized aliens, and several states subsequently enacted measures prohibiting the employment of individuals who were not lawful residents of the United States.
child_questions: question: How did courts rule on these state measures?
answer: In a 1976 decision declining to find one such measure preempted, the Supreme Court recognized that it was "within the mainstream of [a state's] police power" to restrict the employment of aliens within their jurisdiction whose presence in the United States was not authorized by the federal government.

question: What was the effect of the IRCA?
answer: However, in 1986, Congress enacted the Immigration Reform and Control Act (IRCA), which amended the INA to sanction employers of unauthorized aliens and expressly preempt states and localities from sanctioning employers other than through "licensing and similar laws."

question: What did the IIRIRA create?
answer: Then, in 1996, Congress enacted the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), which authorized the creation of a pilot program for verifying work authorization that ultimately developed into the program known as E-Verify.
child_questions: question: To what extent is E-Verify required?
answer: Under federal law, use of E-Verify by private entities is generally voluntary, and the Secretary of Homeland Security may not require persons or entities not specified in IIRIRA to participate.

questions: question: How were different arguments in Whiting divided?
answer: The majority in Whiting relied primarily upon the "plain meaning" of IRCA and IIRIRA, while two dissents relied more heavily upon the legislative history and overall purpose of IRCA.
child_questions: question: What does the majority's decision support?
answer: The majority's decision apparently opens the door to additional state and local restrictions upon employing unauthorized aliens.
child_questions: question: How is this affected by other rulings?
answer: However, several lower court decisions subsequent to Whiting suggest that any state and local E-Verify measures, in particular, may need to parallel federal law to avoid being found to be preempted. Measures that would criminalize the seeking or performance of work by unauthorized aliens were not at issue in Whiting, but were later found to be preempted in the Supreme Court's June 25, 2012, decision in Arizona v. United States.