What Does Alabama's Immigration Law Mean For Alabama Business?
The Beason-Hammon Alabama Taxpayer and Citizen Protection Act was signed by Governor Bentley on June 9, 2011, and parts of it become effective on September 1. Since that time, there have been at least 4 lawsuits filed, numerous news stories, rallies, and protests, and many have mischaracterized the law. Three of the lawsuits are pending in Federal Court, and have been consolidated before Judge Blackburn: the fourth is pending in state court in Montgomery. On Wednesday, August 24, a 7 hour hearing was held before U.S. District Judge Sharon Lovelace Blackburn concerning the legality of Alabama's Immigration Law. Much of the argument centered on the criminal provisions of the law, and concerns of religious leaders. Most importantly for businesses in Alabama, the E-Verify portion of the law was NEVER mentioned during the arguments. Although it is difficult, if not impossible to predict how Judge Blackburn will rule, because the United States Supreme Court has already ruled that Arizona's E-Verify law is constitutional, I expect that this portion of the law will become effective as set forth in the law. This Blast is an attempt to let businesses know what the law requires and how to comply with it in the event provisions pertaining to the employment of workers and the E-Verify portions are found to be constitutional.
EFFECTIVE DATES. There are 3 dates associated with the law: 1. The effective date for the majority of the law is September 1, 2011. 2. The effective date for the mandatory use of E-Verify for companies doing business with the State of Alabama is January 1, 2012. 3. The effective date for all businesses in Alabama to use the E-Verify system is April 1, 2012. My interpretation of the Act is that the prohibition against employing unauthorized aliens has an effective date of September 1, 2011, with the mandatory use of E-Verify to follow, as set forth above. Assuming these portions of the Act are held to be constitutional, ALL BUSINESS ENTITIES AND EMPLOYERS must take steps to comply with the law. The best way to do so is to begin using E-Verify as soon as possible and review all I-9's to make sure they are accurate and complete. The use of the E-Verify system does not negate companies from using and maintaining I-9 forms, which are still required by federal law. The E-Verify system combines the US Department of Homeland Security (USDHS), the Social Security Administration (SSA), the Employer, and to a lesser extent, the Alabama Department of Homeland Security. To use the E-Verify system, companies must have an executed Memorandum Of Understanding(MOU) between USDHS and SSA, and must use the system in compliance with the E-Verify User Manual. Of particular interest, E-Verify CANNOT be used to verify the status of existing employees: only newly hired employees. In light of this law, as well as the recent increase by Immigration and Custom Enforcement (ICE) in conducting I-9 Audits, it is advisable for Employers to do their own I-9 Audits now to ensure that the I-9's for all employees are complete and accurate.
KEY DEFINITIONS. An "EMPLOYER" is broadly defined as "any person, firm, corporation, partnership, joint stock association, agent, manager, representative, foreman, or other person having control or custody of any employment, place of employment, or of any employee, including any person or entity employing any person for hire within the State of Alabama, including a public employer." A "BUSINESS ENTITY" is broadly defined to include profit or not for profit entities, and includes, but is not limited to any business that possesses a business license or permit, or is exempt from operating with a business license or permit, "self-employed individuals, business entities filing articles of incorporation, partnerships, limited partnerships, limited liability companies, foreign corporations…business trusts and any business entity that registers with the Secretary of State." A "CONTRACTOR" is broadly defined as "A person, employer, or business entity that enters into an agreement to perform any service or work or to provide a certain product in exchange for valuable consideration. This definition shall include, but not be limited to, a general contractor, subcontractor, independent contractor, contract employee, project manager or a RECRUITING OR STAFFING ENTITY". The Act broadly defines "KNOWS OR KNOWINGLY" as "A person acts knowingly or with knowledge with respect to either of the following: a. The person's conduct or to attendant circumstances when the person is aware of the nature of the person's conduct or that those circumstances exist. b. A result of the person's conduct when the person is reasonably aware that the person's conduct is likely to cause that result".
PUBLIC CONTRACTS. The Act prohibits any business entity or employer doing business with the state, any political subdivision of the state, or any state funded entity from knowingly employing, hiring or continuing to employ an unauthorized alien, and all such business entities and employers "shall attest to such, by sworn affidavit signed before a notary." As a condition of an award of such a contract, effective January 1, 2012, the business entity or employer MUST be enrolled in the E-Verify program, and they must participate in the E-Verify program during the performance of the contract. Subcontractors are also required to participate in the E-Verify program, and shall attest to such by sworn affidavit before a notary. The use of the E-Verify program by the business entity or employer is an affirmative defense to any lawsuit alleging that they are in violation of this Act. VIOLATIONS of the Act carry severe consequences: Upon a FIRST VIOLATION, the state entity may terminate the contract. Additionally, the state entity may petition the Attorney General to take action to suspend the business licenses and permits for a period not to exceed 60 days. Before a business license or permit can be reinstated, the business entity shall terminate any unauthorized alien workers and file an affidavit stating that they are in compliance with the provisions of the Act and be enrolled in the E-Verify program. Upon a SECOND OR SUBSEQUENT VIOLATION, the contract shall be deemed breached, shall be terminated, and upon application to the Attorney General, an action may be brought to PERMANENTLY REVOKE THE BUSINESS LICENSES AND PERMITS of the business entity or employer in violation of the Act. The same punishments apply to subcontractors. The SECRETARY OF STATE "shall adopt rules to administer this section and shall report any rules adopted to the Legislature."
ALL BUSINESS ENTITIES AND EMPLOYERS. The Act prohibits any business entity or employer from knowingly employing or hiring an unauthorized alien to perform work within the State of Alabama. Effective April 1, 2012, "every business entity or employer in this state SHALL enroll in E-Verify…". A business entity or employer using E-Verify "shall not be deemed to have violated this section with respect to the employment of that employee." Upon a FIRST VIOLATION by a court, the court shall do all of the following: 1. order the business to terminate the employee. 2. Subject the business to a 3 year probationary period, during which time the business SHALL file quarterly reports with the local distinct attorney "of each new employee who is hired by the business entity or employer in the state". 3. Order the employer to file an affidavit with the local district attorney that the employment of every unauthorized alien has been terminated. 4. Direct the applicable governing body to suspend the business license and permits for a period not to exceed 10 business days specific to the location where the unauthorized alien performed work. 5. Reinstate the business license only upon the business filing an affidavit with the court that the business is in compliance with the MOU issued at the time of enrollment in E-Verify. For a SECOND VIOLATION, the court shall order the applicable governing body to PERMANENTLY REVOKE all business licenses specific to the locations where the unauthorized alien performed work. For a THIRD OR SUBSEQUENT violation, the court shall order the applicable governing body to FOREVER SUSPEND THE BUSINESS LICENSE AND PERMITS throughout the state.
ENFORCEMENT OF THE ACT. There is no private cause of action to enforce the provisions of the Act. Rather, any resident of Alabama may petition the Attorney General to bring an enforcement action against a business entity or employer by submitting a written petition, including an allegation that describes the alleged violator or violators, as well as the action constituting the violation, and the date and location where the action occurred. The AG has 60 days to investigate, and must either file a civil complaint in a court of competent jurisdiction or inform the petitioner in writing that the AG has determined that filing a civil complaint is not warranted. The Act further provides that no "wage, compensation, whether in money or in kind or in services, or renumeration of any kind for the performance of services paid to an unauthorized alien shall be allowed as a deductible business expense for any state income or business tax purposes in this state…Any business entity or employer who knowingly fails to comply with the requirements of this section shall be liable for a penalty equal to 10 times the business expense deduction claimed…"
ALABAMA DEPARTMENT OF HOMELAND SECURITY. The Act requires the Alabama Department of Homeland Security (ADHS) to do a number of things: 1. Establish and maintain an E-Verify employer agent service for any business entity or employer in Alabama with 25 or fewer employees. The ADHS "shall establish an E-Verify employer agent account with the USDHS, shall enroll a participating business entity or employer in the E-Verify program on its behalf….and shall not charge a fee to a participating business entity or employer for this service". 2.. The ADHS shall, by November 29, 2011, have the employer agent service in place. 3. Every three months, the ADHS shall request from the USDHS a list of every business entity or employer in Alabama that is enrolled in the E-Verify program, and make this list available on its website.
CONCLUSION. The Alabama Taxpayer and Citizens Protection Act is in its infancy, and will be fought in the courts for a long time. I have not addressed a number of provisions of the Act, including criminal activity, education, medical care, transporting unauthorized aliens, harboring unauthorized aliens and falsifying documents.