Can local governments require contractors to use E-Verify?
I sometimes get questions about what actions local governments can take to ensure that contractors are not employing unauthorized immigrants, especially now that jobs are scarce. In particular, can a local government enact an ordinance that requires contractors to use the E-Verify program? E-Verify is a web-based program that allows participating employers to verify the employment eligibility of their new employees electronically. It is structured as a voluntary program operated by the U.S. Department of Homeland Security in partnership with the Social Security Administration. In theory, the program is able to determine whether someone is in fact authorized to work.
The Department of Homeland Security encourages the use of E-Verify, but federal law prohibits the Department from requiring employers to use it. There are ongoing concerns about the accuracy of the program—that the system is vulnerable to identity fraud and falsely rejects many U.S. citizens and legal residents. Some state legislatures, including the North Carolina General Assembly, have mandated its use by certain employers. North Carolina requires all state agencies, departments, institutions, and universities to use E-Verify to check the work authorization for employees hired on or after January 1, 2007, and it requires local education agencies to use it for employees hired on or after March 1, 2007. North Carolina local governments are not required to use E-Verify, although they may voluntarily elect to do so.
May state and local governments legally require government contractors to use the program, or would such an action violate federal law? There is no explicit prohibition on doing so, but based on the few cases that have been decided in other states, such an ordinance may violate federal law depending upon how it is structured. There are no North Carolina cases that address this question. Here are two issues local governments should consider before enacting such an ordinance.
The first issue is determining whether an ordinance requiring the use of E-Verify (“E-Verify ordinance”) violates the Immigration Reform and Control Act of 1986 (IRCA), the federal law regulating the employment of aliens. While local governments generally have a right to determine contract terms, they must also comport with federal law in the area of immigration. IRCA sets out the process to verify work eligibility and expressly preempts “any state or local action that imposes criminal or civil sanctions (other than through licensing and similar laws)” on employers of unauthorized aliens. Therefore, any local law that regulates the employment of unauthorized aliens by imposing a criminal or civil sanction violates IRCA and may be struck down.
Whether an E-Verify ordinance violates IRCA depends, in part, on how the ordinance is enforced. For example, if the failure to use E-Verify results in a fine, the ordinance probably violates IRCA because a fine is clearly a civil sanction. If the failure to use E-Verify results in a loss of contract, the ordinance may also violate IRCA. In fact, a federal court in Oklahoma found that such an ordinance likely violates IRCA because a loss of contract is a civil sanction proscribed by the federal law.
IRCA contains an exception for “licensing and similar laws.” What types of laws are covered by this exception? The Ninth Circuit Court of Appeals found that an Arizona law suspending the business license of employers that employ unauthorized aliens falls within this exception and therefore does not violate IRCA. The Arizona law also requires all employers to use E-Verify, but provides no penalty for violation of the requirement.
The second issue is determining whether an E-Verify ordinance conflicts with the federal provision that makes participation in the E-Verify program voluntary. The Ninth Circuit Court of Appeals and a federal court in Missouri found no conflict. These courts reasoned that although E-Verify may not be made mandatory at the national level, there was no indication that Congress intended to prevent states from requiring the use of the program. A federal court in Pennsylvania, however, found such an ordinance conflicts with the federal law.
All we have are a few federal cases which, at times, provide conflicting guidance. These cases are not binding on local governments in North Carolina, but they demonstrate the potential legal risks depending on how an E-Verify ordinance is structured. Stay tuned though—more guidance may be in the works as the U.S. Supreme Court is considering reviewing the legality of Arizona E-Verify law.