SCOTUS: Arizona Can Sanction Employers of Undocumented Workers

Yesterday, the Supreme Court of the United States issued its decision in Chamber of Commerce v. Whiting.  At issue was an Arizona statute that imposed significant sanctions, including suspension or revocation of a business license, on an employer who knowingly or intentionally employed unauthorized aliens.  Although the Court’s analysis is limited to the Arizona statute, the Court nonetheless recognized that several States have imposed additional employment-related laws.  

The Court upheld the Arizona licensing law, finding that it was not preempted by the Immigration Reform and Control Act (“IRCA”).  Although the IRCA prohibits a State from imposing a civil or criminal sanction, the State is still able to penalize those employers who knowingly or intentionally employ unauthorized aliens by imposing sanctions via licensing laws.  Congress carved out the licensing exception for a reason, and a State may use “appropriate tools” to exercise the authority.

The Whiting decision could very well have an effect on workers’ compensation practice.  Workers’ compensation benefits for an illegal alien is a topic of serious debate.  Some states allow compensation while others do  not.  Compare Dynasty Sample Co. v. Beltran, 479 S.E.2d 773 (Ga. 1996) (allowing benefits) with Felix v. Wyoming Workers’ Safety and Compensation Div., 986 P.2d 161 (Wyo. 1999); see also Marboah v. Ackerman, 877 A.2d 1052 (D.C. 2005).  Additional concerns arise when a claimant reaches permanency and an employer must demonstrate suitable alternative employment.  For instance, employers cannot continue to employ the employee or offer modified employment without violating the IRCA, which has civil and criminal penalties.  Under the state law addressed in Whiting, an employer could face suspension or revocation of its business license if it intentionally or knowingly employs an undocumented worker.  Considering the employer’s burden of demonstrating suitable alternative employment, it appears like the employer is stuck between a rock (federal law) and a hard place (state law).  By the time the vocational expert prepares the rehabilitation report and labor market survey, the employer will be aware of the employee’s undocumented status.  No guidance from the Court is expected for the foreseeable future following the Court’s recent refusal to hear an undocumented alien workers’ compensation case.  Rodriguez v. Integrity Contracting, 09-1537 (La. App. 3 Cir. 5/5/10), 38 So.3d 511, cert. denied, Vaughan Roofing & Sheet Metal, LLC v. Rodriguez, 131 S.Ct. 1572 (2011).