Balch & Bingham

ALABAMA=20 PASSES TOUGH IMMIGRATION = BILL

Earlier=20 this month, Gov. Robert Bentley signed The = Beason-Hammon Alabama Taxpayer and Citizen = Protection Act (Act 2011-535) into law, = calling=20 the legislation the toughest illegal = immigration=20 law in the nation. At more than 70 pages, = the Act=20 is lengthy and complex. The following is a = summary=20 of the major provisions in the Act that = will have=20 the most direct impact on Alabama = employers:

Prohibition on = Employing=20 Unauthorized Aliens

The Act prohibits any = employer=20 doing business in the State of Alabama = from hiring=20 or continuing to employ unauthorized = aliens in=20 Alabama. The Act also prohibits = unauthorized=20 aliens from applying for, soliciting, or=20 performing work as an employee or = independent=20 contractor in Alabama. An employer that = has=20 "complied in good faith" with the I-9 = requirements=20 found in 8 U.S.C. =A7 1324a(b) will have = an=20 affirmative defense that it did not = knowingly hire=20 or employ an unauthorized alien.

E-Verify=20 Mandate

The bill also requires = that all=20 Alabama employers register and use = E-Verify no=20 later than April 1, 2012. For employers = doing=20 business with the State or receiving any = State=20 funding, the E-Verify mandate takes effect = January=20 1, 2012. Small businesses with 25 or fewer = employees will be able to register to use = E-Verify=20 through the Alabama Department of Homeland = Security (ADHS). It remains unclear, = however, what=20 the process will be for utilizing the ADHS = E-Verify program or if it will require = that small=20 employers provide ADHS with copies of = their I-9=20 forms in order to query employees through = the=20 system.

Independent=20 Contractors

The Act generally does = not impose=20 liability on employers for violations = committed by=20 their independent contractors. (Note, = however,=20 that under Federal law an employer may = face=20 liability for violations of independent=20 contractors if it has actual or = constructive=20 knowledge that the independent = contractor's=20 employees are unauthorized.) The Act also = exempts=20 "casual domestic labor performed in a = household"=20 from its provisions.

Disallowance of = Tax=20 Deductions

Employers may not take = deductions=20 for wages, salaries or compensation of any = kind=20 paid to an unauthorized alien. The = disallowance of=20 the deduction appears to apply whether or = not the=20 employer knew that the alien was = authorized. If=20 the employer knowingly claims a tax = deduction that=20 is disallowed under this provision of the = Act, the=20 Act imposes a penalty of up to 10 times = the=20 claimed deduction.

Discrimination = and=20 Wrongful Termination Claims

The Act makes it "a=20 discriminatory practice" for an employer = to refuse=20 to hire or to discharge a U.S. citizen or=20 authorized alien while retaining an alien = the=20 employer knows or should know is an = unauthorized=20 alien. The U.S. citizen or authorized = worker=20 aggrieved by the "discriminatory practice" = can=20 collect compensatory damages, costs, and=20 attorney's fees in a state-court civil = action.

Employers who terminate = unauthorized employees in compliance with = the Act=20 are immune from wrongful termination and=20 retaliation claims arising under Alabama = law. This=20 immunity does not apply, however, to any = claim=20 arising under federal law, including = claims of=20 discrimination based on national = origin.

Penalties for = Violations=20 of the Act

Penalties for hiring = unauthorized=20 aliens can be severe. The penalties can = range form=20 temporary suspension of business licenses = and=20 permits for the first violation, to = permanent=20 revocation of the business licenses = statewide for=20 multiple violations. Furthermore, = employers that=20 are found to have violated the law will = have to=20 comply with additional reporting = requirements for=20 up to three years after a violation is = found. The=20 enforcement provisions in the employment=20 provisions of the Act are complex and = involve=20 various state agencies including the = Attorney=20 General, local district attorneys, the = Alabama=20 Department of Homeland Security, and = ultimately,=20 the state courts.

Public=20 Contractors

The law does not impose = liability=20 on public contractors for their = subcontractor's=20 violations as long as they retain a sworn=20 affidavit from the subcontractor attesting = compliance with the law, and if the = contractor=20 does not otherwise know that the = subcontractor is=20 in violation of the law. The Act also = allows state=20 authorities or law enforcement to verify=20 compliance with the requirements imposed = on state=20 contractors at any time.

Contracts with = Unlawfully=20 Present Aliens

The Act declares most = contracts=20 entered into by unlawfully present aliens = to be=20 void and unenforceable in Alabama courts, = if the=20 other party to the contract had knowledge = that the=20 alien was unlawfully present in the United = States.

Conclusion

In sum, the Act imposes = several=20 new obligations on employers doing = business in=20 Alabama, and imposes severe penalties for=20 noncompliance. The primary employment = provisions=20 of the Act, including the E-Verify = requirement,=20 become effective on April 1, 2012. Many of = the=20 other relevant provisions, including = disallowance=20 of tax deductions, voidance of contracts = with=20 unauthorized aliens, and discriminatory = practices,=20 will become effective on September 1, = 2011.

While some parts of the = law might=20 draw legal challenges, most of the = provisions=20 relating directly to employers appear to = be likely=20 to survive these challenges. Many other = questions=20 arising under the Act are likely to be = litigated=20 in the courts for years to come. Despite = these=20 uncertainties, some things are clear: = Alabama=20 employers should promptly take steps to = implement=20 an immigration compliance program drafted = by an=20 experienced attorney. Such a program, = which should=20 include the employment eligibility = verification=20 (I-9 Form) process and E-Verify, among = other=20 measures, can help ensure that the = employer=20 remains in compliance with the=20 Act.