For The Members of the Greater Birmingham Apartment Association and
The Greater Birmingham Association of Landscape Professionals
N o v e m b e r 9 , 2 0 11
Beason-Hammon Alabama Taxpayer and
Citizen Protection Act
Its Current Impact on Your Business
D AV I D WA L S T O N , C H A R L I E S H A H A N D L E S L I E A L L E N
THE ALABAMA IMMIGRATION ACT
• Disclosure and Limitation:
– This presentation does not, and is not designed to, constitute
legal advice.
– It is a topical review of ever-changing subject matter, and is not
intended to provide answers to specific legal questions or
situations.
– While we endeavor to ensure that the information is timely and
accurate, we do not warrant it as such.
– Use of this survey does not create an attorney-client relationship.
THE ALABAMA IMMIGRATION ACT
• Governor Bentley signed the Beason-Hammon Alabama
Taxpayer (“Alabama Immigration Act” or “the Act””) into law on
June 2, 2011.
• The Act was immediately challenged in a series of lawsuits filed
by the US Department of Justice and various private parties.
THE ALABAMA IMMIGRATION ACT
• The Act Itself And The Current Legal Challenges Have
Greatly Impacted Businesses In Alabama.
– Your Businesses –
• Management Companies for Multi-Family Living Communities
• Commercial and Residential Landscaping Businesses
– Through the loss of workers
THE ALABAMA IMMIGRATION ACT
WHY ARE LAWFUL HISPANIC EMPLOYEES
DISAPPEARING FROM YOUR WORKFORCES?
THE ALABAMA IMMIGRATION ACT
• We Believe The Lawsuits Have Created Uncertainty For
Businesses And Workers.
– Hispanic workers are uncertain about the potential for personal
and family difficulties created by the Act.
• Applying for and retaining employment, obtaining housing, profiling /
police stops, criminal penalties.
– Businesses are uncertain about the provisions that apply to their
business and are concerned about violating laws.
• Immigration violations vs. federal discrimination laws (ethnic
profiling).
THE ALABAMA IMMIGRATION ACT
• What We See As The Current Impact Of The Alabama
Immigration Act On Your Businesses In
– Private Contracts
– Employment
– Conducting Business with Public Entities
THE ALABAMA IMMIGRATION ACT
PRIVATE CONTRACTS
THE ALABAMA IMMIGRATION ACT
• Section 27(a)
– No court of this state shall enforce the terms of, or
otherwise regard as valid, any contract between a party
and an alien unlawfully present in the United States, if
the party had direct or constructive knowledge that the
alien was unlawfully present in the United States at the
time the contract was entered into, and the performance
of the contract required the alien to remain unlawfully
present in the United States for more than 24 hours after
the time the contract was entered into or performance
could not reasonably be expected to occur without such
remaining.
THE ALABAMA IMMIGRATION ACT
• What is an “Alien?”
THE ALABAMA IMMIGRATION ACT
THE ALABAMA IMMIGRATION ACT
• (1) ALIEN. Any person who is not a citizen or national of the
United States, as described in 8 U.S.C. § 1101, et seq., and any
amendments thereto.
• 8 U.S.C. § 1101
• (3) The term “alien” means any person not a citizen or national of
the United States.
THE ALABAMA IMMIGRATION ACT
• What is “direct or constructive knowledge”?
• (9) KNOWS or KNOWINGLY. 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.
Alabama case law - Determination of constructive
knowledge
• Exercise a reasonable level of vigilance?
• “Know or should have known?”
THE ALABAMA IMMIGRATION ACT
•
(b) This section shall not apply to a contract for lodging for one night, a
contract for the purchase of food to be consumed by the alien, a
contract for medical services, or a contract for transportation of the alien
that is intended to facilitate the alien’s return to his or her country of
origin.
•
(c) This section shall not apply to a contract authorized by federal law.
•
(d) In proceedings of the court, the determination of whether an alien is
unlawfully present in the United States shall be made by the federal
government, pursuant to 8 U.S.C. § 1373(c). The court shall consider
only the federal government’s determination when deciding whether an
alien is unlawfully present in the United States. The court may take
judicial notice of any verification of an individual’s immigration status
previously provided by the federal government and may request the
federal government to provide further automated or testimonial
verification.
THE ALABAMA IMMIGRATION ACT
• How to be sure?
• (10) LAWFUL PRESENCE or LAWFULLY PRESENT. A person
shall be regarded as an alien unlawfully present in the United
States only if the person’s unlawful immigration status has been
verified by the federal government pursuant to 8 U.S.C. §
1373(c). No officer of this state or any political subdivision of this
state shall attempt to independently make a final determination of
an alien’s immigration status. An alien possessing selfidentification in any of the following forms is entitled to the
presumption that he or she is an alien lawfully present in the
United States:
THE ALABAMA IMMIGRATION ACT
•
a. A valid, unexpired Alabama driver’s license.
•
b. A valid, unexpired Alabama nondriver identification card.
•
c. A valid tribal enrollment card or other form of tribal identification bearing a
photograph or other biometric identifier.
•
d. Any valid United States federal or state government issued identification document
bearing a photograph or other biometric identifier, if issued by an entity that requires
proof of lawful presence in the United States before issuance.
•
e. A foreign passport with an unexpired United States Visa and a corresponding
stamp or notation by the United States Department of Homeland Security indicating
the bearer’s admission to the United States.
•
f. A foreign passport issued by a visa waiver country with the corresponding entry
stamp and unexpired duration of stay annotation or an I-94W form by the United
States Department of Homeland Security indicating the bearer’s admission to the
United States.
THE ALABAMA IMMIGRATION ACT
• Chief Judge of Jefferson County Circuit Court – Scott
Vowell
• Abraham Perez and Hector Perez v. GTX Auto Import &
Auto Repair
• Claim for fraud – sale of salvage vehicles
• Motion to Dismiss filed by GTX – Plaintiffs are illegal
aliens
THE ALABAMA IMMIGRATION ACT
• Alabama Constitution, Article IV, Section 95
• “There shall be no law of this state impairing the obligation of
contracts by destroying or impairing the remedy for their
enforcement…”
• “After suit has been commenced on any cause of action the
legislature shall have no power to take away such cause of action…”
• “It is one of the fundamental principles of American law that an Act of
the Legislature which is repugnant to the Constitution is void.”
THE ALABAMA IMMIGRATION ACT
• “The unusually plain language of this provision of the
justly criticized Constitution of 1901 makes it clear to the
Court that the legislature cannot use Section 27(a) of the
Act to take away the plaintiff’s existing cause of action in
this case.”
• “It may well be that Section 27(a) also violates the first
sentence of this Section of the Constitution because it
impairs the obligation of contracts by destroying or
impairing the remedy for their enforcement.”
THE ALABAMA IMMIGRATION ACT
The Federal E-Verify Program
THE ALABAMA IMMIGRATION ACT
• E-Verify
– A free federal service sponsored by the Department of
Homeland Security and the Social Security Administration
– E-Verify electronically compares the information from an
employee’s I-9 form with Social Security Administration and
Department of Homeland Security records to verify the identity
and employment eligibility of each newly hired employee.
THE ALABAMA IMMIGRATION ACT
• E-Verify
– E-Verify is voluntary under federal law.
– E-Verify will be mandatory under the Alabama Immigration Act:
•
Private employers must enroll and participate by April 1, 2012.
•
Employers engaged in business with governmental bodies must
enroll and participate by January 1, 2012.
THE ALABAMA IMMIGRATION ACT
• E-Verify
– We will not discuss the E-Verify process here. That information
can be found on government websites.
• Enrollment:
http://e-verify.uscis.gov/enroll
• The E-Verify Process:
http://e-verify.uscis.gov/emp
• E-Verify Quick Reference Guide:
www.dhs.gov/E-Verify
» The materials from these websites are included on a flash drive
available upon request.
THE ALABAMA IMMIGRATION ACT
• E-Verify
– Most businesses want to know the cost of E-Verify.
• E-Verify does not add significant costs to your current
employment verification process.
THE ALABAMA IMMIGRATION ACT
• E-Verify
– There is a minimal increase in administrative costs for
participating in E-Verify
– Enrollment
-
10 minutes
– Required tutorial
-
1 hour
– Entry into E-Verify
-
5 minutes (every new employee)
(one time effort)
(one time effort)
THE ALABAMA IMMIGRATION ACT
• E-Verify
– The information E-Verify requires is the same
information obtained in I-9 process.
• The I-9 process is mandatory under federal law and your
compliance should not add any additional expense.
THE ALABAMA IMMIGRATION ACT
• E-Verify
– The results obtained under E-Verify also present little additional
costs to employers.
• 98.3% of submissions are verified as lawful.
• Of the 1.7% mismatches, the only requirements on the employer
are:
– To provide the employee with a copy of the notice and advise the
employee of his or her right to contest the mismatch; and
– Retain the employee until the E-Verify process is completed.
THE ALABAMA IMMIGRATION ACT
• E-Verify
– If there is a contest, the employer must refer the employee to the
SSA or DHS. It is up to the employee to follow through with the
contest.
• If the contest is successful, the employer retains the employee.
• If the contest is not successful, the employer must terminate the
employee.
THE ALABAMA IMMIGRATION ACT
EMPLOYMENT
THE ALABAMA IMMIGRATION ACT
• Objectives:
– Understand the I-9 process and the E-Verify system.
– Discuss the factors to determine whether workers are employees
or independent contractors.
– Examine the obligations imposed on employers by the provisions
of the Act already in effect or scheduled to become effective.
– Identify the employment-related provisions of the Act that have
been determined by the courts as unenforceable at this time.
THE ALABAMA IMMIGRATION ACT
• The I-9 Process - Overview:
– A federally required process (under the Immigration and
Reform Control Act) for new employees.
– www.uscis.gov/I-9Central
THE ALABAMA IMMIGRATION ACT
• The I-9 Process – Overview (continued):
– The employer examines certain documents to establish
both identification and employment authorization; and
– The employer completes the I-9 Form attesting that:
• you have reviewed the required documents;
• they appear to be genuine; and
• to the best of your knowledge, the employee is authorized to
work in the U.S.
THE ALABAMA IMMIGRATION ACT
• More about the I-9 Process:
– Required for your employees.
– Not required for your independent contractors.
– How do you know the difference?
THE ALABAMA IMMIGRATION ACT
• More about the I-9 Process (continued):
– It is not as simple as whether you issue a Form 1099
or a W-2.
– Many factors are examined to determine whether a worker
is an employee or an independent contractor.
– It is often a complicated analysis. When in doubt, call your
attorney or your accountant.
THE ALABAMA IMMIGRATION ACT
• More about the I-9 Process (continued):
– Factors for Independent Contractors:
• Did you hire them to do a job according to their own means
and methods?
• Do they supply their own tools and materials?
• Do they offer their services to the general public?
• Do they work for a number of clients at the same time?
THE ALABAMA IMMIGRATION ACT
• More about the I-9 Process (continued):
– Factors for Independent Contractors - continued:
• Do they have an opportunity for profit or loss as a result of
the labor or services provided?
• Do they direct the order in which the work is to be done?
• Do they determine the hours during which the work is to be
done?
• Are they subject to your control only as to the results of the
job done?
THE ALABAMA IMMIGRATION ACT
• More about the I-9 Process (continued):
– What if you use a temporary or staffing agency?
• In most circumstances, these workers are providing services
to you as an independent contractor. You do not have to
complete the I-9 process.
• The agency, however, must complete an I-9 for the workers
because they are considered employees of the agency.
THE ALABAMA IMMIGRATION ACT
The Employment Obligations in Effect or
Scheduled to Become Effective
THE ALABAMA IMMIGRATION ACT
1) Employers are prohibited from knowingly
hiring or employing an unauthorized alien to
perform work in Alabama.
– This prohibition is not new. It has been required by federal
law since 1986 under IRCA.
– What does it mean to knowingly hire or employ?
THE ALABAMA IMMIGRATION ACT
• Knowingly:
– It includes both actual and constructive knowledge; you act
knowingly if you knew or should have known about the
employee’s unlawful status.
– Whether you should have known is judged by a test of
reasonableness.
– It is unreasonable if you become aware of information that
creates a suspicion that an employee is an unauthorized
alien.
THE ALABAMA IMMIGRATION ACT
• Examples of Knowingly:
– An employee’s admission.
– An employee’s failure to assist in completing the required
Form I-9 within 3 days of employment.
– Discrepancies between the information and documentation
provided by the employee.
– A clear discrepancy between the photograph presented
during the I-9 process and the photograph received from
the E-Verify check.
THE ALABAMA IMMIGRATION ACT
• Penalties for Violations:
– First violation:
• termination of the unauthorized alien;
• 3-year probation for employer with quarterly reports required
of every new employee;
• submission of affidavit of compliance; and
• suspension of business license and required permits for
violating location for up to 10 days.
THE ALABAMA IMMIGRATION ACT
• Penalties for Violations (continued):
– Second violation:
• permanent revocation of business license and required
permits for violating location.
– Third violation:
• permanent revocation of all business licenses and required
permits for all locations of business throughout the state.
– Civil monetary penalties between $1000 and $5000 per
day.
THE ALABAMA IMMIGRATION ACT
• Safe Harbor:
– You do not knowingly hire or employ an unauthorized alien
if you use the E-Verify system to verify the work
authorization of the employee.
THE ALABAMA IMMIGRATION ACT
2) Employers are required to use the federal EVerify database.
– Employers with less than 26 employees can use the
state’s alternative e-verification system.
– E-Verify (or the state alternative) applies to all employers:
• public and private employers
• regardless of size
THE ALABAMA IMMIGRATION ACT
E-Verify Requirement (continued):
– Becomes effective April 1, 2012 – for private employers
– Enrollment and participation required by January 1, 2012 businesses that receive government contracts or grants
THE ALABAMA IMMIGRATION ACT
The Employment Obligations that Currently
Cannot Be Enforced
THE ALABAMA IMMIGRATION ACT
1) It is a misdemeanor for an unauthorized
alien to apply for, solicit or perform work as
an employee or independent contractor.
– This is not currently enforceable.
THE ALABAMA IMMIGRATION ACT
2) Employers prohibited from claiming as
business expense deductions on tax returns
all wages paid to unlawful aliens.
– The provision in the Act included a significant penalty for
violation of 10 times the deduction claimed.
– This is not currently enforceable.
THE ALABAMA IMMIGRATION ACT
3) Employers can be sued for discharging or
failing to hire a citizen or person authorized to
work in the U.S. while hiring or continuing to
employ an unauthorized alien.
– The provision in the Act authorized courts to award
compensatory damages and attorneys’ fees to those who
successfully sued employers.
– This is not currently enforceable.
THE ALABAMA IMMIGRATION ACT
• What should employers do now?
– Be proactive. Educate yourself and your employees.
– Perform self audits:
• Be sure your I-9s are in good order.
• Be sure your policies for completing I-9 Forms are sound.
• Review your employment policies generally.
– Register for, learn about and start using E-Verify.
THE ALABAMA IMMIGRATION ACT
BUSINESS WITH
PUBLIC ENTITIES
THE ALABAMA IMMIGRATION ACT
• Public Entities
– “As a condition for the award of any contract, grant, of an
incentive by the state, any political subdivision [of the state], or
any state-funded entity … the business entity or employer shall
not knowingly employ, hire for employment, or continue to
employ an unauthorized alien….”
THE ALABAMA IMMIGRATION ACT
• Public Entities
– This provision was not challenged in any lawsuit and will
be enforceable in Alabama.
• The United States Supreme Court found a similar
provision in Arizona’s immigration act to be enforceable.
THE ALABAMA IMMIGRATION ACT
• Public Entities
– “Any political subdivision” of the state
• Counties
• Municipalities
• Towns
THE ALABAMA IMMIGRATION ACT
• Public Entities
– What about water systems, local utilities, hospitals, libraries,
etc.?
• Whether the Alabama Immigration Act applies to contracts with such
entities depends entirely on whether the system is owned by a
county or municipality or by a “public corporation.”
• How do you know? You have to ask.
THE ALABAMA IMMIGRATION ACT
• Public Entities
– “State-funded” entity
• Direct funding
– State treasury
• Flow-through funding
– Federal funds funneled through state agencies – grants, housing
programs, tax incentive programs
– If you deal with a state agency on an economic basis, the
Alabama Immigration Act more than likely applies to your
business relationship.
THE ALABAMA IMMIGRATION ACT
• Public Entities
– A business entity or employer working on public contracts shall
enroll in E-Verify.
THE ALABAMA IMMIGRATION ACT
• Public Entities
– A business entity or employer working on public contracts shall
attest to compliance with Section 9, by sworn affidavit signed
before a notary.
• A draft affidavit is included in the materials on a flash drive
available on request.
THE ALABAMA IMMIGRATION ACT
• Public Entities
– Penalties for Non-Compliance
THE ALABAMA IMMIGRATION ACT
• Public Entities
– First Violation
• The state, political subdivision, or state-funded entity MAY terminate
the contract after providing notice and an opportunity to be heard.
• The Attorney General MAY bring an action to suspend the business
licenses and permits of the business entity or employer for a period
not to exceed 60 days
THE ALABAMA IMMIGRATION ACT
• Public Entities
– Second and Subsequent Violations
• The state, political subdivision, or any state-funded entity SHALL
terminate the contract after providing notice and an opportunity to
be heard.
• The Attorney General MAY bring an action to permanently revoke
the business licenses and permits of the business entity or
employer
THE ALABAMA IMMIGRATION ACT
• Public Entities
– SAFE-HARBORS:
• Under the Alabama Immigration Act business entities and
employers with public contracts which participate in the E-Verify
program shall not be found to have violated Section 9.
THE ALABAMA IMMIGRATION ACT
• Public Entities
– SAFE HARBORS
• No business entity or employer working on a public contract will be
liable for violations by direct subcontractors IF
– the contractor receives a sworn affidavit of compliance from the
subcontractor, UNLESS
– the contractor knows the subcontractor is not in compliance.
THE ALABAMA IMMIGRATION ACT
So, given the current state of immigration laws,
what is the wisest course of action for
your business?
THE ALABAMA IMMIGRATION ACT
• In Sum
– The provision penalizing apartment owners for renting to
unlawful aliens is not enforceable - currently
– However, your business practices may place you in compliance.
• It is a standard practice to conduct background and credit checks on
applicants. These checks should confirm the identity of an applicant
and if a applicant has a valid social security number.
THE ALABAMA IMMIGRATION ACT
• In sum
– The provision making a contract with an unlawful alien
unenforceable in a court probably will not be upheld. This
provision runs both ways.
• This provision runs both ways. Aliens cannot enforce against you
but you cannot enforce against aliens.
– With this uncertainty and the potential consequences, make
efforts to verify the lawful status of the owners of subcontractors,
vendors and other companies with which you do business.
THE ALABAMA IMMIGRATION ACT
• In Sum
– Ensure I-9 Compliance
• Have your Human Resources / Payroll Department trained in I-9
compliance.
– “I-9 Central Home”
-
www.uscis.gov
• Have your Human Resources / Payroll Department self-audit the
employment files of current employees for I-9 compliance.
– A copy of the “I-9 Central Home” materials are included on a flash drive
available upon request.
THE ALABAMA IMMIGRATION ACT
• In Sum
– Enroll in E-Verify -- Now.
THE ALABAMA IMMIGRATION ACT
• In Sum
– “Captured” subcontractors and leasing agencies, those that only
service your company, are not independent contractors under the
Alabama Immigration Act.
• You can be held responsible for the lack of compliance by the
subcontractor or leasing agency.
– Even if you believe
• that employees of independent subcontractors / leasing agencies are
not your “employees,” or
• your subcontractors / leasing agencies are in compliance,
THE ALABAMA IMMIGRATION ACT
• In Sum
– Amend you contracts to REQUIRE require the other party to provide
a certificate of compliance, warrant compliance and indemnify you
against the other party’s failure to do so.
• A sample contract provision in included in the materials on a flash drive
available upon request.
THE ALABAMA IMMIGRATION ACT
• In Sum
– If you do business with state agencies, execute an affidavit of
compliance when your self-audit supports it.
• Affidavit + sworn testimony
– You want to be right when you certify
THE ALABAMA IMMIGRATION ACT
• In Sum
– If you have any doubt about whether water authorities, utility
boards, libraries, hospitals, or other entities “political
subdivisions,” execute an affidavit of compliance when your I-9
self-audit supports it.
THE ALABAMA IMMIGRATION ACT
• In Sum
– The results of a recent survey indicate that 27 states have
immigration laws related to E-Verify, public contracts and
business licenses.
– If you do business in states other than Alabama, determine if
those states have immigration laws and take steps to comply
with those acts.
– A spreadsheet with a list of the states having immigration acts with
employment, public contract and/or business license provisions is
included on a flash drive available upon request.
THE ALABAMA IMMIGRATION ACT
We wish to thank the co-sponsors of this event
for the opportunity to speak with you today
Abbey Residential Services
Arbour Valley Management
Aqua Chem / 4 Seasons
The Greater Birmingham Apartment Association
The Greater Birmingham Association of Landscape Professionals
David B. Walston
dbwalston@csattorneys.com
Charlie Shah
cshah@csattorneys.com
Leslie A. Allen
laallen@csattorneys.com