Businesses Could Lose License for Hiring Unauthorized Workers

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In addition to numerous arrests and millions of dollars in fines on businesses by the U.S. Immigration and Customs Enforcement for inadequate employment eligibility programs, companies in some states must now contend with further potential penalties from the states they operate in, including the loss of its business license.

On May 26, 2011, the U.S. Supreme Court upheld the Legal Arizona Workers Act of 2007, the so-called “business death penalty,” which allows the state of Arizona to strip the business licenses from companies operating in the state if they display a consistent pattern of hiring unauthorized workers.

This decision could have widespread implications, as eight other states including Colorado, Mississippi, Missouri, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia,  have similar laws, and other states could follow.

The ruling also upholds the mandatory use of E-Verify before hiring new employees. Currently, more than a dozen states have an E-Verify mandate in place requiring state agencies or businesses to use the system.

To help ensure employment eligibility compliance and the hiring of authorized workers, organizations should consider using an electronic I-9 system. Electronic I-9 solutions can simplify the completion and management of the Form I-9, provide intelligent compliance monitoring tools, and can fully integrate with E-Verify systems. Employers that rely on an electronic I-9 solution can help ensure an authorized workforce and reduce the risk of government penalties.

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HireRight is a leading provider of on-demand employment background checks, drug and health screening, and electronic Form I-9 and E-Verify solutions that help employers automate, manage and control background screening and related programs.

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The HireRight Blog is provided for informational purposes only. It is not intended to be comprehensive, and is not a substitute for and should not be construed as legal advice. HireRight does not warrant any statements in the HireRight Blog. Any statutes or laws cited herein should be read in their entirety. You should direct to your own experienced legal counsel questions involving your organization’s compliance with or interpretation or application of laws or regulations and any additional legal requirements that may apply.