Roundtable
A Candid Forum
SB 1070: Is it a friend of business? by RaeAnne Marsh The furor over Senate Bill 1070 has made waves in disparate industries. Businesses reliant on tourism may have felt it first: Kristen Jarnagin, vice president of communications for the Arizona Hotel & Lodging Association, says that for the period of April to July 2010, at least 40 meetings were cancelled due to boycotts — and those meetings could have infused $15 million into Arizona’s economy. Plus, she notes, “That does not include ancillary spending on rental cars, at restaurants and at stores.” Senator Michele Reagan says the Arizona tourism industry took a hit not only from the general economic downturn, but, “Add on top of that the big outcry over Senate Bill 1070.” To Arizona Office of Tourism director Sherry Henry, tourism is the “window” to economic
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development, and, she notes, “Nobody relocates their family or business to Arizona without first visiting the state.” And speaking about efforts to attract new business to the region, Barry Broome, president and CEO of the Greater Phoenix Economic Council, says, “Companies from Latin American or South American countries may raise questions as to the quality of life of their employees, and we have to overcome that.” But what about the law’s impact on employers? Mike Lehet, an attorney with Littler Mendelson in Phoenix, looks first at 2007’s Legal Arizona Workers Act (commonly called the Employer Sanctions Law) to explain SB 1070’s ramifications. That law, which went into effect on Jan. 1, 2008, states that employers may not hire undocumented workers, or risk suspension or revocation of their business license. It required employers to use the national E-Verify system to check a person’s employment eligibility status. “There was a lot of drama about its enactment,” Lehet says. “People were terrified it would upend businesses.” It did make employers more aware of immigration issues in the work force, but, Lehet observes, “its bark was much worse than its bite.” This may be because it was enacted on a going-forward basis and would not affect undocumented workers hired before January 2008, says Lehet. He’s seen only three enforcement actions since the law went into effect. SB 1070 contains two provisions that amend the Legal Arizona Workers Act. One is a requirement that employers keep records of the E-verification reports, which many businesses are already doing anyway. “The more interesting amendment with SB 1070 is that it added a defense under the Legal Arizona Workers Act for entrapment.” The Act itself contains two defenses for employers: use of E-Verify or showing good faith compliance with the I-9 process. But SB 1070 adds a provision whereby, if employers are entrapped into hiring an undocumented
worker — “And I think those circumstances will be pretty rare,” says Lehet — they have the defense of entrapment to argue against losing their business license. Adding the entrapment defense “might be a signal there are heightened or more creative efforts by state and local agencies to investigate employers for these issues,” says Lehet, explaining, “When you have heightened investigation and more creative investigation and surveillance, that’s when you get into the entrapment issue.” Lehet notes that, while SB 1070 has been challenged in the courts, these employer sanction provisions have never been an issue. “Those have been in effect for a while and are going to remain in effect.” The basic requirements on employers are diligence about I-9 compliance, with the initial reporting and periodic audits; use of E-Verify when needed; and training the staff regarding the issues. And the employer must investigate if an agency or payroll service raises a question as to identification or risk “being on the hook for hiring an undocumented worker,” says Lehet. “Be aware and responsive to situations that would generally cause an employer to think, ‘I think I need to do something.’” Lehet notes SB 1070 could have an impact on certain industries, indirectly. “There are industries that seem to have more issues with unauthorized labor,” he says. “If certain parts of that labor pool dries up, it would have an indirect impact on employers with respect to their work force — are they going to have enough work force?” But the impact there may not emerge until the economy turns around. Senate Bill 1070
http://bit.ly/sb1070s
S.B. 1070 Senate Fact Sheet http://bit.ly/1070pshs Arizona Hotel and Lodging Association www.azhla.com Arizona Office of Tourism www.arizonaguide.com Greater Phoenix Economic Council www.gpec.org Littler Mendelson
www.littler.com
Sen. Michelle Reagan
www.azleg.gov
inbusinessmag.com