Arizona Immigration Law Costly to Businesses

 

Mitchell C. Laird, Esq.
President, MCL Enterprises, Inc.

 

Under a new Arizona law, all employers in the state, regardless of size, must use the federal government's voluntary E-Verify, or Basic Pilot, program to validate the legal status of employees hired after December 31, 2007.

 

Employers who "knowingly" hire two unauthorized aliens in a three-year period could have their business licenses permanently revoked. A close examination of the law indicates that "knowingly employing unauthorized aliens" does not necessarily require actual knowledge.

 

Arizona's new law could have devastating consequences for my company, MCL Enterprises Inc., which owns 24 Burger King® restaurants in the state. We anticipate hiring approximately 900 new workers in 2008 to maintain a workforce of about 600. At that hiring rate, two bad hires over three years would be better than a 99.9% successful hire rate. However, it would still expose the company to the possibility of losing its license, which would mean the displacement of some 600 legal Arizona workers.

 

Arizona's law is bad policy for several reasons. First, it undermines the federal government's ability to oversee and enforce national immigration law and leaves Arizona employers feeling uncertain about their responsibilities and liabilities under immigration law.

 

Second, compliance is costly. The Government Accountability Office (GAO) estimated that a mandatory dial-up version of the pilot program for all employers would cost the federal government, employers, and employees about $11.7 billion per year, with employers bearing most of the costs.

 

Despite a significant investment in training our employees to use E-Verify, we estimate that as many as 10% of all I-9 forms will have errors upon their initial submission to our administrative offices. In most cases, the error is made by employees while filling out their personal information and is not detected by store managers.

 

Even after we have a good I-9 to work from, the initial response in 14% of E-Verify queries is something other than "employment authorized," which means we incur additional administrative costs to resolve the matter. MCL Enterprises is fortunate to have the staff to deal with these issues and allow for redundancy and backup. For smaller Arizona enterprises, the burdens and potential for liability are even greater.

 

Finally, Arizona's new immigration law can lead to discriminatory hiring practices and lawsuits against employers. At MCL Enterprises, only 3.2% of U.S. citizens have received an initial response other than "employment authorized" compared with 75% of resident aliens. Because of this discrepancy, resident aliens are more expensive to employ. That, and the threat to businesses of losing their licenses over a bad hire, could cause hiring decisions to be based on appearance, nationality, or language skills.

 

Since E-Verify became mandatory in Arizona, applications at our fast food locations are down. Restaurant owners throughout the state are experiencing the same shortage. We need a single, federal workforce enforcement policy that is fast, accurate, and reliable under real-world working conditions and that does not create incentives for employers to treat applicants unequally based on citizenship.