Federal Regulation of Alien Employment and Preemption over State Laws

Federal Regulation of Alien Employment and Preemption over State Laws

Legal Sidebari

Federal Regulation of Alien Employment and
Preemption over State Laws
November 4, 2020
The Immigration Reform and Control Act of 1986 (IRCA) established rules governing the employment of
non-U.S. nationals (aliens) in the United States. IRCA made it unlawful for employers to knowingly hire
“unauthorized aliens” who lack federal permission to work in this country. The statute also created an
employment verification system to determine an employee’s work eligibility. IRCA’s comprehensive
scheme for regulating alien employment displaced a considerable amount of state regulation. But
questions remain about the degree of that displacement. In the last decade, the Supreme Court considered
several challenges to state laws regulating the employment of aliens. These challenges centered on
whether IRCA preempted those state laws, rendering them unenforceable. The Court has held that certain
state laws regulating alien employment are preempted because they intrude upon the federal
government’s regulatory domain, such as those imposing criminal penalties upon unauthorized aliens who
seek employment. But the Court has upheld other state laws or actions relating to the employment of
aliens that do not necessarily interfere with the federal immigration enforcement scheme, including
measures requiring employers within the state to participate in the federal electronic employer verification
system or sanctioning persons who obtain employment through use of fraudulent documents. This Legal
Sidebar provides an overview of IRCA, the doctrine of federal preemption, and the Supreme Court’s
jurisprudence about the preemptive reach of IRCA over state employment laws.
The Immigration Reform and Control Act of 1986
Before IRCA, federal law did not directly address the employment of aliens who were unlawfully present
in the United States, and, to the extent the employment of unlawfully present aliens was regulated, it was
done at the state level. For example, a pre-IRCA California statute prohibited the employment of aliens
who were “not entitled to lawful residence in the United States if such employment would have an
adverse effect on lawful resident workers.” The enactment of IRCA in 1986 stemmed from federal
lawmakers’ concerns about the flow of unauthorized immigration into the United States. Congress sought
to create a comprehensive framework for “combatting the employment of illegal aliens,” which Congress
believed would reduce incentives for aliens to unlawfully enter the country to seek employment.
IRCA made it unlawful for an employer to knowingly hire an “unauthorized alien,” defined as an alien
who was not a lawful permanent resident (LPR) or otherwise authorized by immigration officials to be
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employed in the United States. IRCA created an “employment verification system” that required an
employee to complete an I-9 Form attesting that he or she is a U.S. citizen or national, an LPR, or
otherwise authorized to work under federal law. An employee must provide certain information on the I-9,
including his or her name, address, and Social Security number. Employers must sign the I-9, attesting
that they have verified an employee is not an unauthorized alien by examining certain documents, such as
a U.S. passport or resident alien card. Employers must also retain the I-9 for inspection.
IRCA provided both criminal and civil penalties for employers who knowingly hired unauthorized aliens
or violated the employment-verification requirements. It is not a crime simply for an alien to work in the
United States without authorization, but an alien who engages in unauthorized employment may face
adverse immigration consequences. Moreover, aliens who use false identification documents to establish
employment authorization may be subject to criminal penalties under IRCA and other statutes.
IRCA expressly preempted state or local laws imposing criminal or civil sanctions, “other than through
licensing and similar laws,” on those who employ unauthorized aliens. It also provided that an I-9 and
information “contained in or appended to such form” may not be “used” for purposes other than
enforcement of federal immigration laws or prosecution under federal criminal statutes for fraud, perjury,
and related conduct. IRCA similarly barred use of the “employment verification system” for purposes
other than to enforce federal immigration laws and fraud-related federal criminal statutes.
In 1996, the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) directed
immigration authorities to establish a Basic Pilot Program to allow employers to confirm a job applicant’s
employment eligibility through “a toll-free telephone line or other toll-free electronic media.” This pilot
program became known as E-Verify, and it currently operates as an internet-based system. E-Verify was
originally scheduled to end in 2001, but Congress has extended it multiple times. While IIRIRA requires
federal agencies to use E-Verify, it generally does not require participation by private entities. (Pursuant to
an Executive Order, however, the DHS Secretary required entities entering into certain contracts with the
federal government to use E-Verify.) An employer who uses E-Verify to confirm employment eligibility is
entitled to a rebuttable presumption that the employer has not violated IRCA’s prohibition against hiring
unauthorized aliens.
The Doctrine of Federal Preemption
The Supremacy Clause provides that the “the Laws of the United States ... shall be the supreme Law of
the Land.” Based on this Clause, federal laws supersede (or “preempt”) conflicting state laws. A federal
statute expressly preempts state law if it contains explicit preemptive language, but a federal statute may
also impliedly preempt state law if the federal law’s structure and purpose show Congress’s preemptive
intent. There are two types of implied preemption. First, states may not regulate a field that Congress has
determined to have the exclusive power to regulate (“field preemption”). Second, state laws are
preempted if they conflict with federal law (“conflict preemption”)—either because compliance with both
the federal and state law is a physical impossibility, or because the state law creates an obstacle to the
accomplishment of the “full purposes and objectives” of Congress. Ultimately, courts consider whether
Congress intended to supersede the state law based on the federal statute’s text, structure, and purpose. (A
more detailed discussion of federal preemption can be found in this CRS Report.)
Supreme Court Jurisprudence Concerning State Regulation of Alien
Employment
The Supreme Court has repeatedly recognized that federal law preempts many state or local activities
addressing immigration-related matters, though not every state enactment “which in any way deals with
aliens is a regulation of immigration and thus per se preempted.” Before enactment of IRCA, for

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example, the Court in De Canas v. Bica held that federal immigration laws did not preempt a California
law barring employers from hiring unlawfully present aliens because states have traditionally broad police
powers over employment to protect workers in those states. Moreover, the Court reasoned, the “central
concern” of then-existing federal immigration laws was to regulate the admission of aliens, not the
employment of unlawfully present aliens. As noted, IRCA ultimately established a comprehensive federal
scheme for regulating the employment of aliens in the United States, and state laws like the one
considered in De Canas are now preempted. Still, the Court’s recognition in De Canas that states have
broad authority to regulate employment of persons in their jurisdictions may inform judicial analysis of
IRCA’s preemptive effect. The Supreme Court generally begins its preemption analysis with the
assumption that Congress did not intend to displace state laws. In the case of IRCA, the High Court has
tended to disfavor field preemption arguments against state or local measures, which assert that IRCA left
no room for states to adopt measures that incidentally relate to the employment of aliens in their
jurisdictions. Instead, the Court’s analysis has turned on whether a challenged state or local measure is
either expressly preempted by IRCA or conflicts with the federal law’s objectives and purposes.
Chamber of Commerce v. Whiting
In 2011, the Supreme Court in Chamber of Commerce v. Whiting considered whether IRCA restricted
states from regulating alien employment through business licensing laws, and whether IIRIRA barred
states from requiring employers to participate in the E-Verify program. The Court held that IRCA did not
preempt an Arizona law allowing the suspension and revocation of business licenses belonging to
employers who hire unauthorized aliens. In a 5-3 opinion, the Court determined that the state law’s
licensing provisions were permissible because, although IRCA expressly preempted state laws that
imposed sanctions on employers of unauthorized aliens, it included a proviso that expressly allowed states
to impose sanctions “through licensing and similar laws.” The Court also ruled that federal law did not
impliedly preempt Arizona’s requirement that employers within the state use E-Verify. The Court
reasoned that, while IIRIRA limits the federal government’s ability to mandate E-Verify for nonfederal
entities, it does not restrict states from requiring E-Verify. Further, in the Court’s view, Arizona’s use of
E-Verify was compatible with IIRIRA’s objectives of ensuring reliability in employment authorization
verification and preventing fraud.
Arizona v. United States
A year after Whiting, the Supreme Court again considered IRCA’s preemptive effect on state regulation of
alien employment. In Arizona v. United States, the Court in 2012 considered an Arizona measure that
aimed to deter unlawfully present aliens from working or residing in the state. One component of the
measure made it a criminal offense for “unauthorized aliens” to work in that state. The Court recognized
in a 5-3 vote that IRCA preempted this criminal sanction. The Court observed that while IRCA expressly
barred states from imposing criminal penalties on employers of unauthorized aliens, it was silent on
whether those penalties may be imposed on the employees themselves. Still, the Court held that IRCA
impliedly preempted state laws that criminalized such conduct. In the Court’s view, Congress had made a
“deliberate choice” not to impose criminal sanctions on aliens who unlawfully work in the United States,
and the Arizona statute frustrated the “full purposes and objectives” of Congress.
Kansas v. Garcia
More recently, in 2020, the Supreme Court in Kansas v. Garcia considered whether IRCA barred states
from criminally prosecuting unauthorized aliens who obtained employment through fraud. In that case,
aliens who had presented stolen Social Security numbers on their tax withholding forms argued that IRCA
prevented the state of Kansas from prosecuting them because the Social Security numbers were also
included within their I-9s, and IRCA bars the “use” of any information “contained in” an I-9 except to

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enforce federal law. The Court disagreed in a 5-4 opinion, ruling that IRCA’s restriction on the “use” of
information found within an I-9 does not bar any use of that information outside federal law enforcement.
To interpret IRCA so broadly, the Court declared, “is flatly contrary to standard English usage” because a
person can “use” information “‘contained in’ many different places.” The Court concluded that IRCA’s
restriction on the use of I-9-related information does not prevent states from regulating “things that an
employee must or may do to satisfy requirements unrelated to work authorization,” such as the
completion of tax forms.
The Court also held that IRCA did not impliedly preempt application of Kansas law to prosecute aliens
who fraudulently gain employment. The Court reasoned that state regulation of the use of tax withholding
forms—used to enforce tax laws—is “fundamentally unrelated” to work authorization, and therefore does
not intrude upon a field implicitly reserved to Congress. Further, the Court held, Kansas’s prosecution of
aliens who use stolen Social Security numbers creates no obstacle to IRCA’s objective of regulating the
employment of aliens. The Court distinguished Arizona, which held that IRCA impliedly preempted a
state law making it a crime for unauthorized aliens to work because Congress, through IRCA, had made a
“considered decision” not to criminalize that conduct. Here, Congress made no similar determination that
aliens who use false identities on tax withholding forms should not face criminal prosecution. Finally, the
Court concluded that the possibility that the state prosecutions might impact federal enforcement
priorities does not provide a basis for preemption because the Supremacy Clause prioritizes federal law,
not simply “the criminal law enforcement priorities or preferences of federal officers.”
Legislative Developments
In a few closely divided decisions, the Supreme Court has wrestled with the extent to which IRCA
displaced state laws regulating the employment of unlawfully present aliens. While the Court has ruled
that IRCA generally bars states from imposing penalties on both employers of unauthorized aliens as well
as those engaging in unauthorized employment, the Court has recognized that states retain authority to
regulate the employment of unauthorized aliens through licensing laws, mandatory participation in the E-
Verify system, and the enforcement of criminal laws relating to identity theft and fraud. In recent decades,
states have enacted different measures for regulating the employment of unlawfully present aliens. For
example, some states require all employers to use E-Verify, while other states limit mandatory use of that
program to public employers or contractors. But many states do not require employers to participate in E-
Verify. Additionally, some states impose licensing (or public contract-related) penalties on employers that
hire unauthorized aliens or fail to meet mandatory E-Verify requirements. While states have addressed the
employment of unlawfully present aliens to some degree, Congress has also considered legislation that
would preempt or authorize state regulation in this area. In the 116th Congress, for example, the
Accountability Through Electronic Verification Act (S. 556, H.R. 1399) and the Legal Workforce Act
(H.R. 250) would require all employers in the United States to participate in E-Verify. Additionally, the
Legal Workforce Act would create a new, electronic-based employment eligibility verification process
that displaces the paper-based I-9 process. The bill would also preempt any state or local law, ordinance,
policy, or rule relating to the hiring, continued employment, or employment eligibility status verification
of unauthorized aliens. But the bill would allow states to impose penalties through business licensing and
similar laws on employers who violate the E-Verify requirements.

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Author Information

Hillel R. Smith

Legislative Attorney

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