Arizona employer-sanctions law seldom used

Effort to deter hiring of illegal migrants has led to 3 cases since ’08

Federal raids on Danny’s Family Car Wash outlets in the Valley in August led to charges of hiring illegal i

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By Ronald J. HansenThe Republic | azcentral.comSat Nov 2, 2013 11:08 PM

When federal authorities raided nearly 20 Danny’s Family Car Wash outlets across the Valley in an August crackdown tied to suspected illegal-immigrant workers, there were protests outside the courthouse and a sizable public buzz about the case.

The businesses were indicted, along with 14 lower-level managers, while 179 undocumented workers were detained briefly and released.

The events momentarily renewed the passions surrounding Arizona’s immigration-enforcement policies. They also served as a reminder that one of those laws, known as employer sanctions, has changed business practices for most employers but yielded few court cases for those who skirt the law.

The employer-sanctions law went into effect in 2008 and was intended as a way for state authorities to civilly punish business owners who knowingly hired illegal workers. But there have been only three known court cases statewide since then. The Danny’s case stands as perhaps the biggest warning to employers, although it is a criminal matter handled by federal authorities, not state officials.

Some prosecutors say the state’s law, which received the legal blessings of the U.S. Supreme Court, has a loophole that legislators have refused to close and leaves authorities powerless to conduct meaningful investigations.

Others say police have the legal tools they need but the law is a burden to businesses and leaves them hobbled against cheaters in Arizona and out-of-state companies that don’t have to follow it.

Meanwhile, public complaints about potential violations are nearly non-existent, suggesting a collective indifference on one front of the immigration debate that continues to roil the public and their leaders in Washington.

If the law hasn’t yielded troves of violations, some say it did help lead an exodus of illegal workers from Arizona.

Amelia Cramer, the deputy county attorney in Pima County, said their office has investigated nine cases since 2008 and has yet to take any of them to court. They haven’t received a single complaint in two years.

“It did surprise me at the beginning when we didn’t receive a high volume of complaints,” Cramer said. “But I’m not surprised anymore.”
Businesses coping
Many business owners resisted the employer-sanctions law before it went into effect, arguing in legal challenges that it would present an unreasonable burden on them. The law requires employers to screen new hires for work eligibility using the free federal online program called E-Verify. At least some former opponents now say the law is less onerous than they once feared.

“I was dead wrong on E-Verify,” said Steve Chucri, president of the Arizona Restaurant Association. “Right now, that is the best tool in a restaurant’s toolbox. We are not police officers.”

The system works smoothly enough, he said, and, if used, protects business owners from legal trouble down the road.

But Julie Pace, a Phoenix lawyer who specializes in employment matters, says the law has delivered an unwanted burden.

“It definitely changed hiring practices,” said Pace, who challenged the law in court in 2007. “Companies have to build in more time to find people who can pass E-Verify. They have to delay training, and the rule is you have to do it across the board. Some companies have policies that you don’t start advanced training until they’re through E-Verify, which can take three days, 10 days or more at times.”

Additionally, Pace said, those responsible for personnel can add potential E-Verify audits to the possible government audits of the I-9 paper documents that businesses must collect. “It’s added another layer of government,” she said.

And there are whispers in the business community that some Arizona employers simply ignore the law.

“I’ve seen some companies who are starting up or feel they need all the workers they can get and can’t wait to interview 10 people to find one who can pass E-Verify, so they take their chances and don’t use it,” Pace said. These are likely the same businesses that pay workers cash to avoid tax withholdings and skirt overtime-pay rules, she said.

As of July, Arizona had the second-highest total number of businesses using the online system and was one of only five states to have more than 1 million queries in 2012, according to the Department of Homeland Security.

Legal cases are rare
While businesses seem to have adapted to the law, there are few signs of punishment for those who don’t.

In December 2009, Maricopa County officials announced the first business punished under the employer-sanctions law. It involved Waterworld, a Phoenix amusement park that had already closed by the time the case was resolved, making its punishment, a 10-day suspended business license and three years of probation, largely symbolic.

It was an anticlimactic ending to an investigation that began in June 2008 with Maricopa County sheriff’s deputies raiding the park and two other businesses also owned by Golfland Entertainment Centers. Ten employees were arrested, and authorities said at the time the case would send a message that the employer-sanctions law would have consequences.

In March 2010, county officials brought their second case. In that one, two officers of Danny’s Subway, a west Phoenix sandwich shop, rehired a former employee under a different name after instructing him to get new identification. The restaurant was closed for two days under an agreement reached between the county and the restaurant’s management.

A third case — against the Scottsdale Art Factory, which builds custom doors, gates and furniture — is pending.

The state’s attorney general has not filed any cases.

While state-level cases under employer-sanctions are rare, Pace said the law has served as the beginning point for many cases that evolved into identity-theft and fraud cases, often against workers.

Many lawyers have noted the high legal threshold to prove employers knowingly hired illegal workers. Cramer said the limits help steer work-site matters in another direction.

“The folks who have real investigative authority and capabilities are the federal agencies,” she said.

In 2009, Immigration and Customs Enforcement shifted its strategy to focus on employers who hire illegal workers rather than the employees. But such work-site cases take time and are relatively rare, too. ICE lists three cases in Arizona in recent years.

In one case, Ivan T. Hardt and his Sierra Vista drywall business, Sun Drywall and Stucco, were convicted in 2011 of employing 27 illegal workers. Hardt was sentenced to a year of probation and was ordered to pay $450,000 in restitution and fines. His business was placed on five years of probation.

In another case, the tomato grower Eurofresh Inc. agreed in 2011 to five years of probation and a $600,000 forfeiture for hiring at least 17 supervisory-level illegal workers between 2000 and 2006.

The third case involves Mark and Christopher Evenson, the father-and-son owners of Chuy’s Mesquite Broiler restaurants, and the company’s accountant. That matter is scheduled for trial in February on charges of hiring illegal workers and tax evasion.

Impact is economic
Gauging the impact of employer sanctions is complicated by other events that also played out since 2008.

Most importantly, the economy began unraveling about the same time the law went into effect. Hiring illegal workers became less of an issue because employers were doing less hiring overall.

“The Hispanics who are here illegally are here to work, to make money. If you were undocumented but on the payroll of a company and you lost that job during the recession, your prospects for finding employment in Arizona were pretty bleak at that time,” said Tom Rex, associate director of the Center for Competitiveness and Prosperity Research at Arizona State University.

Arizona employment peaked in October 2007 and didn’t hit bottom until September 2010. The downturn in Arizona began a little sooner than the Great Recession and the free-fall lasted longer.

“We lost over 300,000 jobs, so 50,000 may have been Hispanics who were here undocumented,” Rex said. “They probably left the state. That’s been the main effect (of employer sanctions) to date. It drove more people out of the state than otherwise would have left during the recession.”

Whatever the cause, the state’s illegal-immigrant population plummeted, according to government reports. In January 2008, Arizona had 560,000 illegal immigrants, the DHS estimated. By January 2011, the number had fallen to 360,000.

Even though the economy was shrinking, there was still job turnover in lower-wage work, such as restaurants. But other fields, such as construction, had relatively little concern with the law because the industry was eliminating jobs, not adding them. As the economic recovery continues, the construction industry has been slow to add workers. Employment in that industry remains 38 percent below what it was when the employer sanctions went into effect.

Another factor, though far less important than the overall economy, may be Senate Bill 1070. Just as the national employment picture was beginning to improve, Arizona passed the polarizing 2010 state immigration-enforcement law that deepened a zero-tolerance attitude toward illegal workers. SB 1070 is believed to have touched off a second, smaller exodus of illegal immigrants. Several legal rulings, including one by the U.S. Supreme Court, have since gutted much of the law, but not before it further drove off many who might have tried to test the system.

Last week, Alabama formally abandoned a state law based on Arizona’s SB 1070 that had attracted similar legal pushback.
Reach the reporter at ronald.hansen@arizonarepublic.com.

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