Beason-Hammon Alabama Taxpayer and Citizen Protection Act Its Current Impact on Your Business For The Members of the Greater Birmingham Apartment Association

Beason-Hammon Alabama Taxpayer andCitizen Protection Act

Its Current Impact on Your Business

For The Members of the Greater Birmingham Apartment Association and The Greater Birmingham Association of Landscape Professionals

N o v e m b e r 9 , 2 0 1 1

DAVID WALSTON, CHARLIE SHAH AND LESLIE ALLEN

THE ALABAMA IMMIGRATION ACT

• Disclosure and Limitation:

– This presentation does not, and is not designed to, constitute legal advice.

– It is a topical review of ever-changing subject matter, and is not intended to provide answers to specific legal questions or situations.

– While we endeavor to ensure that the information is timely and accurate, we do not warrant it as such.

– Use of this survey does not create an attorney-client relationship.


• Governor Bentley signed the Beason-Hammon Alabama Taxpayer (“Alabama Immigration Act” or “the Act””) into law on June 2, 2011.

• The Act was immediately challenged in a series of lawsuits filed by the US Department of Justice and various private parties.


• The Act Itself And The Current Legal Challenges Have Greatly Impacted Businesses In Alabama.

– Your Businesses –

• Management Companies for Multi-Family Living Communities

• Commercial and Residential Landscaping Businesses

– Through the loss of workers


WHY ARE LAWFUL HISPANIC EMPLOYEES DISAPPEARING FROM YOUR WORKFORCES?


• We Believe The Lawsuits Have Created Uncertainty For Businesses And Workers.

– Hispanic workers are uncertain about the potential for personal and family difficulties created by the Act.• Applying for and retaining employment, obtaining housing,

profiling / police stops, criminal penalties.

– Businesses are uncertain about the provisions that apply to their business and are concerned about violating laws.• Immigration violations vs. federal discrimination laws

(ethnic profiling).


• What We See As The Current Impact Of The Alabama Immigration Act On Your Businesses In

– Private Contracts

– Employment

– Conducting Business with Public Entities


PRIVATE CONTRACTS


• Section 27(a) – No court of this state shall enforce the terms of, or

otherwise regard as valid, any contract between a party and an alien unlawfully present in the United States, if the party had direct or constructive knowledge that the alien was unlawfully present in the United States at the time the contract was entered into, and the performance of the contract required the alien to remain unlawfully present in the United States for more than 24 hours after the time the contract was entered into or performance could not reasonably be expected to occur without such remaining.


• What is an “Alien?”



• (1) ALIEN. Any person who is not a citizen or national of the United States, as described in 8 U.S.C. § 1101, et seq., and any amendments thereto.

• 8 U.S.C. § 1101

• (3) The term “alien” means any person not a citizen or national of the United States.


• What is “direct or constructive knowledge”?• (9) KNOWS or KNOWINGLY. A person acts knowingly or with

knowledge with respect to either of the following:• a. The person’s conduct or to attendant circumstances

when the person is aware of the nature of the person’s conduct or that those circumstances exist.

• b. A result of the person’s conduct when the person is reasonably aware that the person’s conduct is likely to cause that result.

Alabama case law - Determination of constructive knowledge

• Exercise a reasonable level of vigilance?• “Know or should have known?”


• (b) This section shall not apply to a contract for lodging for one night, a contract for the purchase of food to be consumed by the alien, a contract for medical services, or a contract for transportation of the alien that is intended to facilitate the alien’s return to his or her country of origin.

• (c) This section shall not apply to a contract authorized by

federal law. • (d) In proceedings of the court, the determination of whether

an alien is unlawfully present in the United States shall be made by the federal government, pursuant to 8 U.S.C. § 1373(c). The court shall consider only the federal government’s determination when deciding whether an alien is unlawfully present in the United States. The court may take judicial notice of any verification of an individual’s immigration status previously provided by the federal government and may request the federal government to provide further automated or testimonial verification.


• How to be sure?• (10) LAWFUL PRESENCE or LAWFULLY PRESENT. A person

shall be regarded as an alien unlawfully present in the United States only if the person’s unlawful immigration status has been verified by the federal government pursuant to 8 U.S.C. § 1373(c). No officer of this state or any political subdivision of this state shall attempt to independently make a final determination of an alien’s immigration status. An alien possessing self-identification in any of the following forms is entitled to the presumption that he or she is an alien lawfully present in the United States:


• a. A valid, unexpired Alabama driver’s license. • b. A valid, unexpired Alabama nondriver identification card. • c. A valid tribal enrollment card or other form of tribal identification bearing a

photograph or other biometric identifier. • d. Any valid United States federal or state government issued identification

document bearing a photograph or other biometric identifier, if issued by an entity that requires proof of lawful presence in the United States before issuance.

• e. A foreign passport with an unexpired United States Visa and a corresponding stamp or notation by the United States Department of Homeland Security indicating the bearer’s admission to the United States.

• f. A foreign passport issued by a visa waiver country with the corresponding entry stamp and unexpired duration of stay annotation or an I-94W form by the United States Department of Homeland Security indicating the bearer’s admission to the United States.


• Chief Judge of Jefferson County Circuit Court – Scott Vowell

• Abraham Perez and Hector Perez v. GTX Auto Import & Auto Repair

• Claim for fraud – sale of salvage vehicles

• Motion to Dismiss filed by GTX – Plaintiffs are illegal aliens


• Alabama Constitution, Article IV, Section 95

• “There shall be no law of this state impairing the obligation of contracts by destroying or impairing the remedy for their enforcement…”

• “After suit has been commenced on any cause of action the legislature shall have no power to take away such cause of action…”

• “It is one of the fundamental principles of American law that an Act of the Legislature which is repugnant to the Constitution is void.”


• “The unusually plain language of this provision of the justly criticized Constitution of 1901 makes it clear to the Court that the legislature cannot use Section 27(a) of the Act to take away the plaintiff’s existing cause of action in this case.”

• “It may well be that Section 27(a) also violates the first sentence of this Section of the Constitution because it impairs the obligation of contracts by destroying or impairing the remedy for their enforcement.”


The Federal E-Verify Program


• E-Verify

– A free federal service sponsored by the Department of Homeland Security and the Social Security Administration

– E-Verify electronically compares the information from an employee’s I-9 form with Social Security Administration and Department of Homeland Security records to verify the identity and employment eligibility of each newly hired employee.


• E-Verify

– E-Verify is voluntary under federal law.

– E-Verify will be mandatory under the Alabama Immigration Act:

• Private employers must enroll and participate by April 1, 2012.

• Employers engaged in business with governmental bodies must enroll and participate by January 1, 2012.


• E-Verify

– We will not discuss the E-Verify process here. That information can be found on government websites.

• Enrollment:http://e-verify.uscis.gov/enroll

• The E-Verify Process:http://e-verify.uscis.gov/emp

• E-Verify Quick Reference Guide:www.dhs.gov/E-Verify

» The materials from these websites are included on a flash drive available upon request.

http://e-verify.uscis.gov/enroll

http://e-verify.uscis.gov/emp

http://www.dhs.gov/E-Verify


• E-Verify

– Most businesses want to know the cost of E-Verify.

• E-Verify does not add significant costs to your current employment verification process.


• E-Verify

– There is a minimal increase in administrative costs for participating in E-Verify

– Enrollment - 10 minutes(one time effort)

– Required tutorial - 1 hour (one time effort)

– Entry into E-Verify - 5 minutes (every new employee)


• E-Verify

– The information E-Verify requires is the same information obtained in I-9 process.

• The I-9 process is mandatory under federal law and your compliance should not add any additional expense.


• E-Verify

– The results obtained under E-Verify also present little additional costs to employers.

• 98.3% of submissions are verified as lawful.

• Of the 1.7% mismatches, the only requirements on the employer are:– To provide the employee with a copy of the notice and advise

the employee of his or her right to contest the mismatch; and

– Retain the employee until the E-Verify process is completed.


• E-Verify

– If there is a contest, the employer must refer the employee to the SSA or DHS. It is up to the employee to follow through with the contest.

• If the contest is successful, the employer retains the employee.

• If the contest is not successful, the employer must terminate the employee.


EMPLOYMENT


• Objectives:

– Understand the I-9 process and the E-Verify system.

– Discuss the factors to determine whether workers are employees or independent contractors.

– Examine the obligations imposed on employers by the provisions of the Act already in effect or scheduled to become effective.

– Identify the employment-related provisions of the Act that have been determined by the courts as unenforceable at this time.


• The I-9 Process - Overview:

– A federally required process (under the Immigration and Reform Control Act) for new employees.

– www.uscis.gov/I-9Central

http://www.uscis.gov/I-9Central


• The I-9 Process – Overview (continued):

– The employer examines certain documents to establish both identification and employment authorization; and

– The employer completes the I-9 Form attesting that:

• you have reviewed the required documents;

• they appear to be genuine; and

• to the best of your knowledge, the employee is authorized to work in the U.S.


• More about the I-9 Process:

– Required for your employees.

– Not required for your independent contractors.

– How do you know the difference?


• More about the I-9 Process (continued):

– It is not as simple as whether you issue a Form 1099 or a W-2.

– Many factors are examined to determine whether a worker is an employee or an independent contractor.

– It is often a complicated analysis. When in doubt, call your attorney or your accountant.



– Factors for Independent Contractors:

• Did you hire them to do a job according to their own means and methods?

• Do they supply their own tools and materials?

• Do they offer their services to the general public?

• Do they work for a number of clients at the same time?



– Factors for Independent Contractors - continued:

• Do they have an opportunity for profit or loss as a result of the labor or services provided?

• Do they direct the order in which the work is to be done?

• Do they determine the hours during which the work is to be done?

• Are they subject to your control only as to the results of the job done?



– What if you use a temporary or staffing agency?

• In most circumstances, these workers are providing services to you as an independent contractor. You do not have to complete the I-9 process.

• The agency, however, must complete an I-9 for the workers because they are considered employees of the agency.


The Employment Obligations in Effect or Scheduled to Become

Effective


1) Employers are prohibited from knowingly hiring or employing an unauthorized alien to perform work in Alabama.

– This prohibition is not new. It has been required by federal law since 1986 under IRCA.

– What does it mean to knowingly hire or employ?


• Knowingly:

– It includes both actual and constructive knowledge; you act knowingly if you knew or should have known about the employee’s unlawful status.

– Whether you should have known is judged by a test of reasonableness.

– It is unreasonable if you become aware of information that creates a suspicion that an employee is an unauthorized alien.


• Examples of Knowingly:

– An employee’s admission.

– An employee’s failure to assist in completing the required Form I-9 within 3 days of employment.

– Discrepancies between the information and documentation provided by the employee.

– A clear discrepancy between the photograph presented during the I-9 process and the photograph received from the E-Verify check.


• Penalties for Violations:

– First violation:

• termination of the unauthorized alien;

• 3-year probation for employer with quarterly reports required of every new employee;

• submission of affidavit of compliance; and

• suspension of business license and required permits for violating location for up to 10 days.


• Penalties for Violations (continued):

– Second violation:

• permanent revocation of business license and required permits for violating location.

– Third violation:

• permanent revocation of all business licenses and required permits for all locations of business throughout the state.

– Civil monetary penalties between $1000 and $5000 per day.


• Safe Harbor:

– You do not knowingly hire or employ an unauthorized alien if you use the E-Verify system to verify the work authorization of the employee.


2)Employers are required to use the federal E-Verify database.

– Employers with less than 26 employees can use the state’s alternative e-verification system.

– E-Verify (or the state alternative) applies to all employers:

• public and private employers

• regardless of size


E-Verify Requirement (continued):

– Becomes effective April 1, 2012 – for private employers

– Enrollment and participation required by January 1, 2012 - businesses that receive government contracts or grants


The Employment Obligations that Currently Cannot Be Enforced


1) It is a misdemeanor for an unauthorized alien to apply for, solicit or perform work as an employee or independent contractor.

– This is not currently enforceable.


2) Employers prohibited from claiming as business expense deductions on tax returns all wages paid to unlawful aliens.

– The provision in the Act included a significant penalty for violation of 10 times the deduction claimed.



3) Employers can be sued for discharging or failing to hire a citizen or person authorized to work in the U.S. while hiring or continuing to employ an unauthorized alien.

– The provision in the Act authorized courts to award compensatory damages and attorneys’ fees to those who successfully sued employers.



• What should employers do now?

– Be proactive. Educate yourself and your employees.

– Perform self audits:

• Be sure your I-9s are in good order.

• Be sure your policies for completing I-9 Forms are sound.

• Review your employment policies generally.

– Register for, learn about and start using E-Verify.


BUSINESS WITH PUBLIC ENTITIES


• Public Entities

– “As a condition for the award of any contract, grant, of an incentive by the state, any political subdivision [of the state], or any state-funded entity … the business entity or employer shall not knowingly employ, hire for employment, or continue to employ an unauthorized alien….”


• Public Entities

– This provision was not challenged in any lawsuit and will be enforceable in Alabama.

• The United States Supreme Court found a similar provision in Arizona’s immigration act to be enforceable.


• Public Entities

– “Any political subdivision” of the state

• Counties

• Municipalities

• Towns


• Public Entities

– What about water systems, local utilities, hospitals, libraries, etc.?

• Whether the Alabama Immigration Act applies to contracts with such entities depends entirely on whether the system is owned by a county or municipality or by a “public corporation.”

• How do you know? You have to ask.


• Public Entities

– “State-funded” entity

• Direct funding– State treasury

• Flow-through funding– Federal funds funneled through state agencies – grants,

housing programs, tax incentive programs

– If you deal with a state agency on an economic basis, the Alabama Immigration Act more than likely applies to your business relationship.


• Public Entities

– A business entity or employer working on public contracts shall enroll in E-Verify.


• Public Entities

– A business entity or employer working on public contracts shall attest to compliance with Section 9, by sworn affidavit signed before a notary.

• A draft affidavit is included in the materials on a flash drive available on request.


• Public Entities

– Penalties for Non-Compliance


• Public Entities

– First Violation

• The state, political subdivision, or state-funded entity MAY terminate the contract after providing notice and an opportunity to be heard.

• The Attorney General MAY bring an action to suspend the business licenses and permits of the business entity or employer for a period not to exceed 60 days


• Public Entities

– Second and Subsequent Violations

• The state, political subdivision, or any state-funded entity SHALL terminate the contract after providing notice and an opportunity to be heard.

• The Attorney General MAY bring an action to permanently revoke the business licenses and permits of the business entity or employer


• Public Entities

– SAFE-HARBORS:

• Under the Alabama Immigration Act business entities and employers with public contracts which participate in the E-Verify program shall not be found to have violated Section 9.


• Public Entities

– SAFE HARBORS

• No business entity or employer working on a public contract will be liable for violations by direct subcontractors IF

– the contractor receives a sworn affidavit of compliance from the subcontractor, UNLESS

– the contractor knows the subcontractor is not in compliance.


So, given the current state of immigration laws,

what is the wisest course of action for your business?


• In Sum

– The provision penalizing apartment owners for renting to unlawful aliens is not enforceable - currently

– However, your business practices may place you in compliance.

• It is a standard practice to conduct background and credit checks on applicants. These checks should confirm the identity of an applicant and if a applicant has a valid social security number.


• In sum

– The provision making a contract with an unlawful alien unenforceable in a court probably will not be upheld. This provision runs both ways.

• This provision runs both ways. Aliens cannot enforce against you but

you cannot enforce against aliens.

– With this uncertainty and the potential consequences, make efforts to verify the lawful status of the owners of subcontractors, vendors and other companies with which you do business.


• In Sum

– Ensure I-9 Compliance

• Have your Human Resources / Payroll Department trained in I-9 compliance.

– “I-9 Central Home” - www.uscis.gov

• Have your Human Resources / Payroll Department self-audit the employment files of current employees for I-9 compliance.

– A copy of the “I-9 Central Home” materials are included on a flash drive available upon request.

http://www.uscis.gov/


• In Sum

– Enroll in E-Verify -- Now.


• In Sum

– “Captured” subcontractors and leasing agencies, those that only service your company, are not independent contractors under the Alabama Immigration Act.

• You can be held responsible for the lack of compliance by the subcontractor or leasing agency.

– Even if you believe

• that employees of independent subcontractors / leasing agencies are not your “employees,” or

• your subcontractors / leasing agencies are in compliance,


• In Sum

– Amend you contracts to REQUIRE require the other party to provide a certificate of compliance, warrant compliance and indemnify you against the other party’s failure to do so.

• A sample contract provision in included in the materials on a flash drive available upon request.


• In Sum

– If you do business with state agencies, execute an affidavit of compliance when your self-audit supports it.

• Affidavit + sworn testimony

– You want to be right when you certify


• In Sum

– If you have any doubt about whether water authorities, utility boards, libraries, hospitals, or other entities “political subdivisions,” execute an affidavit of compliance when your I-9 self-audit supports it.


• In Sum

– The results of a recent survey indicate that 27 states have immigration laws related to E-Verify, public contracts and business licenses.

– If you do business in states other than Alabama, determine if those states have immigration laws and take steps to comply with those acts.

– A spreadsheet with a list of the states having immigration acts with employment, public contract and/or business license provisions is included on a flash drive available upon request.


We wish to thank the co-sponsors of this event for the opportunity to speak with you today

Abbey Residential Services

Arbour Valley Management

Aqua Chem / 4 Seasons

The Greater Birmingham Apartment Association

The Greater Birmingham Association of Landscape Professionals

David B. [email protected]

Charlie [email protected]

Leslie A. [email protected]

mailto:[email protected]



Documents

Beason-Hammon Alabama Taxpayer and Citizen Protection Act Its Current Impact on Your Business For The Members of the Greater Birmingham Apartment Association