Ruth E. Martin, Esq. Senior Vice President Primerus Business ...

Ruth E. Martin, Esq. Senior Vice President Primerus Business ...

For The Members of the Greater Birmingham Apartment Association and The Greater Birmingham Association of Landscape Professionals November 9, 2011 Beason-Hammon Alabama Taxpayer and Citizen Protection Act Its Current Impact on Your Business D AV I D W A L S T O N , C H A R L I E S H A H A N D L E S L I E A L L E N 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.

THE ALABAMA IMMIGRATION ACT 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 ALABAMA IMMIGRATION ACT 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

THE ALABAMA IMMIGRATION ACT WHY ARE LAWFUL HISPANIC EMPLOYEES DISAPPEARING FROM YOUR WORKFORCES? THE ALABAMA IMMIGRATION ACT 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). THE ALABAMA IMMIGRATION ACT What We See As The Current Impact Of The Alabama Immigration Act On Your

Businesses In Private Contracts Employment Conducting Business with Public Entities THE ALABAMA IMMIGRATION ACT PRIVATE CONTRACTS THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT What is an Alien? THE ALABAMA IMMIGRATION ACT THE ALABAMA IMMIGRATION ACT (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. THE ALABAMA IMMIGRATION ACT 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 persons conduct or to attendant circumstances

when the person is aware of the nature of the persons conduct or that those circumstances exist. b. A result of the persons conduct when the person is reasonably aware that the persons 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? THE ALABAMA IMMIGRATION ACT

(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 aliens 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 governments determination when deciding whether an alien is unlawfully present in the United States. The court may take judicial notice of any verification of an individuals immigration status

previously provided by the federal government and may request the federal government to provide further automated or testimonial verification. THE ALABAMA IMMIGRATION ACT 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 persons 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 aliens immigration status. An alien possessing selfidentification in any of the following forms is entitled to the presumption that he or she is an alien lawfully present in the United States: THE ALABAMA IMMIGRATION ACT a. A valid, unexpired Alabama drivers 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 bearers 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 bearers admission to the United States.

THE ALABAMA IMMIGRATION ACT 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 THE ALABAMA IMMIGRATION ACT

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 ALABAMA IMMIGRATION ACT

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 plaintiffs 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 ALABAMA IMMIGRATION ACT The Federal E-Verify Program THE ALABAMA IMMIGRATION ACT 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 employees 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. THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT E-Verify

Most businesses want to know the cost of EVerify. E-Verify does not add significant costs to your current employment verification process. THE ALABAMA IMMIGRATION ACT 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 employee)

- 5 minutes (every new THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT 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.

THE ALABAMA IMMIGRATION ACT EMPLOYMENT THE ALABAMA IMMIGRATION ACT 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 ALABAMA IMMIGRATION ACT The I-9 Process - Overview: A federally required process (under the Immigration and Reform Control Act) for new employees.

www.uscis.gov/I-9Central THE ALABAMA IMMIGRATION ACT 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 THE ALABAMA IMMIGRATION ACT More about the I-9 Process: Required for your employees. Not required for your independent contractors. How do you know the difference? THE ALABAMA IMMIGRATION ACT

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.

THE ALABAMA IMMIGRATION ACT More about the I-9 Process (continued): 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?

THE ALABAMA IMMIGRATION ACT More about the I-9 Process (continued): 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? THE ALABAMA IMMIGRATION ACT More about the I-9 Process (continued): 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 ALABAMA IMMIGRATION ACT The Employment Obligations in Effect or Scheduled to Become Effective THE ALABAMA IMMIGRATION ACT

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? THE ALABAMA IMMIGRATION ACT

Knowingly: It includes both actual and constructive knowledge; you act knowingly if you knew or should have known about the employees 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.

THE ALABAMA IMMIGRATION ACT Examples of Knowingly: An employees admission. An employees 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.

THE ALABAMA IMMIGRATION ACT 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.

THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT 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.

THE ALABAMA IMMIGRATION ACT 2)Employers are required to use the federal E-Verify database. Employers with less than 26 employees can use the states alternative e-verification system. E-Verify (or the state alternative) applies to all employers:

public and private employers regardless of size THE ALABAMA IMMIGRATION ACT 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 ALABAMA IMMIGRATION ACT The Employment Obligations that Currently Cannot Be Enforced THE ALABAMA IMMIGRATION ACT

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. THE ALABAMA IMMIGRATION ACT 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. This is not currently enforceable. THE ALABAMA IMMIGRATION ACT

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. This is not currently enforceable.

THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT BUSINESS WITH PUBLIC ENTITIES THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT 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 Arizonas immigration act to be enforceable. THE ALABAMA IMMIGRATION ACT Public Entities Any political subdivision of the state Counties Municipalities Towns THE ALABAMA IMMIGRATION ACT

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. THE ALABAMA IMMIGRATION ACT 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.

THE ALABAMA IMMIGRATION ACT Public Entities A business entity or employer working on public contracts shall enroll in E-Verify. THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT Public Entities Penalties for Non-Compliance THE ALABAMA IMMIGRATION ACT 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 THE ALABAMA IMMIGRATION ACT 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 THE ALABAMA IMMIGRATION ACT Public Entities SAFE-HARBORS: Under the Alabama Immigration Act business entities and employers with public contracts which participate in the EVerify program shall not be found to have violated Section 9.

THE ALABAMA IMMIGRATION ACT 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.

THE ALABAMA IMMIGRATION ACT So, given the current state of immigration laws, what is the wisest course of action for your business? THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT 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.

THE ALABAMA IMMIGRATION ACT In Sum Enroll in E-Verify -- Now. THE ALABAMA IMMIGRATION ACT 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, THE ALABAMA IMMIGRATION ACT 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 partys failure to do so.

A sample contract provision in included in the materials on a flash drive available upon request. THE ALABAMA IMMIGRATION ACT 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 THE ALABAMA IMMIGRATION ACT

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. THE ALABAMA IMMIGRATION ACT 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. THE ALABAMA IMMIGRATION ACT 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. Walston [email protected] Charlie Shah [email protected] Leslie A. Allen

[email protected]

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