Could Texas revoke the business license of employers who hire undocumented workers?

TX AG Opinion GA-0695: Could Texas revoke business licenses of employers of unauthorized workers?

Plain-English summary

A House committee chair asked whether Texas could constitutionally enact legislation that suspended or revoked the business license of employers of unauthorized aliens, relied solely on the federal government's immigration-status determination, and imposed no civil or criminal sanctions. The question came against the backdrop of a federal scheme, the Immigration Reform and Control Act of 1986 (IRCA), that broadly governs the employment of unauthorized aliens.

The Attorney General began with IRCA's preemption clause, which preempts any state or local law imposing civil or criminal sanctions on employers of unauthorized aliens "other than through licensing and similar laws." IRCA makes it unlawful to knowingly hire an unauthorized alien and sets up the nationwide I-9 Form process for verifying work authorization. The opinion first rejected an argument that the request was too speculative to answer, explaining that the AG must opine on questions affecting the public interest or a requestor's official duties, and a legislator's question about potential legislation qualifies.

Turning to the substance, the opinion looked to Arizona's Legal Arizona Workers Act (LAWA), which prohibits knowingly employing an unauthorized alien, channels complaints through the attorney general or county attorney, requires verification through the I-9 process, and on a second violation requires permanent revocation of the employer's licenses at the business location. A federal district court in Arizona Contractors Association v. Candelaria held LAWA was not preempted because it was a licensing measure within IRCA's savings clause, and the Ninth Circuit affirmed in Chicanos Por La Causa v. Napolitano. Noting that the law in this area was developing, that other circuits were reviewing similar municipal ordinances, that Texas had no statewide licensing statute, and that it had no actual bill to review, the opinion concluded that if Texas adopted a statewide licensing statute closely tracking Arizona's, and the Fifth Circuit followed the Ninth Circuit's reasoning, such a statute would likely be upheld as a licensing law within IRCA's exception. It cautioned that the Fifth Circuit is not bound by the Ninth Circuit.

Currency note

This opinion was issued in 2009. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Immigration preemption law changed substantially after 2009, including major U.S. Supreme Court decisions addressing the Arizona statute discussed here and the scope of state immigration enforcement. The cases cited in this opinion may have been affirmed, refined, or superseded on review. Do not treat this analysis as current law without checking the latest authority.

Who this opinion affected (as of 2009)

The Texas Legislature: The opinion advised that a statewide business-licensing statute modeled on Arizona's, relying solely on the federal immigration-status determination, would likely survive IRCA preemption as a licensing law, subject to how the Fifth Circuit might rule.

Texas employers: The opinion described the kind of license suspension or revocation regime that such legislation could create for employers found to have employed unauthorized workers.

Courts and litigants: The opinion explained that the controlling question would be whether a Texas statute fit IRCA's savings clause for "licensing and similar laws," as the Arizona law had in the Ninth Circuit.

Common questions

Could Texas pull a business license over hiring unauthorized workers?
The opinion advised that a statewide licensing statute closely tracking Arizona's law would likely be upheld as a licensing measure within IRCA's savings clause, if the Fifth Circuit adopted the Ninth Circuit's reasoning.

Why are licensing laws treated differently from other sanctions?
IRCA expressly preempts state and local civil or criminal sanctions on employers of unauthorized aliens "other than through licensing and similar laws," so a license-based measure falls within the statute's savings clause.

Did the opinion guarantee a Texas law would survive?
No. The opinion stressed it could not give certainty without actual bill language, that the area of law was developing, and that the Fifth Circuit is not bound by the Ninth Circuit's decision.

What was the Arizona law it relied on?
The Legal Arizona Workers Act, which bars knowingly employing an unauthorized alien and, on a second violation, requires permanent revocation of the employer's licenses at the business location, based solely on the federal I-9 determination.

Background and statutory framework

Congress established a comprehensive scheme prohibiting the employment of illegal aliens (Hoffman Plastic Compounds, Inc. v. Nat'l Labor Relations Bd., 535 U.S. 137, 147 (2002)). IRCA preempts state or local civil or criminal sanctions on employers of unauthorized aliens "other than through licensing and similar laws" and sets up the I-9 Form process (8 U.S.C.A. § 1324a(h)(2) (West 2005); 8 C.F.R. § 274a.2(b) (2008)). The AG must opine on questions affecting the public interest or a requestor's official duties (Tex. Gov't Code Ann. § 402.042(a) (Vernon 2005)). Arizona's LAWA prohibits knowingly employing an unauthorized alien, requires complaint and verification procedures, and mandates license revocation on a second violation, based solely on the federal determination (Ariz. Rev. Stat. Ann. §§ 23-212(A), (B), (D), (F)(2), (H), 23-211(7)(a) (2008)). A federal district court upheld LAWA as a licensing law within IRCA's savings clause (Arizona Contractors Ass'n, Inc. v. Candelaria, 534 F. Supp. 2d 1036 (D. Ariz. 2008)), and the Ninth Circuit affirmed (Chicanos Por La Causa, Inc. v. Napolitano, 544 F.3d 976 (9th Cir. 2008)). District courts split on similar municipal ordinances (Lozano v. City of Hazleton, 496 F. Supp. 2d 477 (M.D. Pa. 2007); Gray v. City of Valley Park, No. 4:07CV00881 ERW, 2008 WL 294294, at *12 (E.D. Mo. Jan. 31, 2008)).

Citations

Statutes:

• 8 U.S.C.A. § 1324a(h)(2) (West 2005)
• 8 C.F.R. § 274a.2(b) (2008)
• Tex. Gov't Code Ann. § 402.042(a) (Vernon 2005)
• Ariz. Rev. Stat. Ann. §§ 23-212(A), (B), (D), (F)(2), (H), 23-211(7)(a) (2008)

Cases:

• Hoffman Plastic Compounds, Inc. v. Nat'l Labor Relations Bd., 535 U.S. 137, 147 (2002)
• Arizona Contractors Ass'n, Inc. v. Candelaria, 534 F. Supp. 2d 1036 (D. Ariz. 2008)
• Chicanos Por La Causa, Inc. v. Napolitano, 544 F.3d 976 (9th Cir. 2008)
• Lozano v. City of Hazleton, 496 F. Supp. 2d 477 (M.D. Pa. 2007)
• Gray v. City of Valley Park, No. 4:07CV00881 ERW, 2008 WL 294294, at *12 (E.D. Mo. Jan. 31, 2008)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0695
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2009/ga0695.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

February 26, 2009

The Honorable Frank J. Corte, Jr.
Chair, Committee on Defense and Veterans' Affairs
Texas House of Representatives
Post Office Box 2910
Austin, Texas 78768-2910

Opinion No. GA-0695

Re: Constitutionality of proposed legislation that would provide for the suspension or revocation of the business license of employers of undocumented aliens (RQ-0732-GA)

Dear Representative Corte:

The United States Congress has established a "comprehensive scheme prohibiting the employment of illegal aliens in the United States." Hoffman Plastic Compounds, Inc. v. Nat'l Labor Relations Bd., 535 U.S. 137, 147 (2002). Section 1324a(h)(2) of the Immigration Reform and Control Act of 1986 (the "IRCA") provides:

The provisions of this section preempt any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens.

8 U.S.C.A. § 1324a(h)(2) (West 2005). The IRCA makes it unlawful for a person or other entity "to hire, or to recruit or refer for a fee, for employment in the United States an alien knowing the alien is an unauthorized alien." Id. § 1324a(a)(1)(A). The IRCA also creates a uniform, nationwide system, known as the "I-9 Form Process," for verifying a person's work authorization status. See 8 C.F.R. § 274a.2(b) (2008). Under this process, an employer must complete an I-9 Form and inspect documents that establish both an applicant's identity and eligibility to work in the United States. Id. The IRCA specifically preempts any state or local law imposing civil or criminal sanctions upon employers of unauthorized aliens, except for sanctions that may be imposed by licensing and similar laws. See 8 U.S.C.A. § 1324a(h)(2) (West 2005).

You pose the following question: "If Texas legislation (1) provided for the suspension or revocation of the business licensure of employers of unauthorized aliens; (2) relied solely upon a federal determination of immigration status; and (3) did not impose civil or criminal sanctions, would the law be permissible under the U.S. Constitution?"[1]

Before we consider the substantive issues you raise, we note that at least two briefs submitted to us contend that the instant request is not one that may properly be answered by the attorney general because it is "a speculative proposal without concrete language."[2] Statutory law requires the attorney general to "issue a written opinion on a question affecting the public interest or concerning the official duties of the requesting person." TEX. GOV'T CODE ANN. § 402.042(a) (Vernon 2005). The question you present here is clearly a matter "affecting the public interest." And because you are a member of the Legislature seeking guidance about potential legislation, this question indisputably relates to your official duties.

Other state legislatures and local governments have enacted legislation similar to that about which you inquire.[3] In your request, you explain that an Arizona state law (the Legal Arizona Workers Act) "prohibits an employer from intentionally or knowingly employing an unauthorized alien." Request Letter at 1; ARIZ. REV. STAT. ANN. § 23-212(A) (2008). That statute (the "LAWA") requires the Arizona attorney general to "prescribe a complaint form for a person to allege a violation of subsection A." ARIZ. REV. STAT. ANN. § 23-212(B) (2008). On receipt of such a complaint, either the attorney general or a county attorney is required to conduct an investigation into the facts alleged in the complaint. See id. In the course of that investigation, the attorney general or the county attorney must "verify the work authorization of the alleged unauthorized alien" on the basis of the I-9 Form Process heretofore described. Id. If the investigation reveals that the complaint is not "false and frivolous," the attorney general or county attorney is required to notify the United States immigration and customs enforcement bureau as well as a local law enforcement entity. Id. An action for a violation of subsection A must be brought "against the employer by the county attorney in the county where the unauthorized alien employee is or was employed." Id. § 23-212(D). The statute prescribes the punishment for first and second-time violations of subsection A. Id. § 23-212(F)(1). For a second violation, "the court shall order the appropriate agencies to permanently revoke all licenses that are held by the employer specific to the business location where the unauthorized alien performed work." Id. § 23-212(F)(2). The LAWA makes clear that the determination of whether a person is an unauthorized alien must be based solely on "the federal government's determination" under the I-9 Form Process. Id. § 23-212(H).

In Arizona Contractors Association, Inc. v. Candelaria, the court held that the LAWA was not preempted by federal law because it was a licensing measure that fell within the savings clause of the IRCA's preemption provisions; that it was not impliedly preempted by the IRCA; and did not, on its face, violate an employer's right to procedural due process. Ariz. Contractors Ass'n, Inc. v. Candelaria, 534 F. Supp. 2d 1036 (D. Ariz. 2008). The court declared that "if the [LAWA] constitutes a licensing or similar law, it is expressly authorized by IRCA's savings clause." Id. at 1045-46. Under the terms of the LAWA, "license" is defined to mean "any state or local 'authorization that is required by state or local law and that is issued . . . for the purposes of operating a business in this state.'" Id. at 1046 (quoting section 23-211(7)(a) of the LAWA). License includes "articles of incorporation, a certificate of partnership, a foreign corporation registration, and a transaction privilege (sales) tax license, but not a professional license." Id. (quoting section 23-211(7)(b)-(c) of the LAWA). The court concluded that the LAWA is "a 'licensing law' because it sets out criteria and a process to suspend or revoke a permission to do business in the state. It therefore falls within the plain meaning of IRCA's savings clause."). Id.

The district court's ruling in Candelaria was upheld by the Court of Appeals for the Ninth Circuit. That decision, Chicanos Por La Causa, Inc. v. Napolitano, 544 F.3d 976 (9th Cir. 2008), is currently the only federal appellate decision to consider the constitutionality of a state statute that proscribes the employment of unauthorized aliens. The courts of appeal for the Third and Eighth Circuits are currently reviewing municipal regulations regarding the same issue.[4] Because the law in this area is developing, and because we have not reviewed the details of any proposed legislation, we cannot provide certainty about the constitutionality of any proposed Texas statute. Moreover, Texas, unlike Arizona has no statewide licensing statute. On the basis of the Candelaria decision, however, and the Ninth Circuit Court's approval of that decision, it appears that, were the Texas Legislature to adopt a statewide licensing statute that closely tracks the Arizona statute, and were the Court of Appeals for the Fifth Circuit to follow the reasoning of its sister appellate court, such a statute would be upheld on the grounds that, as a licensing statute, it is within the exception to the IRCA and as such, is not preempted thereby. We note, however, that the Fifth Circuit Court is not bound by the decision of the Ninth Circuit Court.

[Footnote 4: These cases have thus far reached only the level of the federal district court. Lozano v. City of Hazleton, 496 F. Supp. 2d 477 (M.D. Pa. 2007) (Notice of Appeal filed Aug. 23, 2007), held that a municipal ordinance prohibiting the employment of unauthorized aliens was preempted by the IRCA. Id. at 536-37. On the other hand, a district court in Missouri held that a local ordinance prohibiting the employment of unauthorized aliens was a "licensing law," and as such, fell within the exception to the IRCA. Gray v. City of Valley Park, No. 4:07CV00881 ERW, 2008 WL 294294, at *12 (E.D. Mo. Jan. 31, 2008).]

SUMMARY

If the Texas Legislature were to enact a statewide licensing statute that closely tracks the Legal Arizona Workers Act, and the Fifth Circuit Court of Appeals were to adopt the reasoning of the Ninth Circuit Court of Appeals, such a statute would be upheld on the grounds that, as a licensing statute, it is within the exception to the Federal Immigration Reform and Control Act of 1986.

GREG ABBOTT
Attorney General of Texas

ANDREW WEBER
First Assistant Attorney General

JONATHAN K. FRELS
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee