On January 1, 2008, a new Tennessee law took effect, Public Chapter No. 529 (click HERE to download PDF). This law amended Tenn. Code Ann. § 50-1-103, and effectively threatens business license revocation for Tennessee employers that "knowingly" employ an illegal alien (even a single alien).
How does an employer "knowingly" employ an illegal alien? Either with actual knowledge that an employee is not authorized to work in the United States, or by failing to fully adhere to federal employment verification procedures (such as by failing to fill out Form I-9 correctly, failing to examine an individual's identity and work authorization documents, or failing to re-verify an employee whose employment authorization documents expired during employment). Even an employer's recklessness or negligence in this area might be found to satisfy the "knowingly" standard.
If a report is made of an employer's possible employment of an illegal alien to the Tennessee Department of Labor, the agency will investigate the matter. If there is substantial evidence that the employer did knowingly employ an illegal alien, a contested hearing will be held before the agency and, if there is clear and convincing evidence that the employer did knowingly employ an illegal alien, its license to do business in Tennessee can be revoked until the employer shows that it is no longer in violation (i.e., it has fired any illegal aliens in its employment). For a second offense, an employer's business license will be revoked for a full year. No rights of appeal are included in the new law.
This law is very Draconian. Although prior bills in the Tennessee legislature would probably have been preempted by the federal immigration laws, the new law appears to have corrected most if not all of the deficiencies leading to federal preemption in the prior bills. Until a legal challenge is mounted on the new law, it is only safe to assume that this law will be upheld.
The new law does not require employers to use the federal database for verification (E-Verify). However, it does provide a safe harbor for employers that use the E-Verify system and hire individuals who are shown as eligible for employment through that system. Therefore, it may be advisable for Tennessee employers to utilize the E-Verify system. Also, if an alien produced fake but proper-appearing documentation as part of the I-9 process, the employer will likely not be found in violation. As noted in a prior Web Alert (Click HERE for prior web alert), a new I-9 Form is now in effect.
What should employers do to avoid losing their Tennessee business license by employing illegal aliens? In addition to using the E-Verify system, it is probably a good idea for whatever individuals at a company are involved with I-9 documentation to receive refresher training on I-9 compliance. It might also be prudent to have an outside firm conduct an audit of an employer's I-9 compliance, prior to an audit by the federal government or investigation by the Tennessee Department of Labor.