Tennessee Lawful Employment Act Provides Safe Harbor

Over the past few years, several states have addressed a perceived shortcoming in existing federal immigration laws by passing state laws requiring the use of E-Verify in certain circumstances, as well as other laws to address and/or curb the “problem” of illegal immigration.

Existing Tennessee law prohibits the knowing hiring and/or employment of illegal aliens.[1] On June 7, 2011, Gov. Bill Haslam signed the Tennessee Lawful Employment Act (TLEA), modifying existing Tennessee immigration law and purporting to extend its and the existing federal law’s restriction on employment of illegal aliens.[2] In a nutshell, the TLEA imposes employment eligibility verification requirements on Tennessee employers and becomes effective on staggered dates during 2012 and 2013.

It is important to keep in mind that the Tennessee law provides additional requirements; employers must also continue to verify the employment eligibility of employees through document verification and completion of the I-9 Form pursuant to federal law, specifically the Immigration Reform and Control Act of 1986 (IRCA).

Requirements

The TLEA requires employers to verify the employment eligibility of all new hires. For employees, the employer may do this using one of two methods: (1) verify each new hire in the E-Verify system; or (2) obtain and maintain a copy of an identification document for each new hire.

An employer must select the same method of compliance for all new employees. In other words, it cannot E-Verify a portion of its employees and obtain an identification document for others. Employers are under the same obligation of consistent treatment of employees under federal employment verification laws.

For employers without internet access wishing to enroll in E-Verify, the Tennessee Department of Labor and Workforce Development (TDOLWD) can provide assistance. Additional information can be obtained on its website at www.tn.gov/labor-wfd.

Non-Employees

Employers must verify the employment eligibility for a “non-employee” such as an independent contractor. Such individuals cannot be confirmed using E-Verify; therefore, the employer must obtain and maintain an identification document for these workers. Federal I-9 regulations, in contrast, do not require employment verification of independent contractors.

Under the TLEA, a “non-employee” is an individual paid directly by the employer in exchange for labor or services.[3] If an employer contracts services from an outside entity (i.e., Limited Liability Company or Corporation), as opposed to an individual, then no action is required to verify that company’s employees.

Acceptable Documents

Acceptable identification documents for purposes of compliance with the TLEA include:

  • valid (unexpired) Tennessee driver’s license or photo identification;
  • valid (unexpired) driver’s license or photo identification from another state;
  • valid (unexpired) U.S. passport;
  • birth certificate issued by a U.S. state, jurisdiction or territory;
  • certified birth certificate issued by the U.S. government;
  • U.S. certificate of birth abroad;
  • U.S. certificate of citizenship;
  • U.S. certificate of naturalization;
  • U.S. citizen identification card;
  • U.S. lawful permanent resident card; or
  • valid alien registration documentation or other proof of current immigration registration recognized by the U.S. Department of Homeland Security.

Many, but not all, of these documents are also acceptable for compliance with I-9 requirements. An employer should not assume a document collected for compliance with the TLEA will also satisfy I-9 requirements.

While the TLEA does not prohibit an employer from requesting a specific document, keep in mind that I-9 regulations require that an employee be permitted to select the document(s) he/she wishes to present from the list of acceptable documents on the I-9 Form.

Timeline for Obtaining Documents

While the TLEA does require the employer to enroll in E-Verify (assuming it chooses this method of compliance) prior to hiring new employees on or after the applicable phase in period, the law does not state that the employee’s information must be entered into the E-Verify system prior to his/her first day of work.[4] Therefore, presumably the employer has three days within which to verify the employee, as it does under federal E-Verify regulations.

Employers electing instead to obtain an identification document, must do so prior to the employee beginning work (or non-employee providing services).[5] In contrast, federal I-9 law gives employers three days from the employee’s start date within which to review documents.

Maintaining Documentation

Employers must maintain a copy of the identification document or E-Verify case verification report. In contrast, I-9 regulations do not impose a requirement that the document be maintained, only that it be examined and recorded on the I-9 Form.

Similar to the federal law (when an employer does choose to maintain I-9 documentation), the TLEA requires an employer to maintain the identification documentation for the later of three years after the employee’s hire date or one year after his/her termination date.[6]

Phased Application

The TLEA becomes applicable to employers in phases, depending on the size of the employer. Employers with five or fewer employees are exempt. Other employers must comply by:

  • Jan. 1, 2012 — Government (state and local) employers, and employers with 500 or more employees.
  • July 1, 2012 — Employers with 200 to 499 employees.
  • Jan. 1, 2013 — Employers with six to 199 employees.

While not made clear in the TLEA, TDOLWD’s website states that the employer’s total number of employees for purposes of determining the effective date includes not only those employees working in Tennessee, but also those employees employed at the employer’s operations in other states, if any.

Inquiry by the Tenn. Department of Labor and Workforce Development

The TLEA mandates that the TDOLWD oversee compliance with the TLEA through inquiry, investigation and inspection. Such oversight may be based on a “routine” inquiry by the TDOLWD or one initiated based on a complaint of non-compliance. Any Tennessee resident or federal employee can lodge a complaint. As long as the complaint is supported by satisfactory evidence, the TDOLWD will conduct an investigation.[7]

When requested by the TDOLWD pursuant to an inquiry, employers must submit documented proof of compliance with the TLEA. Failure to respond within 30 days will result in the issuance of an initial order of non-compliance.[8]

Penalties

The penalties upon TDOLWD issuance of an order of non-compliance of the Tennessee Lawful Employment Act are as follows:

  • First Offense = $500 penalty + $500 per employee or non-employee not verified or for whom a copy of identification documentation is not maintained. The Commissioner of the TDOLWD shall waive the fine for a first offense if he/she finds that the employer complies with all remedial measures within 60 days and that the violation was not “knowing.”
  • Second offense = $1,000 penalty + $1,000 per employee or non-employee not verified or for whom a copy of identification documentation is not maintained.
  • Third offense = $2,500 penalty + $2,500 per employee or non-employee not verified or for whom a copy of identification documentation is not maintained.[9]

Failure to submit evidence of compliance to the TDOLWD within 60 days of the final order of non-compliance may result in suspension of the employer’s business license until it remedies the violation. Further, the TDOLWD will post on its website a list of employers against whom a final order has been issued, to include the employer’s name, place of business, a brief description of the violation, designation as a first or subsequent offense, and any penalties assessed.[10]

For employers choosing to E-Verify new hires, if the employer fails to terminate the employment of any individual for whom a final non-confirmation is issued by the E-Verify system, the TDOLWD may consider that fact when making a determination pursuant to the Tenn. Code Ann. §50-1-103 prohibition against unlawful hiring/employment of an illegal alien.[11] And, of course, employers are also liable under federal law for hiring/employment and document violations.

Safe Harbor

Like federal immigration law, the TLEA provides employers with an absolute defense, or “safe harbor,” to a charge of unlawful hiring/employment of an illegal alien if it verifies the employment eligibility of its new hires in the E-Verify system.[12] This defense is not available if the employer uses the alternative method of obtaining an identification document.

It is unclear whether an employer will be given the benefit of the “good faith compliance” affirmative defense offered under federal I-9 regulations. Good faith compliance can be demonstrated by having written policies and procedures, conducting training, not being a repeat offender, etc. But what is clear is that Tennessee employers are facing the ever more complicated task of complying with a mishmash of sometimes conflicting federal and state laws and regulations aimed at confronting illegal immigration.

Notes

  1. Tenn. Code Ann. §50-1-103.
  2. Tenn. Code Ann. §50-1-701 et seq.
  3. Tenn. Code Ann. 50-1-702.
  4. Tenn. Code Ann. §50-1-703(a)(1)(B)(ii).
  5. Tenn. Code Ann. §50-1-703(a)(1)(B)(i).
  6. Tenn. Code Ann. §50-1-703(a)(3).
  7. Tenn. Code Ann. §50-1-703(c).
  8. Tenn. Code Ann. 50-1-703(a)(6).
  9. Tenn. Code Ann. §50-1-703(f).
  10. Tenn. Code Ann. §50-1-705.
  11. Tenn. Code Ann. §50-1-709.
  12. Tenn. Code Ann. §50-1-703(a)(1)(C)(i).

Edward G. Phillips EDWARD G. PHILLIPS is a lawyer with Kramer Rayson LLC in Knoxville, where his primary areas of practice are labor and employment law. He graduated with honors from East Tennessee State University and received his law degree from the University of Tennessee College of Law in 1978 with honors, and as a member of The Order of the Coif. He is a former chair of the Tennessee Bar Association’s Labor and Employment Law Section.

 

 

KATE E. TUCKER is a partner with Kramer Rayson LLC in Knoxville, where she focuses her legal practice on business immigration and employment and labor. She earned her undergraduate degree from the University of Tennessee in 1997 and her law degree from William and Mary in 2001. Her clients include corporations as well as individual foreign nationals.