Tenth Circuit Immigration Ruling Impacts Municipal Contractors


Due to which sections were originally challenged, municipalities must be careful in reading press reports on recent rulings from the Tenth Circuit Court of Appeals on Oklahoma’s 2007 Immigration bill (HB 1804).  The Tenth Circuit affirmed two portions of the injunctionissued by Federal District Judge Robin J. Cauthron and reversed one portion.  The Court en banc has denied the State of Oklahoma’s rehearing request.  See Chamber of Commerce of the U.S. v. Edmondson, 594 F.3d 742 (10th Cir. 2010).
 
Status Verification Requirement. The original District Court ruling did not apply to all employment portions of HB 1804 impacting public sector employers.  Therefore, the duty to register and use a Status Verification System to verify the federal employment authorization of all new municipal employees was effective for public sector employers on November 1, 2007.  See 25 O.S. Section 1313(A).  The original injunction does not cover this subsection of the Act for OML members.
 
Municipal Contractor Requirements.The District Court injunction stopped the July 1, 2008 effective date of the contractor portions of HB 1804 contained in 25 O.S. Section 1313(B).  This section prohibits public employers from contracting with any contractor or subcontractor who does not participate in the Status Verification System.  The Tenth Circuit reversed this portion of the original injunction. 
 
Discriminatory Practice. The District Court enjoined the Act’s provision at Section 1313(C) creating a discriminatory practice if an employer discharges an employee who is a U.S. citizen or permanent resident alien while retaining an employee who the employing entity knows, or reasonably should have known, is an unauthorized alien hired after July 1, 2008. If the employer is participating in the Status Verification System, the Act exempts the employer from liability for this section.  These provisions remain subject to the injunction.
 
Penalties.The District Court enjoined HB 1804’s penalties for independent contractors who fail to provide the contracting entity documentation to verify the contractor’s employment authorization.  The penalty in 68 O.S. Section 2385.32 requiredthe contracting entity to withhold state income tax at the top marginal income tax rate.  If the contracting entity fails to comply with the withholding requirement, the Act states the contracting entity is liable for the taxes required to have been withheld.  The only exemption is if the contracting entity properly filed IRS Form 8233.  These penalties remain subject to the injunction.
 
The Status Verification System is described in 25 O.S. Section 1312.  In general terms it is an electronic system operated by the federal government to verify the citizenship or immigration status of any individual.  This includes:
 
·         The electronic program of the Illegal Immigration Reform and Immigration Responsibility Act of 1996, 8 U.S.C. Section 1324a, known as the Basic Pilot Program.
·         Any equivalent federal program designated by the U.S. Department of Homeland Security or other federal agency pursuant to the Immigration Reform and Control Act of 1986.
·         Any other independent, third-party system with an equal or higher degree of reliability as the programs or systems described in the Act.
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