Overview: HB 1175 creates state-level penalties (suspending and revoking business licenses) for state employers who knowingly or intentionally hire undocumented workers; it also requires employers in the state to use E-Verify starting July 1, 2013.
HB 1175 applies to any “employer” – an individual or a corporate entity – that transacts business in, and has been licensed by, the state of South Dakota. It covers all employers of any size (even self-employed persons and independent contractors), though it does not cover situations in which an employer contracts for work of an independent contractor. It defines other terms in the act as well.
“No employer may knowingly or intentionally employ an unauthorized alien.” Section 1 defines “intentionally” to mean that “a person’s objective is to cause that result or to engage in that conduct.” Section 1 defines “knowingly employ an unauthorized alien” to be those actions that are described in the provision of the Immigration and Nationality Act pertaining to the “Unlawful Employment of Aliens” (8 U.S.C. 1324a) and instructs that the phrase be interpreted consistently with that provision.1 Finally, Section 1 defines “unauthorized alien” as someone who does not have the legal right to work under federal law (8 U.S.C. 1324(h)(3)).
Sections 3 and 4
Sections 3 and 4 dictate that certain consequences for employers and unauthorized workers attach merely upon receipt of a complaint that an employer has violated Section 2. All of the following actions take place before a court rules on whether an employee is in fact unauthorized and whether an employer has violated the act:
- Check work authorization status: (Section 3) The county or state Attorney General (AG) must investigate all complaints that are filed on the prescribed complaint form, even if the complaint ends up being false or frivolous; in order to investigate, the AG must verify the alleged unauthorized worker’s work authorization with the federal government. The AG has discretion to investigate complaints that are not filed on the prescribed complaint form – even completely anonymous complaints. While Section 3 stipulates that the AG cannot investigate complaints based solely on race, color, or national origin, it is unclear how the AG would determine this. While Section 3 stipulates that a person who knowingly files a false or frivolous complaint is guilty of a Class 2 misdemeanor, nothing in Section 3 prevents even false or frivolous complaints from being investigated (meaning that the immigrant’s work authorization must still be checked with the federal government).
- Notify ICE and local police: (Section 4) If the complaint is not determined to be false or frivolous, the AG must notify both ICE and local law enforcement of the unauthorized worker.
- Bring action against employer: (Section 4) If the complaint is not determined to be false and frivolous, the AG must bring action against the employer pursuant to Section 5.
Section 5 describes when and where legal actions against employers may be filed. It further describes what conduct by an employer may properly constitute a second violation.
Section 6 describes consequences for employers for their first violation:
- The employer must terminate the employment of all unauthorized workers and certify that this step has been taken. This means that, upon a finding that an employer knowingly or intentionally hired one unauthorized worker, that employer must then re-examine the authorization of its entire workforce. The employer must also certify that he or she will not knowingly or intentionally hire an unauthorized worker in the future.
- If the employer will NOT so certify, the court must order state agencies to suspend all licenses held by the employer (Section 1 defines what constitutes a “license”).
- Even if the employer takes all of the appropriate steps, the court may still consider ordering state agencies to suspend that employer’s licenses, depending on the nature of the violation.
- The employer must be placed on probation for a period of time determined by the nature of the violation.
Section 7 describes consequences for employers for their second violation:
- The court must order state agencies to permanently revoke all licenses held by the employer specific to the business location where the violation took place.
Section 8 lays out what conduct is considered a first and second violation.
Section 9 requires the attorney general to maintain copies of court orders finding first and second violations of this act and to make those copies publicly available on their website. Section 9 also calls for the creation of a database of the employers and business locations that have committed a first violation.
Section 10 states that, in determining whether an employee is unauthorized, “the court shall consider only the federal government’s determination…” Also, according to this section, verifying the employment authorization of an employee through the E-Verify program creates a rebuttable presumption that the employer did not violate the act. Additionally, this section states that an employer who has acted in good faith to comply with the federal E-Verify procedures can use his/her good faith compliance as an affirmative defense that he/she did not violate the act.
“Nothing in this Act requires an employer to take any action that the employer believes in good faith would violate federal or state law.”
Section12 mandates that all employers in the state use the E-Verify system for all new hires starting July 1, 2013.
It would be very hard to argue that HB 1175 is unconstitutional. The text of HB 1175 is similar in almost every particular to a 2007 Arizona law called the “Legal Arizona Workers Act” (LAWA). Last year, the U.S. Supreme Court upheld the constitutionality of LAWA.2 Challengers of the Arizona law argued that LAWA unconstitutionally stepped into the exclusively federal power to regulate immigration. They also argued that LAWA would obstruct federal execution of federal immigration policies.
The majority of Justices on the Supreme Court disagreed. LAWA’s business license penalty for employers is constitutional, they held, because it fits into a narrow and explicitly protected sphere for states to act to punish the employment of unauthorized workers. Federal immigration law expressly prevents states from passing any law “imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ . . . unauthorized aliens.”3 Because LAWA revokes the business licenses of employers who hire unauthorized workers, the Court held that the law falls within this exception.
Nor is it unconstitutional, the Supreme Court held, for LAWA to mandate that employers in the state use the E-Verify system. This mandate would not conflict with the overall scheme of federal immigration enforcement. Critical to the Supreme Court’s analysis is the fact that LAWA relies wholly on federal determinations of an employee’s work authorization. South Dakota’s HB 1175 contains identical language in this regard: Section 3 states that “A state, county or local official may not attempt to independently make a final determination on whether an alien is authorized to work in the United States.” Section 10 further states that, in determining whether an employee is unauthorized, “the court shall consider only the federal government’s determination…” Rather, HB 1175 mandates that work authorization be verified with the federal government. Thus, this Supreme Court decision opens the door for states to pass similar laws that penalize employers for employing unauthorized workers by revoking their business licenses and that mandate use of E-Verify.
Notwithstanding the fact that HB 1175 is probably constitutionally sound, there are strong arguments that HB 1175 is not good policy.
- The bill is an unfunded mandate requiring local resources to be used in carrying out federal immigration enforcement.
HB 1175 wastes limited AG and court resources. HB 1175 states clearly that the AG must investigate all complaints, must notify the Department of Homeland Security and local law enforcement if the compliant is not false or frivolous, and must bring an action against the employer in state court if the complaint is not false or frivolous. In addition, the AG must maintain copies of court orders that indicate that an employer has a first or second violation of the act and must place these orders on its website. Thus, HB 1175 requires the AG’s office to expend considerable state resources on a myriad of immigration enforcement duties that fall within the purview of the federal government. Not only do these additional duties burden taxpayers, but they take away from other important work carried out by the AG’s office such as prosecuting criminals, Medicare fraud, and consumer fraud. Lastly, it is worth noting that these additional immigration duties are triggered by a complaint that can be made by anyone at any time.
- Mandatory E-Verify without comprehensive federal immigration reform hurts children and their families hardest.
In 2010, South Dakota was home to 22,238 immigrants, almost 41% of whom were naturalized U.S. citizens. Unauthorized immigrants comprise less than 1.5% of the state’s workforce (or fewer than 10,000 workers), according to a report by the Pew Hispanic Center. But 92% of the children of South Dakota’s 22,238 immigrants are U.S. citizens.4 Hurting the ability of South Dakota’s relatively small population of undocumented workers to provide for themselves and their families will have huge collateral consequences for lawful residents and U.S. citizens, and these consequences hit children hardest.
If one of these parents is deported, the emotional and financial damage to the family members left behind can be devastating. Economic insecurity and health insecurity are documented consequences of increased enforcement of our currently broken federal immigration system. Parents in immigration detention often face the loss of their parental rights while incarcerated, since they may not receive notice of court
proceedings, may not have adequate legal counsel,5 cannot comply with the terms of family reunification plans mandated by the child welfare system, and are often not even told where their children are.6 Children of undocumented immigrants suffer terribly as a result of the enforcement of our currently broken immigration laws. The Urban Institute has shown that “Parent-child separations pose serious risks to children’s immediate safety, economic security, well-being, and longer term development.”7 The report continues:
Most families in our sample lost a working parent, because they were detained, deported, or released but not allowed to work. Following job loss, households experienced steep declines in income and hardships such as housing instability and food insufficiency. Many families experienced prolonged hardship in part due to extended efforts to contest deportation that took months and often more than a year to adjudicate.8
- Mandatory E-Verify in South Dakota would discourage economic activity in the state.
Unauthorized workers and their family members (who may be lawfully present or even citizens) are taxpayers, consumers, and entrepreneurs. The Immigration Policy Center has shown that the 2010 purchasing power of Latinos in South Dakota totaled $548.5 million—an increase of 1,162.2% since 1990; Asian buying power totaled $260.4 million—an increase of 811.3% since 1990. According to the Immigration Policy Center, “If all unauthorized immigrants were removed from South Dakota, the state would lose $190.5 million in economic activity, $84.6 million in gross state product, and approximately 1,440 jobs, even accounting for adequate market adjustment time, according to a report by the Perryman Group.”9
Arizona’s LAWA went into effect on January 1, 2008. Since that time, research has been done to study its effects. According to the Center for American Progress, a Public Policy Institute of California report on Arizona’s experiences found evidence that LAWA “shifted many unauthorized immigrants in Arizona from the formal economy, where they pay income taxes, to the informal economy where they do not.”10
- The act provides several protections for employers but none for unauthorized workers.
HB 1175 has much more serious and immediate consequences for immigrant workers than it does for employers. Employers get several safe harbors and affirmative defenses in HB 1175. But for
immigrants, enforcement is immediate. Simply upon receipt of a complaint that is not false or frivolous, ICE and local police automatically will be notified that a particular worker is unauthorized. Under HB 1175, this enforcement process can be started by an anonymous complaint from any person (so long as it is not false or frivolous). While Section 3 states that an AG may not investigate complaints that are based solely on race, color, or national origin, it is unclear how an AG would know that.
- The act will increase fear and distrust in immigrant communities.
This law turns neighbors into immigration agents. This will significantly increase fear and distrust in immigrant communities in the state, and make it harder for police to do their job.
- Mandatory E-Verify imposes costs and implementation burdens that fall heavily on small businesses and on U.S. citizens who may be wrongly denied work because of errors.
Please see our E-Verify fact sheet (attached to this analysis) for a discussion of the problems with E-Verify. Among the problems discussed are the implementation burdens on businesses and the error rates that impact U.S. citizens. Please also see the fact sheet (attached to this analysis) complied by the National Immigration Law Center in July 2011, “E-Verify: The Impact of Its Mandatory Use on South Dakota Workers and Businesses.”
1 “(1) In general.— It is unlawful for a person or other entity…(A) 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 (as defined in subsection (h)(3)) with respect to such employment…” [emphasis added] 8. U.S.C. § 1234a(a)(1)(A). This provision of the INA does not reference intentional hiring, but “knowingly” is broader than “intentionally”; the Legal Arizona Workforce Act, which the U.S. Supreme Court last year found to be constitutional, contained both “knowingly” and “intentionally” as well.
2 Chamber of Commerce v. Whiting, 563 U.S. ___ (2011) http://www.supremecourt.gov/opinions/10pdf/09-115.pdf  .
3 Immigration Reform and Control Act, 8 U. S. C. §1324a(h)(2).
4 All of the above data comes from: Immigration Policy Center, “New Americans in South Dakota” (January 2012) http://www.immigrationpolicy.org/just-facts/new-americans-south-dakota 
5 National Immigrant Justice Center, Isolated in Detention: Limited Access to Legal Counsel in Immigration Detention Facilities Jeopardizes a Fair Day in Court (September 2010): 8-10. The report found that several factors contributed to inadequate counsel for those in immigration detention including the geographic isolation of many detention facilities, inadequate phone access, and inadequate legal aid resources.
6 Women’s Refugee Commission, Torn Apart by Immigration Enforcement: Parental Rights and Immigration Detention [“WRC Report”] (December 2010): 1 http://www.womensrefugeecommission.org/programs/detention/parental-rights .
7 The Urban Institute, Children in the Aftermath of Immigration Enforcement (February 2010). http://www.urban.org/UploadedPDF/412020_FacingOurFuture_final.pdf 
8 Ibid. at vii-viv.
9 Immigration Policy Center, “New Americans in South Dakota” (January 2012) http://www.immigrationpolicy.org/just-facts/new-americans-south-dakota 
10 Philip E. Wolgin and Angela Maria Kelley, “Your State Can’t Afford It: The Fiscal Impact of States’ Anti-Immigrant Legislation” (July 2011): 5 http://www.americanprogress.org/issues/2011/07/pdf/state_immigration.pdf  .
This document was prepared by CLINIC in January 2012 in response to the introduction of South Dakota’s HB 1238 into the state legislative assembly. This same bill but with a different number, HB 1175, was introduced into the legislative assembly in 2013. Karen A. Herrling has reviewed HB 1175 and has updated the analysis. This document is for informational purposes only and is not intended as legal advice. For questions, please contact CLINIC’s State & Local Advocacy Attorney Jen Riddle at email@example.com  or (202) 635-7410.