State Mandatory E-Verify Bill: An Analysis of Montana’s House Bill 297 (Feb 2013) | CLINIC

State Mandatory E-Verify Bill: An Analysis of Montana’s House Bill 297 (Feb 2013)

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An Analysis of Montana’s House Bill 297 (2013)

Overview: This bill creates state-level penalties (suspending business licenses) for employers in Montana who knowingly hire undocumented workers; it also requires employers in the state to use E-Verify six months after the passage of the bill. 


Section 1:  Definitions

This bill applies to any “employer” – an individual or organization – that transacts business in, has been licensed by the state of Montana, and employs individuals that perform employment services in the state.  The term employer does not apply to an entity that hires an independent contractor.  It also does not apply to the occupant or owner of a private residence who hires casual, domestic labor to perform work customarily performed by a homeowner entirely within a private residence.  

Section 1 defines “knowingly employ an unauthorized alien” to be those actions that are described in the provision of the Immigration and Nationality Act (INA) pertaining to the “Unlawful Employment of Aliens” (8 U.S.C. 1324a) and instructs that the phrase be interpreted consistently with that provision.1

Section 1 states that the definition of “unauthorized alien” has the meaning provided in 8 U.S.C. 1324(h)(3).  

Section 1 defines other terms in the bill as well.


Section 2:  Mandatory E-Verify

The bill mandates that all employers in the state use the federal E-Verify program after making an offer of employment that has been accepted by an employee. Verification by employers must comply with federal law, 8 U.S.C. Section 1324a(b).    


Section 3:  Prohibition and Complaint Process 

Section 3(1) prohibits an employer from knowingly employing an unauthorized worker.  

Section 3(2) prescribes a complaint process whereby any person with actual or constructive knowledge that an employer employs or has employed an unauthorized worker (within a prescribed period of time), can file a complaint with the Montana Department of Justice [hereinafter “Department”].  Sections 3(3), 3(4) and 3(5) dictate that certain consequences for employers and unauthorized workers attach merely upon receipt of a complaint that an employer has knowingly employed an unauthorized worker.  All of the following actions take place before there is any adjudication on whether an employee is in fact unauthorized and whether an employer has violated the act:

  • The Department must notify the employer of the complaint.
  • The Department must direct the employer to notify any employee listed in the complaint that a complaint has been filed.
  • The Department must investigate the complaint,even if the complaint ends up being false or frivolous.


Section 3(4) further states that in order to investigate, the Department must verify the alleged unauthorized worker’s work authorization with the federal government.  While Section 3(2) stipulates that a person who knowingly files a false or frivolous complaint is guilty of a misdemeanor, nothing in bill prevents even false or frivolous complaints from being investigated.

Pursuant to Section 3(5), if the Department determines that the complaint is not false or frivolous, the bill mandates that the Department must carry out the following tasks:   

  • The Department must notify Immigration and Customs Enforcement (ICE) of the identity of the unauthorized worker. 
  • The Department must notify local law enforcement of the individual’s presence in the jurisdiction.
  • The Department must hold an administrative hearing where the employer can present evidence to address the allegations in the complaint.  


Section 3(6) states that an employer has not violated the act if the employer used the E-Verify program to determine if the employee has authorization to work.  Additionally, the bill gives employers the affirmative defense of  “good faith compliance” with federal immigration law to use in proceedings under this act.   


Section 4: Enforcement of the Bill 

This section sets forth the penalties for violating the act.  Among other things, the following must occur if an employer is found to have violated the act: (1) the Department must issue a cease and desist order, and (2) the employer must terminate the employment of all unauthorized workers and sign a sworn affidavit within 10 business days after the order has issued.    

If the employer will NOT file a sworn affidavit, the Department must order state agencies to suspend all licenses held by the employer.  The section further states that the licenses will be suspended until the required affidavit has been filed with the Department.  If an employer violates the act again within a 2-year period, the employer’s license must be suspended for 30 days or longer. 

Finally, this section requires the Department to maintain a database of the employers who have violated the act and the number and locations of the violations.


Section 5:  District Court Jurisdiction

This bill gives the district courts of Montana jurisdiction to decide challenges brought by employers or employees.  Montana district courts also have jurisdiction to enforce an order of the Department.  


Sections 6-12

These sections set forth other aspects of the bill.  Section 6 gives the Department the authority to establish procedures and guidelines to implement the act.  Sections 7, 8, 9, and 10 discuss construction, repeal of Montana Code Annotated 39-2-305, codification instructions, and severability.  According to Section 11, the act goes into effect 6 months after its passage and approval.  Section 12 provides that the Department cannot respond to a complaint against an employer for violations that occurred prior to the effective date of the act.   


Legal Analysis

Background on Federal Laws Regulating Employment of Unauthorized Workers

The federal Immigration Reform and Control Act of 1986 (IRCA) already prohibits most employers from knowingly hiring an individual who is not lawfully present or is not authorized to work in the United States.  IRCA sets up an extensive employment verification system, whereby it requires employers to review documents presented by new employees to establish their work eligibility and to report this information in the federal form I-9.2  IRCA further provides penalties and sanctions for employers who knowingly violate the law.3  Finally, IRCA 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.”4 IRCA thus creates a comprehensive scheme for regulating the employment of unauthorized workers, with only one specific and narrow carve-out for limited state action.   

The paper-based I-9 system was the exclusive employment verification procedure under federal law until the passage of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA). Pursuant to IIRIRA, Congress directed the Attorney General to establish three pilot programs to verify new employees’ eligibility for employment.  Of the three pilot programs, only the Basic Pilot Program (now called “E-Verify”) exists.  E-Verify is an internet-based system of employment verification.  It is merely one of the ways – and a new one at that – for an employer to meet its IRCA responsibilities.


Both IIRIRA and IRCA contain strong nondiscrimination provisions, prohibiting employers from using E-Verify or the I-9 process in a way that discriminates against employees based on their citizenship, immigration status, or national origin.5


Congress chose to make the E-Verify pilot program voluntary for most employers.  The one exception is federal contractors, who (pursuant to an Executive order and subsequent federal rule6) must use the E-Verify program in order to receive their contracts.  


Finally, IRCA creates a substantial “safe harbor” for employers who comply with the I-9 procedures.7  Unless an employer persists in violating IRCA after being put on notice of its noncompliance or engages in a pattern or practice of violations, employers who attempt to comply in good faith are protected from civil and criminal penalties under federal law.8


Application of the Bill 

The bill is likely constitutional.  The text of the bill is similar to a 2007 Arizona law called the “Legal Arizona Workers Act.”  Last year, the U.S. Supreme Court upheld the constitutionality of LAWA in Chamber of Commerce v. Whiting.9  Like this bill, LAWA suspends the state-issued business licenses of employers who are found to have knowingly hired unauthorized workers and creates a complaint procedure for challenging these employers.  Also like Montana’s bill, LAWA mandates that employers in the state use the E-Verify system.  

Those who challenged LAWA in court argued that the law 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.”10  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.  Such a state law is not explicitly blocked by IIRIRA;11 nor would it conflict with the overall federal scheme regulating the employment of unauthorized workers.  Critical to the Supreme Court’s analysis of this last point was the fact that the consequences under LAWA for an employer of not

using E-Verify were the same as the consequences stated in IIRIRA: the employer can no longer avail himself of the rebuttable presumption that he complied with the law.    

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.

Policy Arguments

Notwithstanding the fact that the bill is probably constitutionally sound, there are strong arguments that the bill is not good policy.

1. The bill is an unfunded mandate requiring local resources to be used in carrying out federal immigration enforcement. 


This mandatory E-Verify bill requires Montana’s Department of Justice to expend considerable state resources on a myriad of immigration enforcement duties that fall within the purview of the federal government.  Pursuant to the bill, the Department must notify the employer of the complaint, must direct the employer to notify any employee listed in the complaint that a complaint has been filed, and must investigate the complaint,even if the complaint ends up being false or frivolous.  In addition, the Department must verify the alleged unauthorized worker’s work authorization with the federal government.  If the complaint is not false or frivolous, the Department must notify ICE of the identity of the unauthorized worker, must notify local law enforcement of the individual’s presence in the jurisdiction, must hold an administrative hearing where the employer can present evidence to address the allegations in the complaint, and must maintain a database of the employers who have violated the act.  Not only do these additional duties burden taxpayers, but they take away from other important work carried out by the Department 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.

2. Mandatory E-Verify in Montana would discourage economic activity in the state.     

Unauthorized workers and their family members (who may be lawfully present or even citizens) are important in Montana’s economy as taxpayers, consumers, and entrepreneurs.  The following are facts collected by the Immigration Policy Center: 

  • The 2010 purchasing power of Latinos in Montana totaled $650.3 million—an increase of 661 % since 1990. Asian buying power totaled $219.4 million—an increase of 451.5% since 1990.  Additionally, Latino and Asian entrepreneurs added millions of dollars and thousands of jobs to Montana’s economy.
  • If unauthorized immigrants were removed from Montana, the state would lose 96.3 million in economic activity, 42.8 million in gross state product and approximately 720 jobs, even accounting for adequate market adjustment time, according to a report by the Perryman Group.

Arizona provides the clearest test case for state employer sanctions proposals.  LAWA has been costly for Arizona.  It has not stopped unauthorized work but has simply grown the size of the cash-based, underground economy.  In 2008, the first year LAWA was in effect, income tax collection dropped 13% from the year before.12

3. Mandatory E-Verify is costly, particularly for small businesses.  

To comply with the bill, individual employers will need to dedicate staff to understand the requirements of the proposed law and to implement E-Verify.  These employers may need to make upgrades in hardware or software in order to access E-Verify.  Additionally, program administrators and other users are required to complete training and periodic refresher training courses on the use of E-Verify.  

Small businesses, which create most of the nation’s new jobs, cannot afford to set up and use E-Verify, especially at this time when the economy is still fragile. Unlike large companies, they lack human resources departments to help their employees resolve E-Verify errors.13 According to the National Immigration Law Center, small businesses would face the biggest impact from mandatory E-Verify laws.  Nationally, data shows that if use of E-Verify had been mandatory in fiscal year 2010, it would have cost small businesses $2.6 billion.14 In 2011, the Main Street Alliance, a national network of small business owners, wrote to House Judiciary Committee Chairman Lamar Smith to oppose his mandatory E-Verify proposal.15    

4. Mandatory E-Verify without comprehensive federal immigration reform hits children and families hardest.  

In 2010, Montana was home to 20,031 immigrants.  Of this number, over 57%  or 11,506 people were naturalized U.S. citizens.  Unauthorized immigrants comprise less than 1% of the state’s workforce (or fewer than 10,000 workers), according to a report by the Pew Hispanic Center.   But 97.6% of the children of Montana’s immigrants were U.S. citizens in 2009.16  Hurting the ability of Montana’s relatively small population of undocumented workers to provide for themselves and their families can 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,17 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.18  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.”19  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.20

5. This bill 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.  


Please see our E-Verify fact sheet for a discussion of the problems with E-Verify.  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 Montana Workers and Business.”    


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).

2 8 U.S.C. Section 1324a(b); 8 C.F.R. Section 274a.2(b).

3 United States Government Accountability Office, “Employment Verification: Federal Agencies Have Taken Steps to Improve E-Verify, but Significant Challenges Remain,” [GAO Report] December 2010.

4 Immigration Reform and Control Act, 8 U. S. C. §1324a(h)(2).

5 GAO Report; see also Brief of Amicus Curiae Asian American Justice Center, a member of the Asian American Center for Advancing Justice, et. al., in Support of Petitioners, Chamber of Commerce v. Whiting, p. 16-17

6 73 F.R. 67651-705 (Nov. 14, 2008).

7 8 U.S.C. Section 1324a(b)(6)(A).  

8 8 U.S.C. Section 1324a(b)(6).  

9 Chamber of Commerce v. Whiting, 563 U.S. ___ (2011)

10 8 U.S.C. Section 1324a(h)(2).

11 The Supreme Court noted that IIRIRA includes only one specific restriction regarding laws that would make E-Verify mandatory: the Secretary of the U.S. Department of Homeland Security must receive Congressional authorization before making the E-Verify program mandatory for any entity outside of the federal government.

12 National Immigration Law Center, “Costly and Ineffective: What Arizona’s Experience with Mandatory E-Verify Teaches Us,” May 2011  (citing Daniel Gonzalez, “Illegal Workers Manage to Skirt Ariz. Employer-Sanctions Law,” The Arizona Republic, Nov. 30, 2008,  ).  

13 National Immigration Law Center, “E-Verify Creates Burdens for Small Businesses” (June 2011)  

14 Statement of Tyler Moran, Policy Director, National Immigration Law Center, House Committee on the Judiciary, Subcommittee on Immigration Policy and Enforcement, Hearing on: "E-Verify- Preserving Jobs for American Workers," February 10, 2011, pp. 3-4


16 All of the above data comes from: Immigration Policy Center, “New Americans in Montana” (January 2012)   

17 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.

18 Women’s Refugee Commission, Torn Apart by Immigration Enforcement: Parental Rights and Immigration Detention [“WRC Report”] (December 2010): 1

19 The Urban Institute, Children in the Aftermath of Immigration Enforcement (February 2010).  

20 Ibid. at vii-viv.





This document was prepared for CLINIC in February 2013 by Karen A. Herrling.  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 or (301) 565-4806.