PHOENIX (By Faye Bowers, Christian Science Monitor) July 5, 2007 — Arizona leads the nation in population growth. More illegal immigrants cross its border than any other in the United States. Now, in an apparent backlash to those trends, the state is leading the charge to halt illegal immigration by cracking down on employers.

Its new law effectively sets up a two-strikes penalty. A business employing an illegal immigrant would have its business license suspended temporarily. A second offense would mean a permanent revocation of that license.

The new law "takes the most aggressive action in the country against employers who knowingly or intentionally hire undocumented workers," says Gov. Janet Napolitano (D), who signed the measure into law late Monday. She said she decided to sign the bill because "Congress has failed miserably."

This get-tough attitude with businesses is growing across the US. As of April, 40 other states had introduced 209 bills related to employment of undocumented workers – the top subject of immigration-related legislation in the states, according to a report for the National Conference of State Legislatures (NCSL). Although Arizona's new law is apparently the harshest so far, Arkansas, Colorado, Hawaii, Tennessee, and West Virginia are still in the process of enacting legislation to force employers to verify their workers' legal status, cautions Dirk Hegen, an expert on immigration policy at NCSL. Now that federal immigration reform has stalled in Congress, more states are likely to act, he adds.

The bigger challenge, however, may be enforcing such laws, if Arizona is any example.

The ink had barely dried on Governor Napolitano's signature of the new law before employers began scrambling to figure out how to comply with the measure that many have dubbed the "business death penalty."

While Arizona business organizations are nearly unanimous in saying they want to comply with the new law, they argue that it may prove onerous for employers.

"We are going to be engaging in this mass education campaign to let businesses in Arizona know what it contains, what they need to do to be in compliance, and then what the penalties are for not complying," says Ann Seiden, director of communications for the Arizona Chamber of Commerce and Industry. But "we feel like this law puts this unfair burden on the backs of businesses in this state to solve a national problem."

It is already a federal offense to hire an illegal immigrant. But the Immigration Reform and Control Act of 2086 has rarely been enforced, at least until this past year. And employers were not required to use the federal ID-verification system that sprang from that law. Now, under the Arizona law, companies have to use that system, known as the Basic Pilot Program.

And that requirement puts employers at risk, business experts say.

For example, an illegal immigrant may use a stolen Social Security number on a job application that throws up no red flags initially. But if that illicit number is later discovered in any investigation, the employer could see her business closed down for days while investigators figure out what happened.

Another challenge: the Basic Pilot Program had a 4 percent error rate last year, business groups point out.

"When the future of your license depends on one system, and one system only, you can't really refute much of it," says Steve Chucri, chief executive officer of the Arizona Restaurant and Hospitality Association. "We want to work through this to help them perfect the system. But at the same time, we don't want to lose our ability to conduct business in the state because the system may or may not have rendered accurate information."

Those vagaries make it difficult for businesses. "Because of the mistake of one human-resources person who vetted an illegal employee through a flawed database, a company can lose its license," says Spencer Kamps, vice president of legislative affairs for the Home Builders Association of Central Arizona.

The system will force businesses to spend more money to ensure they're complying with the law and on legal fees if they're charged with infractions, business experts say.

"This law has the potential for some bite to it," says Dawn McLaren, an economist at Arizona State University. "It raises the cost of doing business here" – and in a way that's not easy to determine in advance.

On a violation, an employer may avoid losing her license because she didn't "knowingly" or "intentionally" hire an undocumented worker, but she still will most likely incur legal fees in defending her actions, Ms. McLaren points out.

Napolitano has asked the state legislature to return in a special session this fall to address some of what she called "flaws" of the new measure, including the lack of protection for critical infrastructure. "Hospitals, nursing homes, and power plants could be shut down for days because of a single wrongful employment decision," she said in a statement. And "the revocation provision is overbroad and could cause a business with multiple locations to face shutdown of its entire operation based on an infraction that occurred at only one location."