In 2006 and 2007, the city of Hazleton, Pennsylvania adopted a series of local ordinances that, among other things, prohibited any business operating in the city from recruiting, hiring or continuing to employ any person not authorized to work in the U.S. Any company applying for a business license was required to sign an affidavit confirming the legal status of all of its employees in Hazleton. Violators of this ordinance were subject to suspension and loss of their business licenses, along with civil claims for liability from allegedly displaced legal workers.

A number of civil rights and business organizations sued the city, contending that these ordinances unlawfully interfered with the federal government's primary role in controlling immigration. Last week, in Lozano v. City of Hazelton, the Third Circuit Court of Appeals upheld a permanent injunction preventing Hazleton from implementing the employment provisions of its ordinances.

While local laws affecting immigration are not automatically preempted by federal law, Congress expressed clear intent in the Immigration and Control Act of 1986 to regulate and deal with the issue of illegal immigrant employment. IRCA specifically exempts local government licensing from its preemption provisions; however, the effect of the Hazleton laws is to potentially harass employers who comply with I-9 requirements, and to foster suspicion and possible discrimination against legal immigrant workers.

In reaching this decision, the Third Circuit sharply criticized the Hazleton ordinance's provision of a safe harbor for E-Verify use. The court described the system as mistake-filled, unreliable and more likely to err in the case of legal workers of certain national origins. The Third Circuit directly disagreed with other federal courts that have upheld state and local laws that push employers to use E-Verify.

The Third Circuit concluded that the private cause of action provision of the Hazleton ordinance was not ripe for legal challenge, because no aggrieved plaintiff had been sued or had been threatened with suit.

This case adds fuel to the fire in advance of the U.S. Supreme Court's scheduled review of Arizona's illegal immigrant employment law. While not identical to the Hazleton ordinances, Arizona law also favors use of E-Verify, and threatens employers using illegal workers with loss or suspension of authority to do business in the state. The Supreme Court clearly has the opportunity to establish limits for such state and local laws.