Arizona employers focusing on costs effects of new law
Arizona Republic
Dec. 30, 2007

Arizona employers focusing on costs, effects of new law
 (Phoenix, AZ)

Author: Ronald J. Hansen, The Arizona Republic
Estimated printed pages: 4
Right-click here to download pictures. To help protect your privacy, Outlook prevented automatic download of this picture from the Internet.
Like many managers in Arizona, Debra Beal knows a far-reaching crackdown on businesses that employ illegal immigrants is at hand. And like thousands across the state, the restaurant manager has yet to make drastic changes at her business.
"We are waiting on the corporate office (in Texas) to tell us what to do," said Beal, who manages a Pancho's Mexican Buffet in Phoenix.

She is confident the restaurant's 35 current employees are legally allowed to work here. She says she is more concerned these days with declining business than she is with worrying about the details of the state's employer-sanctions law, which goes into effect Tuesday.

After months in court vainly trying to overturn the law before it began, businesses are down to the wire. With their business licenses at risk if they knowingly employ even one illegal worker, many are still trying to figure out what they now must do.

"We won't accept applications until everyone in the office understands what we have to do," said Alex Rubalcaba, the assistant manager of Able Body Labor, a day-labor employer on Central Avenue in Phoenix. "In the meantime, I'm trying to send the guys we already have" on new assignments.

Like most businesses in Arizona, Rubalcaba said Able Body had still not signed up for E-Verify, the free online federal database that electronically checks a new hire's employment eligibility. The service is required for new hires under the sanctions law, but federal records showed few of the state's 150,000 businesses had signed up as of late last week.

That is, in part, because many businesses had hoped to avoid doing so.

As part of a lawsuit seeking to overturn the law, Jason LeVecke, who owns 57 restaurants that employ 1,100 people in Arizona, suggested it would cost him plenty.

He said his company already hired a full-time immigration compliance officer and estimated the law would cost him more than $60,000 in new computers to use E-Verify.

That's because hiring is done at each restaurant, which don't have computers connected to the Internet.

"The requirements of credit-card processing companies is that the computers used in the restaurants to process credit-card transactions cannot be equipped to have access to the Internet," LeVecke said in court papers.

It is a position that didn't persuade U.S. District Judge Neil V. Wake, who has refused to block the law from going into effect.

"The hardship of using E-Verify is an increment to the already-pervasive regulation of labor and employment in our society," Wake wrote in explaining his decision. None of those suing "showed at trial that the actual cost will be (significant) in the context of its business operations."

Businesses that offer to help untangle checking employment verification for other companies said last week they were getting more calls and more clients.

"We've been pretty busy all along, but people are making decisions more quickly now," said Dan Siciliano, executive director of LawLogix, a San Francisco-based company that provides software to electronically handle employment verification services for the federal I-9 forms and E-Verify.

"I'll bet we're going to talk to a record number of (Arizona) businesses. I don't think most businesses have decided what they're going to do."

It's the same for Sheri Trager, vice president of Service Management Solutions, a Prescott-based company that offers a verification program.

In the weeks before Wake began ruling on the legal challenges, she said her company had about 40 requests for seminars explaining her program. After a pair of December rulings, she said they had about 200 such requests.

Some business owners have said they will eventually sign up for E-Verify but don't need to do so right away because they don't plan to hire anyone in the short term.

In fact, the law goes into effect at a time when Arizona employers historically add relatively few new workers.

Private-employer payrolls in the state have shrunk in January every year since at least 1990, according to the U.S. Bureau of Labor Statistics.

Five industries that account for more than 70 percent of the state's workforce (including education/health services and leisure/hospitality) have lost more workers than they hired in January every year for the past three years, the federal records show. Employment generally picks up in February and March.

But LeVecke, for one, suggested in court records that his company is focused on expanding outside Arizona because of the costs and risks of the sanctions law.

Rubalcaba understands the fear. He said the day-labor business is seen as a magnet for illegal workers and worries that the new law will make it a target for investigation.

Beal said she suspects many immigrants, legal and illegal, already have left the state, cutting into her business at the same time the economy has slowed anyway. She said she could only guess what happens when the sanctions law begins.

"As far as what to expect," she said, "I don't know."
Edition:  Final Chaser
Section:  Front
Page:  A19