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ARIZONA STATE LEGISLATURE
Forty-eighth Legislature – First Regular Session
AD HOC COMMITTEE ON BUSINESS OWNERS
Minutes of Special Meeting
Chairman Weiers called the meeting to order at 1:00 p.m. and attendance was noted by the secretary.
Representative Jim Weiers, Chair Doug Quelland
Richard Bark Armando Rios
Richard Bibee Ken Rosevear
Ed Cook Todd Sanders
Tim Dunn Sarah Strunk
Jason LeVecke
Jolynn Clark Randall Nye
Mitch Laird Pat Quinn
Rene Guillen, Majority Research Analyst
Jim Drake, House Rules Attorney
OPENING REMARKS:
Chairman Weiers stated that when he came to the Legislature in 1995, he brought with him his knowledge of the business community in an effort to protect business. Protecting business also protects the citizens of Arizona. He said he came to the Legislature to ensure that every business in the State has the tools and opportunities to prosper and grow. Along with education, business comprises one of the two most fundamental components in ensuring that Arizona will grow. He said the last thing he wants to see is legislation that has adverse impacts on honest businesses in the State. Last session, the Legislature passed H.B. 2779, fair and legal employment act, in an attempt to ensure honesty and fairness among businesses. He stated that the federal government has declared that it is illegal to knowingly employ an unauthorized alien. The State has the jurisdiction to enforce this law through revocation of State-issued licenses. He asked members to work with him to make this a better law for Arizona businesses and to move Arizona’s future forward.
INTRODUCTION OF MEMBERS AND STAFF:
Chairman Weiers asked members and staff to introduce themselves.
Rene Guillen, Majority Research Analyst
Ken Rosevear, Executive Director, Yuma County Chamber of Commerce
Ed Cook, Executive Director, Arizona Prosecuting Attorneys Advisory Council (APAAC)
Sarah Strunk, attorney practicing in the area of business and finance law
Richard Bibee, General Manager, Renaissance Scottsdale Resort and Chairman, Phoenix Business Council
Todd Sanders, representing Greater Phoenix Chamber of Commerce
Richard Bark, attorney who worked on this legislation during the last legislative session
Jason LeVecke, business owner and CEO of Arizona Employers for Immigration Reform
Doug Quelland, small business owner
Armando Rios, consultant to many major employers in Tucson
Tim Dunn, owner of Tim Dunn Farms
STAFF OVERVIEW OF H.B. 2779:
Rene Guillen, Majority
Research Analyst, summarized the provisions of H.B. 2779, fair and legal
employment act, Chapter 279, Laws of 2007 (Attachment 1). The bill prohibits
an employer from intentionally and knowingly employing an unauthorized alien
and requires the Attorney General or county attorney, upon receipt of a
complaint, to investigate the complaint. Additionally, the bill requires the
Court to order the employer to terminate the employment of all unauthorized
aliens and to suspend the appropriate licenses for ten business days. A second
violation requires appropriate licenses to be permanently revoked. H.B. 2779
appropriates
$2.6 million from the General Fund to carry out the provisions of the bill.
Jim Drake, House Rules Attorney, made himself available for questions.
DISCUSSION OF SPECIFIC PROVISIONS:
Mr. Sanders raised the issue of out-of-state employers and how this applies to companies that may have employees who work out of state. He wondered how they are subject to this legislation and whether they are subject to the verification process.
Chairman Weiers referred members to page 2, line 1.
Mr. Drake noted there is no definition for an out-of-state employee in the definition of “employee.” He said the definition refers to an organization that transacts business in this State; therefore, it is clear there is a State tie.
Mr. LeVecke asked whether there would be an objection to making that explicit in the bill. Mr. Drake replied that he thinks it is already expressed in the bill. He thinks it would be redundant to add explicit language.
Mr. LeVecke expressed concern about the vagueness of the language. He feels it should be made explicit. Mr. Drake said he believes it is absolutely clear that this only applies to in-state employees.
Mr. Bark referred to page 3, lines 14-16, and said that language supports Mr. Drake’s argument relating to the definition.
Mr. Quellend asked about the scope of this legislation and wondered whether it includes all businesses in the State, including schools, government, non-profit organizations, etc. Mr. Drake answered that the definition of employer answers that question. Every organization transacting business in Arizona and having a license issued by an agency of this State is included.
Mr. Sanders raised the issue of temporary workers. He asked whether liability would fall on the employer or the company who supplies the temporary workers. Mr. Drake referred back to the definition of “employee.” He said the definition tries to capture a great many situations that may fall outside of the normal bounds because it specifies “an employment relationship” but does not mention the independent contractor situation. He said that term is not defined and would have to be interpreted.
Chairman Weiers asked members to turn to page 6, line 12.
Mr. Bark explained this is the provision that establishes an affirmative defense that the employer has acted in good faith and complied with the requirements of U.S. Code Section 1324b. He pointed out that a technical error was made and the Section should be corrected to read 1324a(b).
Mr. Bark moved that the Committee make a recommendation to draft legislation to clarify that the references in H.B. 2779, known as Laws 2007, Chapter 279, apply to the proper federal laws. The motion carried.
Mr. Bark pointed out the offense for “knowingly” is already included in the definition on page 2, line 10.
Mr. Sanders said this could also include technical issues. He asked whether this reference will cause employers to be penalized for a technical problem. Mr. Bark replied this would conform it to federal law and would still allow the employer to get that defense. He said he does not believe it would include an innocent mistake.
Chairman Weiers referenced the following: page 4, line 2, starting with “The,” page 5, line 16, starting with “the” and page 5, line 30, starting with “the.”
Mr. Guillen read the provisions on license suspension on page 4, lines 2 through 10.
Mr. Sanders stated that one of the concerns of his members is the language that talks about the suspension of all licenses.
Mr. Bark said he believes the language on page 4, line 2, is all-inclusive. He referred to page 2, line 14, which defines “license” to mean any agency permit, certificate, approval, registration, charter or similar form of authorization that is required by law and that is issued by any agency for the purposes of operating a business in this State. He opined that the language on page 4, lines 2 through 5, would be specific to the one location where the violation occurred. If an employer had the type of business that did not have location-specific licenses, the general license would be affected and would affect all locations.
Ms. Strunk pointed out that many businesses have more than one license. She said this language is confusing as to what license gets revoked. She queried whether the license specific to that location would be revoked while the other licenses would remain in effect. She brought up the situation of a convenience market that has a liquor license that is site specific and asked whether a violation would result in the suspension of the liquor license for that particular convenience market. She expressed concern about a market with multiple sites and the shareholders of that corporation who may know nothing about the hiring practices who may lose their limited liability shield.
Chairman Weiers said his intent was that the suspension be site-specific. He believes that the intent needs to be clarified.
Mr. Bark maintained that the language on page 4, lines 2 through 5, is very specific. He believes the question to be raised is what type of businesses do not have location-specific licenses.
Ms. Strunk said there are many businesses that do not have location-specific licenses. As a business attorney, she is obliged to disclose to anyone investing in a corporation that they could lose their limited liability shield as a result of this legislation and that could potentially cause someone not to invest in an entity in Arizona.
Chairman Weiers raised the issue of a business with five locations operating under a single license and where only one location broke the law. He wondered how a license could be taken away from the one location when all five are under the single license.
Mr. Quelland said that raises the question of whether that specific location would be shut down or whether the other locations would also be shut down. Chairman Weiers replied that the business would not be shut down; the license would be revoked; however, he pointed out that revocation may result in the business being shut down. That is the issue and that is a huge concern.
Mr. Bark said the policy is clear in the first sentence on page 4 that the issue is location-specific. He believes the second sentence on page 4 is a legal question.
Mr. Dunn agreed that it gets complicated if the business is a limited liability corporation and has several different locations under separate management but under the same ownership.
Mr. LeVecke related that his business has 67 locations in the State, so that would be very problematic for him. He also noted that some cities require separate business licenses.
Mr. Rosevear brought up agricultural situations where workers work in different fields. He said that some labor contractors have as high as 8,000 employees under their control. Some days those workers work for a farm directly and other days may work for a labor contractor at different farms. In those circumstances, he thinks it is going to be very difficult to define who brings an action against whom in an agriculture situation.
Chairman Weiers said he assumes that the workers have documentation to show that they are legal workers. He stated that one of the issues to be discussed in future meetings is whether it is fair to put businesses in the position of policing what is legal and what is not.
Mr. Rosevear explained that buses pick up workers who have work visas at border towns and transport them over the border to work in the fields. Illegal aliens are not wanted on buses because the buses cross the border and if there is not proper documentation, the entire bus is detained at the border check station, causing the crew to lose a whole day of work. He said that between 20,000 to 22,000 workers come across the border daily. Most workers have been employed by farmers for years and some even have benefits.
Mr. Drake spoke about the workers compensation issue. He declared there is a need to find out who was employing the worker at the time of an injury, and this goes back to the definition. He thinks the definition is very broad and tries to capture as many people as possible under the term “employment relationship.”
Mr. Bark noted that the key question is whether there is an employment relationship with the worker.
Mr. Sanders recommended the following language in terms of the shared licenses issue: page 4, line 3, strike “all” and on line 4, strike “necessary to operate” and insert “specific to the operation of.”
Ms. Strunk also suggested striking “and” at the end of line 3.
Mr. Bark recommended amending the first sentence of page 4 on the shared-license issue to clarify that it is location-specific. In addition, the second sentence should be looked at because it is a legal question.
Mr. Cook said that rather than make these changes on a piecemeal basis, he would suggest that notations be made. He does not think changes should be made until the end of these meetings because of the potential impact on other sections.
Chairman Weeirs related that this Committee does not have the ability to change the law. His intent is to get as much input as possible. He hopes this Committee will make recommendations that will improve the legislation and be adopted by the Legislature. He advised that Rene Guillen and Steve Moortel, House staffers, will be working on this issue and will be available to members for presentation of suggestions and recommendations.
Mr. Bark proposed that the Committee work on language to make this location-specific even when there is not a location-specific license.
Ms. Strunk noted there is no way to split up articles of incorporation at one site and not at another. She said it is either lost or not lost. From a business standpoint, that is one of her concerns and a concern that investors will have in potentially losing their limited liability shield.
Mr. Bark said he believes the law should be as location-specific as possible. He suggested that staff, Legislative Council and the Rules Attorney work on this issue.
Mr. Bark moved that the Committee direct staff to work with Legislative Council to explore the need for language that clarifies that the license suspension revocation as prescribed by Laws 2007, Chapter 279, apply solely to locations in violation of Laws 2007, Chapter 279.
EMPLOYMENT ANTI-DISCRIMINATION LAWS:
Jim Drake, House Rules Attorney, advised that the question has been posed whether this legislation in its current form would need a separate stand-alone anti-discrimination clause. He stated that the answer is no. In addition to the federal law on this subject, Arizona has its own Civil Rights Act that prevents discrimination, such as labor, public accommodation and voting. There are also other statutes such as Title 23 and 16 that relate to labor and voting, and Title 41 that protects all Arizonans.
Mr. Sanders stated that Chamber members have concerns about the complaint process concerning the hiring of illegal aliens. He queried whether the Attorney General and the county attorneys investigate every complaint based on the assertion that there is a certain race at a particular location.
Mr. Cook maintained the need to have integrity in the initial complaint process. He said that prosecutors have ethical obligations that they must follow. A complaint relating to illegal aliens involves a civil violation, not a criminal violation, and does not relieve them of their duties as a prosecutor; however, inappropriate complaints should not enter the process.
Chairman Weiers brought up the legitimacy of the process and who determines the process. Mr. Cook explained that the way this legislation is written, there is some belief that the Attorney General or the county attorneys would have to investigate all complaints. The complaint process needs to have some integrity built into it in order to prevent the investigation of inappropriate or malicious complaints. Complaints need to be evaluated to determine their validity; however, the way the legislation is written may require a prosecutor to investigate a complaint even though it is not sufficiently founded.
Mr. Dunn said the problem with the way the legislation is written is the unfounded complaints. He does not think every complaint should be investigated.
Mr. Rios opined that it is going to be very difficult to set forth criteria about complaints. As a start, the Committee should look at the recommendation that the person making the complaint not remain anonymous. In addition, there should be strict penalties for making frivolous complaints. He thinks this would send a message to people that if they make an unfounded complaint, they will be penalized.
Chairman Weiers stated that he has a lot of concerns and questions about anonymous complaints. Mr. Drake advised that if a person knowingly files a false or frivolous complaint, the minimum is a Class 3 misdemeanor under the terms of the legislation. Mr. Cook noted that a Class 3 misdemeanor is the lowest class in a civil offense; minimum sentence is a suspended sentence while a maximum carries a sentence of 30 days in jail, a $500 fine and a year’s probation.
Based on comments made, Mr. Bark said he believes the complaint process should be a major topic for this Committee to discuss at the next meeting with prosecutors and business owners. He does not think a complaint should be filed based solely on a person’s nationality or that he speaks Spanish or flies the Mexican flag, and it should be made clear that is not acceptable. He wondered whether prosecutors have decided what they will do. Mr. Cook related that he is not familiar with what the Maricopa County prosecutor’s office is doing; however the 14 other counties have looked at creating integrity in the complaint process to ensure that complaints are legitimate and founded.
Mr. Sanders suggested that the solution may be that complaints may not be based on race.
Mr. Rios submitted that anonymous calls should not be pursued.
Chairman Weiers contended that complaints should have some validity and the process should contain safeguards to ensure validity.
Mr. LeVecke noted that on the subject of discrimination, he understands that many of the laws referred to by Mr. Drake apply only to employers of certain sizes. Mr. Drake said that in addition to the statutes that he referenced, federal law also protects individuals. He called members’ attention to H.B. 2779, page 6, lines 16 through 19.
AGENDA ITEMS FOR NEXT MEETING:
Mr. LeVecke said he would also like the “knowledge” issue addressed. He said some issues to be discussed are: who possesses that knowledge, whether employers will be liable for that knowledge, and at what levels within the company or what employer in the State will be liable for knowledge within the company, even though ownership may not have any knowledge.
Without objection, the meeting adjourned at 2:30 p.m.
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Joanne Bell, Committee Secretary
July 6, 2016
(Original minutes, attachments and audio on file in the Chief Clerk’s Office)
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AD HOC COMMITTEE ON BUSINESS OWNERS
AND WORK SITE ENFORCEMENT
2
October 10, 2007
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