Ad Hoc Committee on Business Owners and Work Site Enforcement

Speakers Present

Mark Faull, Maricopa County Attorney’s Office

Tom Barnett, representing himself

Sheridan Bailey, small business owner

PRESENTATION BY MARICOPA COUNTY ATTORNEY’S OFFICE ON HANDLING OF COMPLAINTS AS DESCRIBED BY HB2779 (LAWS 2007, CHAPTER 279)

Mark Faull, Maricopa County Attorney’s Office, described his office’s full enforcement of 2005’s Human Smuggling Act by working with Immigration and Customs Enforcement (ICE) agents and Maricopa County Sheriff Joe Arpaio’s Illegal Immigration Interdiction (III) unit. Mr. Faull stated that he will work in a similar fashion to enforce HB2779 (Laws 2007, Chapter 279) and to handle associated complaints and investigations.

He then stated that the Maricopa County Attorney’s office is waiting for U.S. District Court Judge Neil Wake’s ruling on HB2779 (Laws 2007, Chapter 279) before making any public statements about the design of the complaint process and how his office will work with businesses. He explained that they will work slowly to define compliance and policies, and would not speak publicly about this for probably six more weeks.

Mr. Laird stated that the other fourteen counties have already worked to build fairness and consistency into their complaint process response and that he had drafted a letter with recommended language for a specific complaint process. He requested a motion be put to vote regarding the language.

Chairman Weiers replied that he had just received Mr. Laird’s letter and that the committee cannot vote at this time, but that much of what is in the letter makes sense and can be incorporated into a comprehensive publication to distribute to the Legislature and the Executive.

Chairman Weiers reiterated that he will not personally introduce legislation, that he is not controlling the committee or the process, and that he does wish to ensure that businesses are protected from overregulation and heavy-handedness. He stated his belief that this is the most important piece of legislation passed by any Legislature that he has served in.

Mr. Laird stated his belief that this committee was to make recommendations and Chairman Weiers reminded him that those recommendations will be contained in the published report.

Mr. Laird asked if the committee would make motions and take votes. Chairman Weiers replied that the intent of the committee was not to take votes but to present information for the Executive and the Legislature. He added that, hopefully, what would come out of these meetings is reasoning as to why things need to be changed in order to make this a better piece of legislation. He assured Mr. Laird that his suggestions will be in the report.

Chairman Weiers asked Mr. Faull if he had seen the two-page complaint form distributed by Arizona Prosecuting Attorneys Advisory Council (APAAC); Mr. Faull replied that he had seen a form from Pima County. Chairman Weiers stated that he thought that this was the form agreed upon by the fourteen other counties and presented by Mr. Cook of APAAC at the previous meeting. Mr. Faull indicated that he was not aware of that consensus nor was he in meetings which developed the complaint form.

Chairman Weiers stated that there cannot be inconsistency among the counties with their application of the law, and he stated his concern that there could be confusion between Maricopa County and the fourteen other counties. He stated that it may be necessary to put into statute a standardized form that all must use.

Mr. Faull stated that it is the prerogative of the legislature to do that, but that he noticed some inconsistencies already with the form, such as questions about incomplete submittals. He explained that his office enforces criminal and civil laws and that anonymous informants are routine in criminal investigations and that he would not want to create artificial barriers for someone providing information. He stated that his office evaluates every complaint based on the information submitted and does not want to discourage someone by threatening false reporting or frivolous reporting. He stated that false information can result in prosecution, but that is not stressed up front.

Chairman Weiers reiterated that this issue must be addressed with legislation.

Discussion ensued between Ms. Strunk and Mr. Faull regarding civil complaints, criminal complaints, false information, and how charges could result in these instances.

Mr. Laird asked how the sheriff’s office would be involved in civil cases and Mr. Faull explained that they would follow the defined ICE process, but that much discussion must occur to define this protocol. Mr. Faull stated that there will be two access points to the process, through either the County Attorney or the Sheriff’s Office, and that complaints will be evaluated and discussion would occur about how to proceed. He stated that all parties will have to work together closely to effect legislative intent, in a manner similar to the Human Smuggling Act.

Mr. Laird asked Mr. Faull if he would follow the same complaint process as the other fourteen counties; Mr. Faull replied that the issue of anonymous complaints will be handled differently, and cited the example of the Human Smuggling Act, which Maricopa County is aggressively using, as differentiated from the other fourteen counties.

Mr. Quelland stated that the public on January 1^st of 2008 will assume that this law is fully implemented and asked what will happen with complaints coming in on January 2^nd. Mr. Faull replied that his office is waiting on Judge Wake’s decision, and that many other agencies and businesses are also waiting; he concurred that there will be some tension in the first month of this law, but that a six month rollout was anticipated for businesses to come into compliance.

Chairman Weiers asked if Maricopa County has received any complaints at this time; Mr. Faull stated that he did not know. Chairman Weiers suggested that Maricopa County begin to devise a complaint process and not wait for the Judge; Mr. Faull replied that Maricopa County Attorney Andrew Thomas is in charge and that his office is prepared to enforce the illegal workers act. He further clarified that work has been done on the complaint and enforcement process, but that he is not prepared to discuss this publicly yet.

Mr. Dunn stated that business owners would like to know what the complaint process will be and how the counties will handle it. He stated that some employees are getting checked several times a day, and may decide to go elsewhere to work.

Chairman Weiers reminded the committee that those comments are ones that will be included in the report.

Mr. Sanders stated that the Chamber has gotten feedback that some individuals now go to a work site and complain about everyone speaking Spanish, and he expressed concern that Maricopa County cannot tell him anything about how race-based complaints will be handled. Mr. Faull replied that whatever process is designed will not discriminate based on race or language, and that while motivation is hard to discern, safeguards are in place. He stated his opinion that a form will not solve that issue.

Mr. Sanders asked if Maricopa County will investigate all complaints; Mr. Faull replied in the negative, that they would not investigate all complaints. Mr. Sanders asked where the authority to investigate is under this statute; Mr. Faull replied that the county authorities have that authority and can use ICE-qualified investigators, particularly if a county has few investigative resources. Discussion ensued about clarifying in statute any restrictions as to the use of different methods for investigation and compelling cooperation.

Mr. Rosevear inquired about the expectations of an employer who must hire an attorney to defend his or her business and may face difficulties with financing sources. He stated that quick and fair adjudication is important, but that rural counties are not treated fairly because they are not funded like Maricopa and do not have the resources.

Ms. Strunk commented that businesses are not waiting for the judge’s decision, that they expect the law to be implemented, and she stressed the importance of providing clarification to business owners.

Mr. Bibee asked if Maricopa County will be investigating all anonymous and/or frivolous complaints; Mr. Faull replied in the negative, stating that some complaints have merit and some do not.

Chairman Weiers asked for his definition of a frivolous complaint; Mr. Faull replied that it is defined by law, and that guides his office. Discussion ensued about how a complaint could be deemed frivolous if it is not investigated, and how a complaint could be re-categorized from frivolous to false without investigation. Mr. Faull stated that a false claim is one that the complainant knows is false when he or she submits it, and that this is based on case law, not statute.

Mr. Sanders asked what business owners should know about submitting these claims; Mr. Faull replied that if they are “good actors” they will have nothing to fear. He further clarified that there is not a penalty for submitting a frivolous complaint.

Mr. Nye spoke about the standard of proof required for false complaint and constructive knowledge.

Mr. Faull issued a correction to his previous comments: “A person who knowingly files a false and frivolous complaint is guilty of a Class III misdemeanor.” He stated that this appears to be creating a new criminal violation.

Chairman Weiers asked if a frivolous complaint is not investigated, how can it be determined to be false; Mr. Faull replied that if something is frivolous on its face, it would not be investigated.

DISCUSSION OF LICENSES AS DEFINED BY HB2779 (LAWS 2007, CHAPTER 279)

Ms. Strunk stated that she has concerns about some of the language in the bill, specifically the definitions and the unintended consequences that could result. She explained that in the bill the definition of license has been expanded well beyond its normal accepted definition, which is a license that is granted by competent authority to engage in a business occupation or activity that would otherwise be unlawful. She stated that Articles of Incorporation, Certificates of Partnership or other organizational documents do not fit that normal understanding of the word license. She explained that including these in the bill and having them subject to being revoked could result in:

1. businesses losing their limited liability shield and deciding to re-form outside the state of Arizona, with resultant loss of revenue to the state

2. disclosure of capital investment, which may not be desirable to businesses

3. no provision that calls for suspension of these types of organizational documents, because they are not licenses, nor is it clear what revocation would mean to these documents

Chairman Weiers asked for an example of suspension; Ms. Strunk reiterated that it is not clear what the law does because there is no such thing as a suspension of Articles of Incorporation in business law. She stated that perhaps the Corporation Commission could declare a business “not in good standing” but that this could affect financing. Mr. Nye stated that he, too, did not understand how Articles of Incorporation could be suspended.

Ms. Strunk stated that her other concerns include:

transaction privilege licenses – it seems unwise to suspend these, as Arizona would want these taxes paid, no matter what happens to the business
professional licenses definition – it is vague and unclear in this law, and the range of professions is extremely broad

Mr. Sanders asked if there was a way to carve out certain business locations within a corporation; Ms. Strunk replied that there is not, that all locations would be affected even though the violation occurred at one location. She reiterated that Articles of Incorporation are not licenses and were never intended to be licenses.

Mr. Quelland asked about the revenue that would be affected if businesses move out-of-state; Ms. Strunk replied that the quantity is not known, but that there would be some effect.

Ms. Clarke expressed concern about the licenses of critical services such as schools, utilities and hospitals, and asked if those could be suspended by this law. Mr. Quelland replied that if the license of a school district is pulled, then the county takes over the district.

Mr. Laird asked again about making a motion to recommend his draft of proposed changes to the Legislature; Chairman Weiers suggested distribution to the committee members at this time (Attachment 1) and stated that these will be part of the final published report of recommendations.

Mr. Dunn expressed his concern that if the Articles of Incorporation are suspended, banks could call the notes on the corporation and put it out of business.

Mr. Bibee asked about reviewing the final report; Chairman Weiers replied that there will be a draft released first, which will include all the recommendations, and that the committee members will be able to review it before release to the Legislature. He stated his belief that the report will be thoroughly read by the legislators.

Mr. Laird presented an explanation of Attachment 1:

· pages 1 & 2 – changes definitions of employee, subcontractor, and independent contractor to more closely match federal definition

Mr. Sanders stated that that addresses Mr. Quinn’s question and that an employer is not responsible for subcontractors. Mr. Dunn stated that is very important.

· pages 3 & 4 – addresses the definition of knowingly by limiting to actual knowledge and thus to address liability

· page 5 – re-defines license and deletes such things as the Articles of Incorporation

· page 6 – clarifies complaint process and puts in safeguards similar to the other fourteen county attorneys; addresses the penalties for frivolous and false complaints

· page 7 – addresses the standard of proof issue

Mr. Nye commented that the state ought to do more before it puts a company out of business.

· pages 8, 9, 10, & 11 – deals with location-specific sanctions in order to avoid affecting an entire, multi-location company

Chairman Weiers asked how the law could be site-specific; Mr. Laird gave an example of a health license. Ms. Strunk stated that there is still confusion about location-specific licenses and general licenses. Mr. Laird commented that the fair thing would be to make it location-specific. Ms. Strunk concurred, suggesting it say “if there is no site-specific license, then the state would move up to the general license.”

· page 12 – addresses the inaccurate reference to 8 United States Code 1324a(b)

PUBLIC TESTIMONY

Tom Barnett, representing himself, addressed the committee to ask rhetorically if the State of Arizona was really willing to shut down the Phoenix Suns, or the Arizona Diamondbacks, or a hospital, or Shamrock Foods which employs 50,000 people. He reminded the committee of all the concession sales, the sales tax revenue, the income taxes, and all other revenue which would be lost.

Sheridan Bailey, small business owner, addressed the committee to provide an historical context about civil regard and fairness and the sanctity of property rights. He stated that the state cannot take away a resident’s source of income and his belief that this law imposes penalties that encroach on economic property rights in a manner so severe as to rise to a criminal offense.

Mr. Bailey suggested a graduated response, one in which the punishment would fit the crime; he stated that this law would allow one or two people to shut down a business. He stressed his opinion that this is a dangerous piece of legislation.

Chairman Weiers asked what would be his solution; Mr. Bailey stated that state legislators should use their time to persuade the Federal government, which has proper jurisdiction over immigration, to act.

Chairman Weiers stated that Arizona is preempting Federal law, but is prohibited by Federal law from fining; it can only revoke licenses. Mr. Bailey replied that the nature of the penalties is his greatest concern and he urged graduated penalties, such as a graduated tax penalty for companies violating the hiring law.

Without objection, the meeting adjourned at 5:01 p.m.

___________________________________

Jane Dooley, Committee Secretary

November 1, 2007

(Original minutes, attachments and audio on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov/)

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AD HOC COMMITTEE ON BUSINESS OWNERS

AND WORK SITE ENFORCEMENT

November 1, 2007

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Members Present

Members Absent

Speakers Present