[Editor’s Note: today’s post is brought to you by guest blogger Bruce Buchanan, partner-in-charge of immigration practice, King & Ballow, LLP.]

Tennessee is one of 18 states that have passed legislation or have an executive order implementing E-Verify. However, the Tennessee Lawful Employment Act, which will become effective on January 1, 2012, is unique in that the use of E-Verify is not mandatory. Under the new law, an employer may enroll and use E-Verify for newly-hired employees, or it may accept, copy and maintain a state-issued driver’s license or identification, unexpired U.S. passport, permanent resident card, work authorization, birth certificate, certificate of naturalization, or a few other forms of identification from newly-hired employees.

You will note the documents above are redundant of documentation needed for I-9 verification. The only real difference is the requirement to maintain a copy of the identification document. Under the Immigration Reform and Control Act (IRCA), an employer is not required to maintain a copy of the presented documents from List A or Lists B and C.

A second provision in the law involves a “non-employee” providing labor or services to an employer. A “non-employee” is defined as “any individual, other than an employee, paid directly by the employer in exchange for the individual’s services.” If an employer contracts with an individual/non-employee, it must request and maintain a copy of one of the specified documents, such as state-issued driver’s license or identification. However, a subcontractor, who is not an individual, is not covered by this provision under the definition of non-employee.

An employer violates the law by failing to receive E-Verify confirmation or to request and maintain a copy of one of the specified identification documents. An employer has a “safe harbor” and cannot be found to have violated the law by employing an employee without work authorization if the employer utilized E-Verify and received a confirmation or the employee appealed the tentative non-confirmation and the appeal has not been resolved. This “safe harbor” is not available for employers who copy and maintain an employee’s driver’s license or identification if the employee is found to be working without employment authorization.

The Tennessee Lawful Employment Act will be phased in as follows: Employers with 500 or more employees and governmental entities must comply by January 1, 2012; employers with 200 to 499 employees by July 1, 2012; and employers with six to 199 employees by January 1, 2013. Employers with five or fewer employees are exempt from the law.

Any lawful resident of Tennessee or a federal agency employee may file a complaint with the Tennessee Department of Labor and Workforce Development, which will investigate such complaints. This provision is an extension of the current law which only allows state or local officials to file a complaint alleging an employer’s employment of an unauthorized worker.

The penalties for the new law are: First offense – $500 penalty + $500 per employee or non-employee not verified or copy of documentation maintained; second offense – $1,000 penalty + $1,000 per employee or non-employee not verified or copy of documentation maintained; and third offense – $2,500 penalty + $2,500 per employee or non-employee not verified or copy of documentation maintained

Most states that have passed E-Verify require it for all employers. Why is Tennessee different? In my opinion, two primary factors are the strength and the diversity of the Chamber of Commerce and the level of tourism in Tennessee. The Chamber of Commerce has opposed mandatory E-Verify. Further, Tennessee’s Chamber includes a lot of foreign-based employers, such as Nissan’s North American headquarters in the Nashville area, Volkswagen’s new manufacturing facility near Chattanooga and Wacker Chemie AG in east Tennessee.

The second apparent factor is tourism. Again, Tennessee strives to be a friendly state toward domestic and foreign tourists, and E-Verify can be viewed as unfriendly to an immigrant population. Interestingly, the only other state which just passed non-mandatory E-Verify is Louisiana, a state heavily reliant upon tourism.

After passage of this law in 2011 without mandatory use of E-Verify, the Tea Party supporters in Tennessee felt like the Republicans had abandoned them in favor of the Chamber of Commerce. The Tea Party supporters vowed to seek mandatory E-Verify in 2012. Only time will tell if they will be successful.

Disclaimer: The content of this post does not constitute direct legal advice and is designed for informational purposes only. Information provided through this website should never replace the need for involving informed counsel on your employment and immigration issues.

To learn more about how I-9 Compliance Software can help you comply with Form I-9 and E-Verify requirements, click here.