Under proposed legislation heard yesterday in the Senate Business & Commerce Committee, virtually all private employers in Texas will be required to participate in the E-Verify program when hiring new employees.
SB 1621/HB 3846 directs state agencies to enforce the E-Verify mandate by making participation “a condition of a license, certificate, registration, permit, or other authorization issued by the agency that is required for a person to practice or engage in a particular business, occupation, or profession in this state.” The requirement thus runs the gamut from regulated industries, such as oil and gas, manufacturing, utilities, to small businesses with alcoholic beverage licenses or sales tax permits. It also regulates, among many others, the building trades, licensed and registered professionals of all kinds, health care providers, political subdivisions, restaurants, hair salons and barber shops, convenience stores, auto repair shops, automobile dealers, beer and liquor wholesalers, trucking companies, airlines, farms and ranches, antique sellers, entertainment venues, professional sports teams, stadiums and arenas, lobbyists—well, you get the picture.
The reach of these bills—not to mention the enforcement challenge they present—is staggering. According to the Texas Workforce Commission, as of February 2023 total non-farm employment in Texas stood at about 13.9 million positions, about 11.8 million of which are in the private sector. The Small Business Administration estimates that there are about 3 million small businesses in Texas employing about 4.9 million Texans. Small businesses account for about 99.8% of Texas businesses as a whole. (The SBA defines a “small business” in various ways for different types of businesses, so a general definition does not really exist. For purposes of state agency actions that affect small business, however, Texas law defines the term as “a legal entity, including a corporation, partnership, or sole proprietorship, that: (1) is formed for the purpose of making a profit; (2) is independently owned and operated; and (3) has fewer than 100 employees or less than $6 million in revenue.” § 2006.601(2), Government Code.)
Is it possible for state agencies to police millions of large and (mainly) small employers as the bill requires them to do? And exactly how would such enforcement be done? Alas, the legislation is silent on the subject, instead delegating it to the Texas Workforce Commission to figure it out. In any event, the proposal represents arguably the largest expansion of state regulatory authority over private businesses in the history of the state. Let’s be clear that the bill gives the state the power to shut down businesses that, for any reason, fail to verify all new employees using the E-Verify system. We presume that the only way an agency can actually verify the verification (or lack thereof) will be to: (1) require the business to certify under penalty of perjury that it has complied with the statute; (2) establish a complaint and investigation procedure to ferret out violations; (3) provide some mechanism to deal with the false positives and potential for error in the E-Verify system itself; and (4) create an administrative process by which a business may challenge the agency’s enforcement action, followed by judicial review. We have no idea how much the implementation of all of this will cost Texas taxpayers or what the compliance costs to Texas businesses will be, but if we had to guess, the game will not be worth the candle.
It is entirely understandable that the Legislature is looking for ways to deal with the pressures of immigration on Texas communities, particularly along the border. But absent comprehensive immigration reform at the federal level and the infusion of massive resources into dealing with the social and economic problems that are driving migration in the first place, it is hard to see a clear path forward. From our perspective, however, putting the onus on Texas businesses to enforce immigration laws—and threatening the very livelihoods of business owners and their employees if they come up short—is both very unlikely to make much of a dent in the problem and very likely to make Texas a much more expensive and unattractive place to do business.
E-Verify Memorandum of Understanding Contract
2022 Texas Business Licenses & Permits
