A bill approved by the Tennessee Legislature and expected to be signed by the governor will strengthen incentives for Tennessee employers to use the federal “E-Verify” employee verification system to bar illegal immigrants from obtaining legal employment within the state. E-Verify is a Department of Homeland Security program available over the Internet and administered in tandem with the Social Security Administration. The Tennessee Lawful Employment Act (TLEA), which covers newly hired employees, will take effect January 1, 2012.

In addition to state and local governments and agencies within Tennessee, private-sector employers with more than 499 employees will fall immediately under the new provisions in January; companies with between 200 and 499 employees will be covered by July 1, 2012; and all businesses staffed by six or more employees will be covered beginning January 1, 2013. Employers with fewer than six employees are exempt.

Affected employers will be required to either choose the E-Verify system or to gather state-approved documentation from prospective workers. The documentation may include a current U.S. passport; state-issued driver’s license or non-driver’s identification card; official birth certificate; certificate of naturalization; permanent resident card; work authorization; or certain other forms of identification. The allowed documentation under the TLEA will differ from current I-9 verification requirements only in that copies of the documents must be retained by the employer. This document retention is not required by the federal Immigrant Reform and Control Act.

Consistent with the new legislation and with federal law, employers who opt into the E-Verify system must apply it without exception to all new hires; it will not be possible to alternate between verification methods. Employers lacking Internet access will be permitted to use the Tennessee Department of Labor and Workforce Development (DoLWD) as their agent for employee registration and verification. Limited “safe harbor” protections are available for employers who have opted for E-Verify.

A provision in the law empowers lawful residents of Tennessee or federal agents to file complaints at the DoLWD against allegedly infringing employers. Older provisions have authorized only local or state officials to file such complaints. The DoLWD will investigate credible claims that an employer has violated the law by hiring ineligible persons.

An employer failing to follow the law will be subject to a minimum penalty of $1,000 for a first offense, rising another $500 for each additional employee or non-employee over the first for whom the employer has neglected to collect and maintain satisfactory documentation; a second offense will incur a minimum penalty of $2,000, rising another $1,000 for each additional violation. A third offense will increase the minimum penalty to $5,000, with $2,500 more for each additional violation. A non-employee is defined as any individual paid by the employer for independent contractor services.

Under current law, employers found in violation might temporarily or permanently lose their business licenses, depending upon the number of offenses committed within a three-year period.