On May 10, 2011, Indiana Governor Mitch Daniels signed a new law (SEA 590) that significantly affects both public and private employers and creates substantial penalties for businesses that employ illegal immigrants. The new law will impact businesses operating in Indiana and particularly those doing business with state and local governmental entities.  The effective date of the new law is July 1, 2011.
 

Under the new law if a business knowingly employs illegal immigrants, the state may sue the business to recover unemployment insurance benefits paid to a worker employed on or after July 1, 2011. The law prohibits the deduction of expenses associated with the employment of illegal immigrants in the calculation of state income taxes if the business knowingly hires illegal immigrants. Use of the E-verify system by a business will create a presumption that the business did not knowingly employ an illegal immigrant.
 

A “day laborer” may not commence employment in Indiana unless the individual has completed a Form I-9. In addition, knowingly or intentionally transporting, harboring or concealing an illegal alien for commercial advantage or financial gain will be a Class A misdemeanor. Such conduct involving nine or more illegal aliens will be a Class D felony. In addition, law enforcement officers must impound any motor vehicle used in connection with transporting, harboring or concealing illegal immigrants. 
 

Beginning July 1, 2011, all state agencies and political subdivisions must use E-Verify for all new hires. E-Verify allows employers to electronically verify the identity and employment eligibility of new hires. State agencies and political subdivisions will be prohibited from contracting with a business that does not participate in E-Verify.  Businesses contracting with state agencies and political subdivisions must sign an affidavit certifying that the business does not knowingly employ illegal immigrants. State agencies and local governments cannot award a grant of more than $1,000 to a business unless the business is enrolled and participating in the E-Verify program and the business provides documentation certifying its enrollment and participation. If a business employs subcontractors under a public contract, the subcontractor must certify to the business that it uses E-Verify and does not knowingly employ illegal immigrants. If a business violates the law, upon notice from a state agency or political subdivision, the business will have 30 days to remedy a violation and if the business fails to remedy the violation within 30 days or to challenge the violation within 20 days of notice, the state agency or political subdivision may terminate the contract without penalty and recover damages.
 

This new law is a strong incentive for Indiana businesses to enroll and participate in the E-Verify system. If you have any questions regarding this new law or any other immigration related issue, please contact the author, Christopher L. Lucas, or the Bowers Harrison attorney with whom you usually work.