S.F. 172 Section 1. NEW SECTION . 93.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Agency” means an agency, department, board, or 4 commission of this state or a political subdivision that issues 5 a license for purposes of operating a business in this state. 6 2. “Economic development incentive” means a grant, loan, or 7 performance-based incentive awarded by a government entity of 8 this state. “Economic development incentive” does not include a 9 tax credit or tax incentive program. 10 3. “Employ” means hiring or continuing to employ an 11 individual to perform services. 12 4. “Employee” means an individual who provides services 13 or labor for an employer in this state for wages or other 14 remuneration. “Employee” does not include an independent 15 contractor. 16 5. “Employer” means a person, as defined in section 4.1, 17 that transacts business in this state, that has a license 18 issued by an agency in this state, and that employs twenty-five 19 or more full-time employees in this state. “Employer” includes 20 this state, a political subdivision of this state, and a 21 self-employed individual. In the case of an independent 22 contractor, “employer” means the independent contractor and 23 does not mean the person or organization that uses the contract 24 labor. 25 6. “E-verify program” means the employment verification 26 program as jointly administered by the United States department 27 of homeland security and the United States social security 28 administration or any successor program. 29 7. “Government entity” means this state or a political 30 subdivision of this state that receives and uses tax revenues. 31 8. a. “Independent contractor” means a person that carries 32 on an independent business, that contracts to do a piece of 33 work according to the person’s own means and methods and that 34 is subject to control only as to results. Whether a person is 35 -1- LSB 1825XS (4) 87 je/rj 1/ 10

S.F. 172 an independent contractor is determined on a case-by-case basis 1 through various factors, including whether the person does any 2 of the following: 3 (1) Supplies tools or materials. 4 (2) Makes services available to the general public. 5 (3) Works or may work for a number of clients at the same 6 time. 7 (4) Has an opportunity for profit or loss as a result of 8 labor or service provided. 9 (5) Invests in facilities for work. 10 (6) Directs the order or sequence in which the work is 11 completed. 12 (7) Determines the hours when the work is completed. 13 b. Independent contractor status includes an individual who 14 performs services and is not an employee pursuant to section 15 3508 of the Internal Revenue Code. 16 9. “Knowingly employ an unauthorized alien” means the 17 actions described in 8 U.S.C. §1324a, and shall be interpreted 18 consistently with 8 U.S.C. §1324a and any applicable federal 19 regulations. 20 10. “License” means a permit, certificate, approval, 21 registration, charter, or similar form of authorization, other 22 than a professional license, that is required by law and that 23 is issued by an agency, allowing the licensee to do business 24 in this state. 25 11. “Unauthorized alien” means an alien who does not have 26 the legal right or authorization under federal law to work in 27 the United States as described in 8 U.S.C. §1324a(h)(3). 28 Sec. 2. NEW SECTION . 93.2 Knowingly employing unauthorized 29 aliens. 30 1. Knowingly employing unauthorized aliens prohibited. An 31 employer shall not knowingly employ an unauthorized alien. If 32 an employer uses a contract, subcontract, or other independent 33 contractor agreement to obtain the labor of an alien in 34 this state, and the employer knowingly contracts with an 35 -2- LSB 1825XS (4) 87 je/rj 2/ 10

S.F. 172 unauthorized alien or with a person who employs or contracts 1 with an unauthorized alien to perform the labor, the employer 2 violates this subsection. 3 2. Court action required. An action for a violation of 4 subsection 1 shall be brought against the employer by the 5 county attorney in the district court of the county where the 6 unauthorized alien employee is or was employed by the employer. 7 The district court shall expedite the action, including 8 scheduling a hearing at the earliest practicable date. 9 3. Court order —— first violation. On a finding of a first 10 violation as described in subsection 5, the court shall require 11 by order all of the following: 12 a. The employer shall terminate the employment of all 13 unauthorized aliens. 14 b. (1) The employer shall be subject to a three-year 15 probationary period for the business location where the 16 unauthorized alien performed work. 17 (2) During the probationary period, the employer shall file 18 quarterly reports on the form prescribed in section 252G.3 with 19 the county attorney for each new employee who is hired by the 20 employer at the business location where the unauthorized alien 21 performed work. 22 c. The employer shall be required to file a signed sworn 23 affidavit with the county attorney within three business days 24 after the order is issued. The affidavit shall state that the 25 employer has terminated the employment of all unauthorized 26 aliens in this state and that the employer will not knowingly 27 employ an unauthorized alien in this state. 28 (1) The court shall order the appropriate agencies to 29 suspend all licenses that are held by the employer if the 30 employer fails to file a signed sworn affidavit with the county 31 attorney within three business days after the order is issued. 32 All licenses that are suspended shall remain suspended until 33 the employer files a signed sworn affidavit with the county 34 attorney. Upon filing of the affidavit, the suspended licenses 35 -3- LSB 1825XS (4) 87 je/rj 3/ 10

S.F. 172 shall be reinstated immediately by the appropriate agencies. 1 (2) Licenses that are subject to suspension under this 2 paragraph “c” are all licenses that are held by the employer 3 specific to the business location where the unauthorized alien 4 performed work. If the employer does not hold a license 5 specific to the business location where the unauthorized alien 6 performed work, but a license is necessary to operate the 7 employer’s business in general, the licenses that are subject 8 to suspension under this paragraph “c” are all licenses that 9 are held by the employer at the employer’s primary place of 10 business. On receipt of the court’s order, the appropriate 11 agencies shall suspend the licenses according to the court’s 12 order. The court shall send a copy of the court’s order to the 13 secretary of state and the secretary of state shall maintain 14 the copy pursuant to subsection 6. 15 (3) The court may order the appropriate agencies to suspend 16 all licenses described in this paragraph “c” that are held by 17 the employer for not more than ten business days. The court 18 shall base its decision to suspend under this subparagraph 19 on any evidence or information submitted to it during the 20 action for a violation of subsection 1 and shall consider the 21 following factors, if relevant: 22 (a) The number of unauthorized aliens employed by the 23 employer. 24 (b) Any prior misconduct by the employer. 25 (c) The degree of harm resulting from the violation. 26 (d) Whether the employer made good faith efforts to comply 27 with any applicable requirements. 28 (e) The duration of the violation. 29 (f) The role of the directors, officers, or principals of 30 the employer in the violation. 31 (g) Any other factors the court deems appropriate. 32 4. Court order —— second violation. For a second violation, 33 as described in subsection 5, the court shall order the 34 appropriate agencies to permanently revoke all licenses that 35 -4- LSB 1825XS (4) 87 je/rj 4/ 10

S.F. 172 are held by the employer specific to the business location 1 where the unauthorized alien performed work. If the employer 2 does not hold a license specific to the business location 3 where the unauthorized alien performed work, but a license 4 is necessary to operate the employer’s business in general, 5 the court shall order the appropriate agencies to permanently 6 revoke all licenses that are held by the employer at the 7 employer’s primary place of business. On receipt of the order, 8 the appropriate agencies shall immediately revoke the licenses. 9 5. Violations defined. 10 a. A violation shall be considered a first violation by 11 an employer at a business location if the violation did not 12 occur during a probationary period ordered by the court under 13 subsection 3, paragraph “b” , for that employer’s business 14 location. 15 b. A violation shall be considered a second violation by 16 an employer at a business location if the violation occurred 17 during a probationary period ordered by the court under 18 subsection 3, paragraph “b” , for that employer’s business 19 location. 20 6. Secretary of state database. The secretary of state 21 shall maintain copies of court orders that are received 22 pursuant to subsection 3, paragraph “c” , and shall maintain a 23 database of the employers and business locations found to have 24 committed a first violation of subsection 1 and make the court 25 orders available on the secretary of state’s internet site. 26 7. Federal determination creates rebuttable presumption. In 27 determining whether an employee is an unauthorized alien, the 28 court shall consider the federal government’s determination 29 of the immigration status of the employee pursuant to 8 30 U.S.C. §1373(c). The court may take judicial notice of the 31 federal government’s determination. The federal government’s 32 determination that the employee is an unauthorized alien 33 creates a rebuttable presumption of the employee’s unauthorized 34 status. The employer may present evidence that the employee 35 -5- LSB 1825XS (4) 87 je/rj 5/ 10

S.F. 172 is not an unauthorized alien. 1 8. Good-faith compliance. For the purposes of this section, 2 an employer that establishes that it has complied in good 3 faith with the requirements of 8 U.S.C. §1324a(b) establishes 4 a conclusive affirmative defense that the employer did not 5 knowingly employ an unauthorized alien. An employer is 6 considered to have complied with the requirements of 8 U.S.C. 7 §1324a(b), notwithstanding an isolated, sporadic, or accidental 8 technical or procedural failure to meet the requirements, if 9 there is a good-faith attempt to comply with the requirements. 10 9. Entrapment as affirmative defense. 11 a. It is an affirmative defense to a violation of subsection 12 1 that the employer was entrapped. To claim entrapment, the 13 employer must admit by the employer’s testimony or other 14 evidence the substantial elements of the violation. An 15 employer who asserts an entrapment defense has the burden 16 of proving all of the following by a preponderance of the 17 evidence: 18 (1) The idea of committing the violation started with law 19 enforcement officers or their agents rather than with the 20 employer. 21 (2) The law enforcement officers or their agents urged and 22 induced the employer to commit the violation. 23 (3) The employer was not predisposed to commit the violation 24 before the law enforcement officers or their agents urged and 25 induced the employer to commit the violation. 26 b. An employer does not establish entrapment if the employer 27 was predisposed to violate subsection 1 and the law enforcement 28 officers or their agents merely provided the employer with an 29 opportunity to commit the violation. It is not entrapment for 30 law enforcement officers or their agents merely to use a ruse 31 or to conceal their identity. The conduct of law enforcement 32 officers and their agents may be considered in determining if 33 an employer has proven entrapment. 34 Sec. 3. NEW SECTION . 93.3 E-verify program —— employer 35 -6- LSB 1825XS (4) 87 je/rj 6/ 10

S.F. 172 participation —— economic development incentives from government 1 entities. 2 1. An employer, after hiring an employee, shall verify the 3 employment eligibility of the employee through the e-verify 4 program and shall keep a record of the verification for the 5 duration of the employee’s employment or at least three years, 6 whichever is longer. 7 2. In addition to any other requirement for an employer to 8 receive an economic development incentive from a government 9 entity, the employer shall register with and participate 10 in the e-verify program. Before receiving the economic 11 development incentive, the employer shall provide proof to the 12 government entity that the employer is registered with and 13 is participating in the e-verify program. If the government 14 entity determines that the employer is not complying with this 15 subsection, the government entity shall notify the employer 16 by certified mail of the government entity’s determination 17 of noncompliance and the employer’s right to appeal the 18 determination. On a final determination of noncompliance, 19 the employer shall repay all moneys received as an economic 20 development incentive to the government entity within thirty 21 days of the final determination. 22 3. Every three months, the secretary of state shall request 23 from the United States department of homeland security a 24 list of employers from this state that are registered with 25 the e-verify program. On receipt of the list of employers, 26 the secretary of state shall make the list available on the 27 secretary of state’s internet site. 28 Sec. 4. NEW SECTION . 93.4 Compliance with federal and state 29 law. 30 This chapter shall not be construed to require an employer to 31 take any action that the employer believes in good faith would 32 violate federal or state law. 33 Sec. 5. IMPLEMENTATION OF ACT. Section 25B.2, subsection 34 3, shall not apply to this Act. 35 -7- LSB 1825XS (4) 87 je/rj 7/ 10

S.F. 172 EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 This bill prohibits employers from knowingly employing 4 unauthorized aliens. 5 The bill defines “employer” as a person that transacts 6 business in this state, that has a license issued by an agency 7 in this state, and that employs 25 or more full-time employees 8 in this state. “Employer” includes this state, a political 9 subdivision of this state, and a self-employed individual. 10 In the case of an independent contractor, “employer” means 11 the independent contractor and does not mean the person or 12 organization that uses the contract labor. 13 The bill requires the county attorney to bring an action 14 in district court against an employer for a violation in the 15 county where the unauthorized alien employee is or was employed 16 by the employer. The bill provides that such an action must be 17 expedited by the court. 18 The bill provides that for a first violation, the court 19 must order the employer to terminate the employment of all 20 unauthorized aliens and to submit a signed sworn affidavit 21 to that effect or face suspension of business licenses by 22 appropriate agencies. The court must also order a three-year 23 probationary period for the employer. The court may also 24 order the suspension of the employer’s business licenses 25 by appropriate agencies for up to 10 business days, after 26 considering certain factors. The bill provides that for a 27 second violation, defined as a violation occurring during a 28 probationary period for a previous violation, the court must 29 order the permanent revocation of the employer’s business 30 licenses. The bill directs the secretary of state to maintain 31 an online database of first-time offenders. 32 In determining the immigration status of an alleged 33 unauthorized alien employed by an employer, the bill requires 34 the district court to consider the federal government’s 35 -8- LSB 1825XS (4) 87 je/rj 8/ 10

S.F. 172 determination of the immigration status of the employee. The 1 federal government’s determination that the employee is an 2 unauthorized alien creates a rebuttable presumption of the 3 employee’s unauthorized status. The employer may present 4 evidence that the employee is not an unauthorized alien. 5 The bill provides that an employer who establishes that 6 the employer complied in good faith with 8 U.S.C. §1324a(b) 7 establishes a conclusive affirmative defense that the employer 8 did not knowingly employ an unauthorized alien. The bill 9 provides that an employer is considered to have complied with 10 the requirements of 8 U.S.C. §1324a(b), notwithstanding an 11 isolated, sporadic, or accidental technical or procedural 12 failure to meet the requirements, if there is a good-faith 13 attempt to comply with the requirements. The bill provides an 14 employer with an affirmative defense of entrapment if certain 15 elements are met. 16 The bill requires an employer hiring a new employee to 17 verify the employee’s employment eligibility through the 18 federal e-verify program. The bill requires the employer 19 to keep records of the verification for the duration of the 20 employee’s employment or three years, whichever is longer. The 21 bill requires an employer receiving an economic development 22 incentive from a state government entity to register with the 23 federal e-verify program. The bill provides that an employer 24 who does not comply with the requirement must repay all moneys 25 received for the economic development incentive. The bill 26 provides an employer the right to appeal a determination of 27 noncompliance, and does not require repayment until a final 28 determination of noncompliance is made. The bill directs the 29 secretary of state to request from the United States department 30 of homeland security a list of employers registered with the 31 e-verify program every three months. The bill directs the 32 secretary of state to make the list available on the secretary 33 of state’s internet site. 34 The bill provides that the bill shall not be construed 35 -9- LSB 1825XS (4) 87 je/rj 9/ 10

S.F. 172 to require an employer to take any action that the employer 1 believes in good faith would violate federal or state law. 2 The bill may include a state mandate as defined in Code 3 section 25B.3. The bill makes inapplicable Code section 25B.2, 4 subsection 3, which would relieve a political subdivision from 5 complying with a state mandate if funding for the cost of 6 the state mandate is not provided or specified. Therefore, 7 political subdivisions are required to comply with any state 8 mandate included in the bill. 9 -10- LSB 1825XS (4) 87 je/rj 10/ 10