S.F. 516 Section 1. NEW SECTION . 95.1 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 1A. “Department” means the department of workforce 7 development. 8 2. “Economic development incentive” means a grant, loan, or 9 performance-based incentive awarded by a government entity of 10 this state. “Economic development incentive” does not include a 11 tax credit or tax incentive program. 12 3. “Employ” means hiring or continuing to employ an 13 individual to perform services. 14 4. “Employee” means an individual who provides services 15 or labor for an employer in this state for wages or other 16 remuneration. “Employee” does not include an independent 17 contractor. 18 5. “Employer” means a person, as defined in section 4.1, 19 that transacts business in this state and that has a license 20 issued by an agency in this state. “Employer” includes 21 this state, a political subdivision of this state, and a 22 self-employed individual. In the case of an independent 23 contractor, “employer” means the independent contractor and 24 does not mean the person or organization that uses the contract 25 labor. 26 6. “E-verify program” means the employment verification 27 program as jointly administered by the United States department 28 of homeland security and the United States social security 29 administration or any successor program. 30 7. “Government entity” means this state or a political 31 subdivision of this state that receives and uses tax revenues. 32 8. a. “Independent contractor” means a person that carries 33 on an independent business, that contracts to do a piece of 34 work according to the person’s own means and methods, and that 35 -1- LSB 1498SV (3) 88 je/rn 1/ 11

S.F. 516 is subject to control only as to results. Whether a person is 1 an independent contractor is determined on a case-by-case basis 2 through various factors, including whether the person does any 3 of the following: 4 (1) Supplies tools or materials. 5 (2) Makes services available to the general public. 6 (3) Works or may work for a number of clients at the same 7 time. 8 (4) Has an opportunity for profit or loss as a result of 9 labor or service provided. 10 (5) Invests in facilities for work. 11 (6) Directs the order or sequence in which the work is 12 completed. 13 (7) Determines the hours when the work is completed. 14 b. Independent contractor status includes an individual who 15 performs services and is not an employee pursuant to section 16 3508 of the Internal Revenue Code. 17 9. “Knowingly employ an unauthorized alien” means the 18 actions described in 8 U.S.C. §1324a, and shall be interpreted 19 consistently with 8 U.S.C. §1324a and any applicable federal 20 regulations. 21 10. “License” means a permit, certificate, approval, 22 registration, charter, or similar form of authorization, other 23 than a professional license, that is required by law and that 24 is issued by an agency, allowing the licensee to do business 25 in this state. 26 11. “Unauthorized alien” means an alien who does not have 27 the legal right or authorization under federal law to work in 28 the United States as described in 8 U.S.C. §1324a(h)(3). 29 Sec. 2. NEW SECTION . 95.2 Knowingly employing unauthorized 30 aliens. 31 1. Knowingly employing unauthorized aliens prohibited. An 32 employer shall not knowingly employ an unauthorized alien. If 33 an employer uses a contract, subcontract, or other independent 34 contractor agreement to obtain the labor of an alien in 35 -2- LSB 1498SV (3) 88 je/rn 2/ 11

S.F. 516 this state, and the employer knowingly contracts with an 1 unauthorized alien or with a person who employs or contracts 2 with an unauthorized alien to perform the labor, the employer 3 violates this subsection. 4 2. Complaints —— court action required. A county attorney, 5 local law enforcement official, or member of the public may 6 file a complaint of a violation of subsection 1 with the 7 department. If the department determines, based on evidence 8 included with the complaint or on evidence gathered by the 9 department, that an employer has violated subsection 1, the 10 department shall bring an action against the employer in the 11 district court of the county where the unauthorized alien 12 employee is or was employed by the employer. The district 13 court shall expedite the action, including scheduling a hearing 14 at the earliest practicable date. 15 3. Court order —— first violation. On a finding of a first 16 violation as described in subsection 5, the court shall require 17 by order all of the following: 18 a. The employer shall terminate the employment of all 19 unauthorized aliens. 20 b. (1) The employer shall be subject to a three-year 21 probationary period for the business location where the 22 unauthorized alien performed work. 23 (2) During the probationary period, the employer shall file 24 quarterly reports on the form prescribed in section 252G.3 25 with the department for each new employee who is hired by the 26 employer at the business location where the unauthorized alien 27 performed work. 28 c. The employer shall be required to file a signed sworn 29 affidavit with the department within three business days after 30 the order is issued. The affidavit shall state that the 31 employer has terminated the employment of all unauthorized 32 aliens in this state and that the employer will not knowingly 33 employ an unauthorized alien in this state. 34 (1) The court shall order the appropriate agencies to 35 -3- LSB 1498SV (3) 88 je/rn 3/ 11

S.F. 516 suspend all licenses that are held by the employer if the 1 employer fails to file a signed sworn affidavit with the 2 department within three business days after the order is 3 issued. All licenses that are suspended shall remain suspended 4 until the employer files a signed sworn affidavit with the 5 department. Upon filing of the affidavit, the suspended 6 licenses shall be reinstated immediately by the appropriate 7 agencies. 8 (2) Licenses that are subject to suspension under this 9 paragraph “c” are all licenses that are held by the employer 10 specific to the business location where the unauthorized alien 11 performed work. If the employer does not hold a license 12 specific to the business location where the unauthorized alien 13 performed work, but a license is necessary to operate the 14 employer’s business in general, the licenses that are subject 15 to suspension under this paragraph “c” are all licenses that 16 are held by the employer at the employer’s primary place of 17 business. On receipt of the court’s order, the appropriate 18 agencies shall suspend the licenses according to the court’s 19 order. The court shall send a copy of the court’s order to the 20 secretary of state and the secretary of state shall maintain 21 the copy pursuant to subsection 6. 22 (3) The court may order the appropriate agencies to suspend 23 all licenses described in this paragraph “c” that are held by 24 the employer for not more than ten business days. The court 25 shall base its decision to suspend under this subparagraph 26 on any evidence or information submitted to it during the 27 action for a violation of subsection 1 and shall consider the 28 following factors, if relevant: 29 (a) The number of unauthorized aliens employed by the 30 employer. 31 (b) Any prior misconduct by the employer. 32 (c) The degree of harm resulting from the violation. 33 (d) Whether the employer made good faith efforts to comply 34 with any applicable requirements. 35 -4- LSB 1498SV (3) 88 je/rn 4/ 11

S.F. 516 (e) The duration of the violation. 1 (f) The role of the directors, officers, or principals of 2 the employer in the violation. 3 (g) Any other factors the court deems appropriate. 4 4. Court order —— second violation. For a second violation, 5 as described in subsection 5, the court shall order the 6 appropriate agencies to permanently revoke all licenses that 7 are held by the employer specific to the business location 8 where the unauthorized alien performed work. If the employer 9 does not hold a license specific to the business location 10 where the unauthorized alien performed work, but a license 11 is necessary to operate the employer’s business in general, 12 the court shall order the appropriate agencies to permanently 13 revoke all licenses that are held by the employer at the 14 employer’s primary place of business. On receipt of the order, 15 the appropriate agencies shall immediately revoke the licenses. 16 5. Violations defined. 17 a. A violation shall be considered a first violation by 18 an employer at a business location if the violation did not 19 occur during a probationary period ordered by the court under 20 subsection 3, paragraph “b” , for that employer’s business 21 location. 22 b. A violation shall be considered a second violation by 23 an employer at a business location if the violation occurred 24 during a probationary period ordered by the court under 25 subsection 3, paragraph “b” , for that employer’s business 26 location. 27 6. Secretary of state database. The secretary of state 28 shall maintain copies of court orders that are received 29 pursuant to subsection 3, paragraph “c” , and shall maintain a 30 database of the employers and business locations found to have 31 committed a first violation of subsection 1 and make the court 32 orders available on the secretary of state’s internet site. 33 7. Federal determination creates rebuttable presumption. In 34 determining whether an employee is an unauthorized alien, the 35 -5- LSB 1498SV (3) 88 je/rn 5/ 11

S.F. 516 court shall consider the federal government’s determination 1 of the immigration status of the employee pursuant to 8 2 U.S.C. §1373(c). The court may take judicial notice of the 3 federal government’s determination. The federal government’s 4 determination that the employee is an unauthorized alien 5 creates a rebuttable presumption of the employee’s unauthorized 6 status. The employer may present evidence that the employee 7 is not an unauthorized alien. 8 8. Good-faith compliance. For the purposes of this section, 9 an employer that establishes that it has complied in good 10 faith with the requirements of 8 U.S.C. §1324a(b) establishes 11 a conclusive affirmative defense that the employer did not 12 knowingly employ an unauthorized alien. An employer is 13 considered to have complied with the requirements of 8 U.S.C. 14 §1324a(b), notwithstanding an isolated, sporadic, or accidental 15 technical or procedural failure to meet the requirements, if 16 there is a good-faith attempt to comply with the requirements. 17 For purposes of this subsection, “good-faith attempt to comply” 18 means an employer to which all of the following apply with 19 respect to an employee hired or rehired by the employer: 20 a. The employer made a bona fide attempt to meet the 21 requirements for completion of the form I-9 for the employee 22 found in 8 C.F.R. §274a.2(a)(3), as amended through January 1, 23 2019. 24 b. The employer was a participating employer in the e-verify 25 program at the time the employee was hired or rehired. 26 c. The employer can demonstrate that the employer attempted 27 to verify the employment eligibility of the employee through 28 the e-verify program. 29 9. Entrapment as affirmative defense. 30 a. It is an affirmative defense to a violation of subsection 31 1 that the employer was entrapped. To claim entrapment, the 32 employer must admit by the employer’s testimony or other 33 evidence the substantial elements of the violation. An 34 employer who asserts an entrapment defense has the burden 35 -6- LSB 1498SV (3) 88 je/rn 6/ 11

S.F. 516 of proving all of the following by a preponderance of the 1 evidence: 2 (1) The idea of committing the violation started with law 3 enforcement officers or their agents rather than with the 4 employer. 5 (2) The law enforcement officers or their agents urged and 6 induced the employer to commit the violation. 7 b. An employer does not establish entrapment if the employer 8 was predisposed to violate subsection 1 and the law enforcement 9 officers or their agents merely provided the employer with 10 an opportunity to commit the violation. The conduct of law 11 enforcement officers and their agents may be considered in 12 determining if an employer has proven entrapment. 13 Sec. 3. NEW SECTION . 95.3 E-verify program —— employer 14 participation —— economic development incentives from government 15 entities. 16 1. An employer, after hiring or rehiring an employee, shall 17 verify the employment eligibility of the employee through 18 the e-verify program, shall certify to the department that 19 the employer has done so, and shall keep a record of the 20 verification for the duration of the employee’s employment or 21 at least three years, whichever is longer. The certification 22 shall be considered a record under section 96.11, subsection 23 6, and rules adopted pursuant thereto, and shall be submitted 24 to the department within the time period required by rule for 25 an employer to submit the employer’s contribution and payroll 26 report. 27 2. In addition to any other requirement for an employer to 28 receive an economic development incentive from a government 29 entity, the employer shall register with and participate 30 in the e-verify program. Before receiving the economic 31 development incentive, the employer shall provide proof to the 32 government entity that the employer is registered with and 33 is participating in the e-verify program. If the government 34 entity determines that the employer is not complying with this 35 -7- LSB 1498SV (3) 88 je/rn 7/ 11

S.F. 516 subsection, the government entity shall notify the employer 1 by certified mail of the government entity’s determination 2 of noncompliance and the employer’s right to appeal the 3 determination. On a final determination of noncompliance, 4 the employer shall repay all moneys received as an economic 5 development incentive to the government entity within thirty 6 days of the final determination. 7 3. Every three months, the secretary of state shall request 8 from the United States department of homeland security a 9 list of employers from this state that are registered with 10 the e-verify program. On receipt of the list of employers, 11 the secretary of state shall make the list available on the 12 secretary of state’s internet site. 13 Sec. 4. NEW SECTION . 95.4 Compliance with federal and state 14 law. 15 This chapter shall not be construed to require an employer to 16 take any action that the employer believes in good faith would 17 violate federal or state law. 18 Sec. 5. NEW SECTION . 95.5 Rules. 19 The department shall adopt rules pursuant to chapter 17A to 20 carry out the department’s duties under this chapter, including 21 but not limited to processes for the filing of complaints, 22 quarterly reports, and affidavits pursuant to section 95.2 and 23 certifications pursuant to section 95.3 with the department. 24 Sec. 6. IMPLEMENTATION OF ACT. Section 25B.2, subsection 25 3, shall not apply to this Act. 26 EXPLANATION 27 The inclusion of this explanation does not constitute agreement with 28 the explanation’s substance by the members of the general assembly. 29 This bill prohibits employers from knowingly employing 30 unauthorized aliens. 31 The bill defines “employer” as a person that transacts 32 business in this state and that has a license issued by an 33 agency in this state. “Employer” includes this state, a 34 political subdivision of this state, and a self-employed 35 -8- LSB 1498SV (3) 88 je/rn 8/ 11

S.F. 516 individual. In the case of an independent contractor, 1 “employer” means the independent contractor and does not mean 2 the person or organization that uses the contract labor. 3 The bill authorizes a county attorney, local law enforcement 4 official, or member of the public to file a complaint of a 5 violation with the department of workforce development. If 6 the department determines, based on evidence included with 7 the complaint or on evidence gathered by the department, that 8 an employer has committed a violation, the bill requires the 9 department to bring an action in district court against an 10 employer for a violation in the county where the unauthorized 11 alien employee is or was employed by the employer. The bill 12 provides that such an action must be expedited by the court. 13 The bill provides that for a first violation, the court 14 must order the employer to terminate the employment of all 15 unauthorized aliens and to submit a signed sworn affidavit 16 to that effect or face suspension of business licenses by 17 appropriate agencies. The court must also order a three-year 18 probationary period for the employer. The court may also 19 order the suspension of the employer’s business licenses 20 by appropriate agencies for up to 10 business days, after 21 considering certain specified factors. The bill provides that 22 for a second violation, defined as a violation occurring during 23 a probationary period for a previous violation, the court must 24 order the permanent revocation of the employer’s business 25 licenses. The bill directs the secretary of state to maintain 26 an online database of first-time offenders. 27 In determining the immigration status of an alleged 28 unauthorized alien employed by an employer, the bill requires 29 the district court to consider the federal government’s 30 determination of the immigration status of the employee. The 31 federal government’s determination that the employee is an 32 unauthorized alien creates a rebuttable presumption of the 33 employee’s unauthorized status. The employer may present 34 evidence that the employee is not an unauthorized alien. 35 -9- LSB 1498SV (3) 88 je/rn 9/ 11

S.F. 516 The bill provides that an employer who establishes that the 1 employer complied in good faith with 8 U.S.C. §1324a(b), 2 relating to verification of authorization for employment, 3 establishes a conclusive affirmative defense that the employer 4 did not knowingly employ an unauthorized alien. The bill 5 provides that an employer is considered to have complied with 6 the requirements of 8 U.S.C. §1324a(b), notwithstanding an 7 isolated, sporadic, or accidental technical or procedural 8 failure to meet the requirements, if there is a good-faith 9 attempt to comply with the requirements as defined in the bill. 10 The bill provides an employer with an affirmative defense of 11 entrapment if certain elements are met. 12 The bill requires an employer hiring or rehiring an employee 13 to verify the employee’s employment eligibility through the 14 federal e-verify program and certify to the department of 15 workforce development that the employer has done so. The bill 16 requires the employer to keep records of the verification 17 for the duration of the employee’s employment or three 18 years, whichever is longer, and establishes a time period 19 for submission of certifications to the department. The 20 bill requires an employer receiving an economic development 21 incentive from a state government entity to register with the 22 federal e-verify program. The bill provides that an employer 23 who does not comply with the requirement must repay all moneys 24 received for the economic development incentive. The bill 25 provides an employer the right to appeal a determination of 26 noncompliance and does not require repayment until a final 27 determination of noncompliance is made. The bill directs the 28 secretary of state to request from the United States department 29 of homeland security a list of employers registered with the 30 e-verify program every three months. The bill directs the 31 secretary of state to make the list available on the secretary 32 of state’s internet site. 33 The bill provides that the bill shall not be construed 34 to require an employer to take any action that the employer 35 -10- LSB 1498SV (3) 88 je/rn 10/ 11

S.F. 516 believes in good faith would violate federal or state law. 1 The bill requires the department of workforce development 2 to adopt rules to carry out the department’s duties under the 3 bill, including but not limited to rules on certain specified 4 subjects. 5 The bill may include a state mandate as defined in Code 6 section 25B.3. The bill makes inapplicable Code section 25B.2, 7 subsection 3, which would relieve a political subdivision from 8 complying with a state mandate if funding for the cost of 9 the state mandate is not provided or specified. Therefore, 10 political subdivisions are required to comply with any state 11 mandate included in the bill. 12 -11- LSB 1498SV (3) 88 je/rn 11/ 11