In May 2011, the Supreme Court upheld Arizona's strict immigration law, which requires employers in the state to use the federal government's electronic system, called E-Verify, to ensure that new employees are authorized to work in the United States. The Arizona law also sanctions employers who intentionally or knowingly hire unauthorized workers by suspending or revoking their business licenses.
Before this case was decided, it was unclear how far states could go in legislating immigration matters, given that the federal government has a comprehensive legal framework covering the same ground, the Immigration Reform and Control Act (IRCA). This case made clear that states may address immigration matters, as long as they craft their laws carefully to cover only issues that are within state control (such as business licenses) and avoid creating conflicting obligations for employers.
For more information on the case (Chamber of Commerce v. Whiting), see our blog post, Supreme Court Upholds Arizona Immigration Law.