Arizona E-Verify and I-9 Compliance in 2026 (and the New Contractor Verification Rule)
1) The baseline: Form I-9 is federal and mandatory
No matter what state you’re in, Form I-9 is the foundation. It’s the federal form used to verify identity and work authorization for employees hired in the United States. Arizona doesn’t replace I-9, it stacks extra requirements on top.
Key practical points:
You must complete an I-9 for every employee (not contractors).
Timing: employees complete Section 1 at/near start; employers must review documents and complete Section 2 within the required window (commonly understood as within 3 business days for most hires). Many Arizona HR onboarding resources mirror that standard.
Retention rule: keep I-9s 3 years after hire or 1 year after termination, whichever is later.
Storage: keep I-9s secure and easy to retrieve if audited (often stored separate from the regular personnel file).
If you do nothing else, do I-9 correctly and consistently. Most “pain later” comes from sloppy I-9 completion, missing forms, or inconsistent document practices.
2) Arizona’s long-standing layer: E-Verify for new hires
Arizona’s Legal Arizona Workers Act (LAWA) has historically required Arizona employers to use E-Verify for new hires. The Arizona Attorney General’s office has been very clear: Arizona requires E-Verify and treats compliant verification as a major protection if an employer is accused of employing unauthorized workers.
What E-Verify is (in plain English):
You still do the I-9 first.
Then you run the employee through E-Verify, which checks information against government records.
3) The big change: starting Jan 1, 2026, Arizona expands E-Verify to certain contractor agreements
As of January 1, 2026, the new Arizona measure (originating from HCR 2060 and approved by voters as Proposition 314) expands the requirement beyond employees and into certain labor/services contracts.
What the new rule says (the heart of it)
On or after January 1, 2026, every employer must use E-Verify to confirm lawful presence when the employer initially enters into a contract with an individual for labor or services valued at $600 or more.
That’s the “verify contractors” concept people are talking about. It’s not just W-2 employees anymore; it can apply at the point you hire certain independent contractors (depending on how the relationship is structured).
Important carve-outs and limits (don’t skip this)
The measure includes several limitations/exceptions, including:
You don’t have to E-Verify the same individual more than once.
You don’t have to E-Verify an individual who has a subcontract for work through another employer or independent contractor.
There are exemptions tied to individuals/entities holding certain valid licenses or a valid Arizona driver license(as described in the text).
Practical takeaway: the new law is trying to reach direct “I’m paying you for labor/services” arrangements above a low dollar threshold, but it also tries not to create endless repeat checks or duplicate checks deep in a subcontract chain.
4) Enforcement teeth: investigations, penalties, and “good faith” defenses
The measure also ramps up enforcement language around complaints and investigations and outlines civil penalties in certain scenarios.
Examples from the text include:
The AG or county attorney can investigate complaints alleging an employer knowingly refused required verification (as described in the amended framework).
If a court finds certain knowing violations tied to employing unauthorized workers, civil penalties can reach up to $10,000 per unauthorized worker in some circumstances.
The text also describes a form of affirmative defense for good-faith compliance with federal verification requirements.
Bottom line: the safest posture is documented, consistent compliance (and a clean process you can prove later).
5) What employers should do now: a simple 2026 compliance playbook
A. Tighten your I-9 process (W-2 employees)
Standardize who completes I-9s and how.
Use an internal checklist so Section 2 isn’t late or missing.
Audit a sample of forms quarterly (fixable errors are common).
B. Make E-Verify part of onboarding (and document it)
Arizona expects E-Verify use for covered hires, and recordkeeping matters.
C. Build a contractor verification workflow (NEW for 2026)
If you pay individuals for labor/services, implement a “gate” before contracting:
Trigger question: “Is this labor/services? Is it $600+? Is this a direct contract with the individual?”
One-time check: track whether you’ve already verified that person (the text contemplates not re-running the same individual repeatedly).
Add a contract clause requiring cooperation with verification and accurate info.
Keep a simple contractor log: name, date of first contract, amount, whether exempt, and verification record reference.
D. Don’t misclassify workers to “avoid I-9”
A classic mistake is treating someone as a contractor when they function like an employee. That’s a separate legal risk (tax + wage/hour) and now Arizona’s E-Verify expansion makes “contractor” less of a loophole anyway.
6) FAQ
Does Arizona replace the federal I-9?
No. I-9 is federal and still required for employees. Arizona adds E-Verify requirements on top.
Do I complete an I-9 for independent contractors?
Generally, I-9 is for employees. But as of 2026, Arizona’s E-Verify duty can attach when entering certain labor/services contracts valued at $600+ (with exceptions), which is why contractors are now part of the conversation.
What’s the dollar threshold for the contractor-side verification?
The text uses $600 or more for labor/services contracts.
When did this change become real?
It was referred to voters (HCR 2060) and approved as Proposition 314 in the November 5, 2024 election, with key provisions effective January 1, 2026.
