Georgia Gov. Nathan Deal (R) signed legislation on May 13 that expands state requirements to use the federal E-Verify system to check the immigration status of employees. It also closes a loophole for project worker identification and sets severe penalties for violations.

Building on previous state rules that required public owners and public-works contractors to use E-Verify, the new law expands mandates to all businesses with more than 10 employees. The new rules will take effect on Jan. 1 for employers with 500 or more full-time employees; on July 1, 2012, for those with between 100 and 499 workers; and one year later for those with between 11 and 99 staffers. “What we’ve done is create a level playing field for all employers,” said Deal in a statement.

The new law closes a “gaping loophole” that some independent contractors, classified as 1099 contractors, were exploiting under the previous E-Verify regulations, says Mark Woodall, government affairs director for the Associated General Contractors’ Georgia branch. Because independent contractors who have no employees are not allowed to self-verify, they could not participate in E-Verify, he says.

Several instances last year of illegal workers found at construction sites involved 1099 contractors, who could be hired without the E-Verify system. The new law now requires those workers to provide a driver’s license or identification card from a state that verifies immigration status.

The law creates a new offense of “aggravated identity fraud” for anyone who uses false identification to obtain employment. It carries maximum penalties of 15 years in prison and/or a fine of $250,000. “We ought not be doing this at the state level,” says Woodall. “You don’t want a patchwork of 50 different requirements on this.”