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FLAGSTAFF, Ariz. -- Congress is pushing ahead with a bill that would mandate the use of E-Verify by all U.S. employers. E-verify allows companies to determine if new hires are in the country legally. Meanwhile, California is leading an effort in the opposite direction - the legislature there has passed a bill that would make E-Verify optional in that state.

Arizona and 16 other states already use E-Verify to some degree.

How does it work?

When someone applies for a job the employer runs the prospective employee’s personal information through Social Security Administration and Department of Homeland Security databases designed to weed out undocumented workers.

Employment lawyer Julie Pace said when Arizona mandated E-Verify in 2008, the state suffered because businesses moved out to surrounding states.

“We have a huge labor shortage. We don’t have any dry wallers; we don’t have any roofers; we don’t have any stucco workers; we’re having shortages in the restaurant industry," Pace said. "I mean I could go on and on as the companies call in. People are turning back contracts right now because we can’t get the workers because they can’t pass E-Verify.”

So Pace supports federal legislation that would mandate E-Verify. It’s only fair that other states have it too, she said, so there’s a level playing field.

“The stakes are pretty high in Arizona,” said Garrick Taylor, a spokesman for Arizona Chamber of Commerce and Industry. “If there were to be some sort of violation where an employer was knowingly hiring undocumented workers, the use of E-Verify helps strengthen that employer’s defense that he or she was hiring in good faith.”

But there are arguments mounting on the other side.

Some California lawmakers call E-Verify ineffective. Assemblyman Paul Fong sponsored the state bill to make the use of E-Verify optional.

“It’s a flawed system. We shouldn’t make it mandatory because a flawed system makes mistakes," Fong said. "They misidentify workers. These are American citizens being ineligible to work. That’s a job killer.”

And it’s not fool proof. In fact, 50 percent of people who are undocumented pass E-Verify using counterfeit social security cards and fake IDs, according to the consulting firm Westat.

And many argue that E-Verify alone can’t solve the country’s immigration issues.

“I don’t think it’s an appropriate tool to be using right now,” said Joseph Sigg, a lobbyist for the Arizona Farm Bureau. “At some point it will be fixed. It will be an accurate tool. And at that point one can say it should be across the country. But it’s not a reliable tool in my view.”

Sigg said in addition to a reliable way to verify legal workers, the country needs a guest worker visa program.

“In agriculture, we don’t have an immigration problem. We have a labor problem,” Sigg said. “And we need reliable methods to be able to recruit and retain legal and reliable labor.”

In Washington, the House Judiciary Committee vote split along party lines with all 22 Republicans approving the Legal Workforce Act. But now they’re dealing with a backlash.

Last week, a coalition of regional and national conservative groups that champion less government, privacy protection and small-business interests wrote a letter to members of Congress urging them to vote against the bill.

Andrew Langer, president of the Institute for Liberty - an anti-regulation group - signed the letter. Langer said the bill is a burden on small business owners.

“We’re concerned anytime small businesses become law enforcement officers for the nation,” Langer said.

A vote by the full U.S. House of Represetnatives to mandate E-Verify across the country has not been scheduled yet. California legislation that would restrict the use of E-Verify awaits the governor’s signature.