Indiana House lawmakers passed House Bill 1531 in a 64-26 vote, targeting businesses with more than 10 employees that knowingly hire illegal immigrants.
If signed into law, businesses that violate the measure could face penalties.
The bill originally required schools to report on the number and status of unlawfully present students, but that provision was removed.
It still gives Indiana Attorney General Todd Rokita the authority to withhold funding for a year from government bodies that fail to comply with an immigration detention request.
The bill now heads to the Indiana Senate for consideration.
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