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PHOENIX — State and local agencies could be barred from issuing business licenses and permits to individuals who cannot prove they are in this country legally.

The new requirement was added Thursday to legislation designed to clarify Arizona's new employer-sanctions law. The bill adds new protections from prosecution for companies that follow special procedures to check the legal status of new and existing workers.

House Bill 2745, which will go to the Senate after a final roll-call vote, also clarifies who is an employee whose identity and legality must be verified, versus an independent contractor, and adds new provisions to the statute about companies that pay their workers in cash.

Rep. Steve Farley, D-Tucson, said many of the changes are helpful in fixing the "serious flaws" in the original law, which took effect in January. It allows a judge to suspend a firm's ability to do business if it is found guilty of knowingly hiring an undocumented worker. A second violation within three years results in permanent revocation of any and all business licenses or permits.

But Farley said this late-added provision "turns any official of a city or county government into, in effect, an immigration checker."

And Rep. Theresa Ulmer, D-Yuma, objected to tacking this new requirement onto employer-sanctions legislation.