Businesses that for months resisted a federal mandate to screen for illegal workers now are scrambling to meet a fast-approaching compliance deadline.

Starting today, companies with federal contracts must enroll in E-Verify, an Internet-based system run by the Department of Homeland Security, to check the immigration status of both current workers and prospective hires.

Enforcement of an executive order issued by former President George W. Bush last year was delayed four times for review by the Obama administration.

Business groups opposed to the requirement, led by the U.S. Chamber of Commerce, filed a lawsuit in federal court.

But the new administration signed off on the rule in July, and the final hurdle was cleared on August 25 when a U.S. District judge in Maryland dismissed the suit.

In the aftermath of the ruling, labor and employment lawyers have been busy helping clients develop compliance strategies.

“The E-Verify rule was postponed, postponed, and postponed,” said Joycelyn Fleming, a partner in Ford & Harrison LLP’s Atlanta office and manager of the firm’s business immigration department. “This time, it’s for real.”

E-Verify was established in 1997 as a voluntary program to let employers check the Social Security and visa numbers of workers against other governmental databases.

As of July, more than 134,000 employers had enrolled in the system, according to the Department of Homeland Security.

Bills have been introduced in Congress requiring all businesses to use E-Verify. But the legislation hasn’t moved.

“E-Verify has always been hostage to the whole issue of comprehensive immigration reform,” said Phil Kent, national spokesman for Americans for Immigration Control Inc.

It was in the policy vacuum left by Congress that the Bush administration moved to require federal contractors to use E-Verify to screen illegal workers.

Kent praised President Barack Obama for sticking with the rule.

“This is the main thing they’re doing with regard to immigration control,” he said. “It’s a great signal from the administration.”

Under the rule, most federal contracts and subcontracts entered into, extended or amended on or after September 8 must require the contractor or subcontractor to enroll in and use E-Verify for all new hires and for any of their current employees working in direct support of a federal contract.

The rule only applies to federal contracts worth more than $100,000 in goods or services and subcontracts worth more than $3,000.

It also will cover only contracts with a period of performance longer than 120 days.

Other provisions are more complicated. For example, it excludes contracts covering production of goods that are widely available to the general public.

“Government PXs buy a lot of items—let’s say detergents—that are sold in grocery stores,” Fleming said.

Still another aspect of the rule will require businesses to decide whether to use E-Verify for all of their employees or just a portion of their workforce.

Under the “all-workers” option, companies unable to determine which employees will work on federal contracts can choose to verify their entire payroll.

David Whitlock, a partner in Atlanta-based Elarbee Thompson Sapp & Wilson LLP, said the all-workers option will suit businesses holding government and private-sector contracts.

“You may not know at any given time which of your employees are going to move from the private side to a public contract,” he said. “Rather than build Chinese walls that separate people, you might want to just choose to verify everybody.”

While the lawsuit primarily challenged the government’s authority to change E-Verify from voluntary to mandatory, others have charged that it’s prone to errors that yield mismatches on workers who are in the U.S. legally.

“It’s not ready for prime time,” said Jerry Gonzalez, executive director of the Georgia Association of Latino Elected Officials.

But the Department of Homeland Security recently cited independent research showing that 96.9 percent of queries run through E-Verify during the fourth quarter of 2008 were confirmed as “work-authorized” within 24 hours.

To E or not to E

The following exclusions and exemptions apply to the E-Verify rule for federal contractors, which takes effect September 8:

• Only applies to businesses providing more than $100,000 in goods or services through a federal contract
• Does not apply to businesses with federal contracts for commercial “off-the-shelf” products that do not require substantial modification
• Excludes from verification support personnel involved in indirect or overhead functions and not performing substantial duties in support of a federal contract
• Businesses that would have difficulty separating employees working in support of a federal contract from other employees can verify their entire payroll. Employers choosing the “all workers” option are given 180 days to comply.

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Dave Williams writes for the Atlanta Business Chronicle.