The Department of Homeland Security (DHS) announced the implementation of the regulation requiring certain federal contractors to use E-Verify will be postponed from January 15 to February 20. E-Verify is the Internet-based system operated by DHS in cooperation with the Social Security Administration that allows participating employers to electronically verify the employment authorization of newly-hired employees. The final regulation requires certain federal contractors to use E-Verify for new hires and to reverify existing employees working on covered contracts. (For an overview of the regulation, see Ogletree Deakins’ November 14, 2008 eAlert.)

The announcement comes amidst a legal challenge to the validity of the underlying regulation. On December 23, 2008, a coalition of business groups filed a lawsuit in the U.S. District Court for the District of Maryland (Chamber of Commerce of the United States of America, et al. v. Chertoff et al.) seeking to have the regulation declared invalid. The lawsuit’s principal argument is that the federal government lacked the authority to issue the regulation because the Congressional legislation authorizing E-Verify makes clear that participation in the system is voluntary. The delay in implementation provides both sides in the lawsuit an opportunity to make their initial case before a judge.