So far, business interests are prevailing in those battles. One involves a lawsuit in a California federal court, while the other centers on funding bills in Congress.

Given long timelines in both those arenas, companies likely will halt for a while initiatives they oppose even as the brittle political atmosphere surrounding immigration stops reforms they seek.

The most recent development occurred on November 23, when the Bush administration asked a San Francisco judge to delay until March 24 a hearing on a new program to crack down on illegal unemployment.

The Department of Homeland Security asked for the extra time to revise a rule it promulgated in September that would require companies to resolve within 90 days discrepancies between a worker’s name and Social Security number or fire the employee.

A company’s failure to act could constitute a violation of immigration law. Currently, firms aren’t required to clear up inconsistencies.

The rule prompted a lawsuit by the American Civil Liberties Union and labor and business organizations. They assert that it would foster discrimination against ethnic groups while millions of mistakes in the Social Security database would force companies to fire legal workers.

DHS says the regulation provides guidance and safe harbor for companies dealing with so-called “no-match” letters.

U.S. District Judge Charles Breyer issued a preliminary injunction in October. The fact that DHS wants to revise the rule rather than defend it gives hope to business advocates.

“This motion shows that the government is conceding it has an uphill battle,” says Gregory Wald, an attorney at Squire, Sanders & Dempsey in San Francisco.

DHS denies it is backing down.

“We’re not abandoning the no-match rule,” says Laura Keehner, an agency spokeswoman. “DHS is planning to provide an answer to the small number of minor issues that the judge raised in his opinion.”

Lynda Zengerle, a partner at Steptoe & Johnson in Washington, says that questions about the quality of the Social Security database are at the heart of the case.

“I don’t think they’re so minor,” she says. “I don’t know what, if anything, the government can do about that in five months.”

While the regulation languishes in court, business groups are achieving success on Capitol Hill in stopping the expansion of the government’s electronic employment verification system, formerly known as Basic Pilot and now called E-Verify.

Language that would require all federal contractors—about 200,000 companies—to adopt the system was included in four appropriations bills. But it has been removed from two of them.

Currently about 19,000 firms voluntarily use E-Verify, a system that the Society for Human Resource Management and other HR groups criticize as inefficient, error-prone and incapable of expanding to include all employers.

“Members of Congress seem to realize that Basic Pilot isn’t ready for prime time, and therefore should not be mandated,” Mike Aitken, SHRM director of governmental affairs, said in a statement.

—Mark Schoeff Jr.