The U.S. Dept. of Homeland Security will temporarily abandon its efforts to enforce its regulation cracking down on employers that systematically hire illegal immigrants and develop a new proposal that the agency hopes can pass legal muster, according to papers filed by the agency with the U.S. District Court for the Northern District of California Nov. 23.

The DHS asked the court to put a hold on a pending lawsuit challenging the "no-match" rule until March 2008 so that the agency could develop a proposal that addresses some of the concerns raised by a federal district judge earlier this year. DHS says it plans to develop and publish a revised proposal by March 2008.

Opponents of the rule welcomed the DHS's decision. "The Bush administration essentially admitted that the rule is unlawful," says AFL-CIO President John Sweeney. "We've said all along that DHS had no authority to adopt this rule, which is just another Bush anti-worker initiative."

But DHS emphasizes it is not abandoning the rule entirely; merely modifying it to meet the judge's concerns. "Certainly DHS believes that the court got it wrong when it enjoined the no-match rule, and DHS and DOJ are exploring their options for challenging the court's order," says DHS spokeswoman Laura Keehner. "In the meantime, DHS is planning to provide an answer to the small number of minor issues that the judge raised in his opinion. This should allow the government to move forward with the rule."

The no-match rule would require employers to terminate employees that receive "no-match" letters from the Social Security Administration if they cannot resolve the discrepancy between the employee's name and his or her social security number within 90 days. Employers that do not comply could face criminal prosecution.

Both labor and business groups oppose the rule, claiming that it could result in the termination of thousands of lawful employees, potentially destabilizing the U.S. workforce. Business groups also argue that the DHS did not adequately consider the impact of the rule on small business.

The AFL-CIO and other labor groups, joined by the American Civil Liberties Union, filed a lawsuit challenging the regulations shortly after they were made final in August, and the U.S. Chamber of Commerce joined the lawsuit in September.

In October, a judge from the federal district court issued a preliminary injunction blocking the agency from implementing the regulations until a trial could decide the issue. In his ruling, Judge Charles Breyer wrote that the regulations "would result in irreparable harm to innocent workers and employers" and that the threat of potential criminal prosecution of employers that do not comply with the regulations "reflects a major change in DHS policy."

In November, the Social Security Administration said it would not send out "no-match" letters for the remainder of 2007 because of the lawsuit.