A federal court has upheld the legality of President Barack Obama’s executive order requiring certain federal contractors and subcontractors to use the Dept. of Homeland Security’s E-Verify system to ensure their workers are legally authorized to work in the U.S. The rule implementing the order goes into effect on Sept. 8 and applies to employers holding federal prime contracts of $100,000 or more or subcontracts worth $3,000 or more.

Several business groups, including the Associated Builders and Contractors and the U.S. Chamber of Commerce, had challenged the requirement, claiming broader use of the E-Verify program would expose contractors to potential liabilities and that the Obama administration had not adequately assessed the costs for small businesses.