Business groups and pro-immigration forces were dealt a blow Friday afternoon when a federal judge denied a request for a temporary restraining order on the state's new immigration law, a move that paved the way for the law to go into effect Jan. 1.

Under the law, builders and other businesspeople in Arizona can have their licenses revoked on a second offense if they are found to have knowingly employed undocumented workers. The first offense calls for a 10-day suspension.

In denying the temporary restraining order, U.S. District Judge Neil Wake clearly sided with the Arizona lawmakers, arguing that the immigration law sought to protect the rights of America's most vulnerable workers.

"Those who suffer the most from unauthorized alien labor are those whom federal and Arizona law most explicitly protect," wrote Judge Wake.

"They are the competing lawful workers, many unskilled, low-wage, sometimes near or under the margins of poverty, who strain in individual competition and in a wage economy depressed by the great and expanding number of people who will work for less," he said.

The judge said that in the event of an injunction, whether for a month or years, the loss by this group would be severe.

"Even if the injunction is lifted later, their loss will never be paid back," Wake wrote.

David Selden, an attorney representing 11 business groups, said the trade groups intend to fight on and look forward to the preliminary injunction hearing before Judge Wake set for Jan. 16.

"We've had better days," said an understated Selden, when asked to assess Judge Wake's decision.

Selden said given Judge Wake's strong views in defense of the Arizona law, the likelihood is that the case will wind up in the 9th U.S. Circuit Court of Appeals in San Francisco. The business groups had previously appealed the original lawsuit to the appellate court, also asking for an injunction, but the 9th Circuit deferred its decision, pending the result of the Jan. 16 hearing.

Along with losing a business license on the second offense, the law also mandates that more than 140,000 Arizona employers use the federal government's E-Verify program to screen new hires for employment eligibility. At issue, explained Selden, is that the state can't mandate Arizona's businesspeople to use a voluntary federal program.

Judge Wake will be tough to convince, as his view is that the federal and state government are working in concert on E-Verify.

"Arizona's decision to require employers to use E-Verify is an attempt to coordinate state efforts to reduce the hiring of unauthorized aliens through licensing sanctions with a federal government program that has the same goal," wrote Judge Wake.

"It does not stand as an obstacle, but rather an aid to achieving the federal government's purposes and objectives in a realm explicitly left open to the states," he concluded.

In an e-mail sent out to clients late Friday, Selden and his staff outlined some options for businesspeople concerned with how to proceed, especially with E-Verify. Here are the options for Arizona employers:

  • Sign up for E-Verify. Employers can sign up for E-Verify on a location or state basis. They can also provide a 30-day notice to withdraw from the program based on the outcome of the issues underlying the E-Verify program.
  • Don't sign up. Companies can choose to not sign up for E-Verify until the time the company needs to hire someone new after Jan. 1, 2008, because only newly hired employees can be checked using the program. In addition, the preliminary injunction hearing is Jan. 16, so some companies may want to wait until the district court and/or the 9th Circuit Court rules on the constitutionality of the law. It appears that a decision will occur by February. Businesses may also keep in mind that the state attorney general and county attorneys told Judge Wake that they would not enforce the law until February.
  • Use I-9s until the February decision. Some companies may opt to rely on the stronger defense provided by fully completed I-9s and delay a decision to use E-Verify until the court's decision.

Learn more about markets featured in this article: Phoenix, AZ.