The President signed a new executive order titled “Buy American and Hire American” on April 18, 2017, declared in the news media to crack down on fraud in the H-1B visa context.  In reality, the executive order does not make any immediate changes.  Rather, it orders federal agencies touching these professional workers visas, including the Department of Labor, Department of Justice, and Department of Homeland Security, to suggest possible regulatory reforms.  The agencies are asked to propose new federal rules with the aim “to protect the interests of United States workers in the administration of our immigration system, including through the prevention of fraud or abuse.”  More specifically, the order requests proposals for reforms that would “ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.”

Does this affect H-1B petitions filed against the cap in April 2017?

No, the very general order for agencies to make proposals within the next 150 days does not make any concrete changes that will affect H-1B cases in the pipeline already.

What changes are likely to be made?

The targeted agencies (Labor, Homeland Security, and Justice) may propose regulations that would

  • increase penalties for employers found to violate the working conditions attestations required for all H-1B cases, or
  • tighten the definition of H-1B dependent employers subject to greater scrutiny, or
  • replace the random lottery to allot H-1B visas with a system that rewards employers bringing the most highly skilled H-1B employees and/or paying the highest salaries.

The change from random selection to pay-based or U.S. degree-based selection would likely require a change to the law, however, and therefore the cooperation of Congress.  At the very least, these kinds of changes will have to be vetted using notice-and-comment rulemaking, a process that often takes in excess of one year.  In short, let’s talk again in 150 days.  My bet is that nothing will have really changed.

What does the current immigration law say about H-1B wages and working conditions? 

An H-1B employer is required to make a good faith determination that the proposed wage is at least equal to the area prevailing wage for the occupation and the actual wage the employer pays those similarly employed at the work place, whichever is higher.  The employer must attest that the hiring of a foreign worker will not adversely affect the working conditions of other similarly employed workers.  The employer must attest that at the time of filing the labor condition application there is no strike or lockout ongoing.  Every employer, except universities and nonprofit research institutions, filing a new H-1B petition or a first-time H-1B extension must pay, in addition to the normal USCIS filing fee, an additional $1,500.00 fee ($750.00 if fewer than 25 full-time employees). The government will use the fee, in part, to establish training programs for U.S. workers.  An additional $500.00 fraud prevention and detection fee must be paid for H-1B petitions filed for all new employees.  H-1B employers must keep a public inspection file with copies of the posted attestations, actual wage memos, names of H-1B employees, and prevailing wage determinations.

What does the current immigration law say about fraud and abuse of H-1B visas?

In addition to the above requirements that apply to all H-1B employers, additional attestations apply to H-1B dependent employers (for employers with more than 50 employees, this means having 15% or more of the workforce in H-1B status) and to employers who have been found to have willfully violated any of the above first four attestations. These employers make more stringent attestations to the government about their hiring practices.

H-1B dependent employers only must attest as to:

Non-displacement. The H-1B dependent employer attests that during the 90-day period before filing a visa petition and for 90 days after filing a visa petition, the employer did not and will not displace any U.S. workers by hiring an H-1B worker.

Secondary non-displacement. Before placing an H-1B employee with another employer where the worker would function as an employee of the other employer, the H-1B dependent employer must make certain inquiries. It must attest that it has inquired whether the other employer will use H-1B workers to displace U.S. workers whom the other employer had laid off or intends to lay off within 90 days of the placement. The employer must also state it has no knowledge that the other employer has done so or intends to do so.

Recruitment efforts. The H-1B dependent employer must attest that it has taken good faith efforts to recruit U.S. workers and has offered the opening to any U.S. applicant that is equally or better qualified for the job than the H-1B candidate.

Important Exemption: The above attestations are not required of H-1B dependent employers and willful violators if the LCA is filed for an H-1B exempt employee.2 An H-1B exempt employee is one who holds a master’s degree or who will be paid at least $60,000.00 per year.

How are employers in violation of these rules penalized currently? 

If a union or disgruntled employee files a complaint with the Department of Labor, or if Labor receives information from a credible source that leads to an investigation, penalties can be imposed, as follows:

  • Non-willful violations or misrepresentation of material fact: Max $1,000 fine and inability to employ foreign workers for up to one year
  • Willful violation or misrepresentation of material fact: Max $5,000 fine and at least two years inability to employ foreign workers
  • Willful violation resulting in displacement of U.S. workers during 90 day period before and after filing the petition: $35,000 fine and at least three years unable to employ foreign workers