What Austin tech companies should know about President's H-1B Visa order

Posted on 05/19/2017 by Austin Chamber of Commerce

Disclaimer: Knowledge, statistics, and materials in this story are intended solely for information and are not the opinion of the Austin Chamber of Commerce.

In April, President Trump signed an executive order to review high-skilled H-1B immigration visas. The initiative would impact companies—primarily those in the tech industry—from hiring foreign talent when American talent is not available. The executive order would require the Department of Homeland Security to review the H-1B Visa process and suggest improvement on how the H-1B visa can be limited to the more highly skilled immigrants.

Based on the statutory cap, the U.S. legally admits 85,000 H-1B visas annually, down from 180,000 in the 1990s. Texas ranks second to California on utilizing the most H-1B visa holders who work in high tech, industrial, medical, and science fields. Robert F. Loughran, partner of Foster LLP, provides us with insights on the President’s H-1B Visa order and what it means for Central Texas businesses. A recap of a recent interview is below.

What is an H-1B Visa and why has the President focused on this program?
The H-1B visa is a nonimmigrant visa for which U.S. employers’ petition United States Citizenship and Immigration Services (CIS) to temporarily employ foreign workers in specialty occupations. The recent “Buy American and Hire American” executive order directs the U.S. Secretaries of State, Labor, and Homeland Security, and the Attorney General to suggest reforms to help ensure that H-1B Specialty Occupation Nonimmigrant Visas are awarded to the most-skilled or highest-paid petition beneficiaries. Although President Trump has been inconsistent during his campaign and presidency on his specific opinion of the H-1B program, and his various companies have petitioned for H-1B workers, the Trump Administration highlights its concerns in this order that these visas are being awarded based on the beneficiary meeting a professional qualification threshold rather than H-1B visas being prioritized to the highest-paid or most highly skilled foreign workers.

Will this executive order change H-1B Visa policies?
The executive order calls for rigorous enforcement of immigration laws. The order states the broad policy objectives of the Trump Administration and calls for federal agencies to recommend reforms. However, substantive changes to the law will require Congressional action. Regulatory changes may come through rule-making by the executive branch, but many of the desired changes in the order would likely require Congressional action.

Immigration attorneys have already seen an increase in the rate of requests for further evidence issued by U.S. Citizenship & Immigration Services (CIS). Such requests challenge the nature of the position offered – whether it is a specialty occupation that normally requires a bachelor’s degree or higher– and further questions the individual’s qualification for employment in the specific specialty field. The administration has announced that specific areas of further scrutiny will be H-1B positions for entry-level computer programmers and analysts, as well as staffing companies and foreign workers involved in third party placement. CIS defines third party placement as the usual place of activity at a client site rather than the employer’s premises. This trend is likely to continue as CIS and other agencies move forward in implementation of the new administration’s enforcement-driven policies.

Currently, how are H-1B Visas distributed?
The annual cap on H-1B visas that may be issued is 65,000 for Bachelor’s degree positions and an additional 20,000 for Master’s degree positions. The U.S. Immigration & Nationality Act provides that the H-1B quota numbers are to be allocated in the order in which petitions are filed for such visas. Out of administrative convenience when tens of thousands of petitions in excess of the annual cap are received at the same time six (6) months in advance of the beginning of the fiscal year, current regulations award H-1B visas under the annual quota by random selection, which is referred to as an annual April lottery.

In Austin, who employs the most applicants with H-1B Visas?
According to publically available information from the U.S. Department of Labor, H-1B petitions are most often filed in Austin by staffing, consulting, chip manufacturing, software and related technology companies, as well as by the various universities. Staffing companies for systems analysts filed approximately double the cases in the period searched as the next biggest filing company.

How do these workers contribute to the Central Texas economy?
You may be surprised at the number of companies that utilize the H-1B program, even if only for a single employee who fills a need that the company could not find in the local labor market. Without the ability to fill professional occupations, the ability of these companies to function or continue doing business may be significantly impaired. Tech companies of all sizes may be uniquely faced with the choice of outsourcing key functions when the search of the local workforce results in unfilled positions. Currently if an employer cannot find that particular skilled individual in the U.S. labor market, the H-1B program allows them to hire a foreign national to fill that specialty occupation and enable them to begin or continue to do business in the United States. Companies incur legal and government expenses to petition for that foreign worker, after which employers must comply with all relevant regulations and pay that employee the prevailing wage determined by the U.S. Department of Labor for the position and area of intended employment. The H-1B visa stimulates the local economy compared to outsourced tech jobs as H-1B workers move to the United States, purchase or rent homes, pay state and federal taxes, contribute to Social Security and Medicare, and create the need for additional U.S. support positions.

Employers such as Microsoft and Amazon have coped with a shortage of U.S. and H-1B specialty occupation workers by expanding their offices in Canada.

Is there a reason IT companies are under investigation regarding H-1B Visas?
Certain IT staffing companies have been under specific scrutiny lately and perceived to be violating the spirit of the law when petitioning for thousands of H-1B workers and using third party placement to create a workforce pool to contract out to companies across the United States. The New York Times reported lawsuits against Walt Disney World alleging an abusive arrangement with two global consulting companies, HCL and Cognizant, when Disney allegedly laid off approximately 250 U.S. employees and contracted with these companies to supply their replacements. The lawsuit claims that some of the employees were coerced into training their replacements, petitioned by HCL and Cognizant under the H-1B program and working at Disney as a third party worksite. The Los Angeles Times reported similarly that South California Edison utilized staffing companies to replace U.S. workers with foreign nationals. Similar to the Disney case, those U.S. workers also complained about being required to train the foreign nationals to replace them.

Are there any changes under consideration to the H-1B program that businesses should expect when hiring applicants in the future?
We do not anticipate that Congress will take up this issue before the end of the mid-term elections. Employers should be aware generally of this stricter scrutiny on low-level computer programmers and third party placement. Employers should also anticipate the potential for the Department of Labor audits and should therefore proactively audit their policies and actual practices in recruiting, onboarding, and record-keeping to ensure compliance.

Robert F. Loughran is a Partner of Foster LLP and is Board Certified in Immigration and Nationality Law by the Texas Board of Legal Specialization. He founded Foster’s Global Immigration Section in 1993, founded the firm’s Workforce Compliance Practice Group in 1995, and opened the firm’s Austin Office in 2000. Foster now boasts one of the leading Global Immigration practices in the country, as well as a multi-faceted and complex I-9 compliance practice, in addition to industry leading U.S. immigration expertise. Loughran is admitted to practice before the U.S. District Court Southern District of Texas and the U.S. Court of Appeals (5th Circuit) and is regularly invited to speak and publish on immigration issues.

Related Categories: Public Policy