June 5th, 2009

H-1B legislation to watch - What it's really about

Posted by Brian Sommer @ 7:46 pm

Categories: Current Affairs, India & Services, Professional Services, Selling Professional Services, Service Providers, Vendor Management, Web/Tech

Tags: Legislation, Worker, Dirk Durbin, DOL, Enforcement Issue, H-1B, Human Resources, Labor Relations, Brian Sommer

Both L-1 and H-1B visa law changes could impact SIs, outsourcers and more

Dick Durbin is one-half of the Durbin-Grassley senatorial duo that is proposing new legislation re: H-1B and L-1 visas. Lately, a number of publications have opined about the latest proposed legislation and its impact on outsourcers. Before I get to that, let’s look at what is on Durbin’s site concerning this legislation:

Some claim that the H-1B program helps to create American jobs, but it is currently being used by some companies to outsource American jobs to foreign countries. Under current law, an outsourcing company can use American workers to train H-1B guest-workers, fire the American workers and outsource the H-1B workers to a foreign country where they will do the same job for a much lower wage. In fact, Indian Commerce Minister Kamal Nath has referred to the H-1B as “the outsourcing visa.”

Employers can legally discriminate against qualified Americans by firing them without cause and recruiting only H-1B guest-workers to replace them. The U.S. Department of Labor (DOL) has said: “H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of a foreign worker.” Some companies that discriminate against American workers are so brazen that their job advertisements say “H-1B visa holders only.” And some companies in the United States have workforces that consist almost entirely of H-1B guest-workers.

To address these problems, the Durbin-Grassley bill would, among other things:

Require all employers who want to hire an H-1B guest-worker to first make a good-faith attempt to recruit a qualified American worker. Employers would be prohibited from using H-1B visa holders to displace qualified American workers.

Prohibit the blatantly discriminatory practice of “H-1B only” ads and prohibit employers from hiring additional H-1B and L-1 guest-workers if more than 50% of their employees are H-1B and L-1 visa holders.

Let’s look at these comments first. As to the points Durbin makes, there are a number of truths within them. Yes, there are companies that have advertised “H-1B only” positions. There have been firms who have sacked U.S. workers to make room for an H-1B worker. And, yes, there are no protections for U.S. workers who are fired to allow an H-1B worker to have the position. Finally, there can be no dispute that firms are moving jobs offshore.

So, what else will this legislation do?

According to Durbin’s web site, the legislation will address a number of enforcement issues:

To address potential fraud, the Durbin-Grassley bill would give the government more authority to conduct employer investigations and streamline the investigative process. For example, the bill would:

- Permit DOL to initiate investigations without a complaint and without the Labor Secretary’s personal authorization;
- Authorize DOL to review H-1B applications for fraud;
- Allow DOL to conduct random audits of any company that uses the H-1B program;
- Require DOL to conduct annual audits of companies who employ large numbers of H-1B workers.

The enforcement issues are certain a concern. Durbin’s site goes into more detail there on the shortcomings the Federal government has in this area. Fairness requires that law & regulations be uniformly enforced. Part of the dust-up today regarding H-1B visas is the public reaction to a few, well publicized instances of abuse. Those parties who pushed the extreme limits of the H-1B and L-1 visa programs have created PR, regulatory, legislative and other problems for systems integrators, software developers and outsourcers to name but a few.

As to the effect this proposed legislation could have on firms, Indian outsourcers are already preparing to lobby their cause before Washington D.C. legislators. Smart outsourcers are already contemplating the changes this legislation will have on their business model (for more on this, see this BusinessWeek piece). But note, the big rub seems to be around the ‘firms with more than 50 employees who have more than 50% of their workers on H-1B visas’. That part of the legislation is really attracting attention.

I would have thought the requirement to use a U.S. worker first and the prohibition of sacking a U.S. worker in lieu of an H-1B worker would have triggered the bigger response. I’m sure these provisions will sell well to U.S. workers/voters particularly in a down economy.

We all need to remember that this is ‘proposed’ not ‘actual’ legislation. Similar proposals by Durbin and Grassley last year did not pass. However, the difference now is that the Federal government has a high profile visa fraud case to prosecute. That case will keep this issue in the public eye and that’s something that will make the lobbyists of outsourcers work a lot harder.

We’ll need to watch this legislation. It could change the playing field for services both in the U.S. and abroad.