I woke up yesterday morning to a rather sensational news item on many Indian news websites. The headline had various versions of the following statement: “Bill targeting H1-B visas reintroduced in US Congress”. I was curious. For someone who considers himself quite well informed concerning legal immigration developments in the US, this was rather surprising. Even my dad called me up to tell me about it making front page news in the morning newspaper in Bangalore! So I decided to dig deeper.
I spent about half an hour on the internet going through the text of the actual bill, looking up meanings of certain unfamiliar terms, finding the specific paragraphs of the original law that this bill proposed to modify and fully understand what was happening. And then I looked up what the Indian main stream media was saying.
Wow! It was just unbelievable! What the Indian media was saying was absolutely nothing in line with what was actually proposed in the bill. They were not just twisting words to imply a different meaning. They were actually reporting completely false information! It is absolutely appalling! Additionally, there was not a single source that gave the correct information on the bill and what it actually stands for.
Which is why I have taken it upon myself to lay out the actual implications of the bill properly here. In the next post, I will summarize what the Indian media is saying and the incorrect information being dispensed will become obvious.
H1B Background and Purpose
The H1B visa is issued for high skilled foreign workers to enter the US and work on jobs for which skilled Americans are unavailable. The intent of the H1B visa is to complement the American workers with skilled foreign workers so that the American economy does not stagnate due to shortage of skilled labor. Typically, when an American company wants to hire a worker, they advertise the posting, receive applications, interview personnel and provide offers. If the worker being sought is a US citizen or a permanent resident, there is no issue and all is good. If the worker being sought is neither a US citizen nor a permanent resident, then the company can still hire the person under the H1B visa program. However, it has to follow some general rules and procedures to do so.
General Requirements/Procedures for H1B Visa
So what are these general rules? These rules are aimed at ensuring that the company is not misusing the visa program to employ low wage workers from outside the country when an equally skilled American worker is available or is being replaced. In summary, the following are what the company has to follow:
- Company must file a Labor Condition Application (LCA) which states the general information about the job such as period of employment, wages, location, and type of job. It should put up this notice at the work place so all workers of the company can see it and lodge complaints if there are any misrepresentation of facts on the LCA.
- At least the prevailing wage for that position in that industry is paid to the H1B worker.
- The H1B worker is not being hired during a union strike or similar situation.
If the company meets the above requirements/procedures, then the H1B will be granted to the foreign worker and he/she can work for the company. (This is of course subject to the lottery system). The key to note in the above 3 items is not what IS mentioned, but what IS NOT. The requirements do not specify that the job MUST be advertised in the US or that Americans must be given first preference during the hiring process.
Additional Requirements/Procedures for Certain Companies
All the above items that are NOT specified have made it fairly easy and simple for American companies to hire foreign workers. They are still required to pay the prevailing wage, so they cannot drastically underpay the foreign workers. However, over time, what has happened is that many companies have employed a large number of foreign workers without making any effort to hire American workers (and are termed ‘H1B Dependent Employer’). Specifically speaking, the H1B Dependent Employer (HDE) companies are those that have more than 15% of their work force under H1B visas. There are also many other companies who have actively abused the visa system’s requirements and have now been officially categorized as a ‘Willful Violator’ (WV).
Now, in order to discourage visa abuses by such companies, and to encourage companies to hire American workers (citizens and permanent residents) first (where available), the H1B visa program has additional requirements that the HDE and WV companies must adhere to prior to hiring a foreign worker under H1B. These are as follows:
- Advertise the job posting in the United States and make a ‘good faith’ effort to hire an American worker.
- If a qualified and eligible American worker is available, then the company cannot actively seek to hire a foreign worker in place of the American worker.
- The company cannot fire an American worker within 90 days before and 90 days after the LCA is made.
- The company cannot hire a foreign worker and post that worker in a location that belongs to a different employer.
Essentially, these requirements are targeted to ensure that there is no abuse of the visa program and that American workers are not discriminated against in favor of lower wage foreign workers. The potential visa abuses in the absence of these requirements are fairly obvious and as such, these requirements were considered necessary. Now keep in mind that these additional requirements are not applicable to all employers – only to those that fall under the HDE and WV categories.
The Exemption Loophole
But….there is always a but……there is a way out of these requirements for the HDE and WV companies. The HDE and WV companies can bypass these additional requirements if they hire a foreign worker who falls under the category of ‘Exempt H1B Non-Immigrant‘. So what does this ”Exempt H1B Non-Immigrant’ (EHN) mean? It’s actually very simple. A foreign worker is an EHN if:
- The worker has a Master’s degree in the field of the US job application for which the H1B is sought, OR
- The company is willing to offer a minimum of $60,000 annual salary to the foreign worker.
That’s it! If a foreign worker has a Master’s degree OR if the company is willing to pay minimum $60,000 per year, then the HDE and WV companies can completely bypass all the extra requirements aimed at containing visa abuse.
The Visa Abuse
To consider an example, a HDE company which has 50% of its workforce as H1B workers can hire another dozen of H1B workers, fire a dozen American workers who were working in the same company previously and replace them with the newly hired H1B workers – all by just paying them $60,000 per year or just because the H1B workers have a Master’s degree. (It is a whole other discussion on how easy it is to get a fake Master’s degree certificate for this purpose!) They could then also ship out the new H1B workers to locations of other employers and do their job for them. These other employers can then fire American workers at their company because now they have these potentially lower wage H1B workers doing the same job.
And if you think this kind of abuse does not happen, you are completely wrong. This is EXACTLY what happened when Cognizant and HCL – both HDE companies – sent their H1B workers to work at a Disney location where Disney had just laid off their American workers. What’s more? The American workers had to train the H1B workers as part of their severance package! Even as an Indian citizen and a holder of H1B visa, I would still say that is extremely unfair to the American workers. And how do you think the HDE companies got away with posting THEIR own H1B employees at some other company’s location? You guessed it right. The ‘Exempt H1B Non-Immigrant’ loophole! All they have to do is pay them $60,000 per year (which would have been significantly lower than what the American workers were making) and voila! You can displace any worker you like!
And the worst was still to come. The subsequent lawsuit that was filed by the fired employees was dismissed on the grounds that the hiring of H1B workers by Cognizant and HCL did not impact the firing of Disney workers because the Disney workers were not working for Cognizant or HCL. That is to say, one company can hire a H1B worker, post them to another company’s location, and the other company can fire an existing American worker – all within full legal means and with absolutely no consequence whatsoever!
Visa Abuse Impacts
What this does is two things. Firstly, it is inherently unfair to existing skilled American workers – citizens and permanent residents. But secondly, and more importantly, this abuse of work visas generates a lot of ill will among Americans and among the lawmakers regarding the utility of the H1B visa program overall. Over time, this ill will and negative perceptions will foster the bigger anti-immigrant rhetoric and discussion (as seen with the statements from incoming President Trump on H1B visas), thus leading to more protectionist measures being adopted that will benefit no one and in fact be detrimental to those who have been following the system the right way.
The New H1B Bill
Now coming to the proposed new bill, it offers the following changes to fix this loophole where HDE companies can bypass their additional requirements by hiring an H1B worker with a Master’s degree or by paying him a minimum salary of $60,000 pa:
- Raise the minimum salary for Exempt H1B worker to $100,000 and index it to inflation.
- Remove the Master’s degree exemption. This means that just because one has a Master’s degree does not make him qualified to be categorized under Exempt H1B worker.
So what this bill proposes to do is to close the loophole by raising the minimum salary for an EHN and by removing the Master’s exemption. Keep in mind that these HDE companies can still continue to hire H1B workers as long as they meet the other requirements. And it is also important to note that this provision does NOT apply to any company that is not on the HDE or WV list. Those companies can continue to hire H1B workers without any additional requirements. It also does not mean that EVERY H1B worker will have to be paid minimum salary of $100,000. (Every H1B worker will, however, be paid the prevailing wage at a minimum – which varies based on location, profession, level, etc). The HDE company will have to pay minimum $100,000 pa salary if they want to bypass the additional requirements listed above. And the bill definitely does not mean that the Master’s degree is mandatory to get an H1B visa!
So after studying this bill in full detail, I have to say that even though I am an Indian citizen who is on an H1B visa in the US, I support this bill. It does cut down a major loophole in the visa program that lets HDE companies to abuse the system. And it pains me to acknowledge that, yes, most of these HDE companies are Indian companies – HCL, Cognizant, Infosys, TCS, Wipro, etc. and get close to 80% of the H1B visas every year.
With regard to the bill itself, I would remind all that this is just introduced. The same bill was introduced last year and was scrapped. So I don’t think it will actually pass this time either, but I hope it does. Because if it passes, then there is going to be a bigger chance of these H1B visas going to those who play by the rules and truly deserve it. And in the long run, visa abuse will reduce thus fostering a positive opinion of this important program among the American people and lawmakers.
In the next post, I will discuss all the incorrect information that the Indian media has been reporting.