Investigating Trump's plan to crack down on foreign labor

Rich Meneghello, BridgeTower Media Newswires

Among the many executive orders signed by President Trump in his first 100 days in office, one in particular stands out as having the potential of changing the way that many businesses in Oregon operate. On April 18, the president signed an executive order directing a full review of the H-1B visa program as part of a continued push to clamp down on companies that hire foreign labor instead of American workers. The centerpiece of this directive – dubbed “Buy American, Hire American” – is a proposal to replace the H-1B lottery with a system that distributes visas on the basis of wages, skills and education.

Many people have been awaiting a revision to the H-1B visa process. However, will this proposal bring the relief that employers have been seeking? Or will it unnecessarily hamper them – especially those in the technology sector – as they try to carry out their normal business?

H-1B 101

For those unfamiliar with H-1B, it is a temporary nonimmigrant visa category that allows employers to petition for highly educated foreign professionals to work in “specialty occupations” that require at least a bachelor’s degree or the equivalent. That means the majority of H-1B workers are college educated, either through U.S. or international universities. Jobs in fields such as mathematics, engineering and technology often qualify, which means that many businesses in Oregon rely on H-1B workers to operate.

The Department of Homeland Security caps the number of H-1B skilled immigrants allowed into the U.S. each year at 65,000, plus 20,000 additional individuals who have received a master’s degree from a U.S. institution of higher education. However, the demand for highly skilled foreign workers far exceeds that cap, and hundreds of thousands of employers spend thousands of dollars annually on filing fees and attorneys’ fees in the hope of having their petitions to sponsor these professionals selected through the H-1B lottery.

For example, U.S. Citizenship and Immigration Services (USCIS) estimated it received nearly 236,000 H-1B visa applications for fiscal year 2017. The number for fiscal year 2018 was released several weeks ago, and the USCIS estimates it received approximately 199,000 petitions. Although this number far exceeds the total allocation of 65,000 general-category H-1B visas and the 20,000 advanced degree exemption H-1B visas, it still represents a 15.7 percent decrease from the previous filing period. It also represents the first time since 2013 that the number didn’t rise. That demonstrates that employers are beginning to rethink their use of foreign skilled labor, most likely because of the administration’s pointed comments about immigration matters.

Through a computer-generated random selection process, the USCIS has already begun sending out receipt notices for cases that have been accepted under the 2018 allocation. In addition to more receipt notices being issued over the weeks ahead, the USCIS will also reject and return all unselected petitions with their filing fees.

Summary of executive order

Last month’s executive order does not mean there will be immediate changes to the H-1B program, but instead requires federal agencies to review the visa program and propose reforms. It’s unclear what kinds of changes this review will lead to. Will the Trump administration decrease the total number of visas or increase prevailing wages for such workers to encourage the hiring of Americans? At this point, it’s anyone’s guess. The announced rationale behind the proposed revision is that such a system would make it more difficult to use the H-1B program to replace American workers with lower-wage foreign workers. However, because the H-1B program already prioritizes highly skilled workers, it is unclear whether the current proposal as outlined would actually solve the issue. As with all such reform, the devil will be in the details, so employers will eagerly await details about the proposed revisions.

Employers should welcome substantive reform of the H-1B visa system. The lottery system is expensive for employers, while at the same time hampering strategic talent management plans – employers are largely uncertain about whether they will be able to employ the workers they need until they learn the results of the lottery.

However, employers should hope that the program is not turned into a bidding war where only the biggest companies can play and win, because that could force smaller companies out of the process. Such a result could unfairly favor Silicon Valley or employers in high-paid areas like New York City, while small to medium employers, such as manufacturers in Oregon that require skilled engineers, could be shut out of the H-1B program.

What to do in the meantime?

The executive order doesn’t set a timeline for when the review of the H-1B program will be completed, and there is no way of knowing when the president will announce specific details regarding his plans for reform. In the meantime, as the review is being conducted, it’s likely that employers will see an increase in investigations of fraud in the near future or heightened scrutiny of petitions.

Therefore, companies should ensure that they are taking steps to make themselves audit-proof. Fending off allegations of fraud requires one to ensure it is maintaining proper public access files that contain information about workers’ wages and how the wage rate was set; update the USCIS on a timely basis with any changes in the H-1B employee’s employment, including significant raises, job duties and location; and train staff for on-site visits and audits.

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Rich Meneghello is a partner in the Portland office of Fisher Phillips, a national firm dedicated to representing employers’ interests in all aspects of workplace law. Contact him at 503-205-8044 or rmeneghello@fisherphillips.com, or follow him on Twitter – @pdxLabor Lawyer.

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