ENTERTAINMENT IMMIGRATION: A Questionable Use of H-1B Visas Is Both a Distraction and an Offense

NYSBA Entertainment, Arts and Sports Law Journal

Spring 2016 | Vol. 27 | No. 1


From the New York Times to Breitbart News, the headlines pointed to misfeasance in big corporations regarding high-skilled immigration: Toys ‘R’ Us Brings Temporary Foreign Workers to U.S. to Move Jobs Overseas;¹ Lawyer for Displaced Disney Workers: 1,200 American Workers in N.Y. are Training Their Foreign Replacements;² HP Dumps 30,000 Jobs, But Still Cranking Up H1B Guest-Workers.³

In this installment of entertainment Immigration, we will dissect the events described in these headlines. While neither comprehensive nor high-skilled immigration reform is likely to happen while President Obama is in office,⁴ the topic of immigration reform is here to stay for the foreseeable future. As a result, it is useful to understand how this all works and why these stories are only a small aspect of the problem with the H-1B program.

H-1B Visa Classification

Though there are several sub-classes under H-1B classification, the public discourse surrounding “H-1B visas” is focused on those foreign-born individuals who (1) have Bachelor’s degrees or higher; (2) work in an occupation that typically requires a Bachelor’s degree or higher; and (3) will work in a position that requires a bachelor’s degree or higher.⁵ Those occupations most frequently fall within the technological industries or departments for large corporate entities, and have position titles such as Programmer, Software Engineer, and Analyst (e.g., Systems Analyst, Business Analyst, and the like).⁶

While the majority of the positions within those occupations require a significant amount of skill, there are some instances of positions that fall under those occupational titles requiring less skill but more understanding of mechanical operations. It is from the latter that we find many of our articles about the H-1B visa program.

The Stories

In September 2015, there was a story about Toys ‘R Us firing its U.S. employees, insourcing the fired employees’ replacements from overseas with the H-1B visa program, and making the fired employees train their replacements.⁷ That same month, Breitbart published an article about Hewlett Packard laying off 30,000 employees in the U.S., while having “filed 2668 labor condition applications for H1-B (sic) visa and 815 labor certifications for green card (sic) from fiscal year 2011 to 2014. Hewlett-Packard Company (HP) was ranked 30 among all visa sponsors.”⁸ It is important to note that Breitbart was getting its information from MyVisaJobs.com, a reputable website that compiles the numbers of filings made with the U.S. Department of Labor as they relate to H-1B visa petitions.⁹ Those filings are known as Labor Condition Applications (LCAs), and they are affirmations made by the petitioning employer that the employer will pay the foreign national a wage that is either at or above the prevailing wage rate for an individual working in his or her position, with his or her experience, and in his or her metropolitan area.

In November 2015, Breitbart published another article, in which it referenced an instance whereby Disney laid off 23 of its U.S. workers and replaced them with foreign nationals under H-1B status. One item worth noting is that the headline was based upon this information: “Sara Blackwell, the Florida attorney representing the former Disney workers that were replaced by foreign workers told Breitbart News Daily that there are 1,200 Americans in New York who will suffer the same fate as the Disney workers. ‘Right there in New York, 1,200 Americans are training their replacements’ Blackwell said. Adding that it’s also, ‘happening at AT&T right now.’”¹⁰ I cannot say whether or not Ms. Blackwell’s statement is accurate. A search for any other indication that AT&T laid off 1,200 employees yielded nothing in line with her assertion, and so because of this, we leave it aside and turn back to Toys ‘R Us, HP, and Disney.

How the Foreign Nationals Are Brought Into the U.S.

Method 1

What we do know is that Toys ‘R Us, HP, and Disney each used the H-1B program so as to cut costs. The common thought would be that the transaction occurs like this: Big Company A has 400 employees in the U.S. Big Company A wants to save money. In an effort to do so, Big Company A picks some top earners in the IT, tech or finance divisions of its enterprise, and fires them with upwards of 90 days’ notice. Unbeknownst to those top earners who were just fired, months earlier, Big Company A filed its approved LCAs and H-1B petitions with the U.S. Citizenship and Immigration Service (USCIS). Those petitions were subsequently approved and now those individuals are going to enter the U.S.

Method 2

Another method is that Big Company A has 400 employees in America. Big Company A wants to save money. In an effort to do so, Big Company A picks some top earners in the IT, tech or finance divisions of its enterprise, and fires them with upwards of 90 days’ notice. Unlike Method 1, however, in Method 2, Big Company A contracts with Big Company B to retain new hires. These new hires, however, are frequently less experienced and enter the U.S. under H-1B visa status. Big Company B will be paid the necessary wage rate plus a percentage or flat rate markup. Big Company A will cut its salary expense and, in some cases, will eventually outsource those U.S. positions to the H-1B employee’s home country by having the H-1B employee return home at the end of his or her employment to train his or her colleagues in his or her home country.

This sounds a bit odd and out of line with what we would generally assume was or is the spirit of the law.

If the Visas Are Available, However, What’s the Problem?

Problem 1: The visas are not available…

According to MyVisaJobs.com’s 2016 H1B Visa Reports: Top 100 H1B Visa sponsors, four of the top five sponsors are real Big Company Bs, which filed a combined 71,648 LCAs in fiscal year 2016.¹¹ However, in fiscal year 2016, the maximum number of H-1B visas that were available was 85,000, comprised of an initial 20,000 for Master’s Degree holders, and a remaining 65,000 for all other Master’s Degree holders and Bachelor’s Degree holders.

This means that these entities are pushing the odds in their favor of obtaining these visas by flooding the applicant pool with their own petitions: In 2015, there were 233,000 H-1B petitions filed,¹² a 35% increase from the number of petitions filed in 2014 (172,500), and an 88% increase from the number of petitions filed in 2013 (124,000).¹³ As indicated in the New York Times article referenced above, “In the last five years, federal records show, most of the companies that received the largest share of H-1B visas have been global outsourcing firms, including TCS; Infosys, another large Indian company; Cognizant, which is based in the United States; and Accenture, a consulting operation incorporated in Ireland.”¹⁴

Problem 2: Many talented folks are being kicked out or left out of the U.S…

One consequence of those entities filing so many petitions and receiving the largest share of available H-1B visas is that many foreign-born students or trainees who have spent many months or years in the U.S. are not able to obtain H-1B visas. As a result, those students or trainees will have to rethink their futures in the U.S. and decide between (1) leaving the country, and (2) determining whether there is another visa classification available to them.

This loss of talent is commonly referred to as “brain drain,” and though the U.S. has been and continues to be a magnet for other countries’ great minds, this misuse of the H-1B visa program puts at a disadvantage many individuals who are forced to go elsewhere to study and grow professionally.

Those students and trainees are individuals who have devoted significant time and energy into the American education system, culture, and economy throughout their presence in the U.S. They have also devoted significant time and energy into their communities and relationships. Similarly, a significant amount of time and energy has also been invested in those students and trainees by American educational institutions, organizations, entities, and individuals.

Problem 3: Employers who have petitioned for those foreign-born students and trainees will lose prospective employees…

In addition to the student or trainee losing out on the opportunity to stay and work in the U.S., the prospective H-1B employer loses out on a prospective hire.

In many instances, the student or trainee has worked with the H-1B employer for a period of time prior to seeking H-1B status. It follows then that the H-1B employer has, in many instances, invested time, energy, and money into training, educating, and nurturing the student’s or trainee’s growth.

This amounts to wasted resources, leaving the H-1B employer to try and find another candidate to fill the position. While many have argued that the H-1B employer should be hiring American students and trainees, there are very few American workers who are qualified for these positions, have reasonable expectations, and are interested in growing with the H-1B employer.

When these staffing agencies take away visas from the limited quota of 85,000, they harm other employers who seek to hire individuals for positions with complicated duties that include architects, engineers, and interior designers.

Problem 4: The use of the H-1B visa program by these staffing agencies and consultancy firms is offensive…

The essence of the H-1B visa program is the expansion of the American workforce, while enhancing the competitiveness of American entities and individuals. Replacing American workers with individuals who are less qualified offends the spirit of the H-1B visa program. Additionally, preventing those who contribute to our society from continuing to do so offends the spirit of the program.

Problem 5: Actions like these, when brought to the public’s attention, garner more focus than the larger issues within immigration…

While the actions of these staffing agencies and consultancy firms are problematic and offensive to the spirit of our immigration system, what is worse is the diversion they cause from the more problematic aspects of our immigration system. The topic of these actions consumes the discourse surrounding immigration and immigration reform, thereby stymying any growth that may be made.

Equally frustrating is that there are relatively straight forward and seemingly easy methods by which we can solve the issue of entities using the H-1B visa program in, at best, a questionable manner that ultimately harms the American workforce and American competitiveness.

Possible Solutions to This Issue

Several remedies exist to the problem of using H-1B visas to insource and eventually outsource, thereby displacing workers in the U.S. Here are three: (1) increase the number of available H-1B visas; (2) reevaluate the criteria for H-1B classification; and (3) police the affirmations made by the employers.

The option that is quickest to implement and least harmful to the parties involved is to increase the number of available H-1B visas. This would allow for a better likelihood that more of the students, trainees, and other workers who are to be employed directly with smaller firms would be able to enter or stay within the U.S. This would also provide for more of those smaller employers who seek out the most qualified and best fitting employee, as opposed to the cheapest, to be able to fill their ranks with the individuals they so desire, many of whom they have already trained. Increasing the number of H-1B visas would also allow for these agencies and firms to obtain more H-1B visas, this being the obvious problem with the solution. Therefore, we must look to the next option in addition to increasing the number of H-1B visas.

Reevaluating and revising the criteria for H-1B employers—perhaps to prevent staffing agencies or consultancy firms from using the program—could prove beneficial, but would be more punitive rather than reformative if limited to strictly those agencies or firms. Such a revision could be to prevent employers that have the majority of their employees in the U.S. under H-1B status from fi ling any additional petitions for more H-1B visas. In addition to increasing the number of H-1B visas available and the limitation on the quantity of H-1B visas an employer can have, there would need to be oversight compliance with these changes, as well as the spirit of the visa program.

Policing the affirmations made by employers when they file their LCA with the Department of Labor and file the H-1B petition with the (USCIS) could prove beneficial, but would likely cause smaller H-1B employers to shy away from using the program due to increased scrutiny. However, flagging for further scrutiny the petitions filed by employers who seek to hire hundreds or thousands of individuals under H-1B status would be more likely to strike at the heart of the undesired actions.

Where Do We Go From Here?

The Senate’s Border Security, Economic Opportunity, and Immigration Modernization Act, S.744,¹⁵ would have solved many of these problems. It included provisions for increasing the number of H-1B visas and limiting the number of employees under H-1B status at any one employer. It also created classifications for entrepreneurs.

The Senate Bill increased the maximum number of available visas to 115,000 in the first year of its enactment.¹⁶ Thereafter, it would have also allowed for a “minimum of 115,000 visas and a maximum of 180,000 visas in subsequent years based upon market conditions.”¹⁷

S.744 also “[p]rovide[d] that an employer (other than an educational or research employer) that employs 50 or more employees in the United States may not hire additional H-1B employees if the number of such employees exceeds: (1) 75% of the total number of employees for FY2015, (2) 65% of the total number of employees for FY2016, and (3) 50% of the total number of employees for each subsequent fiscal year.”¹⁸

Although it did not provide for the type of inspection referenced above, it did include a revision of provisions “regarding complaints against H-1B employers [that included]: (1) extending the statute of limitations on complaint investigations to 24 months, (2) increasing fines for specified violations, (3) enhancing whistle-blower protections, and (4) authorizing the Department of Labor to initiate investigations.”¹⁹ Additionally, S.744 created new visas and classes of permanent residency for entrepreneurs and other workers who are not readily categorized under the present immigration system.

Changes as of February 1, 2016

Increased Filing Fees for H-1B Petitions by Certain Employers

President Obama signed into effect the Consolidated Appropriations Act (CAA)²⁰ on December 18, 2015, which requires that employers “who employ 50 or more employees in the United States, with more than 50 percent of those employees in H-1B […] nonimmigrant status,” submit an additional fee of $4,000 if filing (1) an initial petition for H-1B status; or (2) to obtain authorization for a nonimmigrant in H-1B status to change employers, on or after December 18, 2015.²¹ It would seem that the increased fee under this Act is unlikely to deter many of the actors discussed above from engaging in the activities discussed herein. Though $4,000 per petition will add up quickly, it may also be treated as a cost of doing business, and is slight in comparison to the savings made through insourcing and outsourcing. Ultimately, the CAA appears to be more of a money maker for USCIS than a way to reinvigorate the integrity and essence of the H-1B (and L) visa program.

However, when newly enacted laws do not seem to have much practical value to diminish bad acts and Congress has put the brakes on enacting measures that would, in practice, diminish bad acts or offensive behavior, what else can we do but turn to the courts?

Lawsuit Filed Against Disney

In January 2016, two individuals who were laid off by Disney, and presumably as a condition of their severance packages, were required to train their replacements from overseas, filed lawsuits against Disney and consultancy firms HCL and Cognizant. “They claim the companies colluded to break the law by using temporary H-1B visas to bring in immigrant workers, knowing that Americans would be displaced.”²²

Both individuals are seeking class-action status for their matters. Although it is too early to know the merits of the claims or how the court will treat them, these cases will be worth watching, as they present, jointly, what appears to be an issue of first instance before the courts: Whether an insourcing/outsourcing company and a U.S. employer that contracted with that insourcing/outsourcing company “collaborated intentionally to supplant Americans with H-1B workers.”²³

In the End…

Whether either of these cases is meritorious remains to be seen, but in my estimation it is not likely. The amount of wiggle room afforded entities to engage in this type of offensive behavior, thereby tainting the H-1B visa  program, is vast. While it also remains to be seen whether any of these proposed modifications to the H-1B visa program will be passed into law, in the meantime and until we have immigration reform with an eye towards enhancing American competitiveness, it would seem the present acts of Toys ‘R Us, Disney, Tata Consultancy, Infosys, Accenture, HCL, and others will continue unabated.

Endnotes

  1. Julia Preston, Toys ‘R’ Us Brings Temporary Foreign Workers to U.S. to Move Jobs Overseas, N.Y. TIMES, Sept. 30, 2015, at A1 (available at http://www.nytimes.com/2015/09/30/us/toys-r-us-brings-temporary-foreign-workers-to-us-to-move-jobs-overseas.html).
  2. Michelle Fields, Lawyer For Displaced Disney Workers: 1,200 American Workers In N.Y. Are Training Their Foreign Replacements, BREITBART, http://www.breitbart.com/big-government/2015/11/26/lawyer-displaced-disney-workers-1200-american-workers-n-y-training-foreign-replacements/.
  3. Chriss W. Street, HP Dumps 30,000 Jobs, But Still Cranking Up H1B Guest-Workers, http://www.breitbart.com/california/2015/09/16/hp-dumps-30000-jobs-still-cranking-h1b-immigrants/.
  4. Speaker of the House Paul Ryan (R-Wis.) stated in his op-ed piece in USA Today from November 3, 2015 that he will not take up immigration reform with President Obama in office. “The House of Representatives will not vote on comprehensive immigration legislation as long as President Obama is in office,” USA TODAY, (Nov. 3, 2015), available at http://www.usatoday.com/story/opinion/2015/11/03/immigration-reform-house-speaker-paul-ryan-editorials-debates/75107720/?Source=GovD.
  5. U.S. Citizenship & Immigration Service, H-1B Specialty Occupations, DOD Cooperative Research and Development Project Workers, and Fashion Models, available at https://www.uscis.gov/working-united-states/temporary-workers/h-1b-specialty-occupations-dod-cooperative-research-and-development-project-workers-and-fashion-models.
  6. 2016 H1B Visa Report: Top H1B Visa Job Title, available at http://www.myvisajobs.com/Reports/2016-H1B-Visa-Category.aspx?T=JT.
  7. Preston, supra.
  8. Street, supra.
  9. The U.S. Department of Labor requires employers to submit their Labor Condition Applications (LCAs) through its “iCERT Visa Portal System,” available at https://icert.doleta.gov/.
  10. Ms. Blackwell’s statement has not been verified here and that headline does not appear elsewhere. A review of MyVisaJobs.com’s chart reveals that AT&T, through AT&T Services, Inc. (http://www.myvisajobs.com/Visa-Sponsor/Services/50306.htm) and AT&T Mobility Services, LLC (http://www.myvisajobs.com/Visa-Sponsor/Mobility/858616.htm), filed 221 LCAs in FY 2015.
  11. It should be noted that there are other entities listed here with additional agencies and firms: IBM, Deloitte, Ernst & Young, Google, Microsoft, Tech Mahindra (Americas), and Cognizant. 2016 H1B Visa Reports: Top 100 H1B Visa Sponsors, available at http://www.myvisajobs.com/Reports/2016-H1B-Visa-Sponsor.aspx.
  12. Sara Ashley O’Brien, High-skilled visa applications hit record high, CNN MONEY, available at http://money.cnn.com/2015/04/13/technology/h1b-cap-visa/.
  13. Id. 
  14. Preston, supra (emphasis added).
  15. Border Security, Economic Opportunity, and Immigration Modernization Act (as Amended), S. 744, 113th Cong. – 1st Sess., available at https://www.congress.gov/bill/113th-congress/senate-bill/744.
  16. Id. at Sec. 4101.
  17. Id.
  18. Id. at Sec. 4213.
  19. Id. at Sec. 4221.
  20. Consolidated Appropriations Act, 2016 (Pub. L. No. 114-113) (2015).
  21. U.S. Citizenship & Immigration Services, New Law Increases H-1B and L-1 Petition Fees, available at https://www.uscis.gov/news/alerts/new-law-increases-h-1b-and-l-1-petition-fees.
  22. Julia Preston, Suits Claim that Disney Broke Law on Visa Use, N.Y. TIMES, Jan. 26, at A1 (and online as, Lawsuits Claim Disney Colluded to Replace U.S. Workers With Immigrants).
  23. Id.

Article originally written in Entertainment, Arts and Sports Law Journal and is republished here with permission from NYSBA.

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