News Analysis: Current State of the H-1B Program
February 13, 2009
Akshat Tewary, Esq.
It is now common knowledge that the U.S. economy is in a
of recession. While theories abound as to the root causes and expected
duration of the current state of economic stagnation, what is clear is
that most businesses have been affected in one way or another.
Employers of H-1B workers are no exception to global trends, and they
too have been negatively affected.
Complicating matters for H-1B employers is that the
downturn and other independent factors have led to changes in
government policies regarding the H-1B program. Various message boards
and the all-too-familiar H-1B rumor mill have generated grave doubt as
to whether the H-1B program itself is in jeopardy. While the H-1B visa
system is continually evolving, we are happy to state that "reports of
its death have been greatly exaggerated." 
For the most part, the actual statutes and regulations
underlying the H-1B program have remained unchanged in the past couple
of years. What has changed is the interpretation and orientation that
various government actors have taken towards the program. This article
seeks to briefly summarize some of the recent trends in the area, and
provides the author’s bottom line assessment of what these trends mean
for H-1B employers and employees.
The year 2007 saw a concerted effort by members of the
Congress to pass comprehensive immigration reform (CIR) legislation.
While various proposals and amendments were considered, no concrete or
substantial immigration legislation resulted from the debates, which
had essentially devolved into bickering between the pro-immigration and
the pro-enforcement (anti-immigration) lobbies. The H-1B program played
a small part in the overall CIR theatrics, and the same proponents and
opponents  of the program continue to make their voices heard to this
day. The Obama administration is expected to renew the push towards CIR
legislation later in 2009 or early 2010 after legislation focused on
the economy has been fully implemented. Since the economy is a
priority, it is unlikely that the H-1B cap will be raised in time for
the impending April 1, 2009 deadline for cases filed under the Fiscal
Year 2010 H-1B Quota.
On February 10, 2009, the Senate passed its version of
American Recovery and Reinvestment Act of 2009, also known as the
economic stimulus plan. The plan has been reconciled between the
Congressional House and Senate, and was signed into law
by President Obama on Tuesday, February 17, 2009. The final version of
the plan includes an amendment by Senators Bernie Sanders (I-Vt.) and
Charles Grassley (R-Iowa) that led to the following provision being
included in the bill:
Sec. 1610. HIRING AMERICAN WORKERS IN
(a) Short Title.--This section may be cited as
American Workers Act''.
(1) IN GENERAL.--Notwithstanding any other
it shall be unlawful for any recipient of funding under title I of the
Emergency Economic Stabilization Act of 2008 (Public Law 110-343) or
section 13 of the Federal Reserve Act (12 U.S.C. 342 et seq.) to hire
any nonimmigrant described in section 101(a)(15)(h)(i)(b) of the
Immigration and Nationality Act (8 U.S.C. 1101(a)(15)(h)(i)(b)) unless
the recipient is in compliance with the requirements for an H-1B
dependent employer (as defined in section 212(n)(3) of such Act (8
U.S.C. 1182(n)(3))), except that the second sentence of section
212(n)(1)(E)(ii) of such Act shall not apply.
(2) DEFINED TERM.--In this subsection, the
to permit a new employee to commence a period of employment.
(c) Sunset Provision.--This section shall be
the 2-year period beginning on the date of the enactment of this Act.
This amendment requires that any company that is a
funding under the Troubled Assets Relief Program (aka TARP) shall be
deemed to be "H-1B dependent" for a period of two years. A list of TARP
recipients includes major financial institutions across the country,
with the highest concentrations situated in New York, California and
Under existing law, a formula comparing the number of
employees with the number of H-1B employees would determine a company’s
H-1B dependency status.  However, under the new law, all TARP recipients
would also be considered H-1B dependent regardless of how many H-1B
employees they have.
"H-1B dependent" employers have the same rights and
obligations as non-dependent H-1B employers, except for certain
additional attestations. At the time of filing a Labor Condition
Application (LCA) for an H-1B employee, a dependent employer must
attest to the fact that there is no displacement of any U.S. workers in
its workforce or a secondary employer’s workforce for a 90 day period
before or after the filing of the H-1B petition. Since most, if not
all, of the TARP recipients are expected to experience layoffs, it will
be difficult for these companies to file H-1B petitions for their
employees and still claim that the H-1B worker is not displacing a U.S.
worker’s position. However, it is arguable that Sec. 1610 would not
apply to third party employers placing their employees at
TARP-recipient companies as independent contractors, as the statutory
language is silent on the issue.
Bottom Line: The TARP
H-1B amendment does not affect the vast majority of H-1B
employees/employers. Meanwhile, more favorable legislative changes in
the H-1B program are still needed. Stakeholders in
the immigration process should continue to impress upon their
Congressional Representatives and Senators the effects that the current
process has on their businesses and lives, and suggest specific changes
that would improve that process.
Office of Fraud
and National Security Report on H-1B
In October 2008, the Office of Fraud Detection and
Security (FDNS), a division of the USCIS, reported on results of a
survey it had undertaken of 246 randomly-selected H-1B cases drawn from
a total population of 96,827 approved, denied, or pending I-129
petitions filed between October 1, 2005 and March 31, 2006. The FDNS
investigators conducted interviews, site visits and reviews of various
databases and public information sources in compiling data for the
Report. Some of the key results of the survey were that, for the
surveyed cases, approximately:
failure to file an LCA covering a beneficiary’s work location,
· 5.6% of
beneficiaries were receiving below the prevailing wage,
· 4% of
cases involved document fraud, and
· 3% of
employers were operating shell businesses.
Opponents of the H-1B program championed the report as
evidence of wide-spread abuse in the program. Other commentators have
pointed out that the report overstepped jurisdictional bounds, and made
exaggerated claims of fraud drawn from an "absurdly small" sample size.
In our view, even if the percentages stated in the report were
accurate, their magnitude hardly warrants the uproar that the report
has generated. Indeed, one might reasonably expect many U.S. businesses
(possibly well in excess of 11%) to be falling short in some area of
their compliance responsibilities under one or more of the numerous
regulatory regimes that might apply to them (such as Sarbanes Oxley,
the Securities and Exchange Act and related state Blue Sky regulations,
ERISA, Fair Labor Standards Act, Family and Medical Leave Act,
environmental regulations, HIPAA and countless others). Since the
issuance of the report, USCIS has indicated that it will pay closer
attention to weed out fraudulent H-1B cases, and indeed there have been
numerous reports of increased random audits and investigations  being conducted by
USCIS-FDNS as well as the Department of Labor. However these audits
have not imposed any additional substantive requirements on employers,
but rather seek to ensure compliance with existing regulations.
Bottom Line: Legitimate and bona
petitions will continue to be approved as there is no hint of a serious
discussion in Congress of undermining the H-1B program itself. In
fact, the H-1B program remains by far the best solution for the vast
majority of professional workers and international students graduating
from American universities to secure long-term employment in the United
States. Employers must continue to abide by their regulatory
responsibilities as usual, with the knowledge that government has begun
to step up compliance efforts. These responsibilities
include, inter alia, paying their H-1B employees
the required wage, filing new LCAs as required, avoiding unpaid
"benching," and maintaining public access file and LCA notification
Higher Levels of Scrutiny Towards
US Citizenship and Immigration Services (USCIS)
The USCIS’s increased focus on certain H-1B employers,
especially smaller companies and IT consulting companies, is not a new
phenomenon by any means.
For instance, back in the 1990’s, what was then known as
Immigration and Naturalization Service (INS) routinely issued Requests
for Evidence (RFEs) and denials for filings by consulting companies,
claiming that the petitioners were actually job shops offering merely
"speculative" rather than credible employment offers to their sponsored
beneficiaries. In Matter of Shanmukam, LIN 99 243
50365 (AAO May 23, 2000), the Administrative Appeals Office roundly
dismissed the USCIS’s theory of "speculative employment," in holding
that "there is no support for the explanation of this concept per se in
either the statute or regulations." The AAO essentially recognized that
the INS had no basis in denying cases filed by consulting companies on
the ostensible basis that they were merely "job shops," as long as the
petitioner would be the actual employer.
After a brief hiatus, the USCIS once again began to
burdensome document requests of this type to consulting companies.
Although the USCIS no longer seems to characterize the petitioner as
offering "speculative employment," the underlying arguments and
documentation requirements follow the same reasoning. Presently, the
document requests appear under the guise of requests to verify the job
duties to be ultimately performed by the beneficiary. USCIS is unduly
skeptical of employers’ attestations as to the actual requirements of
the positions they themselves offer, and is instead doggedly insistent
on the production of corroborating third-party documentation such as
contracts, work-orders and itineraries of placements. This trend has
been more pronounced for filings under the jurisdiction of the
California Service Center, although it has seeped its way to the
Vermont Service Center as well. Thus, while the regulatory requirements
for H-1B positions have remained largely static, the applicable burden
of proof has risen in the past few years.
Bottom Line: Consulting companies are
to avoid filings that might seem "speculative," and forego on any
extensions or transfers unless concrete project details can be
provided. In addition, certain legal precedents and arguments can be
raised to counter the USCIS’s underlying "speculative employment"
Department of State (DOS)
Over the last few years, the Department of State’s
have also increased the standard of proof required for favorable visa
adjudication in the H-1B context. In many cases, the Consular Officers
essentially re-adjudicate visa petitions that have already been
approved by USCIS, in direct contravention of the DOS’s Foreign Affairs
Manual (FAM). This phenomenon has been especially pronounced at the
Chennai Consulate, although it has manifested itself at the other U.S.
consulates in India and around the world as well. Higher levels of
scrutiny are also being applied towards smaller companies, and those
competing in the computer consulting industry. Oftentimes the visa
applicant is provided with a burdensome list of requested documents
under Section 221(g) of the Immigration and Nationality Act.
Decades-old legal precedent holds that the Consular
(COs) have almost unfettered jurisdiction is making their factual
determinations. However COs can often be favorably swayed when
presented with additional factual documentation that directly addresses
their concerns. In addition, a mechanism is in place at the DOS for
review or appeal of a CO’s legal conclusions (as opposed to factual
Bottom Line: Many, if not most
document requests can be favorably resolved if the requested
documentation is provided in sufficient detail (and where such
documentation is unavailable, if its absence is satisfactorily
A Look Ahead
As the new Obama
administration overhauls the executive branch
of the federal government, one of the many highlights is the recent
appointment and confirmation of former Arizona Governor Janet
Napolitano as Secretary of the Department of Homeland Security, and
former New York Senator Hillary Clinton as Secretary of the Department
of State. Both Napolitano and Clinton have been outspoken proponents of
boosting skilled immigration, and have expressed their favor for
increasing the H-1B cap and reducing green card backlogs. While only
Congress can pass reform legislation, it is hoped that these
appointments will lead to much-needed favorable regulatory and policy
changes at DHS and DOS.
Bottom Line: Napolitano’s
appointments may lead to favorable policy changes in the adjudication
and enforcement of the H-1B cases. However, the prior administration
undoubtedly instilled a culture of increased enforcement and denial of
benefits at USCIS and DOS, and any salutary changes one may expect in
that regard from the recent changes will certainly take time to
permeate through an immigration bureaucracy that seems to rival even
Franz Kafka’s Castle. It is therefore hardly
surprising that the first H-1B policy change to occur under the Obama
administration has been the economic stimulus plan’s de facto
ban on H-1B filings by TARP recipients. As numerous commentators have
argued, such restrictionist policies are highly anti-competitive,
inefficient and contrary to the financial best interests of the country.
Quotation, The New Dictionary of Cultural Literacy
(3rd ed. 2002), available at
below for a
discussion on the 2009 economic stimulus plan’s restrictions on H-1B
filings for TARP recipients.
Dick Durbin, Durbin And Grassley Introduce First Bipartisan
H-1B Visa Reform Bill to Protect American Workers, Apr. 2,
& Carl Hulse, Deal Reached in Congress on $789
Billion Stimulus Plan, N.Y. Times, Feb. 11, 2009, at
Street Journal, Participants
in Government Investment Plan, available at
C.F.R. §655.736 294
(2006). An employer is H-1B dependent if the employer (a) has 25 or
fewer full-time equivalent employees who are employed in the U.S., and
employs more than seven H-1B nonimmigrants, (ii) has at least 26 but
not more than 50 full-time equivalent employees who are employed in the
U.S., and employs more than 12 H-1B nonimmigrant; or (iii) has at least
51 full-time equivalent employees who are employed in the U.S., and
employs H-1B nonimmigrants in a number that is equal to at least 15
percent of the number of such full-time equivalent employees. Id.
Dobbs Tonight, CNN, Nov. 10, 2008, available at
Paparelli's Blog, Oct. 30, 2008, available at
& Ted J. Chiappari, Immigration Risks Imperil the New
Government, N.Y.L.J., Oct. 27, 2008, available at
Visa Reform Takes Shape to Address Fraud, Procedural Nightmares,
eWeek.com, Nov. 7, 2008, at
Moira Herbst, Visa Fraud Sparks Arrests Nationwide,
Businessweek Online, February 13, 2009, at
765 F. Supp. 426 (N.D. Ill. 1990); United States ex rel.
Ulrich v. Kellogg, 30 F.2d 984 (D.C. Cir. 1929), cert.
denied, 279 U.S. 868 (1929); Li Hing of Hong Kong,
Inc. v. Levin, 800 F.2d 970 (9th Cir. 1986).
Open-Door Bailout, N.Y. Times, Feb. 10, 2009, available
Last updated: February 19, 2009.
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