House Bill Narrows Loopholes for Heavy H-1B Users

By Roy Maurer Sep 15, 2016

Recently introduced legislation proposes requiring employers to pay H-1B visa holders higher wages, in an attempt to encourage those employers to use American workers instead.

Rep. Darrell Issa, R-Calif., introduced a bipartisan bill that makes changes to the 1998 exemptions created for H-1B dependent employers, which are companies that employ more than 50 people and have 15 percent or more of their workforces on H-1B visas.

"This bill is about protecting American jobs," Issa said. "The high-skilled visa program is critical to ensuring American companies can attract and retain the world's best talent. Unfortunately, in recent years, this important program has become abused and exploited as a loophole for companies to replace American workers with cheaper labor from overseas."

In the 1998 law, Congress required H-1B dependent employers to file attestations that they couldn't find qualified American workers to fill jobs. But lawmakers also created exemptions for these employers to reduce their regulatory burden. Dependent employers do not have to attest nondisplacement if the visa holder has a master's degree or foreign equivalent or earns at least $60,000 annually. Critics of the program say these loopholes are being abused.

"Because master's degrees are often easily obtained by foreign workers and the $60,000 salary requirement was never indexed for inflation or updated, these two exemptions have allowed dependent companies to flood the H-1B lottery with applications and take up a disproportionate amount of the visas," Issa said.

The bill raises the $60,000 salary minimum to $100,000 and includes an inflation adjustment. It also eliminates the master's degree exemption.

The main criticism of the legislation is that it doesn't go far enough. Rep. Zoe Lofgren, D-Calif., who had until recently been working with Issa on an H-1B reform bill, said his proposal wouldn't do a "damn thing" to stop displacement because IT salaries already top $100,000.

Southern California Edison, Southern California's largest electrical utility, came under scrutiny in February 2015 when it laid off hundreds of technology workers after contracting with two H-1B dependent firms, India-based IT service providers Infosys and Tata Consultancy Services.

Ron Hira, an associate professor of public policy at Howard University, testified in front of a Senate committee one month later that the average annual salary of IT employees at Southern California Edison was $110,466, according to the utilities company, while Infosys and Tata pay new H-1B workers on average $65,565 and $70,882, respectively.

"While [the bill] does not go nearly as far as we would like, raising the minimum wage paid by outsourcers will discourage, but not end, the outsourcing of American jobs," said Peter Eckstein, president of the IEEE-USA, an advocacy organization for U.S. technical professionals. "Given salaries in California, it will have very little impact on Silicon Valley. If Congress wants to end outsourcing, they should pass legislation banning the use of H-1B visas to outsource American jobs."

The U.S. tech industry is supporting Issa's bill. Proponents include Compete America, representing a coalition of technology companies, including Google, Intel and Microsoft;, the lobbying effort led by Facebook founder Mark Zuckerberg; and Michael Bloomberg and Rupert Murdoch's Partnership for a New American Economy (NAE), which advocates for comprehensive immigration reform.

"This bill takes an important step toward updating the H-1B visa program to help ensure that companies are hiring foreign talent for their skills and expertise and not for wage reasons," NAE said.

Calvin Moore, communications director for Issa, said the bill could be attached to an omnibus spending package after the presidential election in November, even though it hit a setback when pulled from a committee markup Sept. 14.

There is precedent for this: A law raising fees for companies with more than 50 employees based in the United States and more than 50 percent of workers employed under H-1B or L visa status was included in the 2015 end-of-year omnibus spending bill.


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