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Monday, June 29, 2009 12:19 PM/EST

When H-1B Visa Holders and the Recession Collide

Whatever your opinion on H-1B visas and foreign workers--and for many, this issue gets under people's skin--please understand this: The law around these temporary worker visas is complex and not without its issues in understanding and enforcement.

A recent CIO Insight article written by an immigration lawyer gives a pretty full picture of what an employer is dealing with, especially as companies are cutting full-time employees who are citizens and H-1B visa holders.

Here's the kind of thing employers, human resources departments and CIOs are dealing with (and a whole lot is more discussed in the article):

Although the H-1B visa allows you to terminate an employee and does not impose any obligation for continued employment, it does impose specific obligations on employers if these workers are terminated early.

• Employers must notify U.S. Citizenship and Immigration Services (USCIS) of the employee's termination and should also withdraw the Labor Condition Application (LCA) that was certified by the Department of Labor as a prerequisite to filing the H-1B petition.

• When an H-1B employee is terminated early, the employer must pay a reasonable cost for transportation to return the employee to his or her last country of residence. Of course, this obligation only applies if the terminated employee actually leaves the United States. It is a good practice to include information about how this will be handled in the H-1B employee's separation package. This allows the employer to establish a uniform mechanism for complying with the requirement and also documents that the offer was made in the event that the employee does not leave the United States upon termination.

Failure to meet either of these obligations can result in a determination that the employer has not effected a bona fide termination. The H-1B program mandates that the employee be paid a required wage rate and provided benefits comparable to those provided to others, so unless and until the H-1B employment relationship terminates, the obligation to pay the employee and provide benefits continues. This issue most commonly arises in the context of a complaint filed with the Department of Labor's Wage and Hour Division, and recent cases have found the employer liable for back wages and benefits where the employer has not notified USCIS of the termination or paid for the employee's transportation abroad.

When dealing with the DOL, we are talking about a plethora of procedures, documentation and legal liability that creates the potential for a ton of confusion and bureaucratic process nightmares.

Just ask Cognizant.

But you can't really blame the DOL for working within the boundaries and constraints that were drawn up in this program.

It's no wonder that there are very few happy proponents of H-1Bs on either side of the equation. Except these guys. Oh, and also these folks.

You don't have to look very far for abuse by employers and workers with H-1Bs. At the end of the day, it has to be difficult to police. That's how some companies are allegedly able to skirt the law for a while. But the feds are starting to catch up.

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Comments (15)

jgo :

So, where are the hinted-at complications? All you mentioned were simple, reasonable matters. For an LCA they fill out a form on the web, and it's either rejected or approved within minutes. No muss, no fuss. They have to merely "attest" that they're good boys, pay "prevailing wage" though not necessarily actual local market prevailing wage and other compensation. Once in a blue moon, DoL or USCIS sends a follow-up message, asking for documentation to support their "attestations". They're not even being charged for background investigations.

For more than a decade, DoL has been asking for congressional authorization to investigate the claims made by sponsor/employers of guest-workers, and it has not been granted.

Congress and their campaign contributors -- executives in business and academe, immigration lawyers -- and NSF know about the huge loop-holes in the statutes; they made sure they were in there.

john :

What is wrong with you Don Sears!!?? Why do you come up with such articles that do not point to any complications or any abuse of system but just stir misinformation? Do you have any point to actually give any solid reasoning as to why H1 is an abuse? When you get a person on H1 here, you sign with LCA. Similarly when you relieve them you sign out with LCA. Whats so absurd about it?
I have seen some of your past articles and it just seems that you might be disgruntled. If you do have any valid point then only point to the flaw in the law. There are other good topics you can put your mind to.
I don't understand why you abuse your power of the internet to provide red neck misinformation...I feel sorry for you.

John :

I remember being in the army in Germany in the 70's. Germany had a "gastarbiter" (guest worker) program which worked fairly well until the 70's recession hit them, and suddenly these guests refused to leave, went on relief, and now 30 years later form the basis for some terrorist cells and gangs. Such programs make a quick profit for a few, and leave everyone else to pick up the long term costs. Better to educate the folks already in your country, and allow slow, careful legal immigration.

Dat :

Well, while Visa's are great tools, I still believe that the employers should do exhaustive searches in the U.S. first. So many do not search for very long in the U.S., thinking a better "bargain" exists outside the U.S., which in most cases, the Visa holder is lower paid or entry level to do work of higher level work.

If employers would just use the resources here in the U.S., we would have a lower unemployment rate and a higher level of employee trust.

There would be little need for H1-B Visa and this problem would more or less disappear.

This article assumes that the H1B is directly hired by the company in question and is not simply working for a contracting company that is simply supplying low cost H1B labor, depressing the prevailing wage rate for all of the non-contract labor. In such a case the contracting company holds the H1B and instead of sending the person home they get benched for a short period until their labor can go to a new client.

So, H1-B workers have MORE protection than US Citizens? No surprises here.

Since I gave up on getting a real job in my technical field, I've often thought of getting a PO Box in India so I would have a better chance of getting a US job.

monica shepard :

The basic issue is money and profits for companies. I have worked in HR and recruiting for large companies for about 20 yrs.

For large and medium companies, H1B workers are mostly working for them as contractors/sub-contractors through small comp/agencies.

From the view of these large companies, contracts are easy way out. Giving about $100 per hour (or nowadays less) would be easier for hire/fire whenever they want and get the job done. They dont give shit as to who fills that order.(h1B or citizens) really. If it were H1B workers, You will be suprised that after their agencies taking their cut, they get only about 50% only. But that still is good amount(80-100k). For citizens/Greencard holders(1099/W2) who are contractors, they are getting huge money. Frankly I have seen very less citizens with experience in some of the new demanding skills in market.Hence this contract business is 70% holded by H1B skilled workers.


A full time employee is just not cost efficient for companies nowadays. Not only is that skill set insufficient, they need to train these employees, adding additional costs with basic perks etc, together with employment contract issues etc for layoffs (Laws, labor unions, laywers ready to sue)...etc. The hiring cost would be 60+40~=$100 along with added risk.

The best and cheapest way is to outsource, so that $100/hr can now be brought with This usally traslates to -- Most work to be sent abroad, except a few High level workers employed in US (H1B and L1 Visa). Usually they prefer to get H1 rather than L1 due to various restrictions with L1. But if we see overall picture, about 50% of all H1 applications (65,000/yr) is taken by these outsourced companies. So their H1 is somehow different. Out of the $40, They are getting about 25$ hr here + their salaries abroad untill the project finishes.
This is not good.

So here is the pref for hiring ->
Outsource > Contractors(citizens/H1B)> Full time.

The main law changes have to be STOP OUTSOURCING.
THAT IS THE KEY. I can bet that Current H1B workers employed in US would be in fact fighting the same as US workers for wages againest L1/H1B/outsourced workers by large outsourcing companies.

announimous :

Why don't we (U.S.) have the similar employment visas as gulf countries (Dubai etc). The passports of employees are held with the employers and it’s their responsibility to deport the employee upon termination of employment. If we have similar rules in play there will be more control.

This should be able to reduce the competition in employment market. Generally, the competition is how low a skilled person in a particular field is able to work. The green card holders or the US citizens have a huge disadvantage as they have families and cannot keep on moving for a job and this increases their cost of living and hence the rate.

There should be healthy competition but you cannot sell oranges for price of apples.

announimous :

It's all compsny bottom line. I've lived this nightmare people like Ballmer are responsible for. The SEC recognizes contract(aka:outsourced) workers pay other than the LIABILITY line. That is an automatic stock price contribution which in turn fattens upper management pockets with HUGE bonuses. Do you really believe Ballmer is seriously looking for the "brightest"? In todays US world that is just another way to say "cheapest". Couple this with throwing money at the politicians and you have the problem with the technology employment picture here. Companies are spending money on "development centers" offshore instead of spending the money on employee education here. I wonder if this contributes to Ballmer's problem looking for the "brightest/cheapest"? Wake up people, hole the upper management of these companies to public scrutiny.

Jon :

H-1B workers pay taxes in the US & spend their wages in the US.

This is a far better situation for US workers than outsourcing which removes the money spent for the foreign workers from the economy.

There are only 65,000 H-1B slots open per year for workers (another 20,000 for advanced degree students).

There are about 30 MILLION Professional and Related category workers, which you think should of against the 85,000 H-1B number since it includes university researchers, etc. or .3% of the total.

If you want to narrowly define professional H-1Bs as being only given to the Computer Specialist category, then your base number of employed is 3.2 MILLION or just around 2% of the total.

The truth is somewhere in between.

The point is, there is by no means a majority of workers being displaced by H-1B workers.

I'd bet that most of the folks who complain about this aren't driving American autos or trucks. Neither do they stay away from buying imported clothes or household goods.

They want value. So do employers.

Workerbee :

The H1-B system is abused it is just a outright scam.

Today talking to my Dad, he had a met a friend he use to work with a few years ago. He had worked up to a position of hiring. He had immigrated from India 20 or so years ago. He does EPA work for Arizona. He told my Dad his goal was to bring 5 people over from India. He ahd got 3 in to do EPA work and he was on his way to the airport to pick-up the 4th person he had brought in from India.

Of course my Niece who has a Environmental degree has been unable to find a job for the last 8 months after sending out dozens of resumes. Tell me again how the H1-B is suppose to work.

WorkerBee

Christian Gross :

>and suddenly these guests refused to leave, went on relief, and now 30 years later form the basis for some terrorist cells and gangs. Such programs make a quick profit for a few, and leave everyone else to pick up the long term costs. Better to educate the folks already in your country, and allow slow, careful legal immigration.

I am glad that there is no garbage being spewed here, phew...

Terrorist cells? Can you please substantiate that? And can you please substantiate the "gangs". Germany does not have a gang problem like that of the US where gangs are entrenched and have become a fashion statement.

The problem with the US is that its immigration system is completely backwards. There is no skilled immigration approach. If you look at countries like Canada, and Australia it is about skilled immigration and it has worked out fine.

http://www.nationmaster.com/graph/imm_imm_pop_imm_as_per_of_sta_pop-immigrant-population-immigrants-percentage-state

The problem is that America has an illegal immigration problem, and that is clouding the legal immigration problem.

jimmy legaro :

Most H1-B workers are mediocre key pushers hired because big companies want to save money and have control over them.
I've seen nasty things in companies concerning H1-B's. It's no vacation being an H1-B worker. The companies heap abuse on them and try to exploit them in any way possible.
I don't support the H1-B program as I believe as a country we should train and hire Americans. It's good for the country.
H1-B's also act as a conduit for outsourcing. No outsourcing could happen without them as Americans are VERY reluctant to train replacements (H1-B's) that will later return to their own country with new training.
With the depression setting in people are realizing that we MUST have good jobs to buy houses, cars and products that all these companies product.

how employer exploits :

1. H-1B employer get an advanced copies of few resignation letter and leave without pay applications signed.
2. If a candidate desrves $100 K per year, application is filed for $45 K. Employer promises 80% of billing. He says that difference will be paid when you are on bench. Mostly do not comply with the promise. Reduces the percentage to be paid to the employee to 60% of billing. Start deducting ficticious expenses, do no pay the money at all. Employer are blessed with power of sponsoring the Visa.
3. Money is not paid at times and on time. Salary slip is NOT sent. If you ask for it means you want to leave. They will stop paying the salary at all.
3. EMployer pays only when he receives that money from middle clients. A meager so the employer that employer pay, that at times come after a lot of request. Employer has power to cancel your VISA. WHy should he exploit it

how employer exploits :

1. H-1B employer get an advanced copies of few resignation letter and leave without pay applications signed.
2. If a candidate desrves $100 K per year, application is filed for $45 K. Employer promises 80% of billing. He says that difference will be paid when you are on bench. Mostly do not comply with the promise. Reduces the percentage to be paid to the employee to 60% of billing. Start deducting ficticious expenses, do no pay the money at all. Employer are blessed with power of sponsoring the Visa.
3. Money is not paid at times and on time. Salary slip is NOT sent. If you ask for it means you want to leave. They will stop paying the salary at all.
3. EMployer pays only when he receives that money from middle clients. A meager so the employer that employer pay, that at times come after a lot of request. Employer has power to cancel your VISA. WHy should he exploit it

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