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Good News, Bad News, What "Hire America" Means to the H-1B Visa Program

The H-1B program has long been the subject of criticism. Many have argued that the program has been used to support outsourcing of jobs that could be performed by Americans.

Although it is framed in very general terms, President Trump’s latest Presidential Executive Order on Buy American and Hire American, signed on April 18, 2017, signals that this administration would like to overhaul the H-1B program. The Order directs the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security to “suggest reforms to ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries”, to issue new rules and guidance to “protect the interests of United States workers”, and to “prevent fraud or abuse” of the immigration system.

While it’s too early to tell exactly what new regulations or rules will come of this order, we can hazard a few guesses regarding potential “winners” and “losers” under the “Hire American” effort. Employers who seek to fill highly skilled or highly paid positions with highly qualified foreign candidates are most likely to benefit, since the new regulations will likely provide a higher likelihood that applications for workers in these types of positions will get reviewed in the first place. The biggest losers are likely to be the IT outsourcing outfits (Infosys, Tata Consultancy Services, and Wipro) that have reportedly garnered thousands of H1-B visas to hire individuals from outside the U.S. to work at lower rates than locally-hired individuals in the same positions. Americans with necessary coding skills (what we used to call “programming”) are thus also likely winners since they will have less competition from foreign workers.

While the existing regulations will apply to applications in early April for the upcoming fiscal year, we would not be surprised if those applications are subjected to greater scrutiny than in the past. In fact, the Department of Homeland Security, in advance of the Executive Order, announced on April 3 that, in an effort to prevent the fraudulent use of H-1B visas, agents will investigate: incidents where an employer’s basic business information cannot be validated; businesses that have a high ratio of H-1B employees compared to U.S. workers; and employers petitioning for H-1B workers who work off-site. If this is any indication of the regulations and guidance to come, as directed by the Executive Order, from the various enforcing agencies, employers should determine if DHS’s investigation priorities apply to them, take stock of any employees on H-1B visas, confirm continuing compliance with applicable regulations, and consider whether an employment-based green card application is in order. Finally, companies who may need H-1B visas next year or in future years have no real choice but to keep a close eye on the changes that will likely be coming to the program.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.