The U.S. Department of Labor is requiring companies to use a new labor condition application for H-1B visas that appears designed to encourage negative media and other attention against high-tech companies that contract out for services. (Photo By Bill Clark/CQ Roll Call)Getty
On Monday, November 19, 2018, the U.S. Department of Labor (DOL) began requiring employers to use a new H-1B labor condition application (LCA) form designed largely to inflict reputational harm on high tech employers. The use of government forms to compel information from companies to encourage negative media attention or other types of retaliation for contracting out services should concern the business community and the public at large.
The key provision of the new form is to require employers of H-1B professionals to name any companies where an H-1B visa holder will perform work on a contract (i.e., a third-party site with the client/customer name). The purpose of this requirement is clear.
“This revision to the labor condition application is nothing more than an attempt to discourage contracting out for services by U.S. companies whose contractors employ H-1B professionals,” said Vic Goel, managing partner, Goel & Anderson, in an interview.
As a legal matter, the labor condition application is the form used by employers to attest they will abide by U.S. immigration law, particularly providing an H-1B visa holder wages and working conditions that are at least commensurate with U.S workers. The name of the company where services will be performed on a contract is not relevant – except if the administration seeks to discourage businesses from awarding contracts to companies that use H-1B visa holders as part of their workforce by the implicit threat of negative attention in the media, or from outside groups and the federal government.
In addition to increased denials of H-1B petitions, Trump administration officials have focused a number of immigration restrictions against companies that provide information technology (IT) services. These actions have inspired multiple lawsuits. (See here, here and here.) This is the case even though IT services companies are using fewer H-1B visas: “More H-1B visas are going to U.S. technology companies, reflecting the strong demand for high-skilled talent in the U.S. economy . . . The top 7 Indian-based companies received only 8,468 approved H-1B petitions for initial employment in FY 2017, a decline of 43% for these companies since FY 2015,” according a National Foundation for American Policy analysis of USCIS data.
An example of how government information is used to launch media (and other) attacks came in an article in 2017. The article claimed a well-known U.S. technology company “planned to use the controversial [H-1B] visa program to supplement its workforce.” It came to this conclusion by searching through the Department of Labor database and picking out applications that matched the company’s address (the site at which work might be performed).
This line of attack is based on faulty premises. First, all major companies contract out work to focus on core competencies. Donald Trump recently chided France for having a much higher unemployment rate than the United States. A major reason for that is the U.S. economy and its labor laws are far more flexible than in France. Contracting out for IT and other services is, in large part, why U.S. companies are so competitive. Coercing companies will encourage increased hiring of foreign nationals abroad and more contracting for IT services to be performed outside of the U.S. – out of the reach of U.S. labor and immigration authorities.
Second, the demand for information technology skills is high, while the annual number of U.S.-born graduates with such skills is low. At U.S. universities, only about 20% of the full-time graduate students in both computer science and electrical engineering are U.S. students. This is the case even though the unemployment rates in computer-related specialties are incredibly low and pay much better than other fields for recent graduates.
Third, Department of Labor data are unreliable for determining how many professionals work for a particular company or at a particular location. Employers need to file a labor condition application for any area an H-1B visa holder may work, whether or not the individual ever works at that location or even obtains an approved visa to work in the United States. The number of positions DOL certifies for an employer can be 5 to 10 times the number of new H-1B petitions approved for a company.
The administration has made previous attempts to encourage a misleading picture of how many new H-1B visa holders companies employ. Certain USCIS reports list all approved H-1B petitions by employer in a year without providing any context. One company, for example, actually had about 3,200 new H-1B petitions for initial employment approved in FY 2017, but were listed in a USCIS report as having almost 29,000 approved petitions that year – 9 times as many. The reason? Under the USCIS administrative decision Matter of Simeio Solutions, since 2015, employers must file amended petitions if work will take place in a new metropolitan statistical area (MSA). The larger numbers are because of extensions of existing employees and the need to comply with government bureaucracy.
The zeal of the administration’s key opponents of immigration showed in the proposed version of the new labor condition application. To the shock of those who follow labor issues, DOL used the term “secondary employer” on the form to describe the worksite where an H-1B visa holder would perform services.
“Calling someone a secondary employer is nonsense,” according to Lawrence Lorber, who specializes at labor law at Seyfarth Shaw LLP. “It raises a lot of issues in the joint-employer context, which is a major policy issue.”
The National Labor Relations Board has announced it would undertake rulemaking on joint-employer, while Labor Secretary Alexander Acosta has also said that DOL will be changing its joint-employer definition. That made it highly curious, in Lorber’s view, for the Department of Labor to use the term “secondary employer” and to do so in a form change, and without going through the Administrative Procedure Act. (Is Apple a “secondary employer” for the individual who mows the lawn at its headquarters if Apple signs a deal with a contractor to supply it lawn services?)
Lynden Melmed, partner, Berry Appleman & Leiden, notes that in the revised version of the form DOL changed the term from “secondary employer” to “secondary entity.” But other problems remain. “The immigration agencies have historically recognized that there are legitimate reasons why U.S. businesses may not want to disclose private contracts,” said Melmed. “The new disclosure requirement reflects a shift in priorities by the Department of Labor.”
Industry sources say the Department of Labor shift is intended to make companies look bad, incite press or other opposition, and gather information to enact additional immigration restrictions. The new form will complicate the H-1B process and add costs for employers.
Adding the name of a company where work will be performed might lead to filing more labor condition applications – and higher filing costs with U.S. Citizenship and Immigration Services, according to comments submitted to the Department of Labor. A separate requirement in the new form raises other cost issues, since it requires employers to provide documentation for a degree when using exemptions provided under the law for H-1B-dependent employers.
There are also legal issues whether the new information required on the form can be imposed through a form change, rather than rulemaking that legally compels the Department of Labor to propose a regulation, receive public comments and then issue a final rule under the Administrative Procedure Act.
Requiring employers to name the company where work will be performed is unnecessary to enforce immigration law and those in the Trump administration who initiated this requirement would know that to be the case, since they are well-versed in the law.
“The labor condition application ensures that the H-1B professional is being paid at least at the prevailing wage for the particular city and state where he or she is working,” said Bo Cooper, a partner at the Fragomen law firm and former general counsel of the Immigration and Naturalization Service. “With many kinds of professional work, an H-1B professional may need to perform work onsite on the premises of another company. This doesn’t affect the obligations of the employer of the H-1B worker. Knowing the name of the client company adds nothing to DOL’s ability to review or enforce the H-1B employer’s compliance with the law.” (Emphasis added.)
Discord in America has reached a worrying level. In February 2017, a gunman shouted, “Get out of my country” and shot Srinivas Kuchibhotla and another H-1B visa holder (Alok Madasani) at Austins Bar & Grille in Olathe, Kansas. Srinivas Kuchibhotla died and his friend was wounded. (Ian Grillot was shot attempting to disarm the shooter.)
Trying to incite people against foreigners, including their employers and customers, is not a legitimate function of government. Federal officials are playing a dangerous game.