Stimulus Package Makes It Harder To Hire H-1B Workers

The provisions are expected to affect new hires, not existing H-1B visa holders in the United States looking to renew their visas.

The $787 billion economic stimulus bill signed into law Tuesday by President Obama will make it more complicated for financial services companies and banks that received federal bailout money to hire foreign workers on H-1B visas.

The new stimulus package contains provisions that for two years deem all companies that received federal funding from the Troubled Asset Recovery Program that was signed into law last year as "H-1B dependent." Till now, "H-1B dependent" has been a category of employers for which H-1B visa holders represent 15% of more of their workforce.

H-1B-dependent companies have additional requirements when hiring H-1B visa workers. For instance, those companies have to attest they've made "good faith" efforts to recruit American workers for positions for which they're seeking H-1B talent, said Elizabeth Espin Stern, an attorney and leader of the global immigration practice of law firm Baker & McKenzie International.

Also, the employers must attest they're offered a minimum of "prevailing wages" during recruitment efforts, haven't displaced a U.S. worker within the 90 days before or after filing an H-1B petition, and have offered the job to an U.S. worker who applied and is equally or better qualified than the H-1B worker.

If those companies attest they've followed the rules but are later audited by the U.S. government and found to have violated the requirements, the employers face possible financial penalties and being banned from participating in the H-1B visa program, said Stern. The provisions are expected to impact new hires, not existing H-1B visa holders in the United States looking to renew their visas, she said.

It's estimated that in the financial services and banking sector, less than 1% of workers have H-1B visas, said Stern. So while the new provisions will make it more burdensome for financial services and banks that have received federal bailouts to hire H-1B visa workers, the new rules themselves aren't likely to make an sizable dent in the overall demand for H-1B visas, said Stern. The United States currently grants petitions for up to 85,000 new H-1B visas annually.

Originally, the H-1B amendments introduced into the stimulus legislation by Sens. Chuck Grassley, R-Iowa, and Bernie Sanders, I-Vt., called for companies that received TARP funding to be barred from hiring H-1B visa workers. However, the provisions that ended up being part of the final bill instead make it more complicated for these companies to hire H-1B visa workers by classifying the employers as H-1B dependent.

Nonetheless, the final provisions signed into law satisfy what the senators are trying to accomplish, said a spokeswoman for Grassley.

"The goal is to make qualified American workers a top priority," she said.

But attorney Stern said the biggest impact on employers will be in making it slower and more arduous to hire hard-to-find expertise. "Many of these financial services, credit card companies use H-1B for specialized IT talent related to risk management, enterprise systems," she said. "Why tie one hand behind their backs" in employing this talent? she said.

Immigration attorney Frida Glucoft of law firm Mitchell Silberberg & Knupp said the biggest impact will be on foreign grad students attending U.S. colleges and universities who are seeking jobs in the United States in the fields of economics, technology, mathematics, and business.

"There will be a brain drain of talent that will go elsewhere," she said. "This is a slippery slope for the U.S."

Not everyone agrees. Donna Conroy, executive director of Bright Future Jobs, an advocacy group pushing for H-1B visa reform, said the new provisions are just a beginning for other changes she hopes will happen.

"This is a political victory," she said. "It's now an issue on the national radar screen."

In fact, more sweeping H-1B and L-1 visa anti-fraud and anti-abuse reform legislation is expected to be reintroduced into the Senate by Grassley and Richard Durbin, D-Ill., said the Grassley spokeswoman, although a specific date has not been determined.

The senators introduced H-1B and L-1 visa reform legislation about two years ago that was to be part of President Bush's comprehensive immigration overhaul effort that failed to move forward in Congress.

In the latest issue of InformationWeek, two dozen industry leaders, from CEOs to CIOs, chimed in with their assessment of the economic stimulus bill and advice for the Obama administration. Download the report here (registration required).

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