H-1B Visa Reform

Challenges

Demand for H-1B visas has long exceeded the available supply. By government regulation, the number of new H-1B visas that are issued each year is strictly limited to 85,000 (with a few exceptions). Visas are awarded via lottery, with “winners” selected from a pool of approved petitions. Every year since 2004, the annual cap on petitions accepted has been reached within five days.

For years, business leaders have been lobbying for the cap on H-1B visas to be raised. Groups like the Business Roundtable, an association of CEOs of major U.S. companies, have also proposed strategies such as allowing individuals with advanced degrees in science, technology, engineering, and math (STEM) from U.S. universities to immediately qualify for a Permanent Resident Card (green card), allowing them to work and live in the U.S. Research supports their claims that such modifications to the program would benefit U.S. businesses and, by extension, the U.S. economy.¹ So far, they have not succeeded in effecting any change. 

Another obstacle to obtaining an H-1B visa is the high cost. Each H-1B visa costs an employer an estimated $5,000 to $6,000 (including immigration attorney and government fees). The employer must also show they have the money in the bank necessary to pay the H1B employee’s salary for a reasonable period of time.

Recent Developments

Within the past year and a half, as part of an across-the-board tightening of immigration restrictions, the U.S. government has further limited the H-1B visa program in a multitude of ways:

• U.S. Citizenship and Immigration Services (USCIS), which oversees the H-1B visa program, announced it will begin deportation proceedings against H-1B visa holders who apply to change or extend their status if their applications are denied.²
• USCIS announced it may begin rejecting visa petitions it previously approved, without explanation.³
• Challenges to H-1B visa petitions in the form of Requests for Evidence (RFE) increased by 45% from 2016 to 2017.⁴
• Denials of H-1B petitions also increased significantly in 2017. ⁵
• Investigations of companies applying to sponsor visas, such as this year's widely publicized Cisco probe that found the tech giant guilty of H-1B visa fraud, have also become more common.
• "Premium processing," which once enabled visa petitioners to pay an additional fee to find out quickly if their petition was approved or denied, has been suspended.  

Anticipated Changes

Restrictions on the H-1B visa program are only expected to increase, due to government actions such as the following: 

• The Department of Homeland Security (DHS) stated in an August 2018 court filing that it intends to strip H-4 visa holders (spouses of H-1B visa holders) of the right to work by repealing the H-4 EAD rule passed in 2015 to help mitigate the massive backlog of H-1B visa holders awaiting green cards.
• USCIS announced that, in 2018, it will double the number of investigative site visits it conducts in connection with H-1B visa petitions.
• In July 2018, USCIS began allowing adjudicators to deny applications on the basis that “initial evidence” was not submitted, yet provided no guidance to adjudicators on how to apply the new policy.⁶
• In August 2018, USCIS announced that suspension of premium processing of H-1B visa petitions will continue indefinitely.

Effects Seen So Far

Recent and expected changes to U.S. policy on H-1B visas are already having an impact:

• Applications for H-1B visas are steadily decreasing – While 236,000 people applied for the visas for FY 2017, only 199,000 did so for FY 2018, and only 190,098 applications were received for FY 2019.
• Fewer international students are applying to U.S. colleges – While enrollment in U.S. colleges by foreign students consistently increased between 2012 and 2016, it fell by 2% from 2016 to 2017.⁷
• Employers are more reluctant to hire international students – In 2018, the National Association of Colleges and Employers reported that the number of employers they surveyed that said they are willing to hire international students declined by 4.1% since 2017 and 10.8% since 2015.⁸
• More foreign IT professionals are moving to Canada – While the U.S. tightens restrictions on immigration, Canada has announced plans to increase the number of immigrants to whom it awards permanent legal residency.  In 2017, Canada issued 400% more invitations (to apply for residency) in the Federal Skilled Worker (FSW) category of its Express Entry program than in 2016. FSW applications are evaluated based on the ability to become economically established in Canada. A large portion of FSW candidates works in computer-related fields.

What Can Businesses Do?

Partnering with a workforce solutions provider like AgileOne is one way to mitigate the risk posed by the current H-1B climate. As a seasoned managed service provider (MSP), AgileOne follows workforce trends, takes note of clients' pain points, and develops innovative solutions that address both. For as long as we have been in business, we have helped clients find and hire the talent they need − in the face of any challenge. Devising creative solutions to workforce challenges is our specialty. In response to the recent and impending changes to the H-1B visa program, AgileOne marshalled our experts in human resources, legal, supplier management, market research, data analysis, and global business to closely monitor and evaluate the situation, and recommend solutions to challenges before they arise.

Managed service providers excel in helping companies address the challenge of filling niche, highly skilled roles. Such providers use their expertise in sourcing and supplier management to identify qualified candidates for these positions. Their first step, as required by law, is to strive to fill the role with a U.S. citizen. With a vast network of known and valued suppliers and deep knowledge of the market, an MSP partner is well-equipped to undertake this. If the possibility of hiring a foreign worker ultimately makes sense for a company, the MSP will manage the process through a contracted supplier, ensuring it is done correctly, cost-efficiently and with minimal burden to its client.

H-1B Visa Alternatives

Though the H-1B visa is a well-known mechanism for hiring a foreign worker in the U.S., it is not the only one. Following is a partial list of other types of work visas, each with its own unique purpose and requirements.

H-1B

As noted above, there are a few exceptions to the 85,000 annual limit on new H-1B visas. There is no cap on these visas for positions related to, or affiliated with, U.S. government research organizations, many of which are privatized. Institutions of higher education are also exempt from the cap.

E-3

The E-3 visa is strictly for Australian citizens. There is an annual cap on the number of these visas that will be issued, but it has never been met. These visas are issued for two years and can be extended an unlimited number of times.

H-1B1

This visa is issued to residents of Singapore and Chile. Annual caps of 5,400 (Singapore) and 1,400 (Chile) have never been met. H-1B1 visas are valid for one year. Special exceptions to limits on this visa may be made for management consultants, disaster relief workers, physical therapists, and certain other types of workers. Holders of this visa must have a degree related to their position, though experience may substitute for a degree.

F-1 OPT STEM Extension Program

Under this program, students graduating school in the U.S. are granted a one-year period after graduation to stay and work in the U.S. Graduates in STEM fields may be eligible for an additional two years, though this provision is being considered for termination, with a decision to be reached by October 2018.  The application process includes providing detailed information about the activities in which the petitioner will be engaged, as they must be related to a person's education (Optional Practical Training).

J-1

The J1 visa is designed to be used for internship and exchange programs that involve both work and study, and is valid for 18 months. Visa sponsors must monitor the work being done by the visa holder, and only specific organizations are considered qualified to do this. Therefore, to employ a “J1 worker,” companies must partner with one of these organizations. Some J1 visa programs require a two-year home country residency program following the 18-month visa term. This is at least partially based on a master list of skills in greatest demand by country.

L-1

This visa is for inter-company transfers. Sub-types include L-1A for executives and managers, and L-1B for employees with specialized knowledge. A basic requirement is that the visa applicant be employed abroad for twelve continuous months within the previous three years by an organization that has a relationship with the company in the U.S. that will employ him or her.

In some cases, when a company wants to hire a worker who is unable to obtain an H-1B visa, the company may decide it makes sense to employ the individual at an overseas affiliate for a period of time, then bring him or her to the U.S. on an L-1 visa. While abroad, the worker can continue to petition for an H-1B visa.

There are no caps on L-1 visas. The L-1A visa can be held for a total of 7 years. The L-1B visa is valid for three years initially, and can be extended up to a maximum of five years.

TN Visa

Created by the North American Free Trade Agreement (NAFTA), the TN visa is for workers in certain professions, from Mexico and Canada only. There are no caps on the number of TN visas that will be issued each year. Also, there is no maximum period of time for which an individual can hold this visa.

Who is Impacted

Most of the focus in the media has been on how changes to the H1-B visa program will affect or are affecting the tech industry. One in eight tech workers has an H-1B visa, according to estimates from Goldman Sachs.7 In addition to tech companies, organizations with large IT departments across a variety of industries —from finance to entertainment to energy, and beyond — utilize the H1-B visa program to hire talent. The number of companies touched by increased needs for IT talent is only expected to continue growing.

How Organizations Are Impacted

Less Certainty

Under the best of circumstances, workforce planning and budgeting involves uncertainty, and strategizing to mitigate it. Considering the current climate, such planning has never been more difficult for organizations that need specialized, hard-to-find talent. If, as proponents of the H1-B visa program argue, the visas are necessary to secure the required volume of workers with certain skills, the tightening of restrictions on the program may add to the difficulties faced by business leaders. Particularly for the tech sectors, the challenges with a shortage of higher-skill laborers can stagnate overall growth.

In addition, navigating the legal environment of the H1-B visa has long been so complicated that many companies utilize outside counsel or legal resources within their own organizations (both of which are costly) to ensure compliance and bolster their chances of success. With changing regulations comes additional uncertainty around compliance and the best path to take to win coveted visas — which means more resources must be dedicated to the effort.

Increased Scrutiny

As explained in the “Recent Developments” section above, the U.S. government has made it abundantly clear that it is dedicating more resources to auditing applications and conducting site visits, and requesting additional supporting documentation for H1-B visa applications. This means that companies that want to employ foreign nationals in specialty occupations will need to allocate more resources to ensuring their applications for visas for these workers are compliant with all current regulations (even as they change from day to day), obtaining or creating supporting documentation, and preparing for possible site visits and audits. 

Higher Salaries

A presidential executive order tasked leaders of four key departments with suggesting reforms to ensure H-1B visas are given to the "most-skilled or highest paid" petitioners. Even apart from the current administration’s clear focus on reforming the H1-B visa program to encourage organizations to find and hire more American workers, there has long been and continues to be bipartisan support for closing loopholes that allow firms to hire foreign nationals at salaries that are lower than the prevailing wage. Current regulations stipulate that an employer must pay a worker on an H-1B visa at least $60,000 a year. However, because the $60,000 figure was established in the 1990s, it is now a low salary for many of the positions filled by H1-B visa holders. The idea of raising minimum annual salaries for H1-B visa recipients, or giving priority to H1-B visa applications for the highest paying jobs, has been floated by many, including the President and elected representatives on both sides of the aisle. 

Solutions

The future of the H1-B visa remains unclear. But as it takes shape, companies need to create contingency plans to ensure work goes on uninterrupted.  Engaging an MSP affords companies the advantage of having a partner who is tracking and engaged, has their finger on the pulse of this tenuous situation, and provides proven expertise, guidance, and alternative solutions to ensure work is delivered. Supported by our teams of experts focused on H-1B visa worker issues, the MSP brings visibility and strategy, and enables clients to carve the best path forward for their organization. As a tenured provider of services and technology that meets the full spectrum of needs related to acquiring and maintaining a qualified workforce, AgileOne is a valuable ally to companies that need highly skilled workers, including those with specialized IT and other hard-to-find technical skills.  Engaging our supplier community to understand the skill sets and eligibility of their workforce gives us the advantage to know what talent is available.  Ensuring our clients maintain legal compliance when engaging workers is a component of every solution we offer, which makes us a trusted partner to companies operating in highly regulated environments.

H-1B Visa Basics

The H-1B or nonimmigrant visa program for workers in “specialty occupations” has its roots in the Immigration and Nationality Act of 1952. The act established the H-1 temporary worker visa program, which allowed non-immigrant workers of “distinguished merit and ability” to fill temporary positions. Holders of this visa were required to maintain a foreign residence.

The Immigration Act of 1990 divided the H-1 visa into two types: the H-1A (to bring foreign-educated nurses to the U.S. to help remedy a nursing shortage), which was eliminated when the act expired in 1995, and the H-1B, which is still used today — though “used” is an understatement.

The 1990 act established an annual cap on the number of H-1B visas that can be issued, and, in recent years, the number of applications has far exceeded that cap. In fact, demand for these visas is so great that, despite the costly and cumbersome process required to apply for one, in six of the last 10 fiscal years, the cap has been reached within five business days. In 2016, the H1-B program had nearly three times as many applications as there were spots.

The 1990 Immigration Act set forth many of the features of today’s H-1B visa program, including the following:

• A maximum of 85,000 H1-B visas can be issued each year. The annual H1-B visa cap is currently set at 65,000, with an additional 20,000 available for individuals holding Master’s degrees or Doctorates issued by U.S. institutions.
• Eligible workers are no longer described as being of “distinguished merit and ability,” but, rather, of working in a “specialty occupation.” A specialty occupation requires the theoretical and practical application of a body of specialized knowledge and a bachelor's degree or the equivalent in the specific specialty (e.g. sciences, medicine, health care, education, biotechnology, and business specialties, etc.). 
• H-1B visa holders may have dual intent — that is, they may work in the U.S. temporarily, as a nonimmigrant, while also pursuing U.S. Permanent Residence (aka a “Green Card”). In accordance, workers are no longer required to maintain a foreign residence.
• The visa is valid for a maximum of six years. Initially valid for a period of three years, the visa may be renewed once — for an additional three years.
• Before hiring someone on an H1-B visa, an employer must successfully navigate and comply with specific requirements. Employers seeking to hire a foreign national on an H-1B visa must file a Labor Condition Application (LCA) with the Department of Labor (DOL). In this form, they must state that they comply or will comply with certain requirements. They must maintain documentation that supports these statements, and produce it for examination upon request. These requirements include:
  • Paying the H1-B visa holder at least the same wage as other similarly qualified employees doing the same work or the prevailing wage for the job, whichever is higher.
  • Ensuring that the employment of the H1-B visa holder will not adversely affect the working conditions of others similarly employed. 
  • Not employing an H-1B worker where a strike is occurring.
  • Providing notice — to the appropriate bargaining representative, or, if there is no such bargaining representative, to others at the intended place(s) of employment — of the employer’s intent to hire H-1B workers within 30 days of filing the LCA.
  • Employers for whom H-1B workers make up more than 15 percent of the workforce, along with “willful violators” of the H-1B rules must meet additional requirements.

About AgileOne

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Sources

1 Business Roundtable (March 2015). State of Immigration: How the United States Stacks Up in the Global Talent Competition. Retrieved from https://www.businessroundtable.org 

2 Business Roundtable (August 23, 2018). Letter to Department of Homeland Security on Immigration Policies. Retrieved from https://www.businessroundtable.org

3 Ibid

4 Torbati, Yeganeh (September 20, 2017). Trump administration red tape tangles up H-1B visas for skilled foreigners, data shows. Reuters. Retrieved from https://in.reuters.com

5 Anderson, Stuart (July 25, 2018). New Evidence USCIS Policies Increased Denials of H-1B Visas. Forbes. Retrieved from https://www.forbes.com

6 Business Roundtable, Letter

7 National Science Board. Science and Engineering Indicators 2018. Retrieved from https://www.nsf.gov

8 National Association of Colleges and Employers (January 22, 2018). Hiring of International Students Continues Decline. Retrieved from https://www.naceweb.org