How Immigration Changes Have Shaped Recruiting

March 24, 2002

Job uncertainty stalks the nearly 500,000 foreign workers now in the UnitedStates on H-1B temporary visas. As hard-pressed employers juggle pink slips andwage cuts, they’re re-evaluating their fidelity to the H-1B program.

"Utilization of the H-1B visa is certainly down -- we saw that when theydidn’t meet the cap this year," says Jeff Lande, vice president for theInformation Technology Association of America. "But there are still shortfallsin the domestic labor market."

Shortfalls are exactly what the H-1B was designed to address -- securingtalent for hard-to-fill technical positions where U.S. expertise is thin on theground. It’s a visa given to skilled workers qualified in fields where therearen't enough American workers, such as information technology. In recent years,the need for high-tech workers from overseas was so great that the maximumnumber of visas available each year -- 115,000 in 2000 and 107,000 in 2001 --was typically exhausted by June or July. Last year Congress voted to raise thecap to an unprecedented 195,000 visas for 2002; now some legislators are talkingabout slashing it back to 65,000 as early as next year.

But Steven Ladik, president of the American Immigration Lawyers Associationand a shareholder with Jenkens & Gilchrist in Dallas, is optimistic aboutthe program. "As attorneys, we’re not expecting any changes to the H-1Bprogram," says Ladik, whose bar association represents more than 7,500attorneys and law professors who practice and teach immigration law. "Thechair of the Federal Reserve has said that foreign workers are going to helpfill important workforce needs in the coming decade, and the Bush administrationhas tacitly told the Department of Labor that it wants to ensure that H-1Bregulations being promulgated now will be ‘business friendly.’ That’s asign that the administration recognizes that employers need access to the bestand brightest around the world. Once you are in a global economy, you can’tput a wall up and still hope to compete with other international entities."

After the 2001 terrorism attacks, employers wonder about their liability,should any of their H-1B employees be accused of connections to terrorism. "Understandard employment law, if an employee commits a criminal act unrelated to hisjob, an employer is not normally going to be liable," Ladik says. He addedthat none of the terrorists associated with the attacks held H-1B visas.

Ladik does caution employers to take extra care when H-1B staff or prospectsare traveling in or out of the United States. "Make sure they carry the properdocumentation, and that you allow for more time, because people from certaincountries are going to be subject to additional security scrutiny."

He also advises employers to consider how current export laws apply to theirH-1B workers. "Exposing an H-1B visa holder to certain types of technology --such as encryption -- can be considered ‘exporting,’ even if the item isknowledge and not an actual product. Having H-1Bs working in certain researchareas when you do not have an export license could be a violation." Whilethese export laws were in place well before September 11, "now is a good timeto review your vulnerability with your in-house counsel." Export-controlstatutes are voluminous, so enlist an expert eye.

Lande agrees: "In the past, the government has been somewhat loose inenforcing these export controls, but I wouldn’t be surprised to see morestringent enforcement now."

H-1Bs and downsizing
H-1B workers are not authorized to stay in the country if they lose theirjobs. Visa holders may remain in the country for up to six years if they areemployed, but because they are awarded visas to perform specific jobs, once thejob is gone, the visa is gone, too. If they can afford it, visa holders who losetheir jobs are allowed to remain in the United States for a while -- the INS hasno strict requirements on how long -- to search for another employer willing tosponsor a new H-1B visa. But that’s a difficult prospect in today’scontracted IT hiring market.

Handling layoffs and salary cuts worries many H-1B employers. "They areconcerned about who they can let go of, and what their obligations under theprogram are," says Lande. "The answers are pretty straightforward, but forthe past couple of years, managers have been on the other side, trying to hireforeign workers. Companies have had to quickly research all these questions."

Lynn Shotwell, legal counsel and director of government relations for theAmerican Council on International Personnel, says, "The Department of Labordoesn’t offer much guidance on how H-1B workers are to be handled when acompany downsizes. But as a rule of thumb, we emphasize treating everyone fairlyand equally." Sound business practices require putting H-1B and domesticemployees on an equal footing, including selecting employees for separationthrough a system -- merit, seniority, etc. -- that makes no distinctions betweenthe two groups. "American workers shouldn’t be disadvantaged; H-1B workersshouldn’t be exploited. The essence of the H-1B program is a level playingfield."

Shotwell goes on to address some of employers’ often-asked questions aboutdownsizing and H-1B:

Can H-1B employees be terminated before U.S. nationals?
"Yes. The DOL probably wouldn’t have a problem with it, but again, thisis not a sound practice." Singling out H-1B workers -- who are often moreexpensive to employ than domestic professionals -- could raise red flags withthe EEOC, implying national-origin discrimination.
What is the notification process for an H-1B holder separation?
"The DOL has no reporting requirements, but employers should notify theImmigration and Naturalization Service that the person is no longer in theiremploy."
Can H-1B employees take a salary cut to keep their jobs?
"The H-1B program requires that H-1B visa holders be paid at or above theprevailing market wage for their work, and the DOL will look very closely atthis, even with an across-the-board pay cut." It’s conceivable that H-1Bworkers will maintain higher salary levels than domestic workers after a paycut, because the DOL is steadfast about paying market rates. Employers that don’tcould face sanctions and can even be barred from the program for a period.
Can employers find cost-effective hires among laid-off visa holders desperateto remain in the United States?
"Again, the prevailing market wage issue applies. However, most H-1Bworkers were making well above these benchmarks in the recent past whenhigh-tech was booming, so employers may find they can hire them for less thisyear than last. But not less than an American."

What’s in the future for H-1B? Employers that have had to lay off staffshouldn’t be tempted to mothball their H-1B program, Lande advises. "I am asoptimistic as everyone else that we will see an upturn in the economy and in ITspending and R&D. The minute we really start moving into a strong recovery,we will experience the technical labor shortages we had before. Employers willeat up the domestic workforce, and the demand for foreign workers will expandonce more."

Workforce Online, March 2002

The information contained here is intended to provide useful information onthe topic covered, but should not be construed as legal advice or a legalopinion.