To: H-1B/L-1/offshoring e-newsletter 160

Yesterday the USCIS announced its regulations implementing the new
statute, EAWA,  that places some restrictions on H-1B hiring by TARP
bailout fund recipients.  It turns out there is a major loophole.

I'll first explain the problem, and then show why the loophole is not
quite as large as it might seem.  I wish to again state that I believe
that the legislation is very beneficial, both in its own right and as a
marker for further H-1B reform, but I wish that USCIS had not ruled as
it did.

The key passage in the announcement, enclosed below, is

#  EAWA does not apply to H-1B petitions seeking to change the status of a
#  beneficiary already working for the employer in another work-authorized
#  category.

Why is this so important?  Isn't it just a grandfather clause?  Well,
no.

Recall that after EAWA was enacted, the industry lobbyists screamed that
now banks could not hire new foreign-student MBAs.  Of course, that
wasn't true, since EAWA merely requires TARP-recipient employers to give
hiring priority to U.S. citizens and permanent residents (green card
holders); it does not impose a flat ban on foreign workers.  But EAWA is
the type of restriction the banks don't want, as they can hire the
foreign workers more cheaply.

However, the above USCIS ruling, which stems from a clause in EAWA,
means that these banks would still be able to hire those foreign
students WITHOUT recruiting Americans after all.  They can simply hire
the student under OPT (the Optional Practical Training section in the
F-1 student visa), and then move them to H-1B.  Since OPT is "another
work-authorized category," this hire would be exempt from EAWA.

So why were the lobbyists screaming?  One reason may have been that
there was no guarantee that USCIS would interpret EAWA in this manner.
The language in the legislation includes

#  (2) DEFINED    TERM.--In  this subsection, the term ``hire'' means to
#  permit a new employee to commence a period of employment.

USCIS could have ruled that OPT workers don't count as "employees," as
OPT is technically akin to an internship.  The industry lobbyists,
especially the immigration lawyers, usually lobby furiously to get new
laws watered down through lax implementation, i.e. weak regulations.  A
highly educational example is immigration lawyer Jose Latour's blog on
the history of the reg implementing the H-1B dependency law; it's no
longer on his site, but for now you can access it in the Wayback Machine
cache, at

http://web.archive.org/web/20040603180542/http://www.usvisanews.com/memo1192.html

Yet the lobbyists could have failed in this case, so they may have been
worried.

But much more importantly, OPT is not so attractive to employers who
wish to exploit foreign labor, because OPTs have complete freedom of
movement--unlike H-1B.  Though the cheap labor aspect of H-1B is well
known, another point that is very important to employers but not often
mentioned in the H-1B debate is that H-1Bs are de facto indentured
servants, largely immobile.  Technically an H-1B can switch employers,
but since the visas are in short supply, it's quite difficult to do so.

Employers love this "loyalty," as they don't want someone to leave them
in the lurch in the midst of a big project.  I go into this in detail in
my University of Michigan law journal article, but just to give you an
idea of how important this is, here's a quote from
Workforce Magazine, a publication for HR executives, May 1999:

#  ...There are two good things about H-1Bs. First, they allow you to
#  travel the globe while you identify technical professionals who want to
#  work in the United States. Second, the H-1B is valid only for the
#  employer who arranges it. If you bring a technical professional into the
#  country and he or she decides to jump ship, its likely that the ship he
#  or she will have to jump on is the one thats going back to the home
#  country. If the person wants to come back, he or she has to start the
#  immigration process all over again. As a result, most H-1B visa holders
#  demonstrate remarkable loyalty.

The point, then, is that OPT does not provide employers with this
"loyalty," and thus the loophole in EAWA is not as large as it may seem.
But it is definitely there, and will be used.

Norm

http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=34dd9b5d82420210VgnVCM1000004718190aRCRD&vgnextchannel=e7d696cfcd6ff110VgnVCM1000004718190aRCRD

USCIS Announces New Requirements for Hiring H-1B Foreign Workers
Changes Apply to Companies that Receive TARP Funding

WASHINGTON - U.S. Citizenship and Immigration Services (USCIS) today
announced additional requirements for employers, who receive funds
through the Troubled Asset Relief Program or under section 13 of the
Federal Reserve Act (covered funding), before they may hire a foreign
national to work in the H-1B specialty occupation category.

The new "Employ American Workers Act," (EAWA), signed into law by
President Obama as part of the American Recovery and Reinvestment Act
on Feb. 17, 2009, was enacted to ensure that companies receiving
covered funding do not displace U.S. workers. Under this legislation
any company that has received covered funding and seeks to hire new
H-1B workers is considered an "H-1B dependent employer." All H-1B
dependent employers must make additional attestations to the U.S.
Department of Labor (DOL) when filing the Labor Condition Application.

EAWA applies to any Labor Condition Application (LCA) and/or H-1B
petition filed on or after Feb. 17, 2009, involving any employment by a
new employer, including concurrent employment and regardless of whether
the beneficiary is already in H-1B status. The EAWA also applies to new
hires based on a petition approved before Feb. 17, 2009, if the H-1B
employee had not actually commenced employment before that date.

EAWA does not apply to H-1B petitions seeking to change the status of a
beneficiary already working for the employer in another work-authorized
category. It also does not apply to H-1B petitions seeking an extension
of stay for a current employee with the same employer.

USCIS is revising Form I-129, Petition for Nonimmigrant Worker, to
include a question asking whether the petitioner has received covered
funding. USCIS will post this revised form on the USCIS Web site in
time for the next cap subject H-1B filing period that begins on April
l, 2009. While USCIS encourages petitioners, whenever possible, to use
the most up-to-date form, USCIS will not require use of the revised
form in time for the start of the filing period for fiscal year 2010.

However, USCIS urges H-1B petitions who have already prepared packages
for mailing using the previous Form I-129 (January 2009 version) to
complete only the page in the revised version of the Form I-129 (March
2009) which has the new question on EAWA attestation requirements and
to file this single page with the prepared package. The single page
referenced is the first page on the H-1B Data Collection and Filing Fee
Exemption Supplement.

USCIS reminds petitioners that a valid LCA must be on file with DOL at
the time the H-1B petition is filed with USCIS. This means that if the
petitioner indicates on its petition that it is subject to the EAWA,
but the Labor Condition Application does not contain the proper
attestations relating to H-1B dependent employers, USCIS will deny the
H-1B petition.

For more information, please see the accompanying Questions and Answers
document about the Employ American Workers Act and its effect on H-1B
petitions.