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H-1B bill stalls in Congress
by By Stanley Mailman and Stephen Yale-Loehr

Controversial legislation that would temporarily increase the number of certain foreign professional workers in the United States has stalled in Congress. Companies, especially in the high-tech field, argue that they desperately need the temporary workers now, while organized labor and the administration complain that any increase will hurt U.S. workers. It remains to be seen whether a compromise can be reached.

As background, the H-1B temporary worker visa category allows professional foreign nationals to work in the United States in specialty occupations for up to six years. Employers must obtain the approval of both the U.S. Department of Labor (DOL) and the Immigration and Naturalization Service (INS) to hire an H-1B worker. For DOL approval, an employer must attest that: (1) he or she is paying the higher of the "prevailing wage" or "actual wage" for the position; (2) he or she has notified other workers of the intention to employ H-1B workers; (3) there is no strike or lockout at the place of employment; and (4) the H-1B workers will not adversely affect the working conditions of U.S. workers. For INS approval, the employer must show that: (1) the position is a professional position that requires at least a bachelor's degree; and (2) the foreign national is a professional who is qualified for the position.

65,000 professionals are allowed each fiscal year into the United States in the H-1B category. Congress chose the 65,000 number at random in 1990, without regard to actual usage or anticipated need. The 65,000 cap was reached six weeks before the end of the fiscal year in 1997, and five months early this year. Since then businesses have lobbied hard to persuade Congress to raise the cap. Organized labor and some members of Congress and the administration oppose a higher limit for H-1B professionals, fearing that H-1B workers take jobs away from U.S. workers.

The media has portrayed the H-1B controversy as primarily affecting the computer software industry. Indeed, many H-1B professionals do work in the computer industry (about 41% in fiscal year 1996, according to Labor Department data). But a majority of H-1B professionals that year worked in other fields: 20% were physical therapists, 5% were other medical/health professionals, 3% were college and university faculty, 2.5% were registered nurses, 2.4% were accountants/auditors, and 2.3% were foreign physicians. H.R. Rep. No. 105-657, at fn. 9-11 (1998).

The Senate overwhelmingly approved an H-1B bill (S. 1723) in May. The bill would provide additional H-1B numbers over the next few years, and would have included provisions designed to protect U.S. workers by requiring some employers to attest that they did not bypass U.S. workers. Also in May, the House Judiciary Committee approved a bill (H.R. 3736) containing much stricter attestation and enforcement provisions. Since then members of Congress have been attempting to negotiate a compromise acceptable to all sides. They thought they had reached one in late July. Under that compromise, the annual number of H-1B visas available would rise to 115,000 by the year 2001.

The compromise would also impose significant new attestation requirements to protect U.S. workers, but only on "H-1B dependent" employers. The compromise defines "H-1B dependent" as a company that has 50 or more employees, at least 15% of whom are non-exempt H-1B nonimmigrants. H-1B nonimmigrants would be considered "exempt" under the bill if they have a master's degree or equivalent in a related field, or earn at least $60,000 a year.

Thus, over 90% of U.S. employers would not have to worry about the new law, either because (1) they do not employ 50 people,1 (2) H-1B professionals comprise less than 15 percent of their workforce, and/or (3) a sufficient number of their H-1B workers earn more than $60,000 a year or have master's degrees. The key for most companies would be to make sure they do not become an "H-1B dependent" employer.

Employers who are "H-1B dependent" would have to file three new attestations with the INS. First, they would have to attest that they have not laid off and would not lay off any U.S. worker from a job that is "essentially equivalent" to the job offered to the H-1B nonimmigrant. This no-layoff attestation would apply only to U.S. workers directly employed by the employer, not contract workers.

Second, under the "third-party placement" attestation, H-1B dependent employers would have to attest that they would not place an H-1B nonimmigrant at a third-party site unless the employer has asked the operator of that site if it has laid off any U.S. workers or will lay off any U.S. workers in essentially equivalent jobs. The H-1B employer would have to pay a $1,000 fine for each U.S. worker laid off by the third-party employer up to 90 days before or after the H-1B petition was filed. The fine would be imposed on a strict liability basis, even if the H-1B employer had no knowledge of the lay-offs and had made the necessary inquiries.

Third, H-1B dependent employers would have to attest that they have taken good faith steps to recruit U.S. workers for the job offered to the H-1B nonimmigrant. The employer would have to offer the job to U.S. workers who are equally or better qualified than the H-1B professional. Employers could use selection standards normal or customary to the type of job involved to show their good faith recruitment. The compromise would create a new arbitration system administered by the INS to resolve complaints regarding an employer's alleged failure to offer the job to a qualified U.S. worker.

Employers who fail to meet the new law's requirements would face fines between $1,000 and $25,000 and would be barred from using the H-1B program for one to two years, depending on the violation involved. An employer found to have committed a willful violation could be subject to random DOL investigations for up to five years. The compromise bill also provides whistleblower protection for individuals who disclose information about a potential violation or who cooperate in an investigation.

Finally, the compromise bill would impose a fee of at least $250 for each approved H-1B petition filed after October 1, 1998 to fund education and training programs for U.S. workers. The fee would apparently apply to all H-1B petitions, not just those filed by H-1B dependent employers. The bill would forbid employers from requiring an H-1B nonimmigrant from reimbursing or otherwise compensating the employer for this fee. Employers who violated this provision would be subject to a $1,000 fine.

Businesses voice several concerns about the compromise bill. They complain that the new attestation requirements, limited though they are to H-1B dependent employers, are too onerous. For example, they worry that the strict liability feature of third-party placements would penalize many innocent employers who temporarily place their employees elsewhere for an assignment. They also complain that the training fee amounts to a tax, and will not guarantee that U.S. workers actually will eventually fill shortage positions.

The no-layoff attestation could pose problems for some industries whose work or research is by nature temporary. For example, motion picture companies temporarily hire digital animators, computer programmers and others to create special effects. Once the movie is completed, the workers are "laid off" and go to work on another film. Under the no-layoff attestation, a motion picture company that is considered H-1B dependent might be prevented from hiring an H-1B professional to work on the next film.

Or consider a cancer researcher whose job is terminated because she finished her research or was unable to get her grant funding renewed. Under the no-layoff attestation, the company that hired her might be barred from hiring another H-1B researcher for a different project.

Another provision in the compromise bill might hurt certain large companies. The bill states that any group treated as a single employer under sections 414(b), (c), (m) or (o) of the Internal Revenue Code would be treated as a single employer for purposes of determining H-1B dependency. Assume an H-1B dependent company has several divisions in different states. One division's decision in one state to lay off several U.S. workers could prevent another division in a different state from hiring a needed H-1B worker.

Despite these concerns, companies generally supported the compromise, and lobbied to have it enacted before Congress adjourned in early August for a month-long break. They argued that they could not wait until October 1, when the new federal fiscal year begins, to hire more H-1B workers. But House Republican leaders, faced with a White House veto threat and sharp differences in their own ranks, shelved the compromise version of H.R. 3736.

This means that it will be at least September before House and Senate negotiators can attempt to re-craft the bill into a form acceptable to the White House. The White House is reportedly still concerned that the bill does not contain enough protections for U.S. workers or enough training provisions.

Opponents of the current compromise bill are coalescing around a substitute touted by Rep. Mel Watt (D-NC). Rep. Watt's substitute would impose even more attestations than those in the original House bill. The Watt proposal would also increase H-1B visa numbers for just two years, and limit the period of stay for new H-1B professionals to four years.

The current H-1B legislative controversy demonstrates the conflicting goals inherent in our immigration system: trying to keep America's global competitive edge while at the same time not harming U.S. workers. No doubt Congress will eventually enact some compromise, although probably not in time to help U.S. businesses this fiscal year. The test of its success will be to see how well it straddles these issues.


1 About 94% of the 6.6 million companies in the United States have less than 50 employees. U.S. Bureau of the Census, County Business Patterns 1995, at 3 (GPO 1997) (Table 1b: United States-Establishments, Employees, and Payroll, by Industry and Employment-Size Class: 1995).


Stanley Mailman (smailman@compuserve.com) and Steve Yale-Loehr (syl@twmlaw.com) are co-authors of Immigration Law and Procedure, published by Matthew Bender and Co. Inc. (http://www.bender.com). They also write a regular column for the New York Law Journal (http://www.nylj.com), where this article first appeared. Mr. Mailman is counsel to Satterlee Stephens Burke & Burke in New York City. Mr. Yale-Loehr is of counsel at True, Walsh & Miller in Ithaca, New York, and teaches immigration law at Cornell Law School.

Reprinted with permission from the August 25, 1998 issue of the New York Law Journal.