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before the




May 25, 2000

Good morning, Mr. Chairman and members of the Subcommittee. I am appearing on behalf of the Administration at today's hearing on the H-1B visa program.

The Administration supports the H-1B program. We need sound and balanced approaches to address the need for additional skilled workers within our economy. Of course, the most important way to increase the availability of skilled workers should be to increase the skills of U.S. workers. Employers should always seek U.S. workers first and train them to be more effective. The President has long been an advocate of improved worker training and enhanced opportunities for American workers. We recognize, however, that U.S. businesses sometimes need access to the international labor market to maintain and enhance their global competitiveness, particularly in high-growth new technology industries and during tight labor markets. Achieving a proper balance between the needs of U.S. workers and those of U.S. businesses has been an important focus of Administration policy.

This background is important in understanding the Administration's ongoing efforts to implement the American Competitiveness and Workforce Improvement Act of 1998 ("the Act"). The Act made significant changes to the H-1B program, imposing new requirements on employers who extensively use H-1B workers. These requirements seek to provide better protection for U.S. workers. We regard these protections as a crucial part of the Act.

The Act requires the Department of Labor to issue regulations to implement these worker protection provisions. On January 5, 1999, just two-and-a-half months after enactment, the Department of Labor published a Notice of Proposed Rulemaking (NPRM) seeking public comment on its implementation proposal. This NPRM did not include regulatory text. My understanding is that the Department received 92 comments, including several that encompassed up to 60 pages and addressed all aspects of the proposed regulation. The commenters included individuals, a union, employee associations, lawyers, businesses, business and trade associations, educational facilities and associations, and U.S. government agencies. They also included submissions from Senator Abraham, who cosponsored the Act in the Senate, Senator Graham, and 23 Members of Congress who joined in a written comment.

The Department took these comments very seriously, analyzing them in detail in light of the legislative history of the Act. Many of the commenters raised complex issues that required a great deal of thought and consideration. For example:

  • The statutory requirements for "H-1B dependent employers" only apply to "nonexempt H-1B workers." An exempt worker is one who either receives wages (including cash bonuses and similar compensation) at an "annual rate" of $60,000 or who has attained a master's or higher degree "or its equivalent." Defining phrases such as "at an annual rate" and "or its equivalent" provoked considerable comment with a variety of definitions suggested. In the proposed rule, the Department had interpreted "at an annual rate" to mean that a worker must actually receive $60,000 each year. Others argued strongly that the statutory language meant that part time workers were "exempt" if their rate of pay, when extrapolated to full time work, would equal $60,000 per year.

  • For the "equivalent" of a masters degree, the Department proposed that only degrees obtained from an accredited educational institution outside the United States could be used. Several trade associations and employers disagreed, voicing a belief that appropriate work experience should also count as equivalent to a master's degree.

  • The Act authorizes the Department to impose "administrative remedies as the Secretary deems appropriate." In the proposed rule, the Department indicated that such remedies could include "make whole relief," that is, relief sufficient to restore affected workers to the position they would have been in given compliance with the law. A number of commenters stated that the authority to seek such relief is beyond the authority granted by the Act.

  • Many commenters expressed concern that the documentation requirements in the proposed rule would create too much of a burden on employers. They pointed to the requirement for employers to document their actual wage systems and their recruiting methods. Some of these documentation requirements apply only to "H1-B dependent employers," while others apply to all employers. Indeed, documentation issues arise as to many provisions of the proposed regulation. Examining where documentation is required in order to achieve the statutory goals is a complicated task.

The Department of Labor has now drafted a suggested interim final regulation entitled, "Labor Condition Applications and Requirements for Employers Using Nonimmigrants on H-1B Visas; Labor Certification Process for Permanent Employment of Aliens -- 29 C.F.R. Part 655 & 29 C.F.R. Part 656." In accordance with Executive Order 12866, the Department submitted its draft to the Office of Information and Regulatory Affairs (OIRA) at OMB for review on January 10, 2000. Under this Executive Order, OIRA must ensure that agency regulatory actions are consistent with the regulatory principles set forth in the Order, and that they do not conflict with other Administration actions or policies.

My staff then began reviewing the draft rule and coordinating a process to solicit interagency views. We received interagency comments and began working with the Department of Labor to resolve issues raised during the comment period.

As described above, the issues raised by commenters are varied and complex. Resolving them properly requires extensive effort and discussion. In accordance with the Executive Order, we extended our review process beyond the initial 90 days referred to in the Order. We continue to work with the Department to complete the process.

Final decisions have not yet been reached on the content of this rule. We are working steadily, but cannot predict precisely how long it will take to complete the review process. Once our review is complete, the Department will finalize the rule package and submit it to the Federal Register for publication.

This concludes my formal testimony.

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