It’s that time of year again when human resources professionals should be thinking about what positions they plan (or I should say, hope) to fill with foreign national workers in specialty occupations requiring H-1B visas. Now is the time to be extending those offers and preparing applications for filing. In the private sector, which is largely subject to the annual 65,000 visa cap on H-1B visas, the filing season will open up again on April 1, 2013 for jobs that can begin on or after October 1, 2013. This ridiculous timeline is courtesy of Congress that imposed annual cap limitations years ago except on institutions of higher learning, nonprofit or government organizations engaged in research, and private companies with qualifying “affiliations” with the foregoing institutions.

The problem with caps
Every year since the cap dropped to 65,000 (plus 20,000 for individuals with US masters degrees), it has been reached well before the end of the fiscal year. Therefore, every year, employers are stuck with a very narrow timetable in which to file applications. When the economy tanked at its worst in 2008, the cap was still reached, albeit in several months. When the economy was at its best with strong job growth, the 65,000 (+20,000) visas were used up in a day. For example, in Fiscal Year 2013 that began October 1, 2012 and will end September 30, 2013, applications were received starting April 1, 2012 and were used up by June 11, 2012 for jobs that began October 1, 2012! Therefore, anyone wanting to hire an H-1B employee subject to the cap for jobs that are open now will have to wait to file on April 1, 2013 for jobs that cannot begin until October 1, 2013! Rather than Congress changing the program to a market demand based one, employers have to be ready to file on April 1, and cross their fingers. Why?

One must hope and pray the quota doesn’t close early, that there aren’t mass filings on April 1 creating a lottery situation where employers can only rely on luck. In addition, having to wait to put the person to work on or after October 1, 2013, means employers have to predict their work loads now, or applications will be denied if work cannot be guaranteed. Improperly benching an H-1B worker for lack of work can lead to debarment from the program and payment of back wages despite lack of work. This absurd process makes it difficult for employers on fast product development or contractual timelines. Yet, it’s the only game we have to play at this time with this category, and why employers should advocate for legislative change.

Are you an employer new to H-1Bs?

In my many years of experience filing these cases, I have concluded that there are three types of employers. The first group knows about H-1Bs, has searched high and low for qualified US workers, and has not been able to fill positions with enough qualified US workers. When they come across talented foreign nationals, they file for H-1Bs, not because it’s cheap, because it isn’t. Rather, to remain competitive in the industry, employers will hire top talent even though the cost of filing fees, qualifying wages, compliance, and legal fees is significant to the overhead cost of that employee. These employers expect to recoup their costs through the value added by a talented employee and the potential for that employee to create other jobs for US workers, create new inventions or products, or develop new markets for the employer, directly or indirectly.

The second group of employers that I speak with are those without prior experience with H-1Bs, but are open to learning more, and likewise, have not been able to find a qualified US worker. Once the employer understands the process, what is required, confirms the cost to hire is within budget, and the employer determines the foreign national will add value to the company, these employers will test out H-1Bs for one or more employees. If the experience is satisfactory, they may hire additional H-1Bs in the future or limit their use of the program to the occasional situation when they run into a great person who happens to be from another country.

The third group of employers refuse to have anything to do with foreign nationals. Sometimes that is due to ignorance of the law, even if other visa options are available. Sometimes it is pure racial, or nationality bias, in which case, the employer may be bordering on employment or immigration related discrimination or I-9 or E-Verify violations (e.g., using nationality to pre-screen individuals instead of documenting status upon hire). But most of the time, it’s because the employer simply doesn’t want to be involved, can’t afford the process, has found an equally or better qualified US worker, just needs a body to fill a position, even if the US worker is less qualified, or where talent or extensive knowledge isn’t a requirement or concern.

Is it true that employers use H-1Bs to get cheap labor?

I can’t tell you how many times this aspect of the H-1B program is mis-reported in the media, usually quoting the anti-immigrant crowd. The US Department of Labor (DOL) views its primary job as the protection the US workers, not foreign nationals. Therefore, it regulates the wages and working conditions of H-1B workers. The regulations specify that the employer must pay the greater of the wages paid in the occupation at the employer’s work site to US workers performing the same or similar work OR the prevailing wage (the average wage paid to workers in the occupation in the geographic area), whichever wage is higher. As part of the DOL labor condition application (LCA), the employer must document both the actual wage paid to its US workers in the same or similar occupation at the work site(s) AND the prevailing wage. The employer must pay the H-1B worker whichever rate is higher. The employer must also maintain records that it has in fact paid the proper wage in case of DOL audit. The employer must also post the LCA for all employees to see at the work site and create a public inspection file. There is a complaint process. Finally, the foreign national must be given a copy of the LCA, so he or she is aware of what should be paid.

The vast majority of H-1B employers abide by these rules. But, as in every group, there are always a few bad apples that violate the law and make life difficult for everyone else. Some people who oppose the H-1B program argue that the above is all very well and fine, but that employers are mis-characterizing the actual level of the foreign national within an occupation (e.g., entry-level, experienced, mid-level, highly experienced), in order to benefit from lower prevailing wages. Determination of the level of placement for an individual is often debatable, and should be within the realm of the employer to decide in relation to its business activities and work needs. Nonetheless, DOL provides information on how to determine the appropriate level. DOL is ill-equipped to make decisions about an individual employers’ operations, requirements and placements. In addition, employers have the option to request a prevailing wage from DOL as a “safe harbor” in case of any audit. Dealing with these prevailing wage requests is a whole other story for another day. Many would argue that the government should not be meddling in an employer’s decision about where to place jobs in its organization, or how to define job descriptions and requirements.

Don’t employers have to recruit for US citizens first?

I see this mis-reported in the press quite often. No. H-1Bs were intended for US employers to hire employees “quickly” on a temporary basis. If the employer later decides to keep the person permanently, they must recruit for US workers at that time as part of the permanent residence process, called PERM, and they MUST obtain prevailing wage figures from DOL and use that figure for payment of wages. But for H-1Bs, no prior recruitment for US workers is required. However, the reality is that given the excessive cost for H-1Bs, employers aren’t going to sponsor H-1B workers unless the employer cannot find qualified US workers. As I mentioned above, typical employers using the H-1B program have already recruited on their own (without DOL supervision) before deciding to use the program because it is so expensive.

There have been recent proposals in Congress to require a PERM type process for H-1Bs, but most employers predict this will be the end of H-1Bs, and of course will make the process much longer to get any qualified foreign worker ready and able to start working within a short period of being identified and selected for hire. The only employers who do have to do some recruitment are those who have been determined to be “H-1B dependent”. That is, the employer has:
-25 or fewer full-time equivalent employees and at least eight H-1B nonimmigrant workers; or -26 – 50 full-time equivalent employees and at least 13 H-1B nonimmigrant workers; or -51 or more full-time equivalent employees of whom15 percent or more are H-1B nonimmigrant workers.

Dependent and “willful violators” (i.e., those who were previously found to have violated the H-1B rules) must attest that they have:
– not displaced U.S. workers in the employer’s workforce;
– notdisplaced U.S. workers in another employer’s workforce; and – have recruited (and documented the recruitment of) U.S. workers and have sought to hire equally or better qualified U.S. workers than the H-1B non-immigrant(s).

This process sounds complicated. Are there other options?

At this Seattle immigration law firm, we analyze every case individually when we first start talking to an employer. We ask for an in-depth job description, list of minimum requirements to perform the job, the compensation and benefits package, and the job applicant’s detailed resume or CV, academic credentials, verification of past employment, awards and publications, among many other factors that would affect visa eligibility, timing, family member needs, the employer’s long term needs and more. We also like to get to know our employer clients’ businesses to see where the job applicant fits into the entire organization. We look at all potential work visa categories as well as any available through a spouse, whereby the employer’s applicant may benefit from a dependent’s work visa. Just because an employer calls and says “we want to get an H-1B visa for this person”, we look at all potential options to determine the best route, including any viable family, lottery or other immigration programs. We also have to determine if the applicant or employment situation is truly subject to the H-1B cap, as there are several exceptions.

The best advice for employers new to H-1Bs is to get more information from a qualified immigration attorney so that all options can be explored for hiring top talent.