Department of Labor Needs a New Set of Penalties for H-1B Abusers

By David North on October 1, 2018

Reading about an outsourcing company caught seriously cheating at least some of its H-1B workers, it struck me that the penalties imposed were needlessly minimal, probably because the only other penalty theoretically available to the Department of Labor was regarded as too severe to be used in this case, and in many others.

It is as if armed robbery had only two penalties: death or a fine. Few robbers, at least in this day and age, would be executed, meaning virtually all of them would be fined instead. Wouldn't it be a good idea to have — as the courts do now — something in between these two punishments, like jail time?

Well, the U.S. Department of Labor (where, once upon a time I was assistant to the secretary) has created for itself, or Congress has created for it, the equivalent of the death-or-fine situation when it comes to punishing wayward H-1B employers.

Given these arrangements, fines (usually modest) are much, much more likely — too likely — rather than a more reasonable penalty.

Let me describe the situation that caused these thoughts, and then suggest a tougher alternative.

There is an outsourcing company in the news named People Tech Group; it appears to have a number of familiar characteristics:

  • It is in Redmond, Wash.;
  • It has an Indian CEO and probable owner or part-owner, Vishwa Prasad; I don't know if this is typical or not, but according to several comments by workers "he shouts at everyone for no reason", as reported by Glass Door;
  • It is a heavy user of H-1Bs, seeking 1,383 of them in 2017, and probably getting 450 of them (because of the continuing over-subscription of applications), and thus would appear to be a large-scale operator;
  • It apparently farms out workers to other corporations, for a profit;
  • It showed rather stingy salaries for this industry; according to Myvisajobs, the average salaries in 2015 were $69,426, rising to $70,305 the next year, and to $85,961 in 2017;
  • It underpaid some of its workers, giving them bottom-level salaries for more skilled work, and failed to pay others when they were not working for other companies, when they should have been paid, as reported by Quartz India

So what were the penalties incurred by People Tech, whose gross revenue has been estimated, and probably seriously under-estimated, as $9.4 million a year? (This estimate indicates that the firm has all of 44 employees, when it probably got 450 more new H-1B ones in the year 2017 alone.)

The firm, according to the Quartz India report, agreed with DoL to pay back wages to 12 workers of $309,914 and to pay a civil penalty of $45,564.

An additional penalty, which DoL declined to inflict, would have been to add the firm to its tiny little list (10 names on it currently) of disbarred/disqualified employers. One of them has been kicked out of the H-1B program for a year, another for five years, and the rest for a period of two years. If a firm is dependent, as most of these presumably are, on a steady supply of new H-1B workers, and if the workers get the usual three-year visas, after two years (for example) the company would have, without any resignations or retirements from its H-1B workers, been reduced to one third of its H-1B work force, a severe (if probably justified) penalty.

My suggestion is that in addition to forcing the cheating employer to pay back wages and perhaps a civil fine, that the employer should have to reduce its incoming H-1B work force by 10 percent to 50 percent in the year or years following the discovery of the cheating.

Since the granting of labor condition attestations, which allow an employer to enter the H-1B lottery, are made by DoL, it could simply reduce the number of new attestations the cheating employer could get in the future, thus forcing the employer to — heaven forbid! — consider hiring some resident workers to replace the lost H-1Bs.

Since the reduction of LCAs could be a nuanced penalty, rather than the all-or-nothing debarment punishment, it would probably mean that more cheating employers would be penalized in this way.

And DoL could say to the unhappy employer: Hey, all we are doing is forcing you, like virtually all other U.S. employers, to engage with the American labor market, at least a little bit.