GAO Reports Fraud and Abuse in H-2B Program

By David North on December 2, 2010

The H-2B program for unskilled non-agricultural migrant workers is one of the nation's many alien worker programs, and one that, according to a recent Government Accountability Office report, is subject to extensive fraud and abuse.

The H-2B program is both smaller than the H-1B program, for high tech workers, and subject to considerably less attention. In terms of visa issuances, one measure of the size of these programs, there were 44,847 H-2B visas issued in FY 2009, compared to 110,367 H-1B visas. These numbers are from the annual Report of the Visa Office at the State Department.

The departments of Labor and Homeland Security are also involved in the program.

Since the H-1B program displaces American workers with college degrees, and depresses wages where the high-tech workers are concentrated, it secures a lot more public attention that the H-2B program, which operates at the other end of the labor market, where employers hire landscapers, forest workers, waiters, and other less-skilled workers.

GAO's report on the troubles with the program are based on a solid foundation; the agency's auditors found ten closed criminal and civil cases in which courts had decided that employers had misused the program and abused their alien workers. The highlights of these cases, as quoted in the report, are as follows:

Hotel owners forced H-2B workers to work in substandard conditions, confiscated workers' passports, and threatened workers that they would be sent home in a ‘box' if they disobeyed orders . . .

Workers from India paid at least $20,000 for H-2B visas to enter the U.S. but were never employed by the construction company . . .

Conspirators fraudulently obtained H-2B certifications from Labor for over 3,800 individuals, leased workers to undisclosed businesses not listed on the visa petitions, [and] defrauded the government of $7.4 million in payroll taxes . . .

By definition, the GAO report was not a random survey of all H-2B operations, but rather a summary of not only bad practices, but those that through the high level of abuse, or through blind luck, wound up in the federal courts. Presumably most H-2B employers simply used the program to lower their wage costs, and to displace U.S. workers – bad enough practices – but managed to do so without violating the not-very strict laws that govern such programs.

The report is one of those rare instances in which an arm of the government actually looks at the downside of one of the nation's multitudinous "guestworker" programs.

It is also one of those GAO reports that sound a little like Sgt. Joe Friday of Dragnet, dealing in colorless terms with "just the facts, ma'am." The GAO, for example, records the punishments handed out to the employers without making any comments.

The penalties, in my eyes, were largely slaps on wrists. In only three of the ten closed cases was anyone sent to jail (one of these related to the hotel owners mentioned above.)

In one instance, a Virginia landscaping company (unnamed by GAO) got off by agreeing to modify its policies and "provide full back pay of $11,173 to a U.S. citizen who was denied a job." Another landscaping company "and labor broker" had to modify its policies and "pay H-2B workers over $20,000."

The most disturbing element in the report consists of the federal benefits that continued to flow to many of the offending firms, despite the court actions.

Here is what happened to a forestry company in Arkansas: "during litigation the company was held in contempt of court three times for intimidating workers who expressed interest in joining the lawsuit ... The company continues to receive active labor certifications from Labor to recruit H-2B workers since the settlement ... the company received over $200,000 from federal contracts during the litigation."

This company also agreed to pay $2.75 million to workers who had been charged illegal fees by the company for obtaining their visas.

Similarly, the employer that made the $11,173 payment to a single displaced U.S. worker has obtained 2,500 H-2B workers since 2007.

Apparently the laws and regulations allow abusive employers to continue to bring in alien workers and to continue to get federal contracts despite their records.

The nation would do just fine without any H-2B program at all; the only "cost" would be that some marginal employers would have to increase their wages a bit to attract workers to their jobs.

If only GAO had some flashy publicists who could let the world know about its findings in cases like this.