Gem Buried in the Spending Bill – Double H-1B Fees for Outsourcing Firms

By David North on December 22, 2015

A nice little gem can be found in the omnibus spending bill signed the other day by the president – a doubling of, and an expansion of, the fees paid by Indian outsourcing companies when they hire either H-1 or L-1 workers.

This counterbalances, to a minor extent, the losses that other immigration-related parts of the same bill have inflicted upon us, as my colleagues John Miano and Dan Cadman have reported.

And comedian Jon Stewart apparently played a role in the H-1B fee story, through his lobbying for the fund that pays for the medical care of first responders who were injured in the 9/11 attacks on New York and the Pentagon. Money from the new fees will be paid into that fund.

Some of the details are still hazy, but the following seems clear:

  • H-1B fees for new workers hired by the outsourcing companies are now to be $4,000 in addition to the routine fees paid by all H-1B employers.
  • Renewals of H-1B visas by these firms will also be charged at the new rate, $4,000; that had not been true in the past and there are at least as many renewals as initial fees.
  • L-1 visas for pretty much the same kind of companies will now cost $4,500 each.
  • The new fee structure will last for ten full years; the previous one was for five years.

Indian outsourcing firms like Tata and Infosys are not named as such in the legislation, but they are included in the category of firms covered by these new fees – "H-1B dependent" firms, so called because that have more than 50 employees (they have thousands) and have 50 percent or more of the staff on H-1B or L-1 visas. Big U.S. firms like Google, Microsoft, and IBM will not pay the increased fees as they are not regarded as H-1B dependent.

All of this is a bit complicated and hardly reported in the American press, with the honorable exception of ComputerWorld, but it was quite thoroughly reported (with some indignation) in the Indian business press, for example here.

Up until September 30 of this year, the extra fee paid by the outsourcing companies for H-1B visas was $2,000. Then the fee disappeared for a while (at a time when few petitions were
being filed) and then was revived in doubled form with the new spending bill.

The decision to use at least part of the fees to support the injured first responders was probably the work of Senator Chuck Schumer (D-N.Y.), who is not exactly a foe of exploitative foreign worker programs.

I say this without inside knowledge, but knowing that Schumer (and his comedian cousin, Amy) had appeared on Jon Stewart's Daily Show, that most of the first responders are from New York, that Schumer is ranking Democrat on the Senate's immigration subcommittee, and that he had engineered a somewhat similar arrangement five years earlier – when Indian outsourcing companies were charged with extra H-1B fees to fund Border Patrol drones, as CIS reported at the time.

Stewart's well-publicized lobbying for the first responders ran into initial GOP opposition on the grounds that there was no identified source for the extra expenditures. Hitting up the outsourcing companies for the costs solved that problem.

These new fees probably will have only a minor effect on the use of H-1B and L-1 aliens – who are routinely hired instead of U.S. workers by these firms. This is because the $4,000 fee comes to only a fraction of the money these firms save each year for every alien worker they hire rather than a resident one.

On the other hand it will probably generate something on the order of $400,000,000 a year (100,000 new or renewed visas x $4,000) from a highly appropriate revenue source. Over ten years that comes to $4 billion.