Sens. Grassley and Durbin Propose H-1B and L-1 Program Reforms

By David North on November 23, 2015

Sens. Chuck Grassley (R-Iowa) and Dick Durbin (D-Ill.) have introduced S. 2266, a comprehensive reform bill for the H-1B and L-1 nonimmigrant worker programs. It would, if enacted as now written, eliminate or narrow the abuses of these programs and probably open up some jobs for U.S. workers.

The bill, however, neither terminates the programs nor reduces the numerical ceilings, as one might wish.

Perhaps the most useful role of the bill is to put employers into a defensive posture so that the conversation is less about expanding the number of H-1B visas and more about the continuing abuses in the two foreign worker programs.

The H-1B program is for highly skilled, nonimmigrant workers (most often in the IT industry) and it currently has annual ceilings of 20,000 for workers with advanced degrees from U.S. educational institutions and 65,000 for all others. The L-1 program is for multi-national companies and allows them, without numerical limits, to transfer professional workers from their overseas units to their U.S. operations. There are some minimal labor standards in the H-1B program currently, and none in the L-1 program.

S. 2266, the H-1B and L-1 Visa Reform Act of 2015, is a 58-page document full of details and references to the existing law.

This is the first of three postings on the bill, and will provide an overview of the proposed changes in the H-1B program. The second will deal with the proposed re-allocation of the 65,000 visas, and the third with the L-1 provisions.

H1-B Program Changes. In general terms, the proposed changes in the H-1B program will narrow the number of employers who can use the program, lift salaries for many aliens hired through it, make the program more expensive than it is now for employers, and seriously buttress the Labor Department's power to regulate the program. It will also make it more transparent and will require the collection and publication of statistics on the program, data that is now secret. Further, as we will discuss in the near future, it will replace the current lottery for the 65,000 visas with a nuanced ladder of priorities, placing only the least attractive jobs, if there is an application overage, into a lottery or some other allocation system to be worked out by the Department of Homeland Security.

My guess — and not everyone familiar with the bill agrees — is that the overall impact of the reforms (assuming that they are not watered down on the Hill) will be less use of this program (as well as of the L-1 program), thus opening up more jobs for resident workers, both citizens and green card holders.

Perhaps the most useful provision (and the one most in danger of being gutted in the lawmaking process) is up front, in section 102 of the bill; it would eliminate from the program employers with 50 or more workers if 50 percent or more of their workers are H-1Bs and L-1s. This would force the Indian outsourcing companies (Infosys, Tata, et al.) to drop out of the rent-a-computer-consultant business or to go on a hiring spree favoring resident workers. Either scenario would be a blessing for resident programmers.

Professor Norm Matloff of UC-Davis, one of the nation's leading experts on, and critics of, the H-1B program, writes that the provision would simply cause the transfer of the rent-an-alien consultant business to U.S. firms like IBM or Cognizant that already have a partially American workforce. Another way around the bill is to hire more OPT workers. A third way, for a firm now contracted with Infosys, for example, would be for the firm to hire, as H-1Bs, the outsourcing company's workers now in their offices as rented consultants.

Nevertheless, I sense that, because of all of these re-arrangements and the resulting insecurities involved for U.S. firms, some to many Americans would be hired to do the work formerly done by the outsourcing companies' H-1Bs.

The proposed bill also would increase the cost of hiring H-1Bs in at least two different ways, both of which would encourage employers to look to the resident workforce. There will be a new fee to be paid to the U.S. Department of Labor (DoL), to fund H-1B enforcement activities, and there will be provisions in the ladder of priorities that allow employers to hire a person of their choosing, if only they agree to pay that worker in the upper half of the DoL's pay scale.

The provision for 200 new DoL workers to investigate H-1B matters should make it more likely that bottom-of-the-barrel H-1B users will be found out, and some of them bounced from the program.

Another indirect benefit of the proposed program is the collection of data on the nation of origin and gender of the H-1 workers tied to a given employer. This would show, in many cases, a remarkable fondness for young, male, Indian workers; some companies would get in trouble because of these current biases, and presumably have to hire some people who do not fit that profile.

The current proposal is loaded with obvious and not-so-obvious provisions designed to create incentives for employers to hire resident workers (and/or the more expensive of the alien workers) and, if left intact despite the legions of lobbyists, should redound to the benefit of Americans with similar skills.

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Read Part 3