Yet Another Visa Class Is Being Misused: E-2 Investors

By David North on April 27, 2014

There is yet another visa class that is being used to mistreat alien workers and to take jobs from Americans — this time it is the Treaty Investors (E-2) category.

How can an alien granted treaty investor status by our diplomats — that sounds pretty prosperous — be exploited in a blue-collar job? We will get to that bit of black magic in a moment.

Despite the word "investor", this is not one of the cases we see so often in EB-5 (employment-based, fifth grouping), in which lots of rich aliens are losing money to DHS-approved middlemen, as reported, for example, in this blog on the multi-million dollar EB-5 scandal in Chicago.

No, this is a different kind of problem, and it is all based on the State Department's lax administration of the treaty investor program, a non-immigrant arrangement in which aliens with some money are granted visas to come to the United States to run a business. All this is in keeping with a batch of treaties we have signed, for better or for worse, with many other nations.

Naturally there are subclasses in the program — there always are — and we need not pay attention, today at least, to E-1 and E-3. The former consists of treaty traders, nonimmigrants who come to buy and sell in the United States; the latter is for Australians in an H-1B-like program.

In contrast to these upper-middle class operations, some E-2 workers are treated like slaves. According to federal court documents, they are worked long hours, kept in miserable housing, exploited mercilessly, and are threatened with deportation if they object.

Meet the E-2 welders (mostly from the Philippines) working for Grand Isle Shipyard, some 60 miles south of New Orleans on the swampy shores of the Gulf of Mexico. GIS is a $100 million-a-year or so construction services company specializing in Gulf oil rigs.

According to one TV news account, GIS's Filipino workers "say they were lured here by lies, and they are instead treated like slaves. Promised salaries of $20 an hour, when their paychecks arrived they broke down to a mere fraction of that, sometimes little more than $3 an hour."

Given this situation, some of the E-2 workers (and ex-workers) have arranged with attorneys to file a class action suit against both GIS and several Philippines-based recruiting agencies, such as Pacific Ocean Manning and People Manpower Philippines, with the latter entities having procured the E-2 visas for the workers. This suit, started back in 2011, is moving slowly through the federal court process. As is the case with many class actions, its voluminous record can be seen in PACER, the federal court's electronic documents' system, as case 2:11-cv-02777-KDE-JCW.

Among many other charges in the 24-page complaint, the workers say that the middlemen required them, before they were hired, to:

[E]xecute two separate contracts, containing different terms. One contract was maintained by [the middlemen], a different contract was provided to the officials at the U.S. Embassy. The major difference between the contracts pertained to the wage rate. The one provided to the U.S. Embassy set forth the prevailing wage rate, the rate required for the employment agreement to meet with the required approval. Whereas, on the other hand, the contract maintained by [the middlemen] provided a wage rate significantly below the prevailing rate.

The complaint also specifies various schemes by the employer and the middlemen to reduce wages paid to the welders and fitters, and the various contractual devices that kept the workers in near indentured servitude.

But how did these oil field construction workers manage to secure treaty investor visas?

It turns out that, in addition to the treaty investors themselves, their spouses, and their children, E-2 visas can also be issued to the employees of such investors (in this case the middleman agencies). Such workers, according to government regulations must:

[E]ither be engaged in duties of an executive or supervisory character or, if employed in a lesser capacity, have special qualifications.

Somehow the State Department figured that being a welder meant that the workers involved had "special qualifications". Meanwhile, the Bureau of Labor Statistics has reported that some 352,250 people already working in the United States had those welding qualifications, as shown here.

Welding does require some training, but this can be completed in a matter of months. There never is a genuine need to bring foreign workers into the United States with those skills.

To make matters worse, E-2 workers are tied to their E-2 employers, meaning that they must continue to work for the middlemen who brought them to the country in the first place. Should they complain about wages or working conditions, their employers can fire them and turn them instantly into illegal aliens. This produces, as the mas migration people argue, a "reliable workforce".

While this is clearly a terrible situation, it may not be a growing one. I could not obtain any government data on the issuance of visas in Manilla to E-2 workers (as opposed to other users of E-2 visas), but the Yearbooks of Immigration Statistics (Table 32) show a steady decline in the admissions of all E-2 Filipino visa holders in recent years, from 1,127 in FY 2010, to 875 in FY 2011, to 585 in FY 2012. Perhaps the State Department has corrected its ways.

A Happy By-Product of the Class Action Suit. Generally I cheer efforts to obtain higher wages and better working conditions for foreign workers, on the triple grounds that they: 1) bring some economic justice to the down-trodden; 2) cost money to the exploitative employers; and 3) run up the costs of foreign workers, thus, one hopes, encouraging U.S. employers to hire U.S. workers in the future. Hence, I hope the welders win vs. GIS.

In the meantime, however, the class action suit has already caused some useful changes. But first some background: GIS is a much-sued company. PACER records 98 civil suits filed against the firm, including many regarding violations of the minimum wage and overtime laws.

One of the newer suits against GIS, filed by Dean Wellman, a former GIS worker on his own behalf and that of other hourly employees (PACER case 2:14-cv-00831-LMA-SS), charges that he was paid "straight-time" when he should have been paid overtime when he worked more than 40 hours a week.

The complaint says, more or less in passing, "While Grand Isle may have cleaned up its act by starting to pay overtime (likely due to a recent Department of Labor investigation and an ongoing wage and hour lawsuit involving a different class of workers), it still owes these workers back pay."

A footnote indicates that the lawsuit is the class action for the E-2 workers described above. Later in the complaint it indicates that GIS was paying overtime to clerical workers, likely to be U.S. citizens.

So there are some U.S. workers who are benefiting, albeit indirectly, from the legal efforts of the E-2s!