Under the Immigration Act of 1990, the United States Congress allotted 65,000 H- 1b Visas per fiscal year. A fiscal year (FY) begins October 1st through September 30th of the following year. Therefore, FY 1998 would begin October 1, 1997, and continue through September 30, 1998. For the first time since the enactment of the Immigration Act of 1991, all 65,000 H-1b Visas for FY 1998 were exhausted by May 12th of 1998. This terrible situation left employers and prospective H-1b workers without the ability to obtain their H-1b Visas and therefore commence employment in the United States. New H-1bs were being issued, but only effective October 1, 1998. These new H-1bs counted against the H-1b quota for FY 1999. Therefore, a consortium of businesses, hi-tech industries and immigration groups joined forces to lobby Congress for an increase in the H-1b professional worker cap. That united front was instrumental in the passage of the “American Competitiveness and Workforce Improvement Act of 1998.” Among other things, the Act increased the yearly quota of H- 1b Visas. The following article is a summary of selected provisions of the Act. Please note that each and every subsection of the Act is not covered. Rather, only those sections which have particular application and relevance for H-1b employers and prospective H-1b employees are discussed. Likewise, this article supplements the article titled “The H-1b “Work Visa” Application Process”, and the article “Hiring Aliens – an Update.” Additionally, this article may be read in conjunction with “Highly Skilled Immigrants: Boon to the American Economy”, also on my website. As with all other legislative matters, immigration law and policy is subject to a number of conflicting pressures. This Act was no exception. On one hand, pro-business forces clearly wanted an increase in the number of H-1b workers. On the other, protectionist U.S. interests felt that the existing 65,000 H-1b limit was adequate, and that foreign workers were undercutting the ability of U.S. workers to find jobs. Therefore, in a classic compromise, these concerns were met through the American Competitiveness and Workforce Improvement Act of 1998. Congress has allowed for a far higher quota of H-1b workers, at least for the next three fiscal years. However, Congress has also imposed additional requirements on H-1b employers. The new Act also creates additional enforcement mechanisms for the Department of Labor to ensure that the H-1b process is not misused. Finally the Act authorizes additional funding to the Department of Labor, the National Science Foundation, and the INS for scholarships to enhance skills of U.S. workers, and statistical reports on H-1b professional workers and employers, and enforcement, respectively.

INCREASE IN H-1B QUOTA

The Act increases the number of H-1b workers from 65,000 to 115,000 in fiscal year 1999, 115,000 in fiscal year 2000, 107,500 in fiscal year 2001, and then back to 65,000 in fiscal year 2002 and thereafter. (A particular emphasis on solving the Y2K problem?)

Therefore, the increase in the H-1b quota is good for only three years. The additional 50,000 workers is almost double the original H-1b quota, and should therefore have a substantial positive impact on the hiring of foreign workers in the United States. Likewise, even though additional foreign workers may be employed, the labor lobby was instrumental in securing substantial protections and safeguards for U.S. workers. Key to these safeguards is the provision that an H-1b dependent employer hiring an H-1b worker will not displace and did not displace a United States worker within the period beginning 90 days before the application and 90 days after any visa petition was filed for the intended H-1b alien. US employers must also undertake “good-faith” recruitment for US workers to fill the positions. What exactly will constitute good-faith recruitment is unclear. Hopefully H-1b recruitment will not require the advertising requirement currently in place for soliciting US workers through the permanent labor certification process. Also, in situations involving placement of H-1b employees with third party companies (most commonly in the case of computer consultants and management consultants) additional safeguards are in place. The employer that has hired the H-1b alien must inquire of the employer where the alien worker is to be placed (“placement employer”) whether that placement employer has displaced any United States worker within the 180 day period described above. Such a consultant cannot be placed if the placement employer has displaced a United States worker. The Act specifies what the term “laid off” means. With respect to a United States worker, laid off means to cause the worker’s loss of employment on illegal grounds. It is perfectly legal for an employer to lay off a worker for inadequate performance, violation of workplace rules, just cause, voluntary departure, voluntary retirement, or the expiration of a grant or contract. Further, an employee who is laid off but is offered a similar employment opportunity at an equal or higher compensation from his or her prior position is not considered to be laid off, regardless of whether or not that employee accepts that offer. Also, note that the 180 day lay off provision is enforced only for employers who are defined as “H-1b dependent.” What exactly does H-1b dependent mean? The Act defines an H-1b dependent employer as the following:

A. 0-25 full-time employees: more than 7 H-1b workers.

B. 26-50 full-time employees: more than 12 H-1b workers.

C. 51+ full-time employees: at least 15% H-1b workers.

Certain “exempt” H-1b non-immigrants need not be counted in either total. Exempt H-1b non-immigrants are H-1b workers who are paid at least $60,000.00 per year or who have a Master’s or higher degree or its equivalent in a specialty related to the intended employment.

ENFORCEMENT AND PENALTIES

The Act provides for increased enforcement and penalties for employers who willfully fail to follow the law and the regulations, misrepresent material facts, or threaten to punish in any way an employee who complains about his employment position either to the employer or to the Government.

As an interesting evolution of the law, an H-1b non-immigrant who complains against an employer (and who have already lost his job as a consequence) will be allowed to seek other appropriate employment in the United States up to the extent of time permitted under his H-1b through his prior employer who he complained against. Employers who have executed agreements with H-1b non-immigrant workers which penalized the non-immigrant for ceasing employment prior to an agreed date have violated the Act. The Secretary of Labor shall determine whether a required payment is a penalty rather than liquidated damages, pursuant to the relative law of the state. Note that under provisions of commercial and contract law also, liquidated damages for breach of contract are permissible, but penalty clauses are often struck down. Therefore, an employer who seeks to recover the actual costs, attorney fees and incidental expenses of the H-1b application (but not the INS filing fee – see below) from an employee will probably succeed without violating this clause of the Act. However, an employer who seeks to recover a large sum of money (example – $10,000.00) for an H-1b employee’s failure to work with the employer for a specified period of time will probably be found to have demanded a penalty, rather than liquidated damages and will therefore be violating the Act. H, L, O, or P aliens cannot be made to reimburse or compensate the employer or sponsoring entity for all or part of the INS fees involved for filing the respective non- immigrant visa application. Employers may not place the H-1b worker “on the bench” without paying them the necessary contractual full-time wages for such non-productive time. This is important especially for computer consulting firms, which very often pay nothing or at best a daily stipend to their non-immigrant workers, if such workers are not assigned to a third party employer. This obligation must be met whether the H-1b employee is full-time or part-time. There is a grace period during which an H-1b employee need not be paid the full-time wage as agreed pursuant to the employment agreement. This is when an H-1b worker has just entered the United States and for thirty days thereafter. In the case of an H-1b worker who is already present in the United States, the employer need not pay the employee for up to sixty days after the date the worker becomes eligible to work for the employer. After these 30 or 60 day periods have passed however, the H-1b employee may not be “benched” without being paid the full wage. Of course, an H-1b employee’s request for an absence or certain circumstances rendering the non-immigrant unable to work will not require the employer to pay the full-time wage for such non-productive time. Certain employers such as educational institutions may pay an annual salary over a shorter period of time (example – nine months). In such a case, the employer is not violating the provisions of the Act by not paying the alien while the alien is non-productive (example, over the Summer months) as long as the non-immigrant has agreed to the compressed annual salary payments prior to commencing employment and such a payment schedule does not cause the non-immigrant to violate any condition of his non-immigrant status. Non-immigrant workers are eligible for all the benefits that an employer offers to U.S. workers, including health, life, disability, and other insurance plans, retirement and savings plans, and cash bonuses and non-cash compensation, including stock options. The Secretary of Labor may institute an investigation against an employer, whether for cause, or even upon suspicion that the employer is violating labor practices and H-1b laws as described in the Act. Existing enforcement mechanisms continue to be in effect. The new enforcement mechanisms are due to expire on September 30, 2001 (when the H-1b cap reverts back to 65,000 workers).

IMPROVEMENT OF U.S. WORKERS

Effective December 1, 1998, any H-1b petition – whether it be for a new H-1b worker, transfer of an H-1b worker or extension of stay of an H-1b worker will require an additional fee of $500.00. This $500.00 fee will be in addition to the new H-1b application fee of $110.00. The purpose of this additional $500.00 fee is to provide for scholarships for low income mathematics, engineering, and computer science students. Funds will also be used to train of United States workers. Colleges, universities and non-profit research institutions are exempt from payment of the new fee. The additional fee is to be deposited to the United States Treasury in a separate account, called the “H-1b Non-Immigrant Petitioner Account.” The funds will be used as follows:

56.3% to the Secretary of Labor for demonstration programs and projects described under the Act.

28.2% to the Director of the National Science Foundation to provide scholarships for low income students.

4% shall be used by the Director of the National Science Foundation to make merit- reviewed grants for mathematics, engineering, or science enrichment courses. Another 4% will be available to the NSF to carry out systemic reform activities.

1.5% will be available to the Attorney General of the United States to decrease the processing time for H-1b petitions and to carry out other duties under the Act.

6% of the amount will be available to the Secretary of Labor to decrease the processing time for applications for H-1b Visas. The Secretary of Labor must provide certification that the Department is complying with the seven day period for providing labor condition attestations. If the Secretary of Labor cannot provide such a certification, then 3% of the total 6% will not be available to the Secretary of Labor until such certification is provided. This provision therefore puts a burden on the Secretary of Labor to tighten up the H-1b labor condition application process and to force regional Department of Labor offices to provide such attestations within seven days, as mandated by the Immigration Act of 1990.

PREVAILING WAGES FOR WORKERS IN HIGHER EDUCATION NON-PROFIT ORGANIZATIONS OR GOVERNMENTAL RESEARCH ORGANIZATIONS

Prevailing wages for such workers will be arrived at by comparing wages for workers only in similar employment. Therefore, a researcher working in a non-profit corporation will not have a prevailing wage based on researchers working in for profit corporations or organizations. This is very important since there is a substantial wage differential between educational or non-profit organizations and for-profit corporations.

REPORTING REQUIREMENTS

The Attorney General, who oversees the INS, is to report the usage of H-1b Visa petitions as the year goes by. Reports must be submitted quarterly. The reports must include details about the H-1b workers including information on the countries of origin, occupations, educational levels, and compensation of H-1b non-immigrants. Likewise, the raw number of H-1bs issued needs to be provided by the Attorney General to Congress. The Act also mandates a report listing the largest H-1b employers and wages paid to their H-1b workers. This information will be directed to the Committee on the Judiciary in both the United States House of Representatives and the United States Senate.

The National Science Foundation has been directed to conduct a study assessing the status of older workers in the information technology field. The study is required to consider whether there is age discrimination in the information technology workplace, and the specifics of how this age discrimination affects promotion and advancement, working hours, telecommuting, salary and stock options and other benefits offered to older workers. The study will also examine the relationship between advancement, promotion and compensation to experience, skill level, education and age. Finally, the study will consider differences in skill level on the basis of age. This report is to be submitted to the Committee on the Judiciary of the United States House of Representatives and the United States Senate no later than October 1, 2000. Likewise, the Director of the National Science Foundation will conduct a study to assess labor market needs over the next ten years for workers with high technology skills. This analysis is to prepare U.S. workers from the ground up by assessing the quality of United States education, progress in education, and future training and education needs of companies in the high technology and information technology sectors. It is hoped that this study will ensure that the needs of the high-tech market will be met. Like the prior study, the NSF must provide its report by October 1, 2000.

CONCLUSION

As noted above, this article is not meant to be a section by section examination of the new law regarding H-1b non-immigrant workers. The new law places some additional demands on employers, including the need to conduct good faith recruitment of US workers. The specific application of the new law remains to be seen, since regulations will need to be issued by the INS, and possibly the US Department of Labor.

Copy right Farhad Sethna 1998 All Rights Reserved