USCIS Announces Restrictions on H-1B Petitions for TARP Recipients

March 23rd, 2009

Under the Employ American Workers Act, which is part of the American Recovery and Reinvestment Act of 2009 (the “Stimulus Bill”), recipients of funds under the Troubled Asset Relief Program (TARP) and section 13 of the Federal Reserve Act face new restrictions on hiring H-1B workers.  EAWA treats such recipients as H-1B dependent employers, which in effect limits banks and other financial institutions from hiring H-1B workers unless equally or more qualified US workers have been offered the position, and prevents banks from hiring H-1B workers in occupations in which they had laid off US workers.

H-1B dependent employers are defined as employers with:

  • 25 or fewer full time equivalent employees and more than seven H-1B workers;  
  • 26 to 50 full time equivalent employees and more than twelve H-1B workers; and
  • More than 50 full time equivalent workers and at least 15% of the work force is comprised of H-1B workers.

H-1B dependent employers are subject to two rigorous requirements not imposed on other H-1B employers.  The first regards good-faith recruitment pursuant to industry-wide standards: the employer must engage in good-faith recruitment for US workers for the position for which the H-1B worker is sought, offer a wage at least as high as to the H-1B worker and offer the position to any equally or better qualified US worker.  The second requirement is that the employer must attest that it has not laid off, and will not lay off, any US worker in a job that is essentially equivalent to the H-1B position in the area of intended employment of the H-1B worker within 90 days prior to and 90 days after the filing of the petition.

The exemptions available for H-1B dependent employers do not apply to the funds-recipients.  “Exempt H-1B nonimmigrants (for whom an H-1B dependent employer is not obliged to meet the additional attestation elements) are those holding a master’s or higher degree or who earn wages (including cash bonuses and similar compensation) at an annual rate of at least $60,000.

The EAWA covers all new H-1B hires between February 17, 2009, and February 16, 2011.  In particular, according to a USCIS announcement on March 20, 2009, it applies to “any Labor Condition Application and/or H-1B petition filed on or after February 17, 2009, involving any new employment by a new employer, including concurrent employment and regardless of whether the beneficiary is already in H-1B status.  The EAWA also applies to new hires based on a petition approved before February 17, 2009, if the H-1B employee has not actually commenced employment before that date.” 

It is important to emphasize what the EAWA does not cover, which are H-1B petitions seeking to change the status of a beneficiary who is already working for the employer in another temporary work-authorized status.  One example of such a “work-authorized status” is the Optional Practical Training (OPT) aspect of the F-1 student visa.  This means that F-1 students working with a TARP recipient employer pursuant to their OPT will not have their petitions subject to the onerous H-1B dependent rules.  The EAWA also does not cover extensions of H-1B status with the same employer.

Bank of America recently announced that it was rescinding job offers to foreign students graduating from US business schools this summer. 

This is one example of the deleterious and dangerous consequence of the EAWA’s protectionist spirit. Just when we need the best talent possible to reinvigorate our economy, our own government is forcing companies to turn them away. Vermont Independent Senator Bernie Sanders, who sponsored the bill with Republication Senator Chuck Grassley, has cited misleading figures from an Associated Press story suggesting that H-1B visa holders are displacing US workers. The AP stated that “the dozen US banks now receiving the biggest rescue packages requested visas for tens of thousands of foreign workers to fill high-paying jobs.” However, these figures exaggerate actual visa use by these institutions. According to the Wall Street Journal in “Turning Away Talent”, March 10, 2009, “H-1B visa holders have been a negligible percentage of financial industry hires in recent years. In 2007, for instance,Citigroup hired 185 H-1B workers, which represented .04% of its 387,000 employees. Bank of America hired 66 H-1B worker, which represented .03% of its 210,000 employees.”

Furthermore, the Wall Street Journal points out the inattractiveness of H-1B visas:  “The reality is that cumbersome labor regulations and fees make foreign professionals more expensive to hire than Americans, which undercuts the argument that the banks were looking for cheap labor and explains why H-1B applications tend to fall during economic downturns.  But far from displacing US workers, H-1B hires have been associated with an increase in total employment.”  The Wall Street Journal referenced a 2008 tech industry study by the National Foundation for American Policy, which found that for every H-1B position requested, US technology companies in the S&P 500 hired five more workers.

With the dearth of US graduates in science, technology, engineering and math, even in this economic downturn, it is important that US companies can compete globally and hire the best talent available.  Protectionism never has and never will make us a stronger country.