Date: Mon, 2 Apr 2007 20:31:41 -0700 From: Norm Matloff To: Norm Matloff Subject: major news--Sen. Durbin introduces H-1B/L-1 bill To: H-1B/L-1/offshoring e-newsletter For the past few weeks there has been a rumor that Sen. Durbin would introduce an H-1B reform bill. He has now done so, numbered S.1035. The rumor had been that the bill would essentially be the one introduced by Democratic Rep. Bill Pascrell in the House in the last two sessions of Congress. It turns out to have both similarities and differences. The key feature of the Pascrell bill--setting a simple, EFFECTIVE definition of prevailing wage--is also in the Durbin bill. Both bills feature some kind of provisions which would require employers to give Americans employment priority over foreign nationals (note my qualifier, "some kind"). The Pascrell bill gives rejected Americans the right to bring lawsuits, which the Durbin bill does not. The Durbin bill requires that employers wishing to hire an H-1B advertise the job on a DOL database on the Web, which Pascrell does not. The Durbin bill has myriad anti-fraud provisions, but as I've said before, fraud is only a small part of the H-1B problem, and I consider it a distraction to discuss it, distracting focus away from the core H-1B issue, which is the loopholes in the prevailing wage law and regulations. You can read the text of the bill on Congress' Thomas Web page. Go to http://thomas.loc.gov/home/r110query.html and search for page S4169 (note, no period) of the Congressional Record. I suggest choosing the Printer Friendly format. When you get to the page, search for "visa" in your browser (ctrl-F in Firefox, and I think in Explorer too). As usual, the bill takes the form of amendments to the U.S. Code, 8 U.S.C. 1182(n), which you can find at http://www.usdoj.gov/crt/osc/ref/8usc1182n.htm Following is my section-by-section analysis of the Durbin bill. At the end, I will summarize my assessment. Section 1: This is the title and table of contents. The title, "H-1B and L-1 Visa Fraud and Abuse Prevention Act of 2007," shows what the authors consider to be the important parts of the bill. Impact: As I said, the authors of this bill are missing the boat in this regard. Though some fraud does occur, currently the vast majority of the abuse is done in full compliance with the law, because the law, especially regarding prevailing wage, is written so loosely. Sections 2(a,b): This basically eliminates the H-1B-dependent clause, under which employers whose workforces consisted of more than 15% H-1Bs were subject to special restrictions. Now ALL employers would be subject to those restrictions, which would include: * Employers would not be allowed to hire H-1Bs within 180 days (expanded from the old 90) of a layoff. * Employers would be required to make "good faith recruitment efforts" to find American workers before filling jobs with H-1Bs. Impact: The anti-layoff provisions would definitely be helpful. Though non-H-1B-dependent employers have not been subject to the "good faith recruitment" requirement before, the employer-sponsored green cards have always had such a requirement. Typically employers circumvent that by requiring so many special skills that the only one in the world who would qualify is the foreign national they want to hire. DOL PERM regulations had in their draft form some restrictions against employers doing this, but the American Immigration Lawyers Association (AILA) forced DOL to back off. Still, this "good faith recruitment" requirement provision would have some value. Section 2(c): This would require employers to advertise jobs on a DOL Web page for 30 days before filling the jobs with H-1Bs. Impact: I have made such a proposal in the past myself. I believe it would be quite helpful, as it would provide public exposure of employers who are avoiding hiring Americans. The provision would be a lot better if the employers were required to state what the final disposition of the opening was, i.e. did the employer hire an H-1B in the end or not? Section 2(d): This would ban the job ads so often seen with phrasing like "H-1Bs only." Section 2(e): This would forbid employers from hiring H-1Bs and then in turn renting them out to other employers. Impact: This problem has gotten a lot of press, but I just don't see it as an issue. What difference does it make whether Intel hires an H-1B directly, or through a job shop such as TCS? And it really would be difficult to enforce. If TCS tells its H-1Bs to always communicate with Intel managers via their own TCS managers, who is to say the H-1B is working for Intel and not TCS? The H-1B can even wear a TCS baseball cap to make the point. Section 2(f): This would limit firms to having 50% of their employers as H-1Bs. Impact: Almost none for most employers. Only 0.1% of employers even meet the 15% threshhold of the existing H-1B-dependency category; even fewer will be voer 50%. This is because these firms do have other workers, e.g. clerical staff, marketing people, accountants and so on. Now if the provision were to say 50% of engineering staff, some employers would be impacted. Section 2(g): This would redefine prevailing wage requirements. The key point is that it would require them to be paid at least the median for all workers in that occupation. Impact: In principle, this could cut down H-1B usage by huge amounts, maybe a 70-80% reduction in visas used. Here is why: As I've often said, the dirty little secret is that H-1B allows Americans to hire young H-1Bs instead of older (40+), thus more expensive, Americans. Currently employers can hire a young H-1B at the lowest of the four defined experience levels, and thus can legally get away with hiring the younger H-1B instead of an older American. By setting the prevailing wage to be at least the median of all workers in the occupation, REGARDLESS OF EXPERIENCE LEVEL, the bill would basically cut the rug out from under the employers of H-1Bs. Simply put, the H-1Bs just wouldn't be so cheap anymore. However, the phrasing is a bit vague. Clause (iii) in this section specifies that OES data be used, which would be great, but clause (ii) does not say this. Nevertheless, even allowing for the probability that the AILA would pressure DOL do put in loopholes in this section, the net effect should be a very big reduction in H-1Bs hired. Moreover, clause (iii) itself is pretty good, requiring at least Level II experience pay levels. John Miano found that currently 56% of H-1Bs are hired at Level I, so again this bill has the potential of greatly reducing the number of H-1Bs hired. If they aren't cheap, employers won't hire 'em. Section 3: These are various anti-fraud provisions. Impact: Very little in the grand scheme of things, as I explained above. Section 4: L-1 reform. This would require recruitment of Americans and would require paying of the prevailing wage, redefined as for H-1B above. Renting out of workers would be banned. There are various anti-fraud measures. Impact: This would be the same as for the corresponding provisions for H-1Bs above. So, what is my overall assessment? IF this bill is given serious consideration in Congress, and IF it passes, and IF the Dept. of Labor does not kowtow too much to the AILA, the redefinition of prevailing wage would bring an absolute sea change to the business of importing foreign programmers and engineers. In addition, the establishment of a DOL Web page for jobs that employers propose to be filled by H-1Bs would be very beneficial. On the other hand, if Congress says, "Well, let's fold those anti-fraud measures in this bill in with our H-1B expansion bill. After all, Durbin's bill was mainly about fraud, so we would be using the essence of his bill," a terrible hoax will have been played on the American people. H-1B is NOT about fraud, for the most part; it's about employers, large and small, taking advantage of huge loopholes, that they wrote, in order to hire cheap foreign labor. Durbin's bill, by having so many anti-fraud measures, and by having its very title focus on fraud, invites a scenario in which its valuable portions are jettisoned. Norm