New H-1B Bill Punishes Dependent Companies

H-1B Visa
H-1B Visa

H-1B reform hit the floor of the U.S. House of Representatives this week, and it proposes some significant changes to the current program. In response, some Indian tech stocks have dipped.

The bill was introduced by Zoe Lofgren, who previously called a different reform bill toothless for not curbing use of the program. Her current bill, dubbed the “High-Skilled Integrity and Fairness Act of 2017,” adds some bite.

Lofgren’s bill eliminates the “per country” cap for H-1B visas so “all workers are treated fairly.” That bit has sent Indian tech stocks into chaos; the current H-1B structure sees most (70 percent) of the visa’s holders coming from India, where many outsourcing firms flourish. Indian firms have reportedly hired more citizens of the United States in anticipation of changes to the program.

The bill would also raise the minimum salary for some visa holders from $60,000 to $130,000. This change doesn’t affect all workers; companies where H-1B holders make up more than 15 percent of the workforce are the real target.

Those companies – dubbed “dependent employers” under U.S. Department of Labor guidelines – can avoid the wage hike, but only if they attest that they’re not displacing domestic workers. Without such paperwork, the company will be forced to pay H-1B employees a minimum of $130,000 per year, which can include bonuses or other types of wages based on fair-market value.

This bill also introduces a new wage system meant to protect the domestic workforce. It cuts the current structure from four tiers down to three, and eliminates the lowest level (the mean of the bottom one-third of wages surveyed). This design places emphasis on hiring higher-paid H-1B employees.

Startups will have a better shot at H-1B visa holders with this bill, too. It allocates 20 percent of all H-1B visas for employers with 50 or fewer employees.


H-1B Pitfalls

In the high-level points of Lofgren’s bill, startups get a better chance at hiring foreign talent, and companies must prove visa holders they hire won’t displace foreign workers (if they don’t prove as much, they’ll end up paying a premium for those employees).

But the finer points of the bill may grate some employers. Startups can’t place H-1B employees at third-party worksites for more than 30 days. If you’re a consulting or outsourcing firm, managing the time an H-1B employee spends away from the office might not be worth the trouble.

It’s also not clear if the 20 percent of H-1B visas reserved for companies with less than 50 employees is fluid. For example, if those smaller firms only utilize 15 percent of H-1B visas, does the remaining five percent become available to larger companies?

The general allocation of H-1B visas under this bill is also a bit clumsy. Those willing to pay a premium for employees gain primacy. If a company wants to hire an H-1B visa holder at 150-200 percent of the prevailing wage, they have priority allocation.

It doesn’t end there: the company can’t reduce the pay of the H-1B employee they hire, even if both parties agree to it. If the visa-holding employee moves to an area where the prevailing wage is higher (going to San Francisco from Albuquerque, for instance), their pay must scale equally, even if they’re already earning well above the median income for the position.

Immigration attorney Jason Finkelman suggests that the bill is wholly unfair, and points to education as the real issue:

Representative Lofgren’s bill is not in the national interest of the U.S. and will severely hurt small and medium size employers, as many won’t have the financial resources to sponsor foreign workers with the skills they may need to innovate and grow their businesses.  It may not be a big deal for the Microsofts and Googles of the world to pay salaries in excess of $100,000, but it would be much harder for startups looking to grow, to be able to pay an H-1B worker that wage.  Many employers, especially in science, technology, mathematics, and engineering sectors depend on the the H-1B work visa to recruit the best and brightest global talent.  U.S. university systems are not pumping out enough qualified STEM graduates, so it doesn’t make sense to place harsher limits on American employers looking to supplement their workforce with the highest-skilled, regardless of where they are from.

For all the chatter about H-1B reform, little of it addresses a core issue: education. Putting more Americans to work is an idealistic view we can all embrace, but when the skill-set and job requirements don’t match, there’s a problem.

Unfortunately, there’s no education reform on the table (at least at the moment) that will ensure we churn out graduates capable of filling the jobs that companies hire H-1B visa holders for. It’s also not clear what President Trump’s incoming reform may do for the work visa program, though some expect another bout of turmoil.

36 Responses to “New H-1B Bill Punishes Dependent Companies”

  1. I didn’t get this cry about it from companies:
    1- Now you can hire as many as you want.
    2- Now they don’t requer master degree.
    3- Special packet for small companies.
    The only thing was 130k salary (remember it is high skill worker I think it is fair to pay 130k for somebody with PHD in havard, Mit, berkeley …).
    Remember that during 90’s a computer engineer used to make more than doctors.
    But I think they wanna pay minimum wage for a high skill worker.

  2. I would hope that a bill like this would make companies look closer at what they really need.
    I apply for jobs that want 2-5 years experience according to the job listed on a job board but when you get to the companies site it says they want 5-7 years.
    Why not hire someone that has 2-5 years (it must be what you need right now otherwise it wouldn’t say that). Get a person into the position, get them trained on the job and then if the company needs something more have the person get training.
    Many large companies offer some sort of tuition reimbursement, hire what you need and make it available for your employees to get a higher education.

  3. YES!!! Hopefully this will be the first step of many towards protecting the American IT workers. I’ve seen experienced American IT workers replaced by fresh-out-of-school H1-B workers at Farmers Insurance. It was an ethnic cleansing. Even the secretary at Farmers was an Indian.

  4. H1B is abused by most American Employers. The same job can be performed by a US College grad with 1year experience.

    H1B’s 99% are showing 8 to 9 fake experience with a 4 year Degree. In real time they have only 6months to 1-year experience. They are in the age group 22 to 27.

    India still doesn’t have a proper electronic banking system. Still using paper transactions U think it is producing geniuses for Technology? lol

    It’s all the tech companies and Politicians who run the show.

    At ADP
    most IT jobs such as simple JAVA developers, a College grad here is highly capable they hire H1B and file for Green Cards.

  5. I am so grateful they are revising this bill. H1 Visa have abused its intended purpose. See links below

    There are tons of skilled American IT professional in need of IT positions; especially Full-time roles as oppose to contracts. Many of these positions are outsourced and offshoring drives down salary wages for skilled resources. Companies should invest in schools just as much as the government.

    Worst, when “the brightest global talent” gets hired and promoted, they bring their global perspective which usually includes prejudices of other nationalities and genders. For example, I have experienced and witnessed, Indian managers only hire and promote Indians. I’ve seen and overheard these resources discriminate against caucasian women, Blacks and Hispanics.

  6. Congress stop your war on the American technology worker. Kill the H1-B and L1 visas. The H1-B visa has been the source of a neverending supply of cheap labor and cause severe carnage and destruction to the American technology worker.

    The American IT worker has suffered enough. Stop the flood of cheap labor from third world countries.

  7. AnnMarie Torres

    I think that if they are looking to hire the best and the brightest in tech 130,000 is fair if they are looking for a junior position where you would make 65-80k then there are plenty in the USA pool. Remember this is not a job that you need college for you just need the knowledge so not all qualified candidates need to be coming from a college…

  8. The core issue with the current H1-B program is the abuse. Only if that is addressed will the program ever be perceived as fair by most Americans.

    Granted, there will always be professionals with sub-par skills who are citizens, but will never get a job in their field simply because no company will hire those folks. And those folks will ALWAYS complain that foreign competition is unfair.

    Most Americans will perceive the program as fair if the prevailing wage requirement is strictly enforced. It is not. THAT is the problem!

  9. “New H-1B Bill Punishes Dependent Companies”

    Wow, Nate Swanner, not too much bias in that headline, eh? There is NO shortage of American tech talent, Nate. These companies must be dependent on CHEAP labor, Nate. I won’t cry any tears for these companies. The H-1B program is a corrupt mess and needs major reform, if hot outright repeal. No matter what you say, Nate.

  10. Main issue is US employers looking for a cheap labour it is what H1b. Foreign workers thinks that our children was not properly raised and not given good education (I read lots comments by Indians).
    The issue not that, If you hire US workers, Employers cannot avoid Medical,SS benefit,special perks such as bonus’s, vehicles,accommodation etc.they save all this money and many more.If they hire foreign workers none of these given except what they signed and agreed in the contract and also they bring their spouse with L1, many expenses to this country.

  11. I agree with what everyone is saying. They need to make the salary of an H1-B visa candidate unprofitable for the large U.S. companies. There also needs to be a reform with the companies themselves. Some companies give a laundry list of skills and reject the candidate when they don’t have one or two of those skills. Bring in American tech workers and train them on the technology. Whether they stay or go is only based on the employer. At least in the long run you’ve built up a pool of domestic talent to work from.

  12. Choon Kim

    J++, Linda, Cori and Ken, I agree with you. I have been working experience in government almost 20 years. I believe H1-B program was abused by employers and lobbyist for a long time. I’m so glad that president Trump is revising this law.

  13. It’s a step in the right direction, but not nearly enough. Since companies are claiming they need “the best and the brightest”, let them prove it by requiring a MINIMUM of two of the following:

    1) A masters degree,
    2) A Nobel prize in science,
    3) Three or more patent awards,
    4) Five or more publications in peer-reviewed scientific journals.

    The truth is, companies mostly use imported labor to drive down wages in America. There is no shortage of skilled American workers. Over 300,000 Americans graduate each year with STEM degrees who are AT LEAST as capable. Many cannot find jobs. H-1B and L-1 visas are little more than importing outsourcing. To see what companies are REALLY doing, see–jNQYNgA Nothing has changed in the past 10 years.

  14. The need for this bill is mostly nonsense. The only correct solution for the H1B program is for the White House to shoot it in the head once and for all.

    The notion that the US education system doesn’t turn out enough STEM graduates is a lie that the Congress formulated for the public so they could continue to take massive payoffs from corporations.

    The best way to explain it to your friends, neighbors, colleagues and anyone who will listen is that H1B is a government sponsored scam. Corporate America can hire all the STEM professionals they desire at market rates. Nothing to do with a drag innovation.

    More so a garden variety fraud and bottom line greed for large and successful companies.

  15. Good. They SHOULD be punished for importing foreign scabs to replace perfectly capable American graduates. No pity for start-ups either. If you won’t hire local you don’t deserve to succeed.

  16. Hugh Janus

    Big companies hire kids from India for clerical work. They can do so because the curreny system is easy to game. The result is that older experienced employees are terminated, instead of being demoted to fill the less challenging roles. There is no shortage of STEM workers, only a shortage of ones enslaved by the H1B system.

  17. Too little, too late. Actually, let me revise that: WAY too little, WAY too late. Unless a current H1-B visa holder can be shown to be the only person in the United States that can do some critical job like mapping a new element on the periodic chart (another way of saying ‘Rocket Scientist’), they need to be terminated from their jobs and SENT HOME TO THEIR COUNTRY of ORIGIN. Even if they have been supplied with a green card after obtaining their H1-B visa. And all their relatives they had subsequently brought over, regardless of THEIR visa status, too. They should be thankful they were allowed to visit for a short time, and now they can go home and work on making their home country a paradise like we enjoy.

    I do make exceptions on retaining those that were admitted here for health reasons, and sub-cultural political reasons (i.e. LGBTQ refuges).

  18. Allocating 20% of all H1b visa for employers with 50 employees or fewer Is TOO MUCH. Should only be atmost 5 %.
    Companies should be made to hire american IT first or this h1b program has to be abolished.

    I know many american IT that I used to work with are very smart, but they were asked to trained beginner indian H1b visa workers to do their jobs and they were laid off as the result They were replaced by these indian h1b visa workers for cheaper pay rate.

    Most Indian h1b workers came here with Bribe degrees (fake degrees), master, mba, php etc. When they came here to work, we have to train them as they don’t understand anything about American businesses’ processes, procedures and business communication. They are not smart as claimed as most of them have fake degrees. They put down all kinds of degrees and work experiences on their resumes like master and php dba, but don’t know how to set up a database, write store procedure, function, or set up user permission etc. all is BS you know.

    They have very bad work ethic and they are very tricky. They come to work very late and get out early but claim that they work 8 or 10 hours per day as the manager is never around to keep track of them. They dress sloppily, go outside smoke and talk on the phone many times per day. When they are at their desks, they either surf the internet or play with their phones. Most of them are very lazy and rude.

    This h1b visa program is corrupt and abusive. I used to work with an indian h1b visa worker and she told me this: If the h1b workers are out of work for 3 months, they are supposed to go back to where they are from. Instead of going back, the Workers have to pay the consulting firms to keep them here and apply for their green cards. The consulting firms would generate fake pay checks for the workers for the date range when they are out of work so that they won’t have to be sent back. These consulting firms need to be investigated and punished for breaking the laws and those H1B visa workers need to be sent back to where they are from.

    Overall, This H1B visa program is very corrupt and abusive. It needs to be abolished.

    Ways to boost the American economy are to create jobs for American – abolish h1b visa program, Invest more in education for areas with shortages, and have fair trades – Impose high tariffs on importing goods like what other countries have been doing.
    “Hire American and buy American” as president Trump said at the inauguration!

    Will continue next time as i have more to say about this h1b visa program

  19. Calaverasgrande

    H1B visas are being misused. Period. They were meant to be for certain types of specialists, say a chemical engineer or lawyer. People who have a unique talent or skill that is not easily replaced by a domestic hire. Instead they are used to shave margins by paying East Asian workers much less to do a job that many Americans are willing, AND ABLE to do.
    The other end of this equation is that H1B hires are not allowed to leave their sponsor company for another domestic company. They have to go back to their country of origin and re-apply. This benefits the sponsor company because many of them experience a lot of churn among mid level employees.
    Abolish H1b visas, it victimizes immigrants and American workers.

  20. Anderson

    if this Bill pass ( Very unlikely), most of big IT companies will move their HQ out of America to other countries such as Canada, Hong Kong, Singapore, and they will NOT be able to hire local IT workers anymore. Seriously, right now, the IT companies has to hire at least 50% of employees from Local, if losing H1B holder, the company has to layoff a lot of people and many of them will be local, the things get worse.

  21. There are many flaws in the proposed bill. I am not American but here is my opinion.
    1) H1-B’s are not on per country cap (green cards are that way)
    2) what is the literacy rate in USA? Here is the answer
    The only glory for many Americans is they speak English by birth. With below 20% literacy you fix American job market? People from foreign nations come to US to pursue their masters paying at least $25000 per student, profit for US.
    3) I do support that no American should be replaced by h1-b which is a misuse of the system but not all Americans can fill the jobs given the opportunities listed in current market.
    4) If you send all people who are on h-b to back to their countries it’s America who looses much how? Say out of 100 h1-b holders 60 people own a car which are on loans, if they leave who will pay off their loan? And think about atleast 20 people own a house on mortgage who will pay their mortgage? The lending companies sell their loans to government and in turn a burden on taxpayers. As Americans say just do the math.
    5) H1-B employees pay Tax on Social Security, Medicare which they practically never claim.(Profits to US citizens).

    On bottom line h1-b is not bad as it’s projected, in a way it is profit to country when not abused.

    Please excuse me if you find any grammar mistakes and also if I hurt anyone with facts.

  22. This makes me so, so happy!! Americans should never be screwed out of their jobs, and yet, this is what US employers have done for the last 15 or so years.

    Microsoft does not merit special dispensations!! Nor does any other US company.

    They have no problem paying legal counsel the huge fees, but refuse to pay larger fees to the US citizens that influence, design and implement the very software that grows their businesses!! I just don’t get it.


  23. 1) regardless of whether it’s per country or not, the cap should be lowered (to zero, IMHO)
    2) That is the ILliteracy rate. Literacy is thus over 80% at a post highschool level — we have no shortage of people who can read and write in America.
    3) They most certainly can. No candidate will ever have the perfect skillset for any position. But there is far too much of an incentive to hire the foreigner when “settling” for the “next-best” (third-best… fourth best… tenth best…) option.
    4) If you’re owning long-term property on a work visa, which by definition is supposed to be temporary, that pretty much defines everything that is wrong with the system.
    5) Oh look, another reason for the Feds to look the other way when the system is abused.

  24. Bill Nowork

    This is another useless bill with lot of loopholes. H1B itself is a loophole. You cannot close a hole with another loophole. E.g. Exception for companies with less than 50 employees? That’s ALL the south Asian housewife saaaftware consultancies!! Helloooo!!!!

  25. I live in Dallas and many of my colleges who are unemployed have a college degree. Also there are many skilled and educated nurses that are being FORCED out of their field because under Obama the “H1-B is the New American Subsidy”. Companies are given tax breaks based on hundreds or thousands of visas they support. What I am witnessing first hand is that 3 visa are hired, then 1 American is forced out so companies can reap the benefits. Most of us are now contractors or left the “highly skilled trade” that we are amply qualified to work because the current system is against us to provide companies a profit gain system bias on getting foreigners to live the American Dream. I am as physically fit to work as I was twenty years ago, and I have a BSEE, MBA, and CCNA yet I have not had a permanent job since 2013, and I know dozens more like me. The only thing good that has happen during Obama’s terms is that unemployment is easier with applications being online, which I have been on twice!

  26. End H1-B Period

    I find it ironic and truly telling about the foreigners using their poor English to try and justify the low wages they’re paid to steal American jobs.

    I have no pity and have been boycotting Disney for a while and when I see someone buying their Chinese-manufactured garbage I tell them they are supporting a monstrous company that forced their American IT employees to train their lower paid foreign replacements.

    Harley-Davidson, McDonalds, Microsoft, Tesla, Google, facebook and more continue to harm Americans and think their poor decisions won’t come home to roost. Why should I waste money buying anything from Microsoft when their “tech support” has been useless for the last decade alone?

    If companies were actually passing the savings onto to consumers the ploy may have worked, however, I have walked away from greedy corporate scum that demands higher compensation for such short-sighted and incompetent work.

  27. H-1B and similar programs have gutted the American STEM career option. I’m surprised there are still college students enrolled in these programs. Yet I have not heard any reports from universities lamenting the high number of empty seats in STEM degree programs. Quite the contrary I suspect that these programs are growing in part due to the number of foreign students enrolled whose parents pay the tuition in-full in cash. Foreign influx of cash tuition might also explain the out of control inflation of tuition fees at US universities but that is another (related) story. H-1B proponents like Jason Finkelman steal American dreams from long-time immigrants that are already in the US and give those dreams to fresh new immigrants. Yes, we are historically ALL immigrants. So lets come together as a nation and help us immigrants that are already here and have worked hard to have a shot at an opportunity to make our dreams come true. If there is room for more fresh immigrants after that then open the doors. Otherwise they have to wait in line just like we did (or our ancestors did on our behalf). I just don’t understand how people like Finkelman feel good about themselves taking jobs away from present immigrants and giving them to fresh incoming immigrants. Why are fresh immigrants more rewarding to give jobs/dreams to than to brothers, sisters, friends, relatives that are already here? Hence to some degree people who favor new immigrants over established immigrants must simply hate established immigrants. I can’t think of any other motivation for stealing dreams from US citizens an giving them to people from a foreign land.

  28. Enough is enough

    As a former employee of a fortune 100 company whose whole team was just summarily fired and replaced with ALL newly arrived H1-B’s I’ve had enough. Educated and skilled American IT workers have seen their salaries and benefits slashed since 2000 and now have to give their *immigration status* before even applying for a job.
    Every IT organization I have been evolved with for the last 10 years are at least half immigrant – mostly Indian.
    I value my Indian colleagues as much as any other and I don’t blame them for taking advantage of any opportunity they can (so would I if I were in their shoes) to provide for their families and live a better life, but this program is being used to impoverish Americans who went to school (and keep going back to keep up), worked hard, and provide immense value to corporations, and are being squeezed for the sake of ever climbing corporate profits. Who speaks for the American worker? NO ONE.

  29. Send each and every H1B back. To the person who is stating facts is just behind the real truth. Uneducated, lack of skills, fudge documents/resumes come here and have to be trained by the people they are replacing.

    I’ve done that twice now and believe me some of them can’t even turn on a computer. I say send them back and make these companies pay better wages to actual skilled americans.

  30. Timur Aurangzeb

    A large number of H1B are indians from the Brahmin Hindu community. They look out and hire only Hindus. It is for this reason that “holi” and “Diwali” is celebrated in some Corp American offices, but no mention of “EID” which is a Muslim Celebratory Holiday. The H1B visa workers barely ever comprise of Muslims and Christians from India. THE H1B VISA IS NOT ONLY A “FRAUD”, IT FAILS TO PROVE THAT IT CONFORMS TO “EQUAL OPPORTUNITY EMPLOYMENT”, BECAUSE IT DOESN’T. ITS MAINLY FOR THE HINDUS FROM INDIA