H-1B Court Decision Impacts Tech Subcontractors

In recent years, the Trump administration has required that employers utilizing the H-1B visa reveal whether those H-1B workers will end up working at third-party worksites. This transparency was potentially a big deal in the constant push-pull between advocates and critics of the visa—but now it looks like a new legal ruling will reverse a key element of it.

The U.S. District Court for the Northern District of Georgia ruled on May 20 that a 2018 policy memo by USCIS (United States Citizenship and Immigration Service) was invalid, and employers don’t need to submit information related to work requirements and where the worker will be based. (Hat tip to Bloomberg Law for the link to the decision.) 

The original USCIS memo justifies the original need for that information by pointing to potential employer abuses. “USCIS recognizes that significant employer violations—such as paying less than the required wage, benching employees (not paying workers the required wage while they wait for projects or work) and having employees perform non-specialty occupation jobs—may be more likely to occur when petitioners place employees at third-party worksites,” it read. “Therefore, in order to protect the wages and working conditions of both U.S. and H-1B nonimmigrant workers and prevent fraud or abuse, USCIS policy should ensure that officers properly interpret and apply the statutory and regulatory requirements that apply to H-1B petitions involving third-party worksites.” (Those “requirements” being the aforementioned documentation.)

Meanwhile, the DOL’s Form ETA-9035 & 9035E (PDF) (applying to H-1B, H-1B1, and E-3 applicants) requires that employers cite whether workers “will be placed with a secondary entity at this place of employment.” If the answer is “yes,” the employer must provide the legal business name of the “secondary entity,” along with the wage rate it pays nonimmigrant workers, and the prevailing wage rate.

But this new court decision argues that USCIS doesn’t need “evidence with that level of micro-granularity” in order to ensure that an employer meets “its burden of showing non-speculative employment, service in a specialty occupation, and the regulatory requirement of an itinerary.”

The decision added: “Because the Court finds nothing in the statute or regulations requires a “detailed itinerary” setting forth everything the prospective visa beneficiary will be doing day by day for three years, there was no interpretive basis for the Agency to suggest that such information is necessary or advisable in most cases to include in connection with an H-1B petition.”

A DOL dataset of H-1B visa applications, released late last year and tabulating FY2019, showed that a large number of companies relied on H-1Bs as “secondary entities” or subcontractors. Some of the biggest tech companies, including IBM, Google, and Microsoft, sourced hundreds of H-1B workers from business-consulting and subcontracting agencies.

Although this ruling might seem to make things easier for subcontractors, long-term trends have worked against those firms. The federal government’s updated policies have resulted in an increasing H-1B denial rate for consulting and business services companies, according to an analysis earlier this year by the National Foundation for American Policy (NFAP). Take a look at the following chart, where it’s clear that these firms have experienced, over the past four years, a skyrocketing change in denial rates versus traditional tech firms:

(Dice’s separate analysis of USCIS data suggests that the rate of initial H-1B approvals (as well as approvals post-RFE) has crept up slightly after a period of declines.)

Will this new court ruling have a big impact on how subcontractors utilize H-1B workers? While it could prove a factor, it’s clear that denials for many of these subcontracting firms have been rising for some time. In addition, restrictions on travel and immigration related to the COVID-19 pandemic could have a massive impact on H-1B and other visa programs over the next few years. 

40 Responses to “H-1B Court Decision Impacts Tech Subcontractors”

  1. I request everyone to please request your company management to include a diverse group of people in the interview process with all having equal participation….so that people don’t just hire their friend, family or caste members only.

        • This HBBBBB1!!!!!!!! is a bunch of BS must be stop period. US labor DPT law is if the US company cannot find the special skill set American Citizen that is only time HB-1 can be used to bring someone with that required skill set.I am US citizen I left the full-time job some knucklehead got hold of my resume convinced me my resume is good fit for this new position after the contract you will get hired full time. Do not listen or trust anyone from outside recruiters they are the third parties scum bags and use internet phones via their PC looks like calling from the USA they are not. In my case, I was dealing with someone from you know where ( I) and another one in the USA both agency get paid by the company I been placed as well they all from the same region of the country. I have 25 plus experienced Reliability Engineer in the semiconductor industry all these people been hired by the inside influence and call themself software and HW engineers honestly they don’t know jack which way to turn the screw and what is the Philp pan head screw what is an Allen wrench. Go figure how they got in to big giant companies. From low-level management to top-level are all foreigners my experience I have seen just hand full white rest 98% all outsiders (Here the hint Chinees Indian System Company)
          1/4 of my pay been split by these two crooked agencies and I got the short end of the stick. This my two cents nothing against any people this is not their fault because of our constitution been hijack and abuse by far-leftist politicians allow this to happen end of the day US citizens are the victims. With the current unemployment rate, America better be “NUMBER ONE & FIRST” leftovers may consider once all Americans are working.
          ” God Bless America” Makes America greatest again.

    • Johnathan

      Diversity should be irrelevant. We should be hiring excellence and American. It is shameful and treasonous that psycopathic executives are allowed to displace better American techies with cheap sycophants.

  2. Mr Bill

    Take a close look at the list, since the author does not call out the blatantly obvious. Obviously the Indian contracting firms are having their h1-‘s denied more, and the domestic firms are having about the same rejection rate, which is not very high. Why is that? Can the author figure that out?
    US citizen contractors are beyond sick and tired of getting hammered by Indian contracting companies replacing US citizens with cheap subpar Indian IT workers. This administration has a lot wrong with it but the fight for the american worker over the Indian labor transplant is finally affecting the situation on the ground.
    AMEN

    • Mr. Patel

      Indian consulting companies are providing IT professionals with no prior experience, knowledge and education. I can prove that because I was once offered job by Indian consultancy company as Senior Java Developer when that time I didnot even know how to write one line of java code. Can you believe it? If NO, it is TRUE! They do proxy interviews with companies during interview process. The most wondering thing is while hiring Contract workers, interviews take place off-site and on PHONE- Yes, PHONE, not even Skype. They also made fake resume for me. I eventually denied and I am happily working as Software Quality Analyst in large Tech company where I started 7 years ago as Tech. Support Specialist.
      No wonder why Indian contracting companies are get more denial.

      • Good point. I got many phone call and email from Indian contract companies for urgent fill position. They don’t even look read my resume. They offered me for some skill I don’t have and positions I’m not looking for. That’s so annoying

    • I just post my comments I could not find it. I could not agree more these are the same crooked BS agencies working in US and India large networking businesses screwing all Americans Jobs.
      Of course Chinees as well.

      • Rocky

        I have seen your so called STEM learners struggling to compete with Indians.
        Indians are/may be working for cheap labor, but work is being achieved though at a lower rate, thats why USA companies themselves are not going for USA workers. If US companies are themselves not worried by placing Americans at work, then see where the problem is..

        • Chuck

          Oddly enough I have experience with both kid’s education and working with H1-bs.
          I’m a member of the local school board and I get to see first hand which kids struggle with what subject matter. In our district, it’s Indian children who struggle and need additional resources. At taxpayer expense, of course. Although my sample size is small, it trumps your fact-less opinion.

          Professionally, companies get what they pay for. We pay H1-bs, approximately half of what a typical US worker would be paid. This isn’t discrimination because H1-bs are paid according to education and experience. So now YOU can see where the problem is.

        • paul bevillard

          “I have seen your so called STEM learners struggling to compete with Indians”
          And I have seen Indians who couldn’t differentiate a screwdriver from a spoon. Yeah, there are few gifted individuals, but the majority are quite laughable.

          • It’s laughable you guys stick to a narrative which suits you. Do you guys even know that there’s a minimum wage requirement for H1-B visa’s. ON top of that, every employer who hires a non-immigrant has to sponsor their H1-B visa’s(6k-10k) and wait for the application to process with uncertainty. Do you think the US companies would go through this demanding process to hire ‘subpar’ foreign nationals ? If so, then you are laughable.

            Maybe it’s because Americans in general are not STEM oriented and their stupid kids prefer a sociology/political science major and accrue 80k in student loans instead of planning for a proper future. And the irony is their parents are none the wiser.

    • Peanut Butter

      “Procedure of H-1B. Visa processing system. How this process can utilize for apply for job in USA.”
      The process is done by the utilization of the application for job visa application. After your application is complete it is processed through an application at the visa processing system, which processes your application where eventually denying your application, since you’re applying at a bad time. Did you get all that?

  3. Most of these H1-B’s are in continuous training from domestic workers … the rate of subverting productivity through pamperism is very high … meanwhile, all intellectual property is scooted out of the country with highly-collaborative online team “sharing” … it’s just a way to get the software licensing sales up … revenue trade for domestic jobs … yet, it’s always the executive management that is winning politically correct points by pressuring out citizens and pressuring in foreign workers … but hey, good news is …

    • Milly

      Funny thing – a “tech lead’, here on an H1b visa, for a project I am working on some of the time called me last week – wanted me to explain if an extract file generated by the application to send to a vendor was a ‘flat file’. I had gone over this extensively with this person last year. And again, is it a ‘flat file’? Cannot make this up. I get calls from the project manager about this. But the “tech lead” is a buddy and from the same place in India as the manager.There is NO WAY this was the best choice of worker.

  4. H1B aside we have absolutely no count of people who work on L and B visas. These people get their local wages to work in US. We can never compete with that.

  5. My Name

    The problem with most desi-owned subcontracting firms are they only hire people belonging to their own, particularly in H1B. Tesla alone, in Fremont CA, a large number of desi consultants there. When you explain something good that they haven’t used before, they will see you as a threat, therefore won’t let you in.

  6. Ron S

    I’ve been following / observing the H1b and L1 visa program screwing for many years and it’s just like drug prices… not a single flirping thing has been done about it, and if anything, very, very little!!!!!!!!!!

  7. When have to replace the H1B visa holders by placing the laid off Americans workers. There are more than 40 millions unemployed. We cannot justify hiring the H1B visa holders. The election is coming in November. Be aware

  8. Non_Indian

    Clearly, I have seen one visible difference, and the consulting firms should be punished. A US Citizen worked in IBM and was laid of as IBM says, resource action. The person applied through and took these consulting firm’s classes. When it comes to hiring, they prefer non-American, as they can manipulate the $, where as they are afraid of their goal of making $ by manipulating resumes and fraud interviews.

  9. The H1B system has been abused and leveraged to perform the same action as moving American factories overseas. Yes, it undermines the salary and opportunities for young American workers. Yes, it places sub-par Indian(yes they are sub-par but that doesn’t even matter) workers in American jobs that do not require specialized and rare ability or technical knowledge; going against the intent of the H1B visa system totally. Yes, it places the US at risk by exposing foreigners to our hard-won technical knowledge. Yes, it has allowed thousands of Chinese spies to work for our companies and ultimately transfer secrets to those evil dogs in china. Yes, it has used completely misapplied terms like “diversity” to give cover to the nefarious machinations against our own American people by sociopath politicians. The time for this evil practice to end is now!!! It is one more method of asymmetrical warfare used against the middle class of this once great country and it must stop.

  10. What the court is saying is that the law (statute) does not require such level of detail. As much as I would prefer this ruling did not happen, the court is correct and doing its job they way we should all want a court to do. Rather than complaining about the court or expecting a President to ride in and save you, the pressure needs to be placed on Congress to change the law. It is that simple people. Put your effort into lobbying your congressman. Venting here changes nothing.

    • Milly

      Contact Chuck Grassley. His S3370 is in committee now – “H1b and L1 Visa Reform Act 2020”. Maybe the judge in this case was fair or maybe biased as an Obama appointee. Tell Chuck Grassley to include provisions that will keep that judge from making these rulings because we need to support Americans first.

  11. If leaders who really cares for future generations of US Citizens (not naturalized Citizens) they would halt Green Cards/ Citizenship’s first and then limit the visas to minimum.

  12. Exposure

    I am an immigrant – moved to the country 30 years ago from an SE Asian country.
    H1 B was necessary at one point no doubt but certainly not any more. I have been in IT companies including Big ITs. I tell you how the H1 B system is abused.
    1) The specialized skills – is a joke for most cases ( There are a few exceptions where there may be a skill shortage). Look at the companies looking for a person. The demands an exceptional candidate who know almost everything in the world. The job will certainly not require a Master of all trades.So obviously there will be no qualified candidates to apply. Now the game begins – fake a resume of a known person( a friend contractor) is then got in. So he gets the job – ha ha ha .. Americans fooled. Just look at the requirements of any job – like a top bank in McLean VA(Just an example any IT department from any company is same)- you will see what I mean.
    2) I have been managing a lot of IT projects. In development projects specially I see and am sort of forced to hire a H1 B resourse from a particular country. Now the main reason is that the H1B will work for almost 24 hours while billing for only 8 hours. He will be working on weekends too. Mostly obey the commands of the boss. Now here is how you are cleverly forced. The companies bid at low rates and unrealistic timelines. So now you have the get the work completed in the timeline which is only possible by hiring an H1 B so that he works day and night.
    3) This is a capitalistic country. So the fortune 500 companies hire people all over the world in the name of talent. Some exceptions can be there – where people are really talanted. Majority are not. Some are given high salaries no doubt. But here is how the eyewash begins. A H1 B does double triple the work. He is obedient and submissive. So the sal may be 1.2 times the market rate (questionable again) but the work timings are unlimited. So you are making money out of an H1 by making him work 3 times and saying he is talanted and laughing at the Americans – ha ha ha.
    3) The Americans working with the H1bs are also forced to work more hours. The reason is simple. These days in the name of cost cutting they will be fired if they dont be like H1bs. Now when there is a cost cutting no one sees the real H1B submissive reason. So they work hard too. Look at any IT company working with H1b – you will see them logged in till late night.
    4) Any project manager from a particular country has seen caste system there. In that counrty show of power or authority is marked by respect in social circles. They come here and have the same mentality. They love showing power and authority which they can only do with an H1 B from the same country. The H1 to stay in the job will obey always – else cost cutting – change of requirements etc will come in. In social circle they will love to speak about them by saying – “That guy REPORTS to me” and that circle says wow… Ha ha ha
    5) While taking interviews too – most managers make sure that they hire someone they know irespective of talant – so that they support him and cover his ass and he is free from layoffs ( This might be true for many American Managers too but it is widespread among the IT managers from a particular country.
    6) Fake interviews are conducted making sure that the candidate is rejected. Now they will hire the person from the same community – so in the social circle again he becomes a big guy. He gave an H1 B a job and becomes a god. I can again cite the example of the bank based out of Mclean VA. Get a chance talk to employess hired and you will soon understand their talent and skills. But you now know why they got hired.
    7) Many of the H1B get their Engineering Degrees from very LOW level colleges. Some somehow manage their Masters here and hide the fact. They then become intelligent and talanted – get hired in the same social circle while fellow Americans get neglected.
    8) Here comes another very interesting observation. H1B people are supposed to be highly skilled professional and we lack those skilled professional in USA. ha ha ha. Now look into any training institute in USA itself and also employers. They train these H1Bs in the latest technology. Why? Again the H1b will be a nice slave. If you can train and then hire – why not hire an American by training them. You again know why. I know a top Big IT company(As far as my knowledge goes all of them do that) based out of Arlington – they have regular training sessions for the H1Bs they hire. Train Americans and hire them – but no as discussed above.
    9) Another Big IT company when the person wants to become a Partner/Director has arrnaged diversity to potray for the promotion. Usually the structure is Hire an Afro American for the PMO assistant Jobs, a White funtional manager to deal with the clients and a few here and there and the rest – from the same H1B program – work more, strange deadlines and the beauiful profit line – Now you get promoted.
    For the proof look into any IT department and you now know the story.
    Interviews should be recorded. You will see how the top capable candidate is rejected. Most Americans have no idea how this works – they cannot imagine. In fact when I told one that how the resume gets faked he did not believe it. Said how can you fake – you will get caught in the interview. But the fakers know how to do so. They all laughed.