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FY 2007 H-1B Numbers Available from April 1, 2006

The CIS will be accepting petitions for Fiscal Year (FY) 2007 H-1B visas from April 1, 2006. The soonest these visas can be used for work authorization will be October 1, 2006, which is the start of FY 2007. Last year, the quota of 58,200 regular track H-1B visas was exhausted by the first day of the fiscal year on October 1, 2005. The 20,000 H-1B visas for persons who had obtained a Master’s or higher degree from a U.S. university was exhausted in January of 2006. Thus, while there are no new H-1B visas available to employers at this time, new visas will be available in about one month, on April 1 for work start dates of October 1, 2006.

DHS Recommends Changes in the L-1 Program to Congress

As many readers may know, from 1990 to the present Congress has placed increasingly onerous restrictions on the H-1B program, which employers frequently use to sponsor foreign workers for professional employment. In addition to the numerical restrictions outlined above, more current restrictions include the application of additional case filing fees to H-1B cases. These filing fees now total $2190.00 per case for most employers. Because of these restrictions, many employers have begun to use other categories of visas, the most popular being the L-1 category through which executives, managers and specialized knowledge workers who have been employed with an affiliate abroad for at least one full year can be transferred to the U.S. It appears that the Department of Homeland Security (DHS) is fully aware of this and believes that it should be just as hard to obtain an L-1 visa as it is to obtain an H-1B, since many companies are now using the L-1 in place of the H-1B. The DHS is also pushing for additional L-1 requirements such as the imposition of a government determined rate of pay for all L-1 visa holders, similar to the prevailing wage requirement currently applied to H-1B holders. Last year, the Congress linked the H and L categories for the first time through the imposition of a $500 “anti-fraud fee” to visa petitions submitted under either category. Additionally, a new law was passed to limit the use of L-1 specialized knowledge workers at off site work locations.

The DHS Office of the Inspector General published a report in January of 2006 titled Review of Vulnerabilities and Potential Abuses of the L-1 Visa Program through which it is now encouraging Congress to make further changes to the L-1 program. The dynamic growth of the IT service industry in the U.S. appears to have stirred the interest of DHS, and the report devotes significant attention to the growth in the number of IT workers from India who are using the L-1 visa in place of the H-1B. With regard to specific numbers, the report notes that the top 5 L-1B specialized knowledge source countries in 2005 were: India (48%), Canada (15%), the UK (5%), Japan (4%) and Germany (3%). The top 5 L-1A manager and executive source countries in 2005 were: Canada (17%), India (11%), UK (11%), Japan (5%) and Mexico (4%). The report also notes that employees from India only made up 10% of the L-1B workers in 2002 and 5% of the managers and it contains a chart showing the parallel movement of the NASDAQ and L-1B visa usage. The DHS believes that the L-1 is now becoming one of the choice “computer visas.” Two paragraphs taken from the report help to illuminate the focus it wishes to pass on to Congress:

There has been considerable media attention regarding the L-1 program over the past few years. Articles have focused on the increase in L-1 visa issuance in the IT sector and on the potential for the L-1 program to be used as a substitute to the H-1B program. Aricles also have focused on firms’ abilities to use the program for labor outsourcing, and on supposed cuts to the American labor force and wages.

Witnesses testifying at congressional hearings have repeated these concerns. Labor advocates felt the L-1 program was growing because of insufficient limitations and that “the absence of these and other protections and limitations make the L-1 program far more attractive to employers than H-1B, and is a major reason for the explosive growth in this visa category.” Workers told of training their own replacements and implied that the L-1 program was driving down salaries and taking American jobs; “Every H-1B and L-1 visa given to outsourcing companies like Tata is a job an American should have” (Testimony by former Siemens Technology Employee, Pat Fluno, on L-1 visas Before the Senate Committee on the Judiciary Subcommittee on Immigration and Border Security Regarding the L-1 Visa Program, July 29, 2003.)

To rectify the perceived abuses, the DHS makes 3 specific recommendations:

1.) The establishment of a procedure to obtain overseas verification of pending H and L petitions. [The focus of this proposal appears to be to confirm the existence of foreign affiliates for L-1 visa petitions. It is not clear how this proposal would tie into the H-1B process, except in the case where an employee obtained a degree or critical work experience outside of the U.S.]
2.) Explore the possibility of having Immigration and Customs Enforcement Officers and experienced criminal investigators assigned abroad to check the bona fides of L petitions.
3.) Seek legislative clarification regarding the current legal definitions applying to the concepts of manager, executive, specialized knowledge, and new office.

Even if none of these recommendations are ultimately followed by Congress, the DHS officers assigned to adjudicate L-1 petitions within DHS will begin to focus more closely on L-1 cases and may adopt a more aggressive posture in adjudicating these cases. Thus, it may become more difficulty to sponsor foreign workers for L-1 visas than in the past, specifically with regard to specialized knowledge workers.

The broader economic impact of this more restrictive approach likely will be the acceleration of the offshoring trend already in place. It is clear that if a company cannot bring skilled employees to the US, it must send its work abroad for completion. The result is that potential L-1 (and H-1B) employees will not live in the U.S. and pay taxes here, or buy goods or services in the United States. Derivative support jobs (secretaries, facility support staff, HR managers, vendor support) will also continue to move abroad, where the depth of talent pool is increasing each year.

DOL Proposed Rule on Substitutions and Other Labor Certification Issues

Labor certification is the process through which companies can obtain lawful permanent residence (a green card) on behalf of a foreign worker to work in the U.S. The labor certification process requires a showing that no U.S. workers are able, available, willing and qualified to take a proposed position. Since the case is about a specific job opening, and not a specific individual worker, it has long been the practice that an approved labor certification application could be used by the employer to sponsor any foreign worker who met the listed job qualifications prior to the date the case was filed and prior to the date the foreign worker joined the company.

The U.S. Department of Labor (DOL) has become aware of certain employers selling sponsorship to desperate foreign workers seeking already approved labor certifications. To end this practice, the DOL has proposed a regulatory change which would prohibit employers from using an already approved labor certification for the sponsorship of another employee. This is unfortunate, as companies have often been able to reuse an already acquired labor certification for a new employee after the original employee beneficiary has left the company or obtained permanent residence on some other basis. Instead of going after the handful of unscrupulous employers it has found, the DOL has chosen to punish all employers by making the process even more restrictive. Although processing times are currently becoming more reasonable, in the days when the DOL took 3-4 years to complete the adjudication of a labor certification, having an already approved application allowed the company and the substituted employee to save a large amount of time, and expense, by completing the process more quickly.

Currently, an approved labor certification is valid indefinitely. The DOL believes that the elimination of substitutions alone does not go far enough in eliminating fraud and has thus also proposed that approved labor certifications be filed with the CIS (Citizenship and Immigration Services) through the I-140 petition process within 45 calendar days of the date they are approved by the DOL. This rule proposes that all certifications approved prior to the final rule’s effective date, including those approved under prior regulations, will be deemed to have expired within 45 days of the effective date of the rule.

The I-140 petition will often require evidence of the sponsored employee’s qualifications, including employment experience verification letters from previous employers. These letters can often take several weeks or longer to obtain, especially when the letters come from employers outside of the U.S. Thus, a 45 day notice may not allow sufficient time for a substitute beneficiary to obtain evidence required to move forward with the I-140 immigrant petition. Also, the 45 day rule would provide an additional reason why employee beneficiaries of new cases under the PERM system should obtain experience letters from previous employers BEFORE any new labor certification application is filed with the DOL.

Another proposed regulatory change would ban foreign workers from paying, directly or indirectly, the attorney fee or any other application related case costs. There is currently a similar regulation in effect for H-1B cases. Regarding this limitation, the DOL takes the position that the labor certification belongs to the employer and that the employee beneficiary shares no legitimate interest in the process.

The proposed regulations listed above are not yet the law, but clearly are moving closer towards publication and eventual implementation. Employers contemplating the substitution of current employees into unused labor certification approvals may wish to move forward with that process as soon as possible while the current substitution rule is still in place. We will include detailed information in a future newsletter upon any change in the current regulations. Nonetheless, as companies plan to meet their future hiring needs and outline policies for the future sponsorship of foreign workers, it may be helpful to note the direction in which the current process is moving.

The Wish Act of 2006

Senator Pete Domenici of New Mexico introduced another comprehensive immigration reform bill. Like the rest of a handful of other bills recently introduced, it contains a mixture of tougher enforcement, including penalties for companies that employee unauthorized workers, as well as benefits such as a guest worker program. While it is impossible to predict the direction the political forces of 2006 will move, the possibility of significant changes in the current immigration system is very high. While the proposed new laws may provide some new burdens for companies employing foreign workers, there is also a high likelihood that some of the problems companies are currently experiencing with the current system will be corrected and additional options for lawfully employing foreign workers in the U.S. will become law.

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About the Author

Attorney Robert Nadalin is a highly qualified and dedicated California Immigration Lawyer who can help you in your time of need. Learn more about your legal options during an honest consultation in San Diego, CA.