Thread: H-1B Audits Won't Solve the Issue of Lower Wages

H-1B Audits Won't Solve the Issue of Lower Wages

By Norm Matloff
Thursday, August 27, 2009, 11:04 AM

Immigration officials have begun auditing firms that hire H-1B and L-1 visa holders to ensure that the person holding the visa and the company that applied for the visa match (among other things). But the audits won't solve the bigger issue of paying those H-1B visa holders lower-than-market wages.

(Read the article from Computer World) http://www.computerworld.com/s/article/ ... taxonomyId

Once again, folks, it is LEGAL to pay H-1Bs below-market wages. Yes, they must pay something called the "prevailing wage," but the legal definition of that term is full of major loopholes, which are exploited by employers, including the large, mainstream firms. So, while it's true, that some employers do break the law, most find no need to do so, as they can use the H-1B visa for cheap labor while complying fully with the law.

Therefore, audits cannot fix the H-1B cheap labor problem. Nor can they fix the loophole referred to by Professor Hira in his remark about circumventing the U.S. labor market--there is no legal requirement that employers try to fill jobs with U.S. citizens and permanent residents before resorting to hiring H-1Bs, and thus THERE IS NOTHING TO AUDIT in this regard. (I thus don't see Ron's point, and suspect he's been misquoted.)

So, why engage in these audits, especially in such a high-profile manner as we see in the enclosed article? There are two possible answers: (a) DOL is naive, and truly wants to fix the perceived problem, or (b) DOL is grandstanding, trying to deflect attention away from the real issue, the loopholes. I've pointed out before that the industry lobbyists love to see highly-publiczed raids on bodyshops, precisely because of (b), and since both major parties are beholden to the tech industry on the issue due to campaign contributions (prominent Republicans have admitted this publicly, and of course it's true for the Democrats too), I must say that (b) may well be the cause for the sudden audit blitz. On the other hand, as a longtime admirer of DOL chief Hilda Solis, I hope the cause is instead (a). If it is (a), it's still sad that she is so uninformed, given her vow at her confirmation hearing to address the H-1B issue.

Again, fraud is NOT the main problem. Yes, there was a study that found a 21 percent noncompliance rate, but as the article mentions, many of the "violations" were merely technical. Even most of the ones violating prevailing wage requirements probably involved only a small dollar amount; in cases in which a DOL audit on prevailing wage resulting in the department ordering employers to give workers back pay, the typical payment has been about $2,000 per worker. These violations are probably not deliberate. By contrast, making use of the loopholes can save the employer ten times that amount, or more.

The excellent Durbin/Grassley bill would, if enacted intact, plug the loopholes. However, if the bill ever does somehow pass, I believe the loophole-plugging portions would be removed, leaving only some provisions to beef up enforcement, for the most part useless.

Norm Matloff is a Professor of Computer Science at the University of California at Davis. He writes an e-newsletter on the H-1B work visa, offshoring and related issues. We repost his writings here with his permission. To directly subscribe to his e-newsletter, contact him at matloff@cs.ucdavis.edu.

http://www.numbersusa.com/content/nusab ... tid=254574

H-1B Visa Sponsors: Surprise! You're Being Audited

By Stephanie Overby
August 12, 2009 09:34 AM ET
All Comments 20

CIO - Large U.S.-based technology companies and Indian IT outsourcing firms are paying close attention to proposed legislation aimed at tightening restrictions on and increasing oversight of the non-immigrant professional visas they use to place foreign professionals in roles stateside. But while the H-1B and L-1 Visa Reform Act, introduced by Senators Chuck Grassley (R-IA) and Dick Durbin (D-IL), remains in congressional committee, U.S. Citizenship & Immigration Services (USCIS), the agency that administers the H-1B and L-1 visa programs, has been increasing its anti-fraud enforcement efforts in response to reported abuse of the temporary worker programs.

Recently, the USCIS has begun making "surprise visits" to the U.S. work sites of companies that sponsor H-1B and L-1 visa holders, including some large U.S.-based financial services companies, says Elizabeth Espin Stern, a partner in the Washington, D.C. office of law firm Baker and McKenzie. USCIS assessors come with a checklist of questions designed to confirm the identity of the employer who petitioned for the visa and the visa beneficiary and to verify that both are in compliance with the terms and conditions of the visa.

USCIS spokesperson David Santos confirmed that the agency has begun conducting random on-site inspections as part of the expansion of its Administrative Site Visit and Verification Program, launched at the beginning of this fiscal year. Prior to beefing up the verification process, only religious organizations were subject to mandatory site inspections and compliance reviews. Today any non-immigrant petition could be subject to workplace audits after approval and prior to any potential adjudication.

The objective of the unannounced on-site visits is clear: to detect fraud and abuses of the visa program. A study conducted last year by the Office of Fraud Detection and National Security estimated that 21 percent of H-1B visa petitions violate H-1B program rules. The offenses range from technical violations to outright fraud. The most common violation was not paying a prevailing wage to the H-1B beneficiary.

Those who have voiced concerns about the propensity for H-1B fraud in the past say the impromptu inspections are a step in the right direction. "Remember the H-1B grants a license-a privilege-to a firm to circumvent the U.S. labor market," says Ron Hira, assistant professor of public policy at Rochester Institute of Technology and co-author of the book Outsourcing America. "With this privilege must come responsibilities. A random auditing process seems like the most sensible way to ensure this integrity."

But USCIS investigation tactics often exceed what is necessary and reasonable to obtain H-1B application verification information, according to Stein. Unlike the Department of Labor, which has the statutory authority to investigate an employer's compliance with visa obligations but rarely conducts audits unless there are complaints, the USCIS has no statutory or regulatory authority to enter the workplace of H-1B and L-1 visa holders. And investigators do not arrive with search warrants or subpoenas, says Stein.

What's more, USCIS has hired contract workers, who complete a USCIS training course, to conduct the site visits. But many of the contractors lack expertise about how companies maintain employment records or demonstrate employment terms, adds Stein.

USCIS spokesperson Santos confirms that compliance with the investigation is voluntary. However, employers taken off guard by an unplanned visit may not be aware of that fact.

The Protocol for an H-1B Visa Audit

Investigators request to interview the petitioner, review documents that support the visa application, and enter the workplace to confirm visually that the visa recipient is employed according to the terms and conditions of the H-1B visa.

Stein advises her clients to designate a leader from the general counsel's office or human resources to guide those who could be involved in a potential USCIS site visit. Although a cooperative and courteous attitude is advisable, company representatives may reasonably request more time to provide documents or other information.

"Employers are not obligated to submit to disruptive or unreasonable requests for access to company employees or company property," Stein says.

Companies who sponsor foreign professionals for visas should always prepare for potential visits or audits in advance by identifying what documents they are willing to share with inspectors and who will provide the records. Proving compliance with the H-1B program is the tricky part.

"The H-1B labor process is complicated," says Allen Erenbaum, a partner in the Los Angeles office of law firm Mayer Brown.

For one, employers must prove that they determined the prevailing wage for the occupation in the metropolitan area and that the H-1B salary exceeds both that market wage and the actual wage it pays to other employees in similar roles. The company must also show that it prepared a memo describing the factors-experience, qualifications, education, job responsibilities-considered in determining the wage, posted a public notice of the H-1B employee's job and salary in two locations for ten days, and maintains a public access file containing all information relevant to the H-1B, which can be reviewed by any member of the public at any time.

"In addition," says Erenbaum, "the employer should maintain additional information which will be helpful in the event of an investigation, including payroll records showing the wage rates for the position, any data used to establish the actual wage for the position, and a copy of documents given to employees describing employee benefits."

Employers also should ensure that visa petitions are kept up to date, says Stern. If wages or work location for an H-1B holder changes, companies must move to amend the original visa petition.

"If an employer gets audited," says Erenbaum, "it's too late to begin to get ready."

http://www.computerworld.com/s/article/ ... taxonomyId