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Government Employs H-1B Workers Despite ‘Hire American’ Pledge

Oct. 24, 2019, 10:00 AM

An attempt by the Labor Department to shine a light on companies that bring on board foreign workers with the help of oft-criticized, third-party placement firms has outed an unexpected employer—the federal government.

Under new data collection rules, the government is now able to identify the ultimate employers of workers with H-1B specialty occupation visas, who are essentially leased to companies via these staffing firms.

The practice has raised the ire of the Trump administration, which would prefer that American companies hire American workers, even though such H-1B workers are largely tapped for highly technical, tough-to-fill vacancies.

A Bloomberg Law analysis of the DOL data shows more than 2,000 H-1B workers approved by the DOL in the first nine months of fiscal year 2019 were meant to be placed by staffing companies in jobs in the federal government. DOL approval is a critical requirement before a worker can be placed.

The number represents a tiny fraction of the estimated 4 million-strong federal contractor workforce, but raises the question of how closely President Donald Trump‘s own administration is following his April 2017 directive that U.S. employers “hire American.”

The agencies where the H-1B visa holders work say they are following the law, and it’s up to the contractors to ensure that their employees are legally authorized to work.

At the same time, the presence of the visa workers could simply be a manifestation of what corporate America has said for years—it’s not always possible to find the right domestic talent for highly technical jobs that are essential to the success of large organizations.

Fannie, Freddie Lead the Pack

The DOL—one of the agencies tasked with ensuring that the H-1B visa program doesn’t displace U.S. workers—itself contracted with third-party companies to take on at least 40 H-1B workers, according to the Bloomberg Law analysis.

Data indicate Fannie Mae and Freddie Mac, which are directed by the Federal Housing Finance Agency under a conservatorship, are the most popular destinations among federal agencies for H-1B workers placed by third-party companies. Together, the two account for at least 1,340 H-1B workers sponsored by more than 460 different third-party companies.

Also high on the list is the Health and Human Services Department (at least 290 H-1B workers), Amtrak (at least 60 H-1B workers), the Commerce Department (at least 60 H-1B workers), and the National Aeronautics and Space Administration (at least 40 H-1B workers).

The vast majority of the workers are in information technology occupations such as software developers, computer programmers, and computer systems analysts.

The data come from labor condition applications (LCAs), the form that employers must have approved by the DOL before petitioning the Homeland Security Department for the visas.

The LCA requires employers to attest, among other things, that they aren’t displacing U.S. workers and that they’re paying H-1B workers either the prevailing wage or the actual wage the employer pays similar workers, whichever is higher.

Staffing Firms Criticized

The process of hiring foreign employees on such visas often involves third-party staffing companies. Firms like Cognizant Technology Solutions Corp., Infosys Ltd., and Tata Consultancy Services Ltd. are the direct employers of these foreign workers and are the entities that go through the visa application process.

Once they receive the visas, the staffing companies lease them to big companies and the government.

Such firms have been criticized in the past for visa fraud schemes and discriminating against U.S.-born workers in favor of workers from South Asia. Critics—mostly advocates for displaced U.S. tech workers—also complain that the program ultimately results in U.S. workers being replaced by foreign-born counterparts who make less money.

And in some cases, that work winds up moving offshore.

The companies say they’re not staffing firms that replace their clients’ employees, but rather providers of services for complex projects. Despite the criticism, the big staffing companies have not been found by the government to have engaged in any wrongdoing.

Although H-1B workers likely have worked on federal projects for some time, the extent has been hard to determine. Until recently, only the staffing companies have been reported in government data. A new application form approved in November 2018 requires employers that place H-1B workers at third-party client sites to name those clients. The names of those “secondary entities” then started appearing in the DOL’s quarterly data releases earlier this year.

The figures only represent H-1Bs approved by the DOL, and don’t indicate whether they also were approved by the DHS. DHS data does not include information on “secondary entities” and so can’t be matched to the DOL data.

Overall, data for the first nine months of fiscal 2019 show that the top landing spot for these leased workers is Wells Fargo, with at least 4,500 H-1B workers certified for placement there. Verizon (at least 3,800), AT&T (at least 3,700), Apple (at least 3,600), and Citigroup (at least 3,600) round out the top five.

The companies sponsoring the most H-1B workers who are sent to third-party work sites are Infosys, Cognizant, Tata, Deloitte & Touche, and Wipro Ltd.

“Depending on its needs, Wells Fargo works with third-party vendors, including specialized technology suppliers,” the company said in a statement. “Based on the work, those vendors may fulfill those needs with workers that they sponsor for H-1B visas, especially in tight labor markets.”

Representatives from the other companies didn’t respond to requests for comment.

Wariness by Trump Administration

The Trump administration has viewed contracting arrangements involving H-1B workers with skepticism. In addition to outing consulting companies’ clients, such companies are required to provide a detailed itinerary of their H-1B workers’ projects at client sites for the entire duration of the visa.

Last year, the DHS’s U.S. Citizenship and Immigration Services indicated on its website that international students participating in a post-graduation work program wouldn’t be allowed to work at third-party sites. The agency later reversed its position.

The H-1B program “has turned into a business model that is abusive, and it’s infiltrated even our government,” Sarasota, Fla., attorney Sara Blackwell said. That model, she said, involves U.S. workers training their H-1B replacements, who in turn train workers in other countries, with the end goal of offshoring the work entirely.

“If they’re going to benefit from the program, then they should at least be transparent,” she said of federal agencies that rely on H-1B workers.

Blackwell, an advocate for displaced U.S. tech workers, is known for bringing a lawsuit against Walt Disney World for laying off its U.S. tech workers and replacing them with H-1B workers employed by contractors. She later dropped the suit, arguing that changes in the law are necessary.

“There are a lot of things that would take no effort that President Trump could do, and that his office could do, that I haven’t seen,” Blackwell said. “A lot of the American workers have been very furious.”

‘Nothing Shady’

Government entities contacted for this story defend the practice of bringing aboard H-1B workers.

“Contractors are required to ensure all workers are legally eligible to perform work,” a DOL spokeswoman said. The agency in June awarded $183.8 million in grants, funded by H-1B fees, for apprenticeships in the H-1B-reliant industries of information technology, advanced manufacturing, and health care, she said.

As for whether the DOL is likely to keep tabs on its own contract H-1B workforce, the spokeswoman said the agency’s Wage and Hour Division does have authority to conduct investigations within the agency. It’s just that its authority to perform H-1B investigations generally is limited by the Immigration and Nationality Act, she said.

“As all federal agencies, NASA adheres to the various applicable laws, regulations, and guidance related to hiring authority,” a NASA spokeswoman said. The H-1B visa process is worked out between the employee, the contractor company, and its human resources department, “not directly with federal agencies,” she said.

Fannie Mae and Amtrak declined to comment. Representatives for Freddie Mac, HHS, and the DOC didn’t respond to requests for comment.

Despite the irony of the Trump administration being on the receiving end of a practice it disfavors, the data show that “there’s nothing shady” about sending H-1B workers to a third-party site, said Kevin Miner, an immigration attorney with Fragomen, Del Rey, Bernsen & Loewy in Atlanta.

Considering the widespread use of federal contracting, it’s not surprising that H-1B workers are part of that equation, he said.

“The fact of the matter is that this is a key part of the workforce,” and these “are fields where it’s particularly difficult to find qualified U.S. workers,” Miner said. The government needs these talents “as much as any other large, sophisticated employer.”

Data methodology: This story is based on U.S. Department of Labor decisions made on labor condition applications (LCAs) between Oct. 1, 2018, and June 31, 2019. The data include fields for the primary employer (the entity requesting the certification) and the secondary entity (the entity where the employee will ultimately be placed). Agencies were identified using this list: https://www.usa.gov/federal-agencies.

We used regular expressions to determine if an entry included an agency name or acronym. Then, we reviewed each one to determine if it was a true match. One exception is Oak Ridge National Lab, which can be found in both fields. We did not include it in this analysis because it is run by a private company.

In some cases, the secondary entity field includes two distinct entities. If a federal agency name appeared along with another entity in the secondary entity field, we counted that as an employee being placed at a federal agency, and we used the entity in the primary employer field in our analysis of top companies placing H-1B workers at federal agencies.

Using data on the Bloomberg Terminal, we consolidated company names under the parent company. For example, Waymo LLC, Google LLC, Google Inc., and Google Ventures Management Company LLC are consolidated under Alphabet Inc.

To contact the reporters on this story: Laura D. Francis in Washington at lfrancis@bloomberglaw.com; Jasmine Ye Han in Washington at yhan@bloomberglaw.com; Christina Brady in Washington at cbrady@bloomberglaw.com

To contact the editors responsible for this story: John Dunbar at jdunbar@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com