Tighter Rules Pose New Hurdles for H-1B Visa Hires

Companies that rely on H-1B visa workers to fill some critical spots face new pitfalls this year as the application season for fiscal year 2011 begins April 1.

U.S. Citizenship and Immigration Services (USCIS) is imposing stricter rules and more oversight on the hiring of foreigners who work as independent contractors or at third-party sites or who have an ownership stake in the company that’s sponsoring them for the H-1B visa. H-1B visas are designed to help companies meet their workforce needs through the temporary hire of foreign workers who are highly skilled in specialized fields.

Immigration lawyers say that the new guidelines, which were issued in January, will require employers to have more direct control of H-1B employees. And they say it will impose new legal expenses for employers who must prove they are in compliance.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

“The employer has to go miles and miles further to document the employer-employee relationship in places where they didn’t have to do before,” says Eleanor Pelta, first vice president of the American Immigration Lawyers Association.

Among the industries most adversely affected by the new tweaks are health care, government contracting and consulting.

The H-1B visa program has been a hot button issue for years, but it has become especially vitriolic during times when the economy is slumping and unemployment is high. Critics say businesses have more than enough skilled workers to choose from in the U.S. and that they use the program to find foreign workers who will accept lower wages. Proponents respond that there is a dearth of highly skilled workers in specialized fields and that access to foreign skilled workers enables U.S. firms to remain competitive and ultimately add new jobs as they grow and expand.

Stepped-up scrutiny of workers is leading to more rejected applications, according to supporters of the H-1B visa program. Many legitimate workers employed by legitimate H-1B employers are being denied entry for technical reasons that previously were not an issue, according to Michael Patrick, a partner and general counsel at Fragomen, Del Rey, Bernsen and Loewy.

As a result, the new guidelines are discouraging employers from using the H-1B program, says Patrick. “It certainly imposes restrictions on work arrangements that have been common in the H-1B program for years,” he says. “It has become a less than attractive alternative for employers.”

Patrick adds that the USCIS could face lawsuits over whether the agency overreached when it issued what amount to new rules without going through the proper rulemaking process.

Enforcement is also rising. The government plans five times the number of employer-site visits this fiscal year than in FY 2009. The audits, which will top out at 25,000, include unannounced interviews with a company representative and an H-1B worker as well as work site tours and record reviews, says Patrick.

But there’ll be one silver lining for employers this year. The H-1B program won’t hit the 85,000 cap placed on the number of H-1B visas on day one, or even in the first month, as it had during the boom years of 2006 and 2007. As a consequence of the economic slowdown, demand for H-1B visas is down. Fortunately for those firms who’ve been shut out in years past, the window for securing a worker will be much longer.