H-1B visa

The H-1B visa is a program that allows American companies and universities to employ foreign scientists, engineers, programmers, and other professionals in the United States. The program is generally thought of as a visa for high tech workers because roughly half are granted to technology-related workers. H-1Bs are used by a wide variety of professionals including several in fields suffering labor shortages like medical doctors, school teachers, pharmacists and even jobs on Wall Street.

Advocates say the program (and similar ones operated by other technologically-advanced countries) helps the host country maintain its technological as well as economic superiority by providing a steady flow of highly skilled professionals who may be short in supply domestically. It also provides an incentive for companies not to move their operations abroad. However, the program has been criticized domestically for displacing substantial numbers of experienced American citizen technical professionals. Economist Milton Friedman has called the program a form of subsidy. It was also blamed for encouraging brain drain in the source countries. Earnings remitted by foreign workers are a major source of income for some developing countries, easing their burden of debt.

Taxation status of H-1B workers

H-1B workers are legally required to pay the same taxes as any other US resident, including Social Security and Medicare.IRS Publication 519 (2004), U.S. Tax Guide for Aliens Any person who spends more than 183 days in the US in a calendar year is a tax resident and is required to pay US taxes on their worldwide income. From the IRS perspective, it doesn't matter if that income is paid in the US or elsewhere. If an H-1B worker is given a living allowance, it is treated the same by the IRS as any other US resident. In some cases, H-1B workers pay higher taxes than a US citizen because they are not entitled to certain deductions (eg. head of household deduction amongst many others). H-1B workers are also not eligible to any Social Security or Medicare unless they retire in the US, which by the very definition of the temporary nature of the visa, is unlikely.Alien Liability for Social Security and Medicare Taxes

H-1B employment

According to the USCIS, "H-1B aliens may only work for the petitioning U.S. employer and only in the H-1B activities described in the petition. The petitioning U.S. employer may place the H-1B worker on the worksite of another employer if all applicable rules (e.g., Department of Labor rules) are followed. H-1B aliens may work for more than one U.S. employer, but must have a Form I-129 petition approved by each employer."H-1B Frequently Asked Questions

US policy on maximum duration

In theory, the maximum duration of the H-1B visa is six years (ten years for exceptional Defense Department project-related work). H-1B holders who want to continue to work in the U.S. after six years, but who have not obtained permanent residency status, must remain outside of the U.S. for one year before reapplying for another H-1B visa.

There are generally two exceptions to the 6 year duration of the H-1B visa:

If a visa holder has submitted an I-140 immigrant petition or a labor certification prior to his 5th year anniversary of having the H-1B visa, he is entitled to renew his H-1B visa in 1 year increments until a decision has been rendered on his application for permanent residence.

If the visa holder has an approved I-140 immigrant petition, but is unable to initiate the final step of the green card process due to his priority date not being current, he may be entitled to a 3 year extension of his H-1B visa. This exception originated with the American Competitiveness in the Twenty-First Century Act of 2000.American Competitiveness in the Twenty-First Century Act of 2000

Quotas and changes in quotas

The number of new H-1Bs issued each year in the United States is subject to an annual congressionally-mandated quota. Those beneficiaries not subject to the annual quota are those who currently hold H-1B status or have held H-1B status in the past and have not been outside the United States for more than one year. This annual quota has had a significant impact on the high tech industry. It has generally been set at 65,000 visas per year, with some exceptions for workers at exempt organizations like universities and nonprofits. During the early years of this quota in the early 1990's, this quota was rarely actually reached. By the mid-1990's, however, the quota tended to be filled each year on a first come, first served basis, resulting in new H-1Bs often being denied or delayed because the annual quota was already filled. In response to the very hot high-tech market of the late 1990s, the quota was increased first to 130,000 and then, in 2000, to 195,000 visas per year. This increase in the quota seemed to play a role in oversaturating an already softening high-tech job market. During the years the quota was 195,000, it was never reached, and the availability of high-tech jobs in the USA plummetted as there was just too much competition for positions.

In 2005, the quota reverted to 90,000 when the temporary increase passed by Congress in 1999 expired. Since then, the quota is again filling up rapidly every year, making H-1Bs again increasingly hard to get. More recently, the basic quota was left at 65,000 but with an additional 20,000 visas possible for foreign workers with US advanced degrees. Of the 65,000 total, 6,800 are reserved for citizens of Chile and Singapore under free trade agreements with those countries. Outside of the 65,000 quota, another 10,500 visas annually are available to Australian citizens under a similar but more flexible program, the E-3 visa program.

In 2006, the entire quota of visas for the year beginning October 1, 2006 was exhausted within a span of less than 2 months (on May 26).^*

When the H-1B program was created in 1990, the annual quota was set at 65,000. In 1998 and 2000, Congress enacted temporary increases to 115,000 and 195,000. These increases expired after FY 2003.

Congress has made the H-1B numbers a bit difficult to understand. In 2000, Congress permanently exempted H-1B visas going to Universities and Government Research Laboratories from the quota. In 2004 Congress approved an additional 20,000 H-1B visas for those with advanced degrees from U.S. institutions. Under Free Trade Agreements with Singapore and Chile, 6,800 H-1B visas (out of the 65,000) are reserved for those countries. However, if they are not used under the agreements, they go back to the general pool.

The law requires USCIS to produce an annual report on the H-1B program. However, they have ignored this requirement since FY 2003. Therefore, the actual H-1B numbers since the expiration of the temporary quota increases are not know. It is likely that the current number new H-1B visas issued each year is about 100,000.

Controversies and criticisms

In theory the H-1B program should be relatively noncontroversial. However, the implementation has caused a number criticisms.

The biggest criticism of the H-1B program has been over its use in replacing U.S. workers. The first documented cases occurred in 1994 when AIG (Livington NJ) and SeaLand (Elizabeth NJ), took advantage of a loophole in the law to replace their U.S. programming staffs with H-1B workers. These companies used contract job shops to supply the H-1B replacements. The companies could claim they did not apply for H-1B visas and the job shops could claim they had not fired any U.S. workers. Thus, the employer could openly and legally replace their U.S. workforce with H-1B workers.

The American Competitiveness Act of 1998 that temporarily expanded the H-1B program contained a provision to close this loophole in the version that passed the House Judiciary Committee. However, the House leadership had it removed before the bill came to a vote.

Another criticism of the H-1B program is the vague eligibility requirements. While frequently and incorrectly described as a program for "highly skilled" workers, H-1B actually applies to "specialty occupations and fashion models". Specialty occupations have generally been interpreted as being those that normally require a college degree. That opens the program up to clever packaging by immigration lawyers.United Department of Labor Office of Inspector General, The Department of Labor's Foreign Labor Certification Programs: The System Is Broken and Needs To Be Fixed, May 22, 1996, p. 20

One of the unintended consequences of the H-1B program was the creation of the business of importing H-1B workers. The largest users of the H-1B program are contract job shops that import H-1B workers then contract them out to other companies. Instead of being used to fill jobs where U.S. workers are unavailable, these contract workers are in direct competition for jobs.United Department of Labor Office of Inspector General, The Department of Labor's Foreign Labor Certification Programs: The System Is Broken and Needs To Be Fixed, May 22, 1996, p. 25

Wage depression is another complaint about the H-1B program. Many studies have found that H-1B workers are paid significantly less than U.S. workers.The Bottom of the Pay Scale: Wages for H-1B Computer Programmers John M. Miano It is claimed that the H-1B program is primarily used as a source of cheap labor. The Labor Certification Process is suppose to ensure H-1B workers are paid the prevailing wage but loophole in the law allow employer to avoid paying the actual prevailing wage.

Historically, H-1B holders have sometimes been described as indentured servants, and while the comparison is not entirely accurate, it had some validity prior to the passage of American Competitiveness in the Twenty-First Century Act of 2000. Although the USA generally requires short- and long-term visitors to disavow any ambition to seek the green card (permanent residency), H-1B visa holders are an important exception, in that the H-1B may legally and openly be used as a stepping stone to the green card under what is called the doctrine of dual intent. H-1B visa holders must generally (with some exceptions) be sponsored for their green cards by their employers. In the past, the sponsorship process has taken several years, and for much of that time the H-1B visa holder was unable to change jobs without losing their place in line for the green card. This created an element of enforced loyalty to an employer on the part of an H-1B visa holder. Critics alleged that employers liked this enforced loyalty because it reduced the risk of the H-1B employee leaving to go work for a competitor, and put American citizens at a disadvantage in the job market, because the employer had less assurance that the U.S. citizen will stay at their job for an extended period of time.

Employers cannot typically sue H-1B holders if they leave under US labor laws, regardless of whether the employee is an H-1B holder, a permanent resident or a US citizen. Although any employer can make this threat, the case history of employers who have attempted to sue or otherwise claim money from H-1B employees is limited. In 2001, San Mateo County Superior Court Judge Phrasel Shelton ruled in an H-1B employee's favor on the unfair competition statute and ordered the employer to drop restrictive language in its employee contracts. The H-1B employee in the case was awarded over $200,000 in fees and damages.'Body shop' must pay fees in H-1B lawsuit In 2002 the employer appealed the decision and lost.Appeal denied in H-1B visa case In addition, Department of Labor's H-1B regulations issued in 2001 prohibit employers from making an H-1B employee pay a penalty for quitting prior to an agreed upon date.

Worker Protection and Law Enforcement

For every H-1B petition filed with the USCIS, there must be included a Labor Condition Application (LCA) certified by the U.S. Department of Labor. The LCA is supposed to ensure that the wage offered to the non-immigrant worker must meet or exceed the prevailing wage in the area of employment. The LCA also contains an attestation section designed to prevent the program from being used to import foreign workers for the purpose of breaking a strike, or for the purpose of replacing US citizen workers. Under the regulations, LCAs are a matter of public record. Corporations hiring H-1Bs are required to make these records available to any member of the public who requests to look at them. Copies of the relevant records are also available from various web sites, including the Department of Labor. Unfortunately, there has been very little attempt to enforce these provisions, especially those parts which require that the H-1B visa holder be paid the "prevailing wage".

At a high level, the LCA process appears to offer protection to both U.S. and H-1B workers. Unfortunately, the details of law render these protections ineffective.United States General Accounting Office, H-1B Foreign Workers: Better Controls Needed to Help Employers and Protect Workers For example, the employer, not the Department of Labor, determines what the prevailing wage is and it can use nearly any source, including its own wage surveys. Many employers use surveys of wages paid to recent college graduates to produce low prevailing wage claims.

The law specifically restricts the Department of Labor's approval process of LCAs to checking for "completeness and obvious inaccuracies".8 USC 1182 (n) An employer can put nearly anything it wants down on the LCA, including fabricated prevailing wage claims, and it will be approved as long as the form is filled out correctly. In FY 2005, only about 800 LCAs were rejected out of over 300,000 submitted.

Recent changes to US law

The American Competitiveness in the Twenty-First Century Act of 2000 and the Department of Labor's PERM system for labor certification erased most of the earlier claimed arguments for H-1B's as indentured servants during the green card process. With PERM, labor certification processing times have been reduced to less than 90 days. Due to the changes in the law, the H-1B employee is free to change jobs if they have an I-485 application pending for six months and an approved I-140, if the position to which they are moving is substantially comparable to their current position. In some cases, if those labor certifications are withdrawn and replaced with PERM applications, processing times will improve, but the person will also lose their favorable priority date. In those cases, employers' incentive to attempt to lock in H-1B employees to a job by offering a green card is reduced, because the employer bears the high legal costs and fees associated with labor certification and I-140 processing, but the H-1B employee is still free to change jobs.

However, many people are ineligible to file I-485 at the current time due to the wide-spread retrogression in priority dates. Thus, they may well still be stuck with their sponsoring employer for many years. There are also many old labor certification cases pending under pre-PERM rules.

On May 25, 2006 the senate passed immigration bill 2611 which would increase the number of H1-B visas from the current level of 65,000 to 115,000 annually with a potential automatic yearly increase of 20%. This legislation must still pass the House to become law, however there has been very little opposition from either party. ^* ^* ^*

Similar Programs

In addition to H-1B visas, there are a variety of other visa categories which allow foreign workers to come into the US to work for some period of time. As the H-1B quotas are used up, and as pressure to crack down on perceived abuses of H-1B has grown, corporations have shown more interest in these other programs.

L-1 visas are issued to foreign employees of a corporation. Under recent rules, the foreign worker must have worked for the corporation for at least one year prior to getting the visa. An L-1B visa is appropriate for nonimmigrant workers who are being temporarily transferred to the United States based on their specialized knowledge of the company's proprietary methodologies. An L-1A visa is for managers or executives who will either manage people or an essential function of the company. There is no requirement to pay prevailing wages for the L-1 visa holders. For Canadian residents, a special L visa category is available.

TN-1 visas are part of the NAFTA treaty, and are issued to Canadian and Mexican citizens.Mexican and Canadian NAFTA Professional Worker Formerly, they were also issued to third country citizens who had obtained permanent residency in Canada. This procedure is called "touching base". TN visas are only available to workers who fall into one of a pre-set list of occupations determined by the NAFTA treaty.

E-3 visas are issued to citizens of Australia under the Australia free-trade treaty.

H-1B1 visas are issued to residents of Chile and Singapore under the amended NAFTA treaty.

When reading this list of visas you should be aware that the rules and regulations of who may apply for them changes every few years. Keeping current on visa law could easily be a full-time job. One recent trend in work visas is that various countries attempt to get special preference for their nationals as part of treaty negotiations. (Poland allegedly asked for 50,000 Green Cards as the price of supporting the recent Iraq War.Poland, Iraq, and Visas) Another trend is for changes in immigration law to be embedded in large Authorization or Omnibus bills to avoid the controversy that might accompany a separate vote.