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Issa bill would kill a big H-1B loophole

Patrick Thibodeau | July 25, 2016
Proposal would raise minimum wage for H-1B-dependent firms from $60K to $100K, but it faces criticism

In response to Issa's bill, Hira said it "will do nothing to eliminate the abuse of the H-1B program. It simply shuffles the deck chairs on the Titanic. Instead of losing their jobs to Tata or Infosys H-1Bs, the Southern California Edison workers would be training their cheaper H-1B replacements employed by IBM or Accenture."

Hira called the bill "a positive first step" for recognizing "that there are problems with the H-1B. But their proposed solution is a swing and a miss."

Peter Eckstein, the president of the IEEE-USA, said the group "appreciates the leadership" Issa is providing on this issue. "While H.R. 5801 does not go nearly as far as we would like, raising the minimum wage paid by outsourcers will discourage, but not end, the outsourcing of American jobs. Still, this bill is a step in the right direction," he said in a statement.

On this one issue, the dependent employer loophole, H-1B visa critics will ask: Why set any minimum salary threshold for displacing U.S. workers? Why not eliminate the ability of IT services firms to displace U.S. workers at third-party sites, something that is now routine in offshore outsourcing?

Issa's bill, if adopted, would create -- to Hira's point -- industry competitiveness issues.

A firm that employs more than 50 people and has 15% or more of its workforce on H-1B visas is categorized by law as H-1B dependent. Most H-1B dependent firms are based in India, so the Indian government will likely argue loudly that all Issa's bill will do is to put their industry at a competitive disadvantage.

IT services firms with large U.S. workforces, IBM and Accenture, in particular, use H-1B workers but aren't subject to H-1B dependent rules because the visa workers make up less than 15% of their workforces. The dependent firms will have to pay the minimum $100,000 salary if they want the exemption. The non-dependent firms will only have to meet the often lower-paying prevailing wage rule.

Issa's bill is very targeted. Critics say the program brings in young, mobile workers who are in competition with older workers. More than half are paid the lowest level of prevailing wage.

Issa's bill is the second H-1B proposal to be introduced this month in the House of Representatives. Rep. Bill Pascrell (D-N.J.), proposed the "H-1B and L-1 Visa Reform Act of 2016," which would require all employers to make a "good faith effort" to recruit U.S. workers, and prohibit firms from hiring H-1B employees if more than 50 people and more than 50% of their employees are H-1B and L-1 visa holders.


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