In what has become a Silicon Valley rite of spring, the filing period for special visas allowing overseas workers to apply for U.S. jobs requiring specialized skills ended after just a few days on Friday. The Department of Homeland Security's U.S. Citizenship and Immigration Services division said it had stopped accepting filings, which have exceeded the 85,000 in H-1B visas per year that the government issues.
The USCIS could not say yet how many applications it has received, though in recent years it has received multiple applications for each opening. The government will hold a lottery after it processes the petitions to determine who will receive the coveted visas.
H-1B visas have become a charged issue. Tech companies say they cannot fill skilled positions with domestic talent, retraining economic growth. Critics say that companies use the visas to undercut U.S. workers, and pay less to employees from overseas. President Trump has criticized the program as a source of cheap labor,
The Department of Homeland Security threw applicants a curve all this year, with a memo filed just before the application window opened -- and after some had likely mailed in their applications. The government outlined some new get-tough provisions on Friday. A new memo questioned circumstances in which the job of programmer would qualify as a specialty occupation, and did not appear to give companies enough time to file a new application that would address the government's concerns.
"Homeland Security issued the memo at a time when it would be too late to revise an application, as the vast majority were filed on [March 31] prior to the memo's release to the public," said Mark Koestler, co-chair of the Business Immigration Group at law firm Kramer Levin Naftalis & Frankel LLP.
Employers who are filing H-1Bs first have to make a filing regarding the wages they would pay with the Department of Labor, which takes seven days for approval. The latest government memo suggested that a programmer might need a specialized bachelors degree and be able to perform complex coding to qualify. A candidate who performed basic programming or had a 2-year degree might not qualify. But because the document came out Friday, there isn't time for applicants to make a new filing.
Given more notice of the government's concerns, applicants could have bolstered their arguments or applied for posts that would more clearly qualify as a specialty occupation, such as systems analyst or a software engineer. The biggest impact will be on applications for programmers placed by big outsourcing companies, who hire for third-party companies.
"Those who have filed petitions for programmers are going to receive extra scrutiny," Koestler said.
The government issues just 85,000 H-1B visas a year; last year, there were 236,000 applicants. On Monday, Homeland Security's U.S. Citizenship and Immigration Services began accepting applications for the visas, which allow overseas workers to take jobs in tech, healthcare and other sectors. Last year was the fourth year in a row that the application window closed after just a few days.
The biggest users of H-1Bs are outsourcing companies like Tata, Infosys (INFY - Get Report) and Cognizant (CTSH - Get Report) , but tech giants including IBM (IBM - Get Report) , Microsoft (MSFT - Get Report) , Amazon (AMZN - Get Report) , Intel (INTC - Get Report) , Alphabet's (GOOGL - Get Report) Google and Apple (AAPL - Get Report) were among the top 20 in 2013 stats Howard University professor Ron Hira, who testified before Congress on H-1B visas last year.
H-1Bs were among the programs that Trump targeted on the campaign trail. Depending on whom you ask, the visas either fill a skills gap that plagues the tech sector, or allow corporations to undercut U.S. workers with lower-paid replacements from overseas.
What will move markets this quarter and how should investors position themselves ahead of time? Jim Cramer sat down with four of TheStreet's top columnists recently to get their views. Click here to listen to his latest Trading Strategies roundtable with them and read their advice for stocks, bonds, forex and gold.
Homeland Security announced that it's targeting companies that abuse the immigration program. Employers can expect visits from the U.S. Citizenship and Immigration Services, among other measures.
"Protecting American workers by combating fraud in our employment-based immigration programs is a priority for USCIS," the government said in a notice on Monday. The USCIS will keep an eye out for companies with especially high ratios of H-1B visa holders to U.S. staffers, as well as employers that have a large number of H-1B staffers who work off-site. The government also set up a special email address (ReportH1bAbuse@uscis.dhs.gov) for whistleblowers to report suspected infractions.
In addition, the USCIS said it's taking another look at occupations eligible for the visas, and the Department of Justice warned employers not to discriminate against U.S. workers.
The warnings will not likely resolve longstanding political disputes over the impact of the H-1B program on the job market, however, Height Securities LLC analyst Peter Cohn suggested in a Tuesday note.
Editor's note: Updated from April 7 with additional information.
"The combined impact of the actions is likely to be minimal as they do not change existing policies in terms of the allocation of H-1B visas, though the actions are intended to deter prospective H-1B employers seeking to game the system," Cohn wrote. "Critics of the existing H-1B program are unlikely to be satisfied by the announcements, keeping the pressure on the Trump administration and Congress to take further action."
The Trump administration has targeted H-1B visas as a "cheap labor program" that undercuts the wages of U.S. workers, and has examined potential reforms, though the White House has not produced a formal proposal. The H-1B program got critical attention in March, when the CBS (CBS - Get Report) news program 60 Minutes ran an expose on H-1B visas that examined cases in which U.S. workers had to train overseas replacements.
This year the government suspended priority applications, which provided a quick response for a fee of $1,225. The U.S. Citizenship and Immigration Services said that it eliminated the option to make the overall H-1B program more efficient -- not because of initiatives at the White House or Congress.
Tech trade group FWD.us, which advocates updating the H-1B process, notes that for the last four years, the application window has closed within a week. The group's founders include Facebook (FB - Get Report) CEO Mark Zuckerberg, former Microsoft boss Bill Gates and Dropbox CEO Drew Houston. Tech bigwigs such as Netflix (NFLX - Get Report) founder and CEO Reed Hastings, Google Chairman Eric Schmidt and Yahoo! (YHOO) CEO Marissa Mayer are also supporters.
"For the fifth consecutive year, the H-1B visa application window closed in just five days, showing that demand for talented high-skilled workers continues to dramatically outpace supply," said FWD.us President Todd Stiletto in a prepared statement Friday. "The arbitrary cap means that talented individuals who would otherwise be helping to grow our economy are kept out of our country -- and that the U.S. loses out on the creation of American jobs, rising wages, and economic growth."
Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Assistant Democratic Leader Dick Durbin (D-Ill) proposed legislation earlier this year to reform the visa program. Grassley said the H-1B workers should "complement America's high-skilled workforce, not replace it," in a January press release.
Meanwhile, Rep. Zoe Lofgren (D-CA), who represents Silicon Valley, proposed the High-Skilled Integrity and Fairness Act of 2017 in January to curtail loopholes that allow companies to find cheaper replacements for U.S. workers rather than fill true gaps in the workforce.
Read Related Articles:
- Justice Department: Do Not Discriminate Against U.S. Workers When Requesting H-1B Visas
- Spicer: Trump Will Take 'Comprehensive Look' at H-1B Visa Program
- Inside the Numbers: How Reliant Is the U.S. Tech Industry on H-1B Visas?