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Behind the News: H-1B Visa Troubles Are Brewing -- AgainCWS 30 March 2.5

Contingent Workforce Strategies 30

The war for talent is taking an interesting turn. In January, U.S. Citizenship and Immigration Services issues a memorandum outlining restrictions on staffing firms' ability to bring in foreign workers on H-1B visas. In mid-February, staffing firms voiced their complaints during a public hearing with the agency, and some organizations are even considering a lawsuit against the agency over the memo.

Traditionally, employers use H-1B visas to bring in workers with college degrees who have particular, hard-to-find skills. These new restrictions -- outlined in the memo -- affect IT staffing firms as well as healthcare staffing firms, particularly those that bring in doctors and allied healthcare professionals.

Difficulties with regard to staffing firms' use of H-1B visas began building earlier than the memo, dating back to a 2008 report on H-1B visa fraud and corresponding political pressure from Capitol Hill, insiders said. According to reliable sources, early on, a USCIS checklist that was inadvertently released publicly showed that some staffing firms would be subjected to greater scrutiny. The checklist stated H-1B requests from any IT staffing operation less than 10 years old and with less than $10 million in revenue would automatically be referred to the fraud division.

January's memo goes much further. Employers apply for H-1B visas on behalf of workers, and the memo provides examples of what represents an employer-employee relationship and what doesn't.

Two examples of what doesn't represent an employer-employee relationship include "third-party placement/'job shop'" and "independent contractors." The staffing firm business model doesn't qualify, according to the memo, because a staffing firm does not maintain control over an employee's daily tasks.

"They're basically saying the employer relationship rides on whether you control the actual day-to-day work activities of the employee," said Mike Hammond, an attorney with the Hammond Law Group LLC.

And that's at odds with other agencies' definition of the relationship, Hammond said. "There's not a single other federal agency or state agency that has found that there wasn't an employer-employee relationship in the staffing model."

The memo primarily impacts IT and healthcare staffing firms, which rely on H-1B visas as a recruitment tool. These recent restrictions aimed at such firms will be a significant blow. Firms employing H-1B visas are most commonly found in the IT and healthcare segments, where U.S. skills shortage has driven such firms to seek talent abroad.

But there is a larger issue as far as end users of contingent labor are concerned. If these restrictions go through, companies could find themselves with a smaller talent pool to choose from. This in turn could place a price pressure on wages that would result in higher bill rates. It could also mean that more U.S. jobs would move offshore -- after all, if you can’t bring people with specific skills sets into the country, then those jobs involving that expertise may need to go to where the people are.

Another casualty of this fight might even be foreign workers' desire to come here to work in the first place. They are already not quite as keen to come to the United States as they once were because there are growing opportunities in their home countries. Infighting within U.S. interests as to whether we really want talented people to come here is bound to further diminish interest.

The fight on this is not over -- the staffing industry will no doubt respond through lobbying efforts as well as potential lawsuits. However, all that will take time. Meanwhile, given that end users of contingent labor are already nervous when it comes to anything legal surrounding contingent workforce issues, the intimation of federal opposition to foreign workers through temp agencies will act as a detriment to such transactions even if the new restrictions are ultimately reversed.


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