President Trump Orders Review of Foreign Hiring by Federal Contractors, Directs DHS and DOL to Increase Scrutiny of H-1B Program

At a glance

In a new executive order, federal agencies are directed to review the use of nonimmigrants and offshoring by their contractors and subcontractors.
By mid-September, the Departments of Labor and Homeland Security must take steps to ensure that the wages and working conditions of U.S. workers are not adversely affected by H-1B workers.
The president’s directives could lead to an increase in employer inspections and the issuance of policies or regulations that may make H-1B employers and their end-clients jointly liable for compliance with H-1B program rules on wages and working conditions.

The issue

President Trump yesterday signed an executive order that requires government agencies to conduct a sweeping review of federal contractors’ and subcontractors’ use of nonimmigrant workers and overseas labor on federal contracts, including whether U.S. workers were adversely affected by the hiring of such foreign nationals. The President has also directed the Departments of Labor (DOL) and Homeland Security (DHS) to take steps to further ensure that U.S. workers are not adversely affected by H-1B workers.

The executive order comes days after DOL and DHS agreed to establish processes by which USCIS will refer suspected H-1B employer violations to DOL and share information and provide access to data concerning nonimmigrant and immigrant petition records. The collaboration would support investigations initiated by the Secretary of Labor, as President Trump directed in his June 22 nonimmigrant and immigrant entry ban proclamation. Though such investigations have long been within the authority of the Secretary, that authority has not previously been exercised.

Review of nonimmigrant hiring and offshoring by federal contractors

The executive order directs federal agencies to review their contractors’ and subcontractors’ use of nonimmigrant workers to fulfill contracts with the U.S. government and any offshoring of jobs to foreign countries, including the type of work performed by foreign workers and whether U.S. workers and U.S. national security interests are jeopardized by the hiring of nonimmigrants or the offshoring of labor.

After the review, the agencies are required to recommend improvements to their procurement processes. The agencies have 120 days to report the results of their review to the Office of Management and Budget.

Employers who contract with the federal government could be asked to provide detailed information about their workforce and offshoring practices in the course of the review.

Further scrutiny of H-1B petitions and new rules on H-1B third-party placements expected

The order also directs DOL and DHS to take action by September 17, 2020 to ensure that the wages and working conditions of U.S. workers are not adversely affected by the hiring of H-1B workers. This could lead to an increase in H-1B investigations, requests for information, and case denials.

The Trump Administration has long planned to issue regulations to toughen H-1B program rules and impose new obligations on H-1B employers and their end-clients, including the requirement that H-1B employers and end clients jointly obtain labor condition applications (LCAs) for H-1B workers at client sites. The joint LCA requirement could create de facto joint employer liability for compliance with obligations concerning H-1B wages and working conditions. The executive order could be the harbinger of those long-anticipated rules.

Fragomen is closely tracking the implementation of the executive order and forthcoming regulations affecting the H-1B and other employment-based immigration programs.

This alert is for informational purposes only. If you have any questions, please contact the immigration professional with whom you work at Fragomen.

We have dedicated extensive resources to monitoring immigration regulatory developments and policy changes as they evolve worldwide.