The Protect and Grow American Jobs Act: What Employers Need to Know

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Executive Summary

A bill amended by the House Judiciary Committee and referred to the House floor for further action would subject H-1B dependent employers to more stringent compliance obligations and place new restrictions on their ability to place H-1B employees at third-party worksites. The bill’s third-party placement rules would also impose obligations on the end-clients of H-1B dependent employers.

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The situation

The House Judiciary Committee has amended H.R. 170, the Protect and Grow American Jobs Act, and referred it to the House floor for further action. Though the bipartisan bill, which was presented by Reps. Darrell Issa (R-CA) and Zoe Lofgren (D-CA), is not expected to become law, its stringent provisions on H-1B dependency and third-party placement of H-1B employees could become a marker for future legislation. Key provisions of the bill are summarized below.

H-1B dependency

The bill would change the definition of H-1B dependency. An employer would be considered H-1B dependent if 20% or more of its U.S. workforce was in H-1B status. Under current rules, H-1B dependency is defined as a workforce of 15% or more H-1B employees.

Recruitment obligations and exemptions

As under current law, H-1B dependent employers would be required to recruit U.S. workers for prospective H-1B petitions and offer those positions to any qualified U.S. worker. The bill would impose a new obligation to submit a recruitment report with each labor condition application (LCA) filing, summarizing the employer’s good-faith efforts to recruit U.S. workers.

The bill would exempt employers from the recruitment obligation if the H-1B beneficiary is paid the lesser of $90,000 or the mean wage in the occupation in the area of employment. The exemption wage would increase in subsequent years to the lesser of (a) $135,000 or (b) the greater of $90,000 and the mean wage for the occupation in the area of employment.

Under current rules, dependent employers are exempt from recruitment obligations, if the H-1B employee will be paid at least $60,000 or holds a master’s or higher degree. There is no obligation to submit a recruitment report.

Non-displacement obligations

H-1B dependent employers would be required to attest that they did not and would not displace a U.S. worker from 90 days before the filing of an H-1B petition through the duration of the H-1B worker’s employment, with no exemptions.

Current rules impose a non-displacement period from 90 days before to 90 days after the filing of the H-1B petition, but dependent employers are exempt from non-displacement obligations if the H-1B beneficiary will be paid at least $60,000 or holds a master’s or higher degree.

The bill would also subject dependent employers to additional non-displacement obligations when placing H-1B workers at third-party worksites, discussed below.

Restrictions on third-party placement of H-1B employees

Dependent employers would be restricted from placing H-1B employees at a third-party worksite or a location in close proximity to such a worksite where there are indicia of an employment relationship between the nonimmigrant and the third-party employer. Such placements could take place only if the H-1B dependent employer and the third-party organization met stringent new requirements:

• The third-party organization would need to provide written assurance that it had not displaced and did not intend to displace a U.S. worker from 90 days before a placement through the duration of the placement. The third party would also need to promise to inform the petitioner of any such displacement and agree to provide the Department of Labor (DOL) with any information required for an investigation.
• If the H-1B dependent employer learned of displacement at the third-party organization, it would be obligated to inform DOL and cease placing H-1B employees with the third party.
• The dependent employer would be required to pay H-1B employees placed at third-party sites the highest of the company's actual wage, the prevailing wage, and the mean wage level for the occupational classification in the area of employment.

Under current rules, H-1B dependent employers are obligated to ask end-clients about displacement of U.S. workers at the end-client’s organization in the period beginning 90 days before and ending 90 days after the placement of the H-1B worker, but end-client organizations do not have direct non-displacement obligations.

Enforcement and public disclosure

H-1B dependent employers would be subject to random Department of Labor audits. DOL, in turn, would be required to investigate at least 5% of H-1B dependent employers annually. H-1B dependent employers would subsidize enforcement by way of a $495 fee for each initial H-1B petition and change of employer petition.

H-1B dependent employers would be named in an annual report to be issued jointly by DOL and the Department of Homeland Security, which would also include information on occupational classifications, wages, third-party worksites, and investigations.

Fragomen is closely following H.R. 170 and will issue further updates when and if the bill advances. If you have questions about H.R. 170, please contact the immigration professional with whom you work at Fragomen. This alert is for informational purposes only.