While it doesn’t make any immediate changes to immigration requirements, a new executive order from President Trump sets the stage for further cutbacks in the use of foreign workers in the United States by heightening scrutiny of contractors and subcontractors employing foreign workers. This will have a chilling effect on H-1B hiring and offshoring in the near term at least.
Among other things, the order singles out those using H-1B visa holders by instructing the Secretaries of Labor and Homeland Security to protect U.S. workers from “any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at job sites (including third-party job sites), including measures to ensure that all employers of H-1B visa holders, including secondary employers, adhere to the requirements of section 212(h)(1) of the Immigration and Nationality Act (8 U.S.C. 1182(n)(1)).” The order also instructs federal agency heads whose agencies entered into contracts in fiscal years 2018 and 2019 to assess whether contractors and subcontractors used temporary foreign labor for their U.S. contracts. Included in the order is a request for information on the nature of the work performed, whether opportunities for U.S. workers were affected, and any potential effects on national security. The order also asks whether contractors and subcontractors performed services in foreign countries previously performed in the United States.
The order asks the agency heads to “propose action, if necessary and as appropriate and consistent with applicable law, to improve the economy and efficiency of Federal procurement and protect the national security.”
In April, the Trump administration signed an executive order to bar various categories of foreign workers, so this new order is more of the same. These orders follow an announcement by TVA that it would be outsourcing roughly 20 percent of its 52,000+ IT jobs in the United States and laying off U.S. workers. TVA made a deal with Capgemini, which is based in France but has 100,000 workers in India, to write new software for TVA instead of having that work done in-house, for example. TVA also employs H-1B workers. In response to TVA’s announcement, the International Federation of Professional and Technical Engineers (IFPTE) had publicly vowed that it would use a variety of tactics to push back, including negotiating with TVA, taking legal action, and asking members of Congress and the Trump administration to help. And indeed they did so, as evidenced by an April 2020 letter to members of Congress positing that TVA’s H-1B workers likely were there to be part of the knowledge transfer for the IT contractors, and/or to do some of the work that otherwise would have been performed by the “soon-to-be unemployed federal employees” working for TVA.
Presumably, these pleas met with sympathetic ears in Congress and the Trump administration during this “Buy American, Hire American” era. After all, this presented a new opportunity to position President Trump before the election as a defender of the American worker by publicly targeting contractors and subcontractors, and the companies and agencies that do business with them.
Similarly, President Trump recently penalized and publicly lambasted the federally owned Tennessee Valley Authority utility for outsourcing jobs. He fired two board members and called for the removal of its CEO, whom he can’t fire. “Let this serve as a warning to any federally appointed board,” he said. “If you betray American workers, then you will hear two simple words: ‘You’re fired.’ “
The COVID-19 pandemic has only exacerbated the impact and the negative publicity surrounding foreign workers and offshoring, as many Americans have lost their jobs either temporarily or permanently and are desperately seeking work. The optics are terrible, as any other companies contemplating such moves are likely to conclude. We can expect a further dip in H-1B applications and more high-profile efforts to penalize companies that hire foreign workers and that take jobs offshore—at least until the election.
- Executive Order, https://www.whitehouse.gov/presidential-actions/executive-order-aligning-federal-contracting-hiring-practices-interests-american-workers/
- IFPTE letter to Congress, http://www.ifpte.org/news/details/TVA-Turns-to-IT-Offshoring-Firms-H-1B-Workers-to-Replace-TVA-IT-Workers
- “Union Blasts TVA for Outsourcing IT Work, Laying Off Chattanooga Employees,” Times Free Press, https://www.timesfreepress.com/news/business/aroundregion/story/2020/feb/27/uniblasts-tvoutsourcing-it-work/516875/
- ” ‘You’re Fired’: Trump Goes After Tennessee Valley Authority Again,” Politico, https://www.politico.com/newsletters/morning-energy/2020/08/04/youre-fired-trump-goes-after-tennessee-valley-authority-again-789619
Contact your WR attorney for advice in specific situations.