Hearing of the Senate Judiciary Committee - Immigration Reforms Needed to Protect Skilled American Workers

Hearing

A woman contacted me last week to share her story about being laid off from a company after
twenty years and replaced by a foreign worker. She said her young son already knows two
computer-programming languages, but she's having second thoughts about steering him into her
field of computers and information technology.

The focus of today's hearing is on our country's immigration policies and the need for reforms to
better protect American workers. With that, I would like to talk about some of our visa programs
to shed light on what is happening to American workers.

We'll hear from witnesses about the H-1B visa program which allows employers to import socalled
"specialty" workers from abroad. The program was intended to serve employers who
could not find the skilled workers they needed in the United States. Most people believe that
employers are supposed to recruit Americans before they petition for an H-1B worker. Yet,
under the law, most employers are not required to prove to the Department of Labor that they
tried to find an American to fill the job first. And, if there is an equally or even better qualified
U.S. worker available, the company does not have to offer him or her the job. Over the years the
program has become a government-assisted way for employers to bring in cheaper foreign labor,
and now it appears these foreign workers take over -- rather than complement -- the U.S.
workforce.

Even though the annual H-1B cap is 65,000, the actual number of foreign workers coming in
through the program is much more because of numerous exemptions. For example, in Fiscal
Year 2014, the agency in charge approved 315,857 H-1B petitions.

The program is highly susceptible to fraud and abuse. But, don't take it just from me. In 2008,
the Fraud Detection and National Security unit within U.S. Citizenship and Immigration Services
(also known as USCIS) released a Benefit Fraud and Compliance Assessment regarding the
program. The agency's own report highlighted the serious and rampant fraud and abuse that is
taking place. In fact, it showed a 20% violation rate in a random sample of H-1B petitions. The
violations in this sample were stunning: people weren't working where they were supposed to.
Documents were forged. Foreign workers weren't being paid what they were promised. Job
duties were significantly different from the position description listed in their application to the
Department of Labor. Site visits established that the reported business locations were nonexistent,
there was no evidence of daily business activity, the business locations were unable to
support the number of employees claimed, or there was no evidence that the employers ever
intended for the beneficiaries to fill the actual jobs offered.

According to the report, "In one instance, the position described on the petition and [Labor
Condition Application] was that of a business development analyst. However, when USCIS
conducted its review, the petitioner stated the H-1B beneficiary would be working in a
laundromat doing laundry and maintaining washing machines."

In January 2011, the U.S. Government Accountability Office (GAO) published a report on the
H-1B program in which it found that program oversight by Homeland Security and Labor is
"fragmented and restricted." It said this restricted oversight and statutory changes weaken
protections for U.S. workers.

In October 2014, the Center for Investigative Reporting did an investigation of the program. It
described how some H-1B employers exploit foreign workers, withhold wages, and force them
into contracts that make them reluctant to ever speak up.

Then there are stories about how U.S. workers are treated. Time and again, we hear about how
U.S. workers are being laid off and forced to hire their replacements, many of whom are not truly
skilled. This is the case with Southern California Edison, a utility company that started laying
off 500 American workers from its "IT" department last August. The company replaced them
with foreign H-1B workers. The company opted to lay off Americans and instead contract that
work out to two overseas-based IT consulting companies, which also happen to be some of the
largest users of H-1B visas. In 2013, one of the two IT companies paid $34 million in a civil
settlement after allegations of systemic visa fraud and abuse, but was not prohibited from
continuing to petition for H-1B workers.

Since I gave a speech on the floor of the Senate a couple weeks ago on this topic, a number of
laid-off company employees have come forward to share their stories with me. I have heard
about how the company forced them to sign non-disparagement agreements in order to receive
their severance package. I have been told how the U.S. workers had to train their replacements --
for weeks and months -- knowing all along that they were going to lose their jobs to cheaper
workers who didn't possess the skills they had. They said it was humiliating.

Worse yet, most of the 500 jobs that had been held by Americans at Southern California Edison
will eventually just move overseas. According to the Los Angeles Times, Edison admits that
eventually about 70% of the work will shift overseas permanently.

Again, this is not new. As noted in a February 16 Los Angeles Times editorial entitled "End H-
1B Visa Program's Abuse," Edison's action are "part of a years-long trend among companies of
misusing H-1B visas to undercut wages and offshore high-paying American jobs."

I invited Southern California Edison to join us today. I thought they would want to defend their
actions and explain why U.S. workers have been left high and dry. Unfortunately, they declined
my invitation.

Despite lax requirements in the law and very little oversight by the federal agencies in charge,
some employers don't like the red tape associated with the H-1B visa program. That is why they
are finding alternative routes to import foreign workers.

Take, for example, the L visa program. The L-1 visa is for temporary intra-company transfers of
personnel from a company's overseas office to its U.S. offices. A U.S. company may transfer
personnel to the U.S. to work in a managerial, executive, or "specialized knowledge" capacity
under the L visa program. In fiscal year 2013, USCIS approved 11,944 L-1 petitions.

Unlike the H-1B program, there is no cap on the number of L-1 visas that may be issued each
year and there is no requirement that employers pay L-1 workers the locally prevailing wage or
even the actual wage being paid to similarly qualified employees.

The problems with the L visa are not as apparent, especially since USCIS squashed an internal
report that highlighted fraud and abuse. The agency seemingly didn't want another black eye as
they had with the H-1B program.

Nonetheless, there are problems. In August 2013 the DHS Office of the Inspector General, at
my request, examined the potential for fraud and abuse in the L-1 program. The OIG found
problems with several aspects of the L-1 program, in particular the adjudication of L-1B
"specialized knowledge" petitions and petitions for "new offices" being opened in the U.S. by L-
1 transferees. Regarding specialized knowledge workers, the OIG said that it agreed with the
USCIS Administrative Appeals Office that Congress intended for the L-1 program to benefit
only a small number of beneficiaries: "A liberal definition of specialized knowledge would open
the category to an unlimited number of foreign workers. … Because it is not clear which
employees should be granted L-1B visas, and because there are no numerical limits on the
number that can be approved each year, the potential number of beneficiaries is limitless." And
yet, a liberalized definition of specialized knowledge -- implemented by executive memo and not
by regulations requiring public comment -- is exactly what we can expect from the
Administration's promised executive actions. Regarding L-1workers opening new offices in the
U.S., the OIG found that "that there are program integrity risks with new office petitions" and
that "[n]ew office petitions and extensions are inherently susceptible to abuse because much of
the information in the initial petition is forward-looking and speculative."

Just last year, a Fremont, California tech company, Electronics for Imaging, Inc., was found by
the Department of Labor to have violated the Fair Labor Standards Act for having grossly
underpaid a group of Indian nationals who the company had transferred on L-1 visas from its
office in India to install a new computer system at the headquarters facility in Fremont.

Specifically, the company flew eight L-1B workers from Bangalore, India to California and paid
them only $1.21 per hour to work 120-hour weeks. The $1.21 hourly rate was equivalent to what
the employees made in Indian rupees at their workplace in India. Importantly, though the
company was found by DOL to have violated the Fair Labor Standards Act for paying the
workers below the State's minimum wage, it did not apparently violate any of the terms or
conditions of the visa program because there is no prevailing wage requirement.

Some employers are also using the B-1 visa to get around the already weak wage requirements
and protections of the H-1B visa. Under the law, persons may be admitted to the United States in
"B" visa status "temporarily for business or temporarily for pleasure." Such visitors may not,
however, be "coming for the purpose of … performing skilled or unskilled labor."

State Department field guidance, however, allows an exception to the general prohibition on
persons performing skilled or unskilled labor in B status in cases where the foreign worker is
performing services in the U.S. that would otherwise qualify for H-1B status, is employed by an
overseas entity, and receives no remuneration from a U.S. source. This State Department
exemption has historically been called the "B-1 in lieu of H" provision.

In 2011, after learning of potential abuse of the B visa, I wrote to the Departments of Homeland
Security and State asking whether either agency was considering eliminating the "B-1 in lieu of
H" loophole. Despite assurance that State was "in the process of discussing with DHS removing
or substantially modifying the B-1 in lieu of H guidelines," there has still been no action.

Years have passed, the abuse continues, and both the Department of State and Department of
Homeland Security continue to do absolutely nothing to address the B-1 in lieu of H issue or
clarify by regulation what, exactly, B-1 visitors are authorized to do while they're in the United
States. Just last October, Infosys, the number one user of H-1B visas entered into a $34 million
settlement with the Department of Justice for allegations of systematic visa fraud and abuse of
immigration processes. Among those allegations was that Infosys had attempted to bypass the
prevailing wage requirement and other U.S. worker protections of the H-1B program by instead
sending workers to the U.S. on B-1 visas to perform skilled labor on extended assignments at
U.S. client worksites. The company allegedly coached employees applying for B-1 visas,
providing them with specific instructions on how to deceive U.S. consular officials in their visa
interviews.

Today, we will hear from the man who blew the whistle on this company for this visa fraud.
In addition to these nonimmigrant visa programs, we'll hear about how foreign students on U.S.
soil are being targeted by some employers. Employers have a pool of cheaper labor right here at
home, and have resorted to using a special program known as Optional Practical Training (OPT)
to bypass the H-1B visa program. OPT is a program that provides foreign students in F-1 visa
status the opportunity to obtain work for a U.S. employer during and/or after completing an
academic program in the United States. It was created by regulation, not by Congress.

There is no cap on the number of foreign students who may be employed in the U.S. in OPT, nor
is there a requirement that the OPT workers be paid the locally prevailing wage or even the
actual wage being paid to similarly qualified employees. There is also no requirement that the
student have an offer of employment before being granted a work permit. In fiscal year 2013,
USCIS granted employment authorization to 123,328 F-1 students under the OPT program.
In March 2014, the Government Accountability Office (GAO) issued a report finding that U.S.
Immigration and Customs Enforcement (ICE) exercised inadequate oversight of the OPT
program. Specifically, the GAO found that ICE's Student and Exchange Visitor Program
(SEVP) has not identified or assessed risks associated with OPT, such as potential fraud or
noncompliance with ICE regulations. The report highlighted several other deficiencies in the
program, including: 1) foreign students, sometimes aided by school officials, are currently
abusing the OPT program to acquire unauthorized employment in the United States; 2) the
federal government does not know where tens of thousands of foreign students in the OPT
program are located, who they are working for, or what they are doing while staying in the
United States; 3) there is a lack of coordination within ICE, inconsistent collection of
information by ICE, and inadequate monitoring mechanisms in place to ensure program
compliance; and 4) there was insufficient oversight to ensure students were engaging in work
that was in their field of study.

One year ago, last March, I sent a letter to Secretary Jeh Johnson requesting that the Department
place a moratorium on the OPT program until the Secretary could certify that the foreign
students were located and that the program no longer posed a threat to national security. That
request has been ignored, and there's been no evidence that the program has been fixed.
Aside from the national security risks posed by the program, there is also the concern that OPT is
allowing employers to use foreign students to bypass worker protections in other immigration
programs. Foreign students don't have to be paid at all, and when they are paid they are
substantially cheaper than U.S. workers because employers are generally not required to make
the 7.65% wage contribution on their behalf for Social Security and Medicare taxes. They also
become susceptible to exploitation because they are desperate to stay in the country.
Foreign students are being targeted. In 2013, IBM placed ads on their webpage with the
following mandatory job requirement: "Should have a valid OPT work permit for legal work
authorization in the United States." And, the job was located in Idaho. The anti-discrimination
provision of the Immigration & Nationality Act does not permit employers to express or imply a
preference for temporary visa holders over U.S. workers, for any employment opportunity in the
United States. The Department of Justice opened an investigation. In late 2013, the Department
of Justice announced it had reached a settlement agreement with IBM under the terms of which
the company agreed to pay $44,400 in civil penalties, revise its hiring and recruiting procedures
and train its human resources personnel to ensure compliance with thaw law, and to be subject to
reporting requirements for a period of two years.

Allow me to show an example of a brazen help wanted ad. In this ad, the employer is looking
for candidates with valid H-1B visas to work in the United States. The skill set needed? "Any
technical skill is fine."

These job ads are often found, and according to Bright Future Jobs director, Donna Conroy,
staffing agencies and recruiters are well aware they can avoid hiring Americans--and do so
brazenly on Internet job portals, excluding Americans from high paying jobs in the tech sector.
Now that I have laid out a number of problems with our immigration policies, it raises the
question as to why we in Congress would simply increase the supply for foreign workers without
adding more protections for American workers. Claims by U.S. businesses that there just aren't
enough U.S. workers willing and able to take these skilled jobs fall flat when we read stories
about recent big layoffs in the tech industry. Bills have been introduced that seemingly ignore
the plight of U.S. workers. Some bills would increase the annual number of H-1B visas from
65,000 to 115,000, or as high as 195,000 per year. This only makes the problem worse. It
doesn't close the loopholes or prevent abuse. It doesn't make sure that American workers are
put before foreign workers. It only increases the supply of cheaper foreign labor. Increasing the
supply of H-1B visas alone also won't help smaller U.S. companies who are already shut out of
the program because the big corporations take thousands of visas each year. The number one
user of H-1B visas is bringing in over 6,000 new workers each year. The top ten companies that
use the H-1B program swallow up over 50% of the supply of available visas.

Instead of just increasing the supply of visas, real reforms are needed.

For years, I have worked with my colleague from Illinois, Senator Durbin. We have introduced
legislation to get at the problems. Our bill would increase worker protections. Most importantly,
it would require all employers seeking to hire an H-1B worker to first make a good faith effort to
recruit an American worker.

Additionally, in the past, our bill would: (1) revise H-1B prevailing wage determination
requirements; (2) require Internet posting and description of H-1B employment positions; (3)
lengthen the period surrounding the hiring of an H-1B worker during which U.S. workers may
not be laid off; (4) prohibit employer advertising that makes a position available only to, or gives
priority to, H-1B nonimmigrants; and (6) limit the number of H-1B and L-1 employees that an
employer of 50 or more workers in the United States may hire. The bill would also give DOL
enhanced authority to investigate employer compliance, and it would set up a random audit
scheme to keep employers honest.

The Durbin/Grassley bill would also reform the L-1 visa program. It would do so by establishing
a prevailing wage requirement for L-1 workers and increasing DOL's authority to investigate
applications for fraud.

Some may also say that Congress should pass the 2013 immigration bill, as if it would make the
problems go away. That bill -- S. 744 -- may have been a good first step in acknowledging the
problems with these visas, but it far from solved the crisis facing skilled American workers.
S. 744 attempts to address the concern that employers are able to bring in foreign workers
without looking at American workers first. It says that an employer must take good faith steps to
recruit U.S. workers, and the employers have to advertise the job on a Department of Labor
website. However, the bill states that only some employers -- so-called "dependent" employers
with a high percentage of foreign workers -- must offer the job first to any U.S. worker that is
equally or better qualified. Why we wouldn't make such a requirement apply to all employers?

The bill also includes an unnecessarily generous provision allowing employers to forego
counting "intending immigrants" in their workforce numbers when calculating whether the
percentage of foreign workers in their workforce puts them over the "dependent" percentage
threshold. Because the bill would impose stricter U.S. worker protection standards for dependent
employers, employers with a large percentage of H-1B workers and who would otherwise be
classified as H-1B dependent employers could get around the worker protections, wage
requirements, and displacement rules simply by applying for Green Cards for their foreign
workers. The Green Card application carveout doesn't actually require the worker to have
followed through and gotten the Green Card. All the company has to do is file the application.

I'm told there has been an uptick in green card applications by dependent or near-dependent
companies simply so such employers can use this loophole should it ever become law.
During this committee's consideration of S. 744, I offered several pro-U.S. worker amendments.
Every amendment I offered was defeated. Ensuring that U.S. workers have the first opportunity
at high paying, high skilled jobs in this country seems like a no-brainer to me.

I'm glad AFL-CIO President Trumka is here to shed light on how S. 744 missed the boat. Back
in May 2013, Mr. Trumka wrote an opinion piece for USA Today saying that hi tech is not
looking to bring in H-1B visa holders for a few years at a time because there is a shortage of tech
workers, but instead want a massive expansion of H-1B visa holders "because they can pay them
less." He concluded: "This is not about innovation and job creation. It is about dollars and
cents."

The International Federation of Professional and Technical Engineers, a branch of the AFL-CIO
which represents 90,000 engineers opposed the committee-passed bill saying, "Hundreds of
thousands of foreign STEM workers will enter the United States each year for the sole purpose
of working in jobs that Americans would normally do." They said, at the time, that "the bill fails
miserably in fixing the worker abuses inherent in the program."

The Communications Workers of America, which represents 700,000 men and women in the
telecommunications industry, said that the committee's immigration bill would "create
preferential treatment for foreign born workers." They also said, "We can spend millions to
educate a STEM workforce but without employers willing to hire these U.S. STEM workers, our
work is for naught."

Today, the story must be told. The voices of American workers must be heard. The lives of U.S.
workers and families are on the line. Will we do everything we can to protect future generations
who desperately want to work in the high skilled sector? Or, will we simply ignore the plight of
those who have lost their jobs and had to train their foreign replacements?

We cannot fail the American worker. Reforms are needed to put integrity back into our
immigration system, and to ensure that American workers and students are given every chance to
fill vacant jobs in this country.

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