Home U.S. Trump Issues Election-Year Order On H-1B Visas And Federal Contracts
Trump Issues Election-Year Order On H-1B Visas And Federal Contracts

Trump Issues Election-Year Order On H-1B Visas And Federal Contracts

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Experts say it is unclear what a new executive order issued by Donald Trump on federal contracting will accomplish, though it may be followed with additional measures to restrict companies that employ H-1B visa holders. Trump’s efforts to protect a relatively small number of union jobs at a federally owned corporation (the Tennessee Valley Authority) against contracts awarded to private companies may be ironic, analysts note, given the administration’s high spending on government contracts for information technology (IT) services. It also comes as U.S. Citizenship and Immigration Services (USCIS) has threatened to furlough over 13,000 federal employees unless the agency receives a bailout.

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“Other than requiring contracting agency reports in four months, it is unclear what the executive order will accomplish,” said Lawrence Lorber, who specializes in labor law at Seyfarth Shaw LLP, in an interview.

The August 3, 2020, executive order states, “Within 120 days of the date of this order, the head of each agency shall submit a report to the Director of the Office of Management and Budget summarizing the results of the reviews.”

The review of agency contracts in FY 2018 and FY 2019 will focus on “(i) whether contractors (including subcontractors) used temporary foreign labor for contracts performed in the United States, and, if so, the nature of the work performed by temporary foreign labor on such contracts; whether opportunities for United States workers were affected by such hiring; and any potential effects on the national security caused by such hiring; and (ii) whether contractors (including subcontractors) performed in foreign countries services previously performed in the United States, and, if so, whether opportunities for United States workers were affected by such offshoring.”

“Pursuant to the Procurement Act, the president has authority to attach employment conditions on procurement,” said Lorber. “Executive orders, however, cannot directly contradict federal law. The executive order suggests that existing contracts will be examined to determine if legal non-citizens are working on a contract. It is unclear what a contractor or a contracting agency should do during the performance of an existing contract. An individual not authorized to work in the United States cannot work on a federal contract, so the import of the order goes to temporary visas. Those visas permit individuals to work. Precluding them raises issues as to whether they can be excluded.”

“The devil is in the details, most of which are not addressed in this executive order,” said Vic Goel, managing partner of Goel & Anderson, in an interview. “On its face, the order will exert pressure on government agencies to review federal contractors’ employment of nonimmigrant workers and whether any services are being performed outside the U.S., but it also appears that the Trump Administration may be teeing up an effort to increase H-1B enforcement.”

Goel thinks it is also possible this is the first step before a regulation that seeks to impose new restrictions on employers of H-1B visa holders in contracting situations. Since 2017, the Trump administration has been engaged in a virtual war against such employers, which came to a head with a legal victory and later settlement with USCIS by the business group ITServe Alliance. The May 20, 2020, settlement included compelling USCIS to withdraw memos that had increased H-1B visa denials. Trump administration policies have resulted in skyrocketing H-1B denial rates for IT services companies, according to a National Foundation for American Policy analysis.

The executive order states, “Within 45 days of the date of this order, the Secretaries of Labor and Homeland Security shall take action, as appropriate and consistent with applicable law, to protect United States 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(n)(1) of the Immigration and Nationality Act.”

The term “secondary employer” is controversial. The judge in the ITServe Alliance case made clear that USCIS must follow its regulation, which was derived from the Department of Labor’s definition of an employer-employee relationship. Under the USCIS regulation, an employer-employee relationship exists if the employer “may hire, pay, fire, supervise, or otherwise control the work” of the employee. In 2018, a proposed version of an H-1B labor condition application, later withdrawn by the Department of Labor, used the term “secondary employer.” At the time, Lawrence Lorber said, “Calling someone a secondary employer is nonsense. It raises a lot of issues in the joint-employer context, which is a major policy issue.”

The executive order’s origin is a complaint by union members of the Tennessee Valley Authority (TVA) that about 100 employees (and potentially another 100) would be laid off after the awarding of at least one information technology contract worth $15 million. Since the contractors have H-1B visa holders on their payroll, as do almost all large technology companies in America, the union asked the Trump administration for help.

On August 3, 2020, in the Oval Office, Donald Trump asserted, “The TVA announced that it would lay off over 200 American workers and replace them with cheaper foreign workers brought in from overseas.” A source with knowledge of the contracts and situation with TVA called the Trump statement “Ridiculously not true.”

The companies have been criticized primarily because they are headquartered in other countries and have a large global workforce, including employing visa holders. If the companies were headquartered in Tennessee and employed all people born in Tennessee, the TVA employees who lost their jobs would not have been in a better situation.

When companies or federal agencies seek to innovate or address legacy technology issues, it is common to contract out for services. The difficulty is that longtime employees may not have received the training to deliver the innovations themselves, at least in the opinion of the executives running the organization. If the focus of employees, through no fault of their own, has been working primarily on older IT systems, then unfortunately, they may not be in a good position to find another job, at least quickly.

Bloomberg Government reports under the Trump administration government spending on information technology services by federal agencies grew to $48.2 billion in 2019. In the Oval Office, Trump expressed shock at the awarding of a $15 million contract, considering it a large amount. But Deltek forecasts, “Spending by the Department of Homeland Security on contracted IT goods and services will climb from $7.2 billion in FY 2019 to $8.3 billion in FY 2024.”

Federal officials have a responsibility to spend tax dollars wisely, and the new executive order does not prevent agencies from contracting out for information technology services. Experts note it would be impossible for the federal government to operate without outside contractors. The executive order on federal contracting may be less important than what new restrictions on immigration are likely to follow it.

 

This article was written by Stuart Anderson from Forbes and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.

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