Donald Trump administration is moving ahead with a proposal to end work permits for spouses of H-1B workers in the United States.
What is H1 B visa?
The H-1B visa is a non-immigrant visa.
It allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise.
Technology companies depend on it to hire tens of thousands of employees each year from countries such as India and China.
The H1-B visa has an annual numerical limit cap of 65,000 each fiscal year, as mandated by the Congress.
The first 20,000 petitions filed on behalf of beneficiaries with a US master’s degree or higher are exempt from the cap.
Generally, a citizen of a foreign country who wishes to enter the United States must first obtain a visa, either a non immigrant visa for temporary stay, or an immigrant visa for permanent residence.
Temporary worker visas are for persons who want to enter the US for employment lasting a fixed period of time, and are not considered permanent or indefinite.
According to the US Citizenship and Immigration Services (USCIS), between 2007 and 2017, it received the maximum number of 2.2 million H-1B petitions from high-skilled Indians.
India was followed by China with 301,000 H-1B petitions during the same period.
What is the H1-B visa programme Bill?
The Bill encourages companies to recruit American workers. It explicitly prohibits replacement of American workers by H1-B or L-1 visa holders.
The Bill seeks to increase the minimum salary of H1-B visa holders from $60,000 to $1,00,000 per annum.
By raising the salary to a level more in line with the average American salary for these positions, it would help cut down on abuse by removing the profit incentive and ensuring these positions remain available for companies who truly needed them.
Currently, firms need not go through extensive paperwork if the potential H1-B employee has an equivalent of a Master’s degree. The Bill aims to do away with the Master’s degree exemption.Because, they are easily obtained by foreign workers.
It also prohibits companies from hiring H1-B employees if they employ more than 50 people and more than 50 per cent of their employees are H1-B and L-1 visa holders.
The H-2B visa nonimmigrant program permits employers to hire foreign workers to come temporarily to the United States and perform temporary nonagricultural services or labor on a one-time, seasonal, peakload or intermittent basis.
The L-1 visa facilitates the temporary transfer of foreign worker in the managerial, executive or specialized knowledge category to the U.S. to continue employment with an office of the same employer, its parent branch, subsidiary or affiliate.
L-1 visa is a temporary non-immigrant visa that allows L-2 visa for the spouse and minor unmarried children under 21 years of age. L-1 visa holder is known as intra-company transferee.
Even though L-1 visa was initially made for large multinational companies to transfer their employees to the U.S., it provides small or start-up companies abroad to expand their business and services to the U.S.
L-1 visa is not limited to specific countries that the U.S. may have some treaties with. Therefore, as long as all eligibility requirements are met, the aliens from any country are eligible.
An L-2 visa is a visa document used to enter the United States by the dependent spouse and unmarried children under 21 years of age of qualified L-1 visa holders. It is a non-immigrant visa, and is only valid for the duration of the spouse’s L1 visa.
|Not limited to MNCs – any U.S. employer may seek the skills of a foreign worker
||Limited to MNCs
|Requires Specific Degree
||Does not require Specific Degree
|The H1B regular cap is 65,000 with an extra 20,000 reserved for those who have completed their Master’s from a US university.
||No limits to the number of L1s approved every year
|Have to be paid the prevailing wage or actual wage
||No such requirement
|6 yrs plus extension
||7 yrs and no extension
|Need to demonstrate lack of availability of domestic workers
||No Need to do so
|Can also do but is authorized by executive action and therefore not permanent
||Spouse (L2 visa) can apply for Jobs
H1B Visa vs L1 Visa
An L1 Visa (Intra-Company Transferee Visa), grants entry into the United States to a foreign worker who has demonstrated competency as a manager, executive and/or possesses specialized knowledge of procedures integral to the operation of a U.S based enterprise. This visa is most commonly obtained by individuals who are employed by multinational companies.
Like the L1, an H1B visa is also a nonimmigrant visa which permits foreign workers to enter into to U.S. to carry out the functions of a company, however, the individual must possess knowledge either theoretical or technical in a specialty occupation field. Examples of such include, but are not limited to:
What is H4 Visa?
Dependents of H-1B visa holders get H-4 visas.
In 2015 US Citizenship and Immigration Services passed the Employment Authorization for Certain H-4 Dependent Spouses rule.
Certain H-4 Dependent Spouses means spouses of H-1B visa holders whose green card applications have reached a certain milestone.
Aftermath the rule thousands of H-4 spouses applied for H4 visa EAD ( Employment Authorization Document).
More than 90% of the 1.26 lakh Employment Authorisation Documents (EAD) issued for H-4 visa beneficiaries since 2015 went to Indians.
What’s the H4 EAD Lawsuit?
A lawsuit was filed against the H4 EAD rule to stop it from going into motion.
Save Jobs USA filed its lawsuit against Department of Homeland Security (DHS) even before the rule was about to go live.
Save Jobs USA’ is an organization comprised of IT workers who claim they lost their jobs to H-1B workers.
It claimed two things:
- The new rule has no protections for US workers and increases the pool of workers looking for jobs
- DHS never had the authority to grant EADs to H-4 visa holders.
What if the EAD rule is ended?
The Trumps administration has said to a federal court that it is planning to end the work permit for the spouses of H1 B visa holders.
The issue has cast its shadow over the job prospects of the H4 visa holders.
Also, the uncertainty over their legal status has stalled the job prospects of hundreds of H-4 visa holders.
The majority of the H4 visa holders are Indian Americans and Women.
What is President-elect Donald Trump’s stand on the issue?
Reshaping immigration is a central tenet of President-elect Donald Trump’s push for companies to invest and hire more in the U.S.
He promised to end the misuse of visa programmes by companies to undercut American workers, referring to an incident that involved Indian companies and IT professionals on H1-B visas.
The incident is HCL Inc. and CTS hired Indian IT professionals on H1-B visas for contracts obtained from Disney World in Florida.
Who will be impacted by the H1B visa reform if it passes?
Among the biggest recipients of H1B visas each year are Indian IT firms, such as Infosys, TCS, Wipro, HCL, Igate, Cognizant, as well as global giants IBM, Accenture, Microsoft, Google, and Amazon, among others. If this bill passes, they will to bear significantly higher costs for employing highly-skilled foreign citizens. The visa reform may even create a gap in demand and supply for talent for smaller companies that cannot afford incurring high costs to employ skilled workers.
It will eliminate the Master’s Degree exemption for employers. The current H-1B visa program has an annual limit of 65,000 visas each fiscal year, and the first 20,000 visas for U.S. master’s degree holders are exempt from that cap. These visas fill up pretty quickly and if the applications exceed the cap, a lottery system is used to allot them further.
The new rules are expected to overturn the existing duration of the optional practical training work visas known as OPTs, which are issued to students after the completion of their studies to gain work experience.
The new rules may bring back restrictions on the spouses of H1B visa holders who until recently were not allowed to work in the US and these draconian restrictions were seen as career killers, but in 2015, those work restrictions were removed to allow H4 visa holders to legally work.
How will the Bill affect Indian companies?
If the reform goes through, the resultant increase in employee wages will be a cost worry for the IT industry.
For the Indian firms, the challenge would be more on increased local hiring. Such wage hikes may hit their margins initially but going forward they will have to rethink over more local hiring.
Indian IT stocks today fell by as much as 4 per cent after the re-introduction of the bill. The top four companies — TCS, Infosys, Wipro and HCL Tech — together lost over Rs 22,000 crore in market valuation.
“This has just been introduced in the house, we have to still see what the new president does. If the bill passes we will have to adapt. The industry has already started hiring onshore so that will increase,” an executive with a large IT company said.
Apart from the visa curbs, the U.S. had also recently hiked the visa fee for certain categories of the H1-B and L1 visas which has had an impact on Indian companies.
Will it affect American Economy?
Indians with H1B and L-1 visas contribute USD 1 billion annually to the US.
Indian IT industry contributes to about 4 lakh direct and indirect jobs in the US , contributing for about USD 5 billion in taxes annually.
A stricter immigration law towards H1B visas is likely to hurt the American economy, as the people working with foreign IT companies in the US holding H1B visas are adding value to American companies.
With the Industry seeing a shift from traditional services to digital technology delivery, they will need more on-the-site deployment.
Skilled foreign workers who come to work in the United States on H1-B visas don’t just directly supplement the US IT industry with specialised skillsets, they also contribute indirectly to other industries in the US. Often H1-B workers bring their families along and thereby bring additional business for other industries like real estate, Banking, hospitality, to name a few. The effects of this announcement will impact the GDP and the overall business economy and growth of US. While 20% of H1-B visa quotas have been set aside for start-ups and small employers with 50 or fewer employees, there is no denying that this will be a dampener to the spirit of innovation and entrepreneurship.
In midst of all this, it’s critical to remember that most US-based companies (including many Fortune 500s) are highly dependent on IT Services Providers. These companies actively outsource for both skills and cost advantages – important to note, it’s not just the latter that drives the decisions. Changes in the H1-B visa arrangement will add immense cost pressures on these organisations.
What had to be done?
Using wage as it’s only pivot, the bill has more than doubled the minimum wage requirement of H1-B visa holders from $60,000 to $130,000. There is no mention of any skills based criteria/requirement. In addition, the High-Skilled Integrity and Fairness Act of 2017 prioritises market-based quota of H1-B visas to companies willing to pay 200 percent of a fixed wage. In light of the STEM (Science, Technology, Engineering and Math) skills gap currently prevailing in the US, a thorough on-the-ground study of multiple factors, with skills being the primary factor, should have been the foundation of the Act.
As labour and capital quit American shores, the more they try to protect their jobs, the more it will affect the rest of the world. But India being one of the fastest growing markets, has plenty of opportunities to stand up to it and deliver, but that require persistent mending of ways things function. While there may be a temporary plug on legal issues in the US, it will lose the perception battle internationally. Since it is arguably inevitable, this gives a lot of chance to India, to introspect and build its own infrastructure.
When it comes to the IT industry, initially the Indian companies will be pressurised to hire Indian talent, but eventually, it will help in overall growth. Additionally, Make in India and Buy American can work together too, which can only improve bilateral trade between the nations. While there may or may not be much logic in the events to come, the unpredictability can also be the sole reason for India to improve internally.