H-1B Visa Program
More Oversight by Labor Can Improve Compliance with Program Requirements Gao ID: GAO-06-901T June 22, 2006The H-1B visa program assists U.S. employers in temporarily filling certain occupations with highly-skilled foreign workers. There is considerable interest regarding how Labor, along with Homeland Security and Justice, is enforcing the requirements of the program. This testimony summarizes our report, GAO-06-720, that describes how Labor carries out its H-1B program responsibilities and how Labor works with other agencies involved in the H-1B program.
While Labor's H-1B authority is limited in scope, it does not use its full authority to oversee employers' compliance with program requirements. Labor's review of employers' applications to hire H-1B workers is timely, but lacks quality assurance controls and may overlook some inaccuracies. From January 2002 through September 2005, Labor electronically reviewed more than 960,000 applications and certified almost all of them. Labor's review of the applications is limited by law to checking for missing information or obvious inaccuracies and does this through automated data checks. However, in our analysis of Labor's data, we found more than 3,000 applications that were certified even though the wage rate on the application was lower than the prevailing wage for that occupation. We also found approximately 1,000 certified applications that contained erroneous employer identification numbers, which raises questions about the validity of the applications. In its enforcement efforts, Labor's Wage and Hour Division (WHD) investigates complaints made against H-1B employers. From fiscal year 2000 through fiscal year 2005, Labor reported an increase in the number of H-1B complaints and violations, and a corresponding increase in the number of employer penalties. In fiscal year 2000, Labor required employers to pay back wages totaling $1.2 million to 226 H-1B workers; by fiscal year 2005, back wage penalties had increased to $5.2 million for 604 workers. Program changes, such as a higher visa cap in some years, could have been a contributing factor. In April 2006, WHD began randomly investigating willful violators of the program's requirements. Labor uses education as its primary method of promoting compliance with the H-1B program by conducting compliance assistance programs and posting guidance on its web site. Labor, Homeland Security, and Justice all have responsibilities under the H-1B program, but Labor and Homeland Security face challenges sharing information. After Labor certifies an application, USCIS reviews it but cannot easily verify whether employers submitted petitions for more workers than originally requested on the application because USCIS's database cannot match each petition to Labor's application case number. Also, during the process of reviewing petitions, staff may find evidence that employers are not meeting their H-1B obligations. For example, Homeland Security may find that a worker's income on the W-2 is less than the wage quoted on the original application. USCIS may deny the petition if an employer is unable to explain the discrepancy, but it does not have a formal process for reporting the discrepancy to Labor. Moreover, current law precludes WHD from using this information to initiate an investigation of the employer. Labor also shares enforcement responsibilities with Justice, which pursues charges filed by U.S. workers who allege they were displaced by an H-1B worker. From 2000 through 2005, Justice found discriminatory conduct in 6 out of the 97 investigations closed, and assessed a total of $7,200 in penalties.
GAO-06-901T, H-1B Visa Program: More Oversight by Labor Can Improve Compliance with Program Requirements
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Testimony:
Before the Subcommittee on Immigration, Border Security and Claims,
Committee on the Judiciary, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EDT:
Thursday, June 22, 2006:
H-1B Visa Program:
More Oversight by Labor Can Improve Compliance with Program
Requirements:
Statement of Sigurd R. Nilsen, Director Education, Workforce, and
Income Security:
GAO-06-901T:
GAO Highlights:
Highlights of GAO-06-901T, a testimony before the Subcommittee on
Immigration, Border Security and Claims, Committee on the Judiciary,
House of Representatives.
Why GAO Did This Study:
The H-1B visa program assists U.S. employers in temporarily filling
certain occupations with highly-skilled foreign workers. There is
considerable interest regarding how Labor, along with Homeland Security
and Justice, is enforcing the requirements of the program. This
testimony summarizes our report, GAO-06-720, that describes how Labor
carries out its H-1B program responsibilities and how Labor works with
other agencies involved in the H-1B program.
What GAO Found:
While Labor‘s H-1B authority is limited in scope, it does not use its
full authority to oversee employers‘ compliance with program
requirements. Labor‘s review of employers‘ applications to hire H-1B
workers is timely, but lacks quality assurance controls and may
overlook some inaccuracies. From January 2002 through September 2005,
Labor electronically reviewed more than 960,000 applications and
certified almost all of them. Labor‘s review of the applications is
limited by law to checking for missing information or obvious
inaccuracies and does this through automated data checks. However, in
our analysis of Labor‘s data, we found more than 3,000 applications
that were certified even though the wage rate on the application was
lower than the prevailing wage for that occupation. We also found
approximately 1,000 certified applications that contained erroneous
employer identification numbers, which raises questions about the
validity of the applications. In its enforcement efforts, Labor‘s Wage
and Hour Division (WHD) investigates complaints made against H-1B
employers. From fiscal year 2000 through fiscal year 2005, Labor
reported an increase in the number of H-1B complaints and violations,
and a corresponding increase in the number of employer penalties. In
fiscal year 2000, Labor required employers to pay back wages totaling
$1.2 million to 226 H-1B workers; by fiscal year 2005, back wage
penalties had increased to $5.2 million for 604 workers. ; however
program changes, such as an increase in the visa cap, could have been a
factor in the increase. Program changes, such as a higher visa cap in
some years, could have been a contributing factor. In April 2006, WHD
began randomly investigating willful violators of the program‘s
requirements. Labor uses education as the its primary method of
promoting compliance with the H-1B program by conducting compliance
assistance programs and posting guidance on its web site.
Labor, Homeland Security, and Justice all have responsibilities under
the H-1B program, but Labor and Homeland Security face challenges
sharing information. After Labor certifies an application, USCIS
reviews it but cannot easily verify whether employers submitted
petitions for more workers than originally requested on the application
because USCIS‘s database cannot match each petition to Labor‘s
application case number. Also, during the process of reviewing
petitions, staff may find evidence that employers are not meeting their
H-1B obligations. For example, Homeland Security may find that a
worker‘s income on the W-2 is less than the wage quoted on the original
application. USCIS may deny the petition if an employer is unable to
explain the discrepancy, but it does not have a formal process for
reporting the discrepancy to Labor. Moreover, current law precludes WHD
from using this information to initiate an investigation of the
employer. Labor also shares enforcement responsibilities with Justice,
which pursues charges filed by U.S. workers who allege they were
displaced by an H-1B worker. From 2000 through 2005, Justice found
discriminatory conduct in 6 out of the 101 97 investigations closed,
and cases filed by U.S. workers. assessed a total of $7,200 in
penalties.
What GAO Recommends:
The Congress should consider eliminating the restriction on Labor using
information from Homeland Security to initiate an investigation and
directing Homeland Security and Labor to share information on employers
that may not be fulfilling program requirements., GAO recommends that
Labor improve its checks of employers‘ applications; and that Homeland
Security‘s U.S. Citizenship and Immigration Services (USCIS) include
Labor‘s application case number in its new information technology
system. Homeland Security agreed with our recommendations. Labor
questioned whether more stringent checks were necessary and believes
Congress intentionally limited Labor‘s role and placed program
integrity with USCIS. We believe there are cost-effective methods that
Labor could use to check the applications more stringently that would
enhance the integrity of the H-1B process.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-901T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Sigurd Nilsen at (202)
512-7215 or nilsens@gao.gov.
[End of Section]
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to assist you in your oversight of the H-
1B nonimmigrant visa program. This program was established to assist
U.S. employers in temporarily filling certain positions with highly-
skilled foreign workers. Employers who want to hire H-1B workers must
attest to meeting certain labor conditions--such as notifying all
employees of the intention to hire H-1B workers and offering H-1B
nonimmigrants the same benefits as U.S. workers. A small number of H-1B
employers are required to make additional attestations concerning the
non-displacement and recruitment of U.S. workers. In recent years,
employers have requested more of these workers than are allowed to come
into the country--the cap on H-1B visas has been reached before or
shortly after the beginning of each fiscal year. Currently, the annual
number of H-1B workers authorized to enter the United States is 65,000,
but in previous years the cap has been as high as 195,000.
Several agencies are involved in the H-1B visa program. The Departments
of Labor (Labor), Homeland Security (Homeland Security), and Justice
(Justice) each have specific responsibilities during certain stages of
the H-1B visa process, ranging from reviewing and approving an
employer's request to hire an H-1B worker, to investigating complaints
from both U.S. and foreign workers. The Department of State also has a
role in issuing the worker's visa. Recently, there has been
considerable interest regarding how Labor, in conjunction with the
other agencies, is ensuring that employers comply with the requirements
of the H-1B program.
I will draw on the results of a report we are releasing today that was
conducted at the request of Chairmen Sensenbrenner and Hostettler,
Ranking Member Jackson Lee, and Representative Smith, which describes
(1) how Labor carries out its H-1B program responsibilities and (2) how
Labor works with other agencies involved in the H-1B program.[Footnote
1] To address these questions, we interviewed officials from Labor,
Homeland Security's U.S. Citizenship and Immigration Services (USCIS),
and Justice. We also reviewed laws and regulations pertaining to the H-
1B program. We analyzed data on the applications electronically
reviewed by Labor as well as data on the H-1B complaints received by
Labor and the outcomes of the associated investigations. We also
analyzed data on the H-1B petitions received by USCIS and conducted
site visits to the California and Vermont service centers. Finally, we
analyzed reports from Justice regarding the outcomes of its
investigations into charges of U.S. worker displacement by H-1B
workers. A detailed discussion of our methodology is available in our
full report.
In summary, Labor's oversight of the H-1B program is limited even
within the scope of its existing authority. Labor's review of
employers' H-1B applications is limited by law to identifying omissions
and obvious inaccuracies, but we found it does not consistently
identify all obvious inaccuracies. For example, Labor certified more
than 3,000 applications even though the wage on the application was
lower than the wage the employers were required to pay for that
occupation and location. Labor's Wage and Hour Division (WHD) enforces
H-1B program requirements by investigating complaints made against H-1B
employers and recently began random investigations of previous program
violators. From fiscal year 2000 through fiscal year 2005, complaints
and violations increased but changes in the program, such as temporary
increases in visa caps, may have been a factor. Labor shares H-1B
responsibilities with Homeland Security and Justice, but Labor and
Homeland Security face challenges sharing information across agencies.
Homeland Security cannot easily verify whether employers submitted
petitions for more workers than they originally requested on their
application to Labor because USCIS's data system does not match each
petition to Labor's application case number. Additionally, during the
process of reviewing petitions, USCIS staff told us they may find
evidence that employers are not meeting their H-1B obligations.
However, USCIS does not have a formal mechanism to report such
information to Labor, and current law precludes WHD from using this
information to initiate an investigation of an employer. Justice
pursues charges filed by U.S. workers alleging they were not hired or
were displaced so that an H-1B worker could be hired instead, but it
has not found discriminatory conduct in most cases.
To increase employer compliance with the H-1B program and protect the
rights of U.S. and H-1B workers, Congress should consider eliminating
the restriction on Labor using petition information submitted by
employers to Homeland Security as the basis for initiating an
investigation. Congress should also consider directing Homeland
Security to provide Labor with information received during the
adjudication process that may indicate an employer is not fulfilling
its H-1B responsibilities. To strengthen oversight of employers'
applications to hire H-1B workers and to help ensure employers are
complying with program requirements, we recommend that Labor improve
its procedures for checking for completeness and obvious inaccuracies,
and, as Homeland Security's USCIS transforms its information technology
system, it include Labor's application case number in the new system.
The agencies gave us technical comments on our report and Homeland
Security agreed with our recommendations. Labor questioned whether more
stringent checks were necessary and believes Congress intentionally
limited Labor's role and placed program integrity with USCIS.
We believe there are cost-effective methods Labor could use to check
the applications more stringently that would enhance the integrity of
the H-1B process.
Background:
The H-1B program was created by the Immigration Act of 1990, which
amended the Immigration and Nationality Act (INA).[Footnote 2] The H-1B
visa category was created to enable U.S. employers to hire temporary
workers as needed in specialty occupations, or those that require
theoretical and practical application of a body of highly specialized
knowledge. It also requires a bachelor's or higher degree (or its
equivalent) in the specific occupation as a minimum requirement for
entry into the occupation in the United States.[Footnote 3] The
Immigration Act of 1990 capped the number of H-1B visas at 65,000 per
fiscal year.
Since the creation of the H-1B program, the number of H-1B visas
permitted each fiscal year has changed several times. Congress passed
the American Competitiveness and Workforce Improvement Act of 1998
(ACWIA), which increased the limit to 115,000 for fiscal years 1999 and
2000. In 2000, Congress passed the American Competitiveness in the
Twenty-First Century Act (AC-21), which raised the limit to 195,000 for
fiscal year 2001 and maintained that level through fiscal years 2002
and 2003. The number of H-1B visas reverted back to 65,000
thereafter.[Footnote 4] Generally, an H-1B visa is valid for 3 years of
employment and is renewable for an additional 3 years.
Filing an application with Labor's Employment and Training
Administration is the employer's first step in hiring an H-1B
worker,[Footnote 5] and Labor is responsible for either certifying or
denying the employer's application within 7 days. By law, it may only
review applications for omissions and obvious inaccuracies. Labor has
no authority to verify the authenticity of the information. Employers
must include on the application information such as their name,
address, rate of pay and work location for the H-1B worker, and
employer identification number. All employers are also required to make
four attestations on the application as to:
1. Wages: The employer will pay non-immigrants at least the local
prevailing wage or the employer's actual wage, whichever is higher, and
pay for nonproductive time caused by a decision made by the employer;
and offer nonimmigrants benefits on the same basis as U.S. workers.
2. Working conditions: The employment of H-1B nonimmigrants will not
adversely affect the working conditions of U.S. workers similarly
employed.
3. Strike, lockout, or work stoppage: No strike or lockout exists in
the occupational classification at the place of employment.
Notification: The employer has notified employees at the place of
employment of the intent to employ H-1B workers.
Certain employers are required to make three additional attestations on
their application. These additional attestations apply to H-1B
employers who: (1) are H-1B dependent, that is, generally those whose
workforce is comprised of 15 percent or more H-1B nonimmigrant
employees; or (2) are found by Labor to have committed either a willful
failure to meet H-1B program requirements or misrepresented a material
fact in an application during the previous 5 years. These employers are
required to additionally attest that: (1) they did not displace a U.S.
worker within the period of 90 days before and 90 days after filing a
petition for an H-1B worker; (2) they took good faith steps prior to
filing the H-1B application to recruit U.S. workers and that they
offered the job to a U.S. applicant who was equally or better qualified
than an H-1B worker; and (3) prior to placing the H-1B worker with
another employer, they inquired and have no knowledge as to that
employer's action or intent to displace a U.S. worker within the 90
days before and 90 days after the placement of the H-1B worker with
that employer.[Footnote 6]
After Labor certifies an application, the employer must submit a
petition for each worker it wishes to hire to USCIS. On March 1, 2003,
Homeland Security took over all functions and authorities of Justice's
Immigration and Naturalization Service under the Homeland Security Act
of 2002 and the Homeland Security Reorganization Plan of November 25,
2002. Employers submit to USCIS the application, petition, and
supporting documentation along with the appropriate fees. Information
on the petition must indicate the wages that will be paid to the H-1B
worker, the location of the position, and the worker's qualifications.
Through a process known as adjudication, USCIS reviews the documents
for certain criteria, such as whether the petition is accompanied by a
certified application from Labor, whether the employer is eligible to
apply for H-1B workers, and whether the prospective H-1B worker is
qualified for the position.
The Wage and Hour Division of Labor's Employment Standards
Administration performs investigative and enforcement functions to
determine whether an employer has complied with its attestations on the
application. An aggrieved individual or entity[Footnote 7] or certain
non-aggrieved parties may file a complaint with Labor that an employer
violated a requirement of the H-1B program. To conduct an
investigation, the Administrator must have reasonable cause to believe
that an employer did not comply with or misrepresented information on
its application. Employers who violate any of the attestations on the
application are subject to civil money penalties or administrative
remedy, such as paying back wages to H-1B workers or debarment, which
disqualifies an employer from participating in the H-1B program for a
specified period of time. Employers, the person who filed the
complaint, or other interested parties who disagree with the findings
of the investigation then have 15 days to appeal by requesting an
administrative hearing.
The Office of Special Counsel for Immigration Related Unfair Employment
Practices (OSC) of the Department of Justice also has some enforcement
responsibility. Under statutory authority created by the Immigration
Reform and Control Act of 1986, OSC pursues charges of citizenship
discrimination brought by U.S. workers who allege that an employer
preferred to hire an H-1B worker.
Labor Does Not Use Its Full Authority to Oversee Employers' Compliance
with Program Requirements:
Labor's H-1B authority is limited in scope, but it does not use its
full authority to oversee employers' compliance with program
requirements. Labor's review of employers' applications to hire H-1B
workers overlooks some inaccuracies, such as applications containing
invalid employer identification numbers. WHD investigates complaints
made against H-1B employers and recently began random investigations of
some employers who had previously violated program requirements. Labor
uses education as the primary method of promoting employers' compliance
with the H-1B program.
Labor's Review of Employers' Requests Is Fast but May Overlook Some
Inaccuracies:
Labor reviews applications electronically[Footnote 8] by subjecting
them to data checks, and its web site informs employers that it will
certify or deny applications within minutes based on the information
entered. We found that of the 960,563 applications that Labor
electronically reviewed from January 2002 through September 2005, it
certified 99.5 percent.
Labor's review of the application is limited by law to identifying
omissions or obvious inaccuracies. Labor defines an obvious inaccuracy
as when an employer:
* files an application after being debarred, or disqualified, from
participating in the H-1B program;
* submits an application more than 6 months before the beginning date
of the period of employment;
* identifies multiple occupations on a single application;
* states a wage rate that is below the Fair Labor Standards Act minimum
wage;
* identifies a wage rate that is below the prevailing wage on the
application; and:
* identifies a wage range where the bottom of the range is lower than
the prevailing wage on the application.
Despite these checks, Labor's system does not consistently identify all
obvious inaccuracies. For example, although the overall percentage was
small, we found 3,229 applications that were certified even though the
wage rate on the application was lower than the prevailing wage for
that occupation in the specific location (see table 1).[Footnote 9]
Table 1: Examples of Wage Rates and Prevailing Wages on Labor Condition
Applications That Were Incorrectly Certified:
Sample applications: Application 1 FY 2002;
Application wage rate: $60,163 per year;
Application prevailing wage: $83,833 per year;
Application status: Certified.
Sample applications: Application 2 FY 2003;
Application wage rate: $37,784 per year;
Application prevailing wage: $52,876 per year;
Application status: Certified.
Sample applications: Application 3 FY 2004;
Application wage rate: $32,000 per year;
Application prevailing wage: $35,000 per year;
Application status: Certified.
Sample applications: Application 4 FY 2005;
Application wage rate: $55,000 per year;
Application prevailing wage: $75,000 per year;
Application status: Certified.
Source: GAO analysis of Department of Labor data.
[End of table]
Additionally, Labor does not identify other errors that may be obvious.
Specifically, Labor told us its system reviews an application's
employer identification number[Footnote 10] to ensure it has the
correct number of digits and that the number does not appear on the
list of employers who are ineligible to participate in the H-1B
program. However, we found 993 certified applications with invalid
employer identification number prefixes. Officials told us that in
other programs, such as the permanent employment program, Labor matches
the application's employer identification number to a database with
valid employer identification numbers. However, they do not formally do
this match with H-1B applications because it is an attestation process,
not a verification process.
Likewise, Labor officials told us they frequently review the
application process to determine where improvements can be made, but
they rely on a system of data checks rather than a formal quality
assurance process because of the factual nature of the form and the
number of applications received. Also, officials said if they conducted
a more in-depth review of the applications, they could overreach their
legal authority and increase the processing time for applications.
Additionally, they said the integrity of the H-1B program is ensured
through enforcement and by the fact that there is actual review by
staff when the employer submits the paperwork to USCIS.
Labor Investigates Complaints, and Has Begun the Process of Randomly
Investigating Previous Violators:
Labor enforces H-1B program requirements primarily by investigating
complaints filed against employers by H-1B workers or others. Labor's
Wage and Hour Division received 1,026 complaints from fiscal year 2000
through fiscal year 2005. Labor officials said they investigate the
employer's compliance with all program requirements for all H-1B
workers; therefore, an investigation may yield more than one violation.
While the number of H-1B complaints and violations has increased from
fiscal year 2000 through fiscal year 2005, the overall numbers remain
small and may have been affected by changes to the program. As shown in
table 2, we found that the number of complaints increased from 117 in
fiscal year 2000 to 173 in fiscal year 2005, and the number of cases
with violations more than doubled, along with a corresponding increase
in the number of employer penalties. In fiscal year 2000, Labor
required employers to pay back wages totaling $1.2 million to 206 H-1B
workers; by fiscal year 2005, back wages penalties had increased to
$5.2 million for 604 workers. The most common type of violation each
fiscal year involved a failure to pay H-1B workers the required wage.
Labor officials told us it is difficult to attribute changes in
complaints and violations to any specific cause because of multiple
legislative changes to the program, such as the temporary increase in
the number of H-1B workers allowed to enter the country and the
additional attestations for certain employers that expired and then
were reinstated.
Table 2: H-1B Complaints, Violations, Back Wages Due, and Civil Money
Penalties Assessed:
Fiscal year: 2000;
Number of complaints: 117;
Number of cases with violations: 93;
Amount of back wages due (millions): $1.2;
Number of employees due back wages: 226;
Civil money penalties assessed: $21,000;
H-1B fiscal year cap[A]: 115,000.
Fiscal year: 2001;
Number of complaints: 192;
Number of cases with violations: 67;
Amount of back wages due (millions): 0.6;
Number of employees due back wages: 135;
Civil money penalties assessed: 17,750;
H-1B fiscal year cap[A]: 195,000.
Fiscal year: 2002;
Number of complaints: 238;
Number of cases with violations: 210;
Amount of back wages due (millions): 3.8;
Number of employees due back wages: 830;
Civil money penalties assessed: 48,350;
H-1B fiscal year cap[A]: 195,000.
Fiscal year: 2003;
Number of complaints: 148;
Number of cases with violations: 264;
Amount of back wages due (millions): 4.0;
Number of employees due back wages: 552;
Civil money penalties assessed: 136,890;
H-1B fiscal year cap[A]: 195,000.
Fiscal year: 2004;
Number of complaints: 158;
Number of cases with violations: 271;
Amount of back wages due (millions): 4.2;
Number of employees due back wages: 390;
Civil money penalties assessed: 114,125;
H-1B fiscal year cap[A]: 65,000.
Fiscal year: 2005;
Number of complaints: 173;
Number of cases with violations: 217;
Amount of back wages due (millions): 5.2;
Number of employees due back wages: 604;
Civil money penalties assessed: 103,350;
H-1B fiscal year cap[A]: 65,000.
Fiscal year: Total;
Number of complaints: 1,026;
Number of cases with violations: 1,122;
Amount of back wages due (millions): 19.0;
Number of employees due back wages: 2,737;
Civil money penalties assessed: 441,465;
H-1B fiscal year cap[A]: N/A.
Source: GAO analysis of Department of Labor, Wage and Hour Division
data, the American Competitiveness and Workforce Improvement Act of
1998, and the American Competitiveness in the Twenty-First Century Act
of 2000.
[A] N/A = not applicable.
[End of table]
Labor's Wage and Hour Division has recently begun random investigations
of employers who have willfully violated H-1B program requirements in
the past. Under the INA, as amended, Labor has had the authority to
conduct these investigations since 1998, but officials told us the
agency had not done so until recently for several reasons. First, these
employers frequently go out of business because they are not allowed to
participate in the H-1B program for a period of time. Second, there are
only a limited number of willful violators--just 50 nationwide in late
fiscal year 2005. In addition, we were told that H-1B investigators
have heavy caseloads. However, Labor officials said they now have 59
cases that they can investigate, and in April 2006, directed each of
their regional offices to initiate a random investigation of at least
one employer prior to the end of fiscal year 2006.
Labor Relies Primarily on Education to Promote Employer Compliance:
Labor uses education as the primary method of promoting employer
compliance with the H-1B program. From 2000 through 2005, Labor's
district offices conducted six presentations on H-1B compliance. Labor
also holds compliance seminars in response to requests from employer
associations and discusses program requirements with companies that do
not have pending lawsuits related to the H-1B program. Additionally,
Labor posts guidance and fact sheets on its web site. While some of its
fact sheets have not been updated since the program was amended by the
H-1B Visa Reform Act in 2004, officials said 26 new fact sheets will be
posted on the agency's web site by the end of fiscal year 2006. During
investigations of employers, Labor explains the employer's legal
obligations and asks the employer about the changes it plans to make to
comply with the law. When an investigation results in an employer's
debarment, Labor publicizes the case through press releases
highlighting the consequences for not complying with H-1B program
requirements. Labor is also working with the Department of State to
provide information cards to H-1B workers when they are issued their
visa. These cards inform them about their employment rights, including
required wages and benefits, illegal deductions, working conditions,
records, and discrimination.
Homeland Security and Justice also use education to promote employer
compliance with the H-1B program. Homeland Security publishes
informational bulletins and uses its web site to advise the public of
any changes to the program regarding filing fees or eligibility
resulting from changes in the law. Justice engages in educational
activities through public service announcements aimed at employers,
workers, and the general public. The agency trains employers and works
with other federal agencies to coordinate employer education programs.
Justice also uses a telephone intervention hotline to resolve disputes
between U.S. workers and H-1B employers, answers questions submitted
via e-mail, issues guidance, and provides information on its web site.
Labor and Homeland Security Face Challenges Sharing Information:
Labor, Homeland Security, and Justice all have responsibilities under
the H-1B program, but Labor and Homeland Security face challenges
sharing information that could help identify possible program
violations. In addition to Homeland Security, Labor also shares
enforcement responsibilities with Justice, which pursues charges filed
by U.S. workers who allege that they were not hired or were displaced
because of an H-1B worker. Justice has found discriminatory conduct in
relatively few cases.
Labor and Homeland Security Coordinate to Process Employers' Requests
to Hire H-1B Workers, but Do Not Use Certain Information to Investigate
Possible Violations:
Homeland Security reviews Labor's certified application as part of the
adjudication process; however, it cannot easily verify whether
employers have submitted petitions for more workers than originally
requested on the application. USCIS's data system does not match each
petition to its corresponding application because the system does not
include a field for the unique number Labor assigns each application.
As a result, USCIS cannot easily verify how many times the employer has
used a given application or which petitions were supported by which
application, potentially allowing employers to use the application for
more workers than they were certified to hire. USCIS told us that while
it has attempted to add Labor's application case number to its
database, it has not been able to because of the system's memory
limitations and it will be several years before a new information
technology system is operational.
During the process of reviewing employers' petitions, USCIS may find
evidence the employer is not meeting the requirements of the H-1B
program, but current law precludes Labor's Wage and Hour Division from
using this information to initiate an investigation of the employer.
Some petitions to extend workers' H-1B status have been submitted with
W-2 forms where the wage on the W-2 was less than the wage the employer
indicated it would pay on the original Labor application, according to
USCIS staff. If the employer is unable to adequately explain the
discrepancy, USCIS may deny the petition but does not have a formal
mechanism for reporting these discrepancies to Labor. Moreover, even if
USCIS did report these cases, current law precludes WHD from using the
information to initiate an investigation. According to officials from
Labor, it does not consider Homeland Security to be an aggrieved party;
therefore, Labor would not initiate an investigation based on
information received from, or a complaint filed by, Homeland Security.
Justice Handles U.S. Worker Cases:
Justice pursues charges filed by U.S. workers who allege that an H-1B
worker was hired in their place. Such charges may be resolved before an
administrative law judge, through an out-of-court settlement, or by
dismissal for lack of reasonable cause to believe that a violation
occurred. From 2000 through 2005, no cases were heard by an
administrative law judge. Most of the 101 investigations started by
Justice from 2000 through 2005 were found to be incomplete, withdrawn,
untimely, dismissed, or investigated without finding reasonable cause
for a violation. Of the 97 investigations closed, Justice found
discriminatory conduct in 6 cases, and assessed $7,200 in penalties in
3 of the 6 cases, all in 2003.[Footnote 11]
Conclusion and Recommendations:
We found that Labor--in coordination with Homeland Security--could
provide better oversight of employers' compliance with H-1B visa
program requirements. Even though Labor's authority to review
applications is limited, it is certifying some applications that do not
meet program requirements or have inaccurate information. Additionally,
USCIS may find information in the materials submitted by an H-1B
employer that indicates the employer is not complying with the program
requirements. However, these employers may not face consequences
because USCIS does not have a formal mechanism for reporting this
information to Labor, and current law restricts Labor from using such
evidence to initiate an investigation. USCIS also has an opportunity to
improve its oversight by matching information from its petition
database with Labor's application case number to detect whether
employers are requesting more H-1B workers than they were originally
certified to hire. As Congress deliberates changes to U.S. immigration
policy, it is essential to ensure that employers comply with program
requirements designed to protect both domestic and H-1B workers.
To increase employer compliance with the H-1B program and protect the
rights of U.S. and H-1B workers, Congress should consider the following
two actions:
Eliminate the restrictions on Labor using petition information
submitted by employers to Homeland Security as the basis for initiating
an investigation, and:
Direct Homeland Security to provide Labor with information received
during the adjudication process that may indicate whether an employer
is fulfilling its H-1B responsibilities.
Further, we recommend that Labor strengthen its oversight of employers'
applications to hire H-1B workers by improving its procedures for
checking for completeness and obvious inaccuracies, including
developing more stringent, cost-effective methods of checking for wage
inaccuracies and invalid employer identification numbers. We also
recommend that USCIS ensure employers' compliance with the program
requirements by including Labor's application case number in its new
information technology system, so that adjudicators are able to quickly
and independently ensure that employers are not requesting more H-1B
workers than were originally approved on their application to Labor.
We provided a draft of our report to the Departments of Labor, Homeland
Security, and Justice for their review and comments. Each agency
provided technical comments, which we incorporated as appropriate.
Justice did not have formal comments on our report.
Homeland Security agreed with our recommendations, and stated that
USCIS intends to include Labor's application case number in its new
information technology system.
Labor questioned whether our recommendation for more stringent
application review measures is supported by the low error rate that we
found, as well as whether the benefits of instituting such measures
would equal or exceed the added costs of implementing them. In
addition, Labor said that Congress intentionally limited the scope of
Labor's application review in order to place the focus for achieving
program integrity on USCIS.
We believe that Labor is at risk of certifying H-1B applications that
contain more errors than were found in the scope of our review. For
example, we checked only for employer identification numbers with
invalid prefix codes, and did not look for other combinations of
invalid numbers or data. Therefore, we do not know the true magnitude
of the error rate in the certification process. We continue to believe
there are cost-effective methods that Labor could use to check the
applications more stringently that would enhance the integrity of the H-
1B process.
Mr. Chairman, this concludes my prepared statement. I would be happy to
respond to any questions you or other Members of the Subcommittee may
have at this time.
GAO Contacts and Staff Acknowledgments:
For information regarding this testimony, please contact Sigurd R.
Nilsen, Director, Education, Workforce, and Income Security Issues, on
202-512-7215. Individuals making key contributions to this testimony
include: Alicia Puente Cackley, Gretta L. Goodwin, Amy J. Anderson,
Pawnee A. Davis, Sheila McCoy and Rachael C. Valliere.
[End of section]
Related GAO Products:
H-1B Visa Program: Labor Could Improve Its Oversight and Increase
Information Sharing with Homeland Security. GAO-06-720. Washington,
D.C.: June 22, 2006.
Homeland Security: Better Management Practices Could Enhance DHS's
Ability to Allocate Investigative Resources. GAO-06-462T. Washington,
D.C.: March 28, 2006.
Immigration Benefits: Additional Controls and a Sanctions Strategy
Could Enhance DHS's Ability to Control Benefit Fraud. GAO-06-259.
Washington, D.C.: March 10, 2006.
Homeland Security: Visitor and Immigrant Status Program Operating, but
Management Improvements Are Still Needed. GAO-06-318T. Washington,
D.C.: January 25, 2006.
Immigration Benefits: Improvements Needed to Address Backlogs and
Ensure Quality of Adjudications. GAO-06-20. Washington, D.C.: November
21, 2005.
Immigration Enforcement: Weaknesses Hinder Employment Verification and
Worksite Enforcement Efforts. GAO-05-813. Washington, D.C.: August 31,
2005.
Department of Homeland Security, U.S. Citizenship and Immigration
Services: Allocation of Additional H-1B Visas Created by the H-1B Visa
Reform Act of 2004. GAO-05-705R. Washington, D.C.: May 18, 2005.
Homeland Security: Some Progress Made, but Many Challenges Remain on
U.S. Visitor and Immigrant Status Indicator Technology Program. GAO-05-
202. Washington, DC: February 23, 2005.
Alien Registration: Usefulness of a Nonimmigrant Alien Annual Address
Reporting Requirement Is Questionable. GAO-05-204. Washington, D.C.:
January 28, 2005.
Highlights of a GAO Forum: Workforce Challenges and Opportunities For
the 21st Century: Changing Labor Force Dynamics and the Role of
Government Policies. GAO-04-845SP. Washington, D.C.: June 1, 2004.
H-1B Foreign Workers: Better Tracking Needed to Help Determine H-1B
Program's Effects on U.S. Workforce. GAO-03-883. Washington, D.C.:
September 10, 2003.
Information Technology: Homeland Security Needs to Improve Entry Exit
System Expenditure Planning. GAO-03-563. Washington, D.C.: June 9,
2003.
High-Skill Training: Grants from H-1B Visa Fees Meet Specific Workforce
Needs, but at Varying Skill Levels. GAO-02-881. Washington, D.C.:
September 20, 2002.
Immigration Benefits: Several Factors Impede Timeliness of Application
Processing. GAO-01-488. Washington, D.C.: May 4, 2001.
H-1B Foreign Workers: Better Controls Needed to Help Employers and
Protect Workers. GAO/HEHS-00-157. Washington, D.C.: September 7, 2000.
FOOTNOTES
[1] H-1B Visa Program: Labor Could Improve Its Oversight and Increase
Information Sharing with Homeland Security, GAO-06-720.Washington,
D.C.: June 22, 2006.
[2] The H-1 non-immigrant category was created under the Immigration
and Nationality Act of 1952 to assist U.S. employers needing workers
temporarily. Non-immigrants are foreign nationals who come to the
United States on a temporary basis and for a specific purpose, such as
to attain education and work.
[3] Fashion models of distinguished merit and ability also qualify for
H-1B visas and do not need to meet the definition of specialty
occupation.
[4] However, under AC-21 and the H-1B Visa Reform Act of 2004, some H-
1B workers--such as those being hired by institutions of higher
education, nonprofit or government research organizations, or those
with a master's or higher degree from a U.S. institution--may be exempt
from the annual cap.
[5] Employers can submit applications to Labor up to 6 months prior to
the H-1B worker's intended employment date.
[6] These additional requirements first applied from January 19, 2001-
-September 30, 2003. However, the provision requiring these
attestations sunsetted, or expired, and was not reinstituted until
March 8, 2005. Consequently, from October 1, 2003, to March 7, 2005, H-
1B dependent employers and willful violator employers were not required
to make the additional attestations, and, in effect, were able to hire
H-1B workers even if they displaced U.S. workers and did not make
efforts to recruit U.S. workers.
[7] An aggrieved individual can be an H-1B worker, a U.S. worker, or a
bargaining representative for workers; an aggrieved entity can be
another federal agency, such as the Department of State, or a
competitor who is adversely affected by the employer's alleged non-
compliance with the application.
[8] As of January 2006, Labor required applications to be submitted
electronically. Special mail application filing procedures are
available for employers without Internet access or with physical
disabilities.
[9] Prior to the enactment of the H-1B Visa Reform Act of 2004, Labor's
regulations permitted employers to pay actual wages that were only 95
percent of the prevailing wage. Our analysis only includes those cases
where the actual wage rate was less than 95 percent of the prevailing
wage.
[10] The employer identification number is used by the Internal Revenue
Service to identify taxpayers who are required to file business tax
returns. The number has nine digits and is issued in the XX-XXXXXXX
format.
[11] In the three cases where penalties were assessed, employers
advertised for only H-1B workers for various information technology
positions. Upon receiving notice of the charges, the employers
immediately agreed not to post discriminatory advertising in the future
and to take steps to recruit U.S. workers (as well as permanent and
temporary residents, refugees, and asylees). In these cases, minimum
penalties were imposed because there were no identifiable victims and,
by statute, penalties are capped at $2,200 per violation or individual.
In the three cases where penalties were not assessed, discrimination
against U.S. workers appeared to be inadvertent, not intentional.
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