H-2B Visa Program
Closed Civil Criminal Cases Illustrate Instances of H-2B Workers Being Targets of Fraud and Abuse Gao ID: GAO-10-1053 September 30, 2010The H-2B visa program assists U.S. employers anticipating a shortage of domestic nonagricultural workers by permitting them to hire nonimmigrant foreign workers temporarily. The program is overseen by several agencies, including the Department of Labor (Labor), the Department of Homeland Security's United States Citizenship and Immigration Services (USCIS), and the Department of State. Employers often hire labor recruiters or other intermediaries to assist with the process of obtaining labor certifications and finding foreign workers. GAO was asked to determine if there were examples of recruiters and employers engaging in illegal or fraudulent activity within the H-2B visa program. GAO reviewed recent closed civil and criminal court cases involving H-2B workers, obtained data from Labor and USCIS on H-2B visas issued in fiscal years 2008 and 2009 and in first 6 months of fiscal year 2010, and interviewed advocacy groups that represent H-2B workers in litigation. In addition, GAO made undercover calls and site visits to recruiters, posing as H-2B employers and foreign H-2B workers and asked a series of questions related to legal requirements of the program. GAO also visited several H-2B housing and work site locations. Case studies and results of tests and site visits cannot be projected to the entire population of H-2B employers and recruiters.
GAO reviewed 10 closed cases over the last 5 years that involved H-2B employers and recruiters that violated various labor laws or settled allegations of violations outside of court. These 10 cases involved diverse employers in different industries with employees in 29 states with violations in areas such as employers failing to pay promised wages, overtime, or both; employers charging H-2B workers exorbitant fees; and employers and recruiters submitting fraudulent documentation to government officials. For example, in one case H-2B workers became indebted to their employer through a series of arbitrary charges. The employer then forced workers to take second jobs at local fast food restaurants to pay these debts. GAO personnel found that most recruiters they called or visited posing as prospective H-2B employers and workers did not encourage our undercover agents to violate program rules. Of the 18 recruiters in multiple states we contacted, 15 appropriately did not offer any advice on violating H-2B program rules. However, during three calls, H-2B recruiters did provide suggestions on how to circumvent program rules, such as providing "good excuses" to help "weed out" prospective U.S. workers or recouping costs through "off-the-book" transactions to avoid restrictions on pay deductions. Additionally, GAO found that H-2B workers contacted during the site visits to their housing locations were generally pleased with their living and working conditions. However, at one location the H-2B workers were afraid to speak with outside individuals for fear of retaliation from their employer.
GAO-10-1053, H-2B Visa Program: Closed Civil Criminal Cases Illustrate Instances of H-2B Workers Being Targets of Fraud and Abuse
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Report to the Chairman, Committee on Education and Labor, House of
Representatives:
United States Government Accountability Office:
GAO:
September 2010:
H-2B Visa Program:
Closed Civil and Criminal Cases Illustrate Instances of H-2B Workers
Being Targets of Fraud and Abuse:
GAO-10-1053:
GAO Highlights:
Highlights of GAO-10-1053, a report to the Chairman, Committee on
Education and Labor, House of Representatives.
Why GAO Did This Study:
The H-2B visa program assists U.S. employers anticipating a shortage
of domestic nonagricultural workers by permitting them to hire
nonimmigrant foreign workers temporarily. The program is overseen by
several agencies, including the Department of Labor (Labor), the
Department of Homeland Security‘s United States Citizenship and
Immigration Services (USCIS), and the Department of State. Employers
often hire labor recruiters or other intermediaries to assist with the
process of obtaining labor certifications and finding foreign workers.
GAO was asked to determine if there were examples of recruiters and
employers engaging in illegal or fraudulent activity within the H-2B
visa program.
GAO reviewed recent closed civil and criminal court cases involving H-
2B workers, obtained data from Labor and USCIS on H-2B visas issued in
fiscal years 2008 and 2009 and in first 6 months of fiscal year 2010,
and interviewed advocacy groups that represent H-2B workers in
litigation. In addition, GAO made undercover calls and site visits to
recruiters, posing as H-2B employers and foreign H-2B workers and
asked a series of questions related to legal requirements of the
program. GAO also visited several H-2B housing and work site
locations. Case studies and results of tests and site visits cannot be
projected to the entire population of H-2B employers and recruiters.
What GAO Found:
GAO reviewed 10 closed cases over the last 5 years that involved H-2B
employers and recruiters that violated various labor laws or settled
allegations of violations outside of court. These 10 cases involved
diverse employers in different industries with employees in 29 states
with violations in areas such as employers failing to pay promised
wages, overtime, or both; employers charging H-2B workers exorbitant
fees; and employers and recruiters submitting fraudulent documentation
to government officials. For example, in one case H-2B workers became
indebted to their employer through a series of arbitrary charges. The
employer then forced workers to take second jobs at local fast food
restaurants to pay these debts. The table below provides a summary of
cases where H-2B workers rights were violated.
Table: Cases of Fraud and Abuse within the H-2B Program:
Industry, location: Hotel - South Dakota;
Details:
* Hotel owners forced H-2B workers to work in substandard conditions,
confiscated workers‘ passports, and threatened workers that they would
be sent home in a ’box“ if they disobeyed orders.
* In 2008, the couple was found guilty on nine counts, including
conspiracy, holding people in peonage, making false statements, and
visa fraud.
Industry, location: Construction and foreign contract labor firm -
Louisiana;
Details:
* Workers from India paid at least $20,000 for H-2B visas to enter the
United States but were never employed by the construction company.
* The construction company owner pled guilty to conspiracy, and the
other conspirators were found guilty of 1 count of conspiracy, 14
counts of encouraging and inducing illegal immigration, and 1 count of
money laundering.
Industry, location: Labor broker, hospitality employers, and
immigration attorney - Virginia;
Details:
* Conspirators fraudulently obtained H-2B certification from Labor for
over 3,800 individuals, leased workers to undisclosed businesses not
listed on the visa petitions, defrauded the government of $7.4 million
in payroll taxes never remitted to the Internal Revenue Service.
* The conspirators pled guilty to charges including conspiracy, visa
fraud, and tax evasion charges that were linked to an international
organized crime ring.
Source: GAO analysis of court files.
[End of table]
GAO personnel found that most recruiters they called or visited posing
as prospective H-2B employers and workers did not encourage our
undercover agents to violate program rules. Of the 18 recruiters in
multiple states we contacted, 15 appropriately did not offer any
advice on violating H-2B program rules. However, during three calls, H-
2B recruiters did provide suggestions on how to circumvent program
rules, such as providing ’good excuses“ to help ’weed out“ prospective
U.S. workers or recouping costs through ’off-the-book“ transactions to
avoid restrictions on pay deductions. Additionally, GAO found that H-
2B workers contacted during the site visits to their housing locations
were generally pleased with their living and working conditions.
However, at one location the H-2B workers were afraid to speak with
outside individuals for fear of retaliation from their employer.
View GAO-10-1053 or key components. For more information, contact
Gregory Kutz at (202) 512-6722 or kutzg@gao.gov.
[End of section]
Contents:
Letter:
Background:
Court Cases Reveal Unfair Wages, Excessive Fees, and Fraudulent
Documentation in the H-2B Program:
In Undercover Tests, Most Recruiters Did Not Encourage H-2B Visa Fraud
but Some Offered to Help Violate Laws and Regulations:
Appendix I: Scope and Methodology:
Table:
Table 1: Summary of Court Cases:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 30, 2010:
The Honorable George Miller:
Chairman:
Committee on Education and Labor:
House of Representatives:
Dear Mr. Chairman:
With the United States continuing to attract tens of thousands of
foreign nationals each year who seek legal employment, the H-2B visa
program is intended to benefit both American employers and foreign
workers. Employers anticipating a shortage of American nonagricultural
workers may hire nonimmigrant foreign workers[Footnote 1] to fill
temporary labor needs though the H-2B visa program. Employers often
hire labor recruiters[Footnote 2] or other intermediaries to help find
foreign workers and obtain the required labor certifications. The
workers come from a diverse set of countries and work in a range of
industries, most often construction, landscaping, manufacturing,
hospitality service, and food processing. Several federal agencies
oversee the program, including the Department of Labor (Labor), the
Department of Homeland Security's United States Citizenship and
Immigration Services (USCIS), and the Department of State (State).
Several recent convictions have shown that some employers and
recruiters may be abusing the foreign workers in the program. In
addition, some employers may violate program rules by subverting
program regulations requiring that employers first attempt to hire
U.S. workers. You asked us to determine if there were examples of
recruiters and employers that were engaging in illegal or fraudulent
activity within the H-2B visa program. Specifically, we (1) reviewed
recent closed civil and criminal court cases of fraudulent, illegal,
and abusive activity by recruiters and employers participating in the
H-2B program and (2) conducted undercover tests of employer and
recruiter practices.
To identify court cases of recent fraud and abuse within the H-2B
program, we researched court documentation involving violations of the
H-2B program in the last 5 years that resulted in a criminal
conviction, civil or administrative liability, or significant
financial settlement. We reviewed a nonrepresentative selection of 10
closed cases, from leads provided by advocacy groups and our own
research, associated with workers employed in 29 states and various
industries to illustrate the types of abuse and fraud that occurred in
the H-2B program, but we cannot generalize these findings to the
program.
To examine methods used by H-2B employers and recruiters, we reviewed
recent civil and criminal cases involving H-2B workers; obtained data
from Labor and USCIS on H-2B visas issued in fiscal years 2008 and
2009 and in the first 6 months of fiscal year 2010; and interviewed
advocacy groups that represent H-2B workers in litigation. We
conducted undercover calls to 18 U.S.-based H-2B recruiters and
staffing agencies. These recruiters were selected from leads provided
by advocacy groups and our own research. Using scenarios based on
recent court cases and program requirements, we posed as potential
employers and foreign workers to assess whether selected recruiters
would advocate violating program laws and regulations. We also made
undercover site visits to two selected recruiters that we had
previously contacted by phone. Finally, we conducted site visits of H-
2B worker housing locations to identify instances of substandard
housing accommodations or other forms of abuse and the mistreatment of
H-2B workers. These sites were selected from leads provided by
advocacy groups and our own research. Case studies, site visits, and
results of proactive testing cannot be projected to the entire
population of H-2B employers and recruiters.
We conducted the work for this investigation from April 2010 through
September 2010 in accordance with the standards prescribed by the
Council of Inspectors General for Integrity and Efficiency. Additional
details on our scope and methodology are included in appendix I.
Background:
The Immigration and Nationality Act allows foreign nationals to enter
the United States to perform temporary labor if unemployed individuals
capable of performing the work cannot be found in the United States.
Labor and USCIS are responsible for reviewing employers' applications
for H-2B workers, and State is responsible for issuing visas to
workers. Under the program, employers in industries with a onetime
occurrence, peak load, seasonal, or intermittent needs can supplement
their domestic workforces with H-2B workers. The temporary work must
be for full-time employment and the employer's need for the workers
must generally be less than a year. The H-2B classification may be
extended for qualifying employment in 1-year increments up to a total
of 3 years. Up to 66,000 H-2B visas can be issued each fiscal year.
Prospective H-2B employers must apply to Labor for a temporary labor
certification attesting that American workers capable of performing
the work are not available and that the employment of foreign workers
will not adversely affect the wages and working conditions of
similarly employed American workers. The H-2B program requires the
employer to attest to Labor that it will offer a wage that equals or
exceeds the highest of the prevailing wage, the applicable federal
minimum wage, the state minimum wage, or the local minimum wage to the
H-2B worker. The employer also must agree to offer terms and working
conditions typical to U.S. workers in the same geographical area;
[Footnote 3] not use H-2B workers to replace striking workers; comply
with all federal, state, and local labor, health, and safety laws; and
detail and clarify all paycheck deductions in the job offer and ensure
that all deductions are reasonable. The employer must also not place
any workers outside the area listed on the Labor application without
first obtaining a new certification and must notify Labor and USCIS if
an H-2B worker quits before the end of the term of employment. In
addition, the employer agrees to forbid any recruiter from seeking or
receiving payment from H-2B workers, except for costs that are the
responsibility of the worker.[Footnote 4] Moreover, the employer
agrees not to seek or receive payment of any kind from the H-2B
workers related to labor certification.
Court Cases Reveal Unfair Wages, Excessive Fees, and Fraudulent
Documentation in the H-2B Program:
The 10 cases that we reviewed demonstrate fraud and abuse committed by
recruiters and employers participating in the H-2B visa program and
operating in 29 states. Though the cases include a diverse group of
employers in different industries, our review of these 10 cases showed
violations in areas such as unfair wages for employees, excessive fees
charged to employees, and fraudulent documentation submitted to
federal agencies to circumvent program rules.
Employers failed to pay the prevailing hourly wage or overtime. In 6
of the 10 cases we reviewed, there were allegations that employers did
not pay their H-2B employees the established hourly wage, overtime, or
both. For example, a carnival operator in New York paid employees by
the week regardless of the number of hours worked. Working up to 80
hours a week, the employees averaged less than $5.00 an hour--far less
than the $8.00 to $12.20 promised. In another case, H-2B employees
alleged that an Arkansas-based forestry corporation did not pay
overtime wages despite work weeks regularly exceeding 40 hours.
Employers charged H-2B workers excessive fees. In 6 of the 10 cases we
reviewed, employers charged their H-2B workers fees that were for the
benefit of the employer or charged excessive fees that brought
employees' wages below the hourly federal minimum wage. These charges
included visa processing fees far above actual costs, rent in
overcrowded apartments that drastically exceeded market value, and
transportation charges subject to arbitrary "late fees." Workers left
the United States in greater debt than when they arrived. In one case,
these fees reduced employees' paychecks to as little as $48 for a 2-
week period. A total of 4 of these cases resulted in a criminal
conviction, including civil or administrative liability, and the
remaining 2 cases resulted in a significant financial settlement.
Employers and recruiters submitted fraudulent documentation. In 8 of
the 10 cases we reviewed, employers were alleged to have submitted
fraudulent documentation to Labor, USCIS, and State to either exploit
their H-2B employees or hire more employees than needed. Employers and
recruiters misclassified employee duties on Labor certification
applications to pay lower prevailing wages; used shell companies to
file fraudulent labor certification applications for unneeded
employees, then leased the additional employees to businesses not on
the visa petitions; and preferentially hired H-2B employees over
American workers in violation of federal law. A total of 5 of these
cases resulted in a criminal conviction, including civil or
administrative liability, and the remaining 3 cases resulted in a
significant financial settlement.
There is no law or program requirement that prohibits companies from
being awarded federal contracts even if they have been found to have
violated H-2B immigration laws. Several of these employers continued
to receive H-2B certifications and money from federal contracts while
in litigation, after reaching a settlement as a result of litigation,
or after being found guilty of various charges.
Table 1 summarizes the 10 cases in which H-2B employers and recruiters
committed visa fraud or exploited their H-2B workers.
Table 1: Summary of Court Cases:
Case: 1;
Location: Arizona, Delaware, Maryland, New Jersey, New York,
Pennsylvania, and Virginia;
Defendants: Temporary employment recruiting agency;
Case details:
* The agency conspired with client businesses to return employed
illegal aliens to native countries, and then fraudulently obtain H-2B
visas to bring the employees back;
* The agency submitted falsified documents to Labor, State, and USCIS
using names from a Mexico phone book and fictitious biographical
information to serve as placeholders, so that additional H-2B visas
were on hand in case client businesses needed to hire additional alien
workers;
* The agency coached the employees to lie to U.S. immigration
officials during visa application interviews and about their previous
presence in the United States;
* Federal criminal suit was filed in 2009;
Outcome:
* In 2009, all parties involved (the owner, his wife, his sister, and
an unrelated office manager) pled guilty. The owner's sister was
sentenced to 3 years of probation, 200 hours of community service a
year for 3 years, and a $50,000 fine. The office manager and the
owner's wife received 5 years of probation. Additionally, his wife
received 200 hours of community service a year for 5 years and a
$2,000 fine, while the office manager received 250 hours of community
service a year for 5 years and a $20,000 fine. The owner passed away
while awaiting sentencing.
Case: 2;
Location: New York;
Defendants: Carnival operator;
Case details:
* In 2008, New York's Office of Attorney General (OAG) began to
investigate this company after receiving complaints from H-2B workers
about wages and substandard housing. The OAG alleged that the company:
* discriminated against 54 Mexican H-2B employees by not paying the
salary promised;
* housed employees in overcrowded, cockroach-and bedbug-infested
trailers with unsanitary restrooms;
* did not provide safety equipment or proper attire;
* verbally harassed employees; and;
* paid $275 to $350 a week regardless of hours (employees earned an
average of $5.00 an hour but were promised $8.00 an hour and $12.20 an
hour for overtime);
Outcome:
* In 2009, the carnival operator settled with the OAG and did not
admit liability, but agreed to pay $325,000 in restitution and damages
to the employees;
* The employer agreed to submit to an independent monitor to ensure,
among other things, compliance with minimum wage and overtime law and
provide equal treatment and sanitary housing to employees.
Case: 3;
Location: South Dakota;
Defendants: Hotel;
Case details:
* The employer forced nine employees to work in substandard conditions
and placed them in servitude[A] at their hotel;
* The employer offered employees $6.05 an hour but actually paid $3.00
per room and required that each room be cleaned for an hour;
* The employer did not pay overtime;
* The employer charged nine employees $1,200 each in visa processing
fees, despite actual fees totaling $1,200 for all nine workers;
* The employer charged seven employees $1,050 a month for an apartment
they shared, though it normally rented for $375;
* The employer forced employees to pay arbitrary charges, leading them
to take second jobs at local fast food restaurants to pay these debts;
* The employer isolated the workers from the community and threatened
physical abuse;
* The employer confiscated the employees' passports and threatened
deportation in a "box" if they disobeyed orders;
* Federal criminal suit was filed in 2007;
Outcome:
* In 2008, the couple who owned the hotel was found guilty on nine
counts, including conspiracy, holding people in peonage,[B] making
false statements, and visa fraud;
* The husband was sentenced to 50 months in jail, while his wife
received 36 months in jail. Each received a $15,000 fine.
Case: 4;
Location: Virginia;
Defendants: Landscaping company;
Case details:
* A labor union filed a complaint with the Department of Justice
alleging that the employer discriminated against U.S. workers by
preferentially hiring H-2B employees in violation of federal law;
* The company obtained certifications for over 2,500 H-2B workers from
Labor since 2007;
Outcome:
* A settlement agreement was reached on May 11, 2010, in which the
employer did not admit liability but agreed to modify its hiring
policy and personnel practices and provide full back pay of $11,173 to
a U.S. citizen who was denied a job.
Case: 5;
Location: Arkansas;
Defendants: Forestry company;
Case details:
* A class action was filed against the company alleging violations of
the Fair Labor Standards Act and Migrant and Seasonal Agricultural
Worker Protection Act. The plaintiffs alleged that the company:
* failed to pay over 2,200 workers the prevailing wage or overtime for
6 years by exploiting their inability to speak English and their lack
of understanding U.S. laws;
* forced 7-day work weeks and frequent overtime without breaks;
* violated the Migrant and Seasonal Agricultural Worker Protection Act
by failing to reimburse the workers for expenses they incurred and
making unlawful withholdings and deductions from wages; and;
* forced workers to move to another work site but deducted living
expenses from their paychecks for both locations;
Outcome:
* During litigation, the company was held in contempt of court three
times for intimidating workers who expressed interest in joining the
lawsuit;
* The company entered into a settlement agreement in which it did not
admit liability but agreed to pay $2.75 million in February 2010 after
workers sued to recover unreimbursed expenses for obtaining H-2B visas;
* The company continues to receive active labor certifications from
Labor to recruit H-2B workers since the settlement;
* The company obtained certifications for over 1,900 H-2B workers from
Labor since 2007;
* The company received over $200,000 from federal contracts during
litigation.
Case: 6;
Location: Louisiana;
Defendants: Construction company and foreign contract labor firm;
Case details:
* The company obtained $1.8 million from a fraudulent H-2B visa
conspiracy to bring 87 Indian nationals into the United States
illegally;
* The company submitted fraudulent H-2B documentation to federal
agencies allegedly seeking workers from India;
* The company charged at least $20,000 for H-2B visas but never
employed the Indian nationals;
* Representatives of the firm traveled to India to assist the Indian
nationals with the application process and corresponded with the U.S.
Consulate on behalf of the workers;
* These conspirators were indicted on federal criminal charges in 2008;
Outcome:
* In 2009, the construction company owner pled guilty to conspiracy
and was sentenced 3 years probation and 6 months home confinement;
* In 2009, the other conspirators were found guilty of 1 count of
conspiracy, 14 counts of encouraging and inducing illegal immigration,
and 1 count of money laundering and sentenced to 41 months
imprisonment.
Case: 7;
Location: Virginia;
Defendants: Labor broker, hospitality employers, and immigration
attorney;
Case details:
* The conspiracy fraudulently obtained H-2B certification from Labor
for over 3,800 individuals;
* The conspirators obtained certifications for more workers than
needed, leasing the additional workers to undisclosed hotels or
businesses not listed on the visa petitions;
* The conspirators generated over $35 million in gross income by
establishing a permanent foreign labor pool for jobs normally filled
by Americans;
* The conspirators defrauded the government of $7.4 million in payroll
taxes never remitted to the Internal Revenue Service;
* The businesses charged H-2B workers exorbitant fees for visa-related
services and excessive rent for unsanitary, overcrowded houses;
* The conspiracy started in 2003 and was terminated in 2009 when
federal criminal charges were filed;
Outcome:
* Nineteen suspects pled guilty to several charges including
conspiracy, visa fraud, and tax evasion charges that were linked to an
international organized crime ring;
* Some individuals convicted in the conspiracy received probation,
home confinement with electronic monitoring, or federal prison
sentences;
* Suspects were sentenced from October 2009 through February 2010.
Case: 8;
Location: Florida;
Defendants: Hospitality labor broker;
Case details:
* Company representatives posed as executives from other legitimate
businesses to fraudulently obtain H-2B certifications from Labor;
* The company coerced workers to sign contracts agreeing to lower pay
than originally promised;
* The company charged up to 16 workers rent to live together in a two-
bedroom house;
* The company paid as little as $48 for 2 weeks of work because of
excessive paycheck deductions, including fees for not cleaning housing
accommodations and arriving late for transportation to work sites;
* Investigative documents indicate that the conspiracy started in 1999
and continued until 2007, when federal criminal charges were filed;
Outcome:
* The court referred to the treatment of these workers as "legal
slavery";
* All four executive officers received federal prison sentences and
joint $1 million dollar asset forfeiture;
* Final sentencing for defendants occurred in 2008.
Case: 9;
Location: Pennsylvania;
Defendants: Landscaping company and labor broker;
Case details:
* A federal civil suit was filed in 2007 alleging that the company did
the following:
* Requested more H-2B workers than needed to lease them to other
businesses via a recruitment firm at a premium rate;
* Misclassified employee duties on Labor certification applications to
pay lower wages to H-2B workers;
* Required foreign workers to pay preemployment bonds guaranteeing
that they would work for the entire season or forfeit the bond to
company, in order to secure H-2B positions. Workers stated that the
bonds were not refunded after terms of employment ended;
* Forced workers to pay excessive rent to live in employer-owned,
substandard housing; and;
* Fired workers who complained or threatened the company with breach
of contract;
Outcome:
* In 2009, the court approved a settlement that required the employer
to pay H-2B workers over $20,000 and submit documentation verifying
adherence to Fair Labor Standards Act and H-2B regulations in future
employment practices.
Case: 10;
Location: Colorado, Connecticut, Delaware, Indiana, Maryland,
Massachusetts, Minnesota, Missouri, New Jersey, New York, Ohio,
Pennsylvania, Texas, Virginia, and Wisconsin;
Defendants: Landscaping company;
Case details:
* A federal class action civil suit was filed in 2005, representing H-
2B workers employed by the company from 2002 to 2005;
* The plaintiffs alleged that the employer made excessive deductions
from paychecks, often resulting in workers receiving less than minimum
wage;
* H-2B workers sought relief under the Fair Labor Standards Act for
minimum wage and overtime violations, breach of contract, and wrongful
termination;
Outcome:
* The company paid a $600,000 settlement to workers in 2008, the
largest amount at that time;
* In 2008, the court ruled that H-2B travel costs, visa expenses, and
employee fees primarily benefited the employer and could not be
deducted from paychecks;
* Since 2008, the firm has been awarded over $35,000 in federal
contracts, and has applied for certifications for over 8,000 employees.
Source: GAO analysis of court records, federal contract data, and
Labor data.
[A] A condition of compulsory service in which the victim is compelled
to perform labor or services against the victim's will for the benefit
of another person through, among other things, the use of force,
threats of force, restraint, or use or threat of coercion through law
or the legal process.
[B] A condition in which the victim is forced to perform labor against
the victim's will to pay off a debt.
[End of table]
In Undercover Tests, Most Recruiters Did Not Encourage H-2B Visa Fraud
but Some Offered to Help Violate Laws and Regulations:
Of the 18 recruiters in multiple states we contacted, 15 H-2B
recruiters did not encourage our undercover agents posing as
prospective H-2B employers and employees to violate H-2B program
rules. Most recruiters told our fictitious employers that they would
have to pay H-2B employees the appropriate prevailing wage, as well as
advertise job openings in local markets before seeking H-2B
certifications. Most recruiters also informed our fictitious employers
that they would not be able to profit from fees charged to H-2B
employees for expenses such as rent or travel. In addition, one
recruiter correctly told our fictitious prospective H-2B employee that
she would have to return to her home country before applying for H-2B
worker status.
However, in three cases recruiters offered advice on violating or
evading program rules. A Texas recruiter suggested that we discourage
American workers from accepting our landscaping job openings by having
applicants run around the shop carrying a 50-pound bag to determine
they were fit for the work. The recruiter also suggested conducting
interviews before 7 a.m. and requiring drug testing prior to the
interview as means to "weed out" qualified American applicants. In
addition, the recruiter suggested that our current American landscape
workers be fired "for cause" or induced to quit months before filing a
petition for H-2B workers to avoid arousing suspicion by Labor.
Furthermore, the recruiter made comments about recouping employer
costs through "off-the-book" transactions for rent to avoid caps on
payroll deductions. A recruiter in New York offered to provide "good
excuses" to help "weed out" prospective U.S. workers who applied for
our housekeeping jobs.
We also found that recruiters we visited did not offer our undercover
agents assistance in violating the rules of the H-2B program. A
recruiter in Kentucky told us that it usually petitions Labor for more
workers than needed in case the employer has to hire one or two U.S.
workers. This allows the employer to still be able to obtain the
amount of H-2B workers it was seeking. However, the recruiter
suggested that interest in these positions is usually limited because
of low wages. Additionally, the recruiter suggested that U.S. workers
would only apply for our jobs so that they could continue to receive
unemployment benefits. We selected two recruiters located in Texas and
New York that we had contacted during our undercover phone calls,
posed as prospective H-2B employers willing to pay a retainer fee, and
sought their assistance to help us obtain H-2B workers and violate the
rules of the program. These recruiters refused to offer assistance in
violating the program rules or to accept our retainer fee.
Our site visits to H-2B employee housing revealed that most of the
workers we spoke with felt they had adequate housing, pay, and working
conditions, though we did find some occurrences that were suspicious.
H-2B employees at a circus in West Virginia with prior allegations of
wage abuse and exorbitant recruitment fees stated that their employer
provided adequate meals, transportation, and living accommodations
that were not deducted from their salaries. The accommodations
consisted of 6 to 7 employees living in one travel trailer. When our
undercover agents asked to enter the trailer, the workers were adamant
that no one was allowed inside without their employer's consent. We
also visited known housing locations for H-2B seafood processing
employees in North Carolina. The employees told our investigators that
they were afraid to speak with outside individuals for fear of
retaliation from the employer. One employee said that another employee
had recently been fired and sent back to their home country for
reporting a burglary at their housing location to the police. Again,
we were not allowed inside the employees' housing.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to interested
congressional committees, the Secretary of Labor, the Secretary of
Homeland Security, and other interested parties. The report also will
be available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-6722 or kutzg@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report.
Sincerely yours,
Signed by:
Gregory D. Kutz:
Managing Director Forensic Audits and Special Investigations:
[End of section]
Appendix I: Scope and Methodology:
To identify court cases of illegal or fraudulent activity within the H-
2B visa program, we researched court documentation involving
violations of the H-2B program in the last 5 years that resulted in a
criminal conviction, civil or administrative liability, or significant
financial settlement. To illustrate cases of fraudulent, illegal, and
abusive activity in the H-2B program, we identified 10 closed cases
for detailed audit and investigation. The 10 cases were selected from
leads provided by advocacy groups and our own research based on
criteria that provided indications of fraud and abuse. For example, to
investigate methods used by H-2B employers and recruiters, we reviewed
recent civil and criminal cases involving H-2B workers; obtained data
from the Department of Labor (Labor)[Footnote 5] and the Department of
Homeland Security's United States Citizenship and Immigration Services
[Footnote 6] on H-2B visas issued; and interviewed representatives of
advocacy groups that represent H-2B workers in litigation. The cases
were associated with workers employed in 29 states and various
industries to illustrate a broad range of abuse or fraud occurring in
the H-2B program.
To illustrate potential fraudulent recruiting methods utilized by H-2B
recruiters, we conducted undercover calls to 18 U.S.-based H-2B
recruiters and staffing agencies. These recruiters were selected from
leads provided by advocacy groups and our own research. Using
scenarios based on recent court cases and program requirements, we
posed as potential employers and foreign workers to assess whether
selected recruiters would advocate violating program laws and
regulations. We also made undercover site visits to two selected
recruiters that we had previously contacted by phone call.
To identify potential instances of abuse, we conducted site visits of
H-2B worker housing locations to identify instances of substandard
housing accommodations or other forms of exploitation and the
mistreatment of H-2B workers. These locations were selected from leads
provided by advocacy groups and our own research. Case studies, site
visits, and results of proactive testing cannot be projected to the
entire population of H-2B employers and recruiters.
We conducted the work for this investigation from April 2010 through
September 2010 in accordance with the standards prescribed by the
Council of Inspectors General for Integrity and Efficiency.
[End of section]
Footnotes:
[1] An H-2B worker is defined as a foreign nonimmigrant worker
employed by a U.S. employer to perform temporary nonagricultural labor
or services. 8 U.S.C § 1101(a)(15)(H)(ii)(b).
[2] A recruiter is an individual or company hired by U.S. businesses
to identify and hire foreign workers for employment under the H-2B
visa program.
[3] H-2B workers are covered by the Fair Labor Standards Act (FLSA).
FLSA establishes minimum wage, overtime pay, recordkeeping, and youth
employment standards affecting employees in the private sector and in
federal, state, and local governments.
[4] According to Labor regulations, acceptable fees that are the
responsibility of H-2B workers include passport or visa fees or
reimbursement for the lesser of the actual cost or fair market value
of transportation abroad.
[5] Total number of records extracted may be understated because of
the variation of each employer or representative name entered into the
Labor database.
[6] The data cover fiscal years 2008 and 2009 and the first 6 months
of fiscal year 2010.
[End of table]
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