TARP to have little effect on H-1B hiring

Top 12 TARP-taking institutions use fewer than 1,000 H-1Bs

Changes to regulations around hiring H-1B applicants are afoot, thanks to TARP (Troubled Asset Relief Program). In terms of the actual numbers of jobs affected, however, it amounts to a hill of beans.

What Congress did was extend rules targeted mainly at consulting companies, where 15 percent or more of the workforce may be H-1B visa employees, to companies receiving TARP funds. Companies that meet this definition are called "Dependent Companies."

The three major requirements for dependent companies are:

  • The employer must attest to the fact that they made a bona fide recruitment effort to hire American workers for the position.
  • The employer cannot displace an American worker 90 days before or after a layoff and hire someone for an essentially equivalent position in the same area.
  • When working at a client site, the employer cannot displace an American worker with someone from the consultancy on an H-1B in an equivalent position.

These requirements are outlined in the Employ American Workers Act (EAWA), put into the bill by Senators Chuck Grassley (R-Iowa) and Bernie Sanders (I-Vt.).

[ For more on H-1Bs, see "The H-1B visa has got to go" and "H-1B visas do not create new jobs." ]

What most people may not realize is that the companies receiving TARP money, almost exclusively financial institutions, do not appear to have a long history of hiring employees on H-1B visas anyway.

(Let me make this clear before I get a lot of spiteful e-mails. I say "do not appear" to be using many workers on an H-1B. I am relying on someone else's research, and have not conducted a major study, myself. If feel this is an assessment is inaccurate, please post a comment at the end of this blog.)

The National Foundation for American Policy (NFAP) reported on the top 12 financial institutions receiving bailout money and the number of H-1B petitions submitted by them in 2007, the latest available records. I spoke with Stuart Anderson, executive director at NFAP, about this matter.

Combined, these 12 companies submitted 919 H-1B petitions.

At first I thought these numbers were artificially low due to the fact that these companies -- Citigroup, Bank of America AIG, et al -- use consultancies that in turn might have many more H-1B employees. However, after speaking with Anderson, I realized that if these consultancies had 15 percent of their employees on the H-1B visa, they would come under the dependent company regulations.

This year, as in years past, the cap on H-1Bs is set at 65,000, with an additional 20,000 reserved for those with graduate degrees from American universities. So, in the scheme of things, EAWA doesn't really do much.

There are a few caveats, however.

Earlier this month Bank of America rescinded its offer to 50 new employees who were going to be hired using the H-1B visa. To many, it appeared to be a small victory for the Grassley-Sanders legislation, holding open jobs for 50 more Americans.

In a sense, that is correct. The EAWA may have helped BofA executives decide to rescind the offer but not for the reason you think, NFAP's Anderson says.

Companies, as a general rule, tend to be extra careful about using H-1Bs to fill positions equivalent to those of recently laid-off workers. Rather than BofA executives acting in compliance with the new EAWA regulations, it may have simply been the usual case of cautious BoA attorneys not wanting to take a chance when layoffs are involved.

I also spoke with Eleanor Pelta, partner in charge of immigration practice at Morgan, Lewis & Bockius. Pelta says that, according to the Department of Homeland Security, the new ruling does not apply to people hired by these TARP-taking companies in another immigration status. In other words, if you are a TARP recipient and you hired a foreign student on an Optional Practical Training visa and then wanted to continue his or her employment under H-1B, that practice isn't subject to TARP because it is not considered a new hire.

Pelta says she and colleagues, other immigration lawyers, believe there will be fewer H-1B applications this year. The good news for employers is that their application has a better chance of getting through. The bad news for employees here is that Pelta still expects that all 65,000 visas will be used up; it's just that there won't be the mad rush that there was last year where over 100,000 applications were received on the April 1 filing day.

I asked Pelta if she believes the Grassley-Sanders bill is in fact a foot in the door for those opposed to the H-1B program as it is now constituted. Pelta said she does believe that. She says foes of the program want more restrictions.

"This is a portent of things to come," she adds.

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