Guest Worker Visas: The H-1B and L-1

Fact Sheet 2013

For a PDF version of this fact sheet, click here.

The United States guest worker visa programs for specialty occupations are a flashpoint in the immigration debate. Chief among the controversial visa programs are the H-1B and L-1. The controversy is not surprising considering that in just fiscal year (FY) 2012, an estimated 420,000 guest workers received work authorization through the H-1B and L-1 visas as well as the Optional Practical Training (OPT) program.

Critics of these temporary work visas and programs point to the lack of protections for guest workers, lack of negotiation power, below market wages, body shops, offshore outsourcing, and absence of a labor market test to protect U.S. workers. Despite growing concerns, proponents of H-1B and L-1 visas seek to increase the number of guest worker visas.

What are Guest Worker Visas?

Guest worker visas, including the H-1B and L-1, allow citizens of foreign countries to temporarily work in the U.S. OPT, while not a visa, grants temporary work authorization for foreign citizens who attend or graduated from a U.S. university. Unlike most visas, workers sponsored on H-1B and L-1 visas can be sponsored by their employer for permanent residence in the U.S., but likely less than 10 percent of the H-1B workforce receives sponsorship.[a]

The H-1B Visa

  • An H-1B visa is a non-immigrant visa for a guest worker who will be employed temporarily in a specialty occupation or field.[1] The visa is held by the employer, not the worker.[2]
  • A “non-immigrant” is a person who enters the U.S. for a temporary stay.
  • “Specialty occupations” are defined by the U.S. Citizenship and Immigration Services (USCIS) as occupations which require the “theoretical and practical application of a body of specialized knowledge along with at least a bachelor’s degree or its equivalent.”[3]
  • H-1B visas are issued for workers in a wide range of occupations, including computer-related occupations; architecture; engineering; education (pre-k through post-secondary); administration; medicine and health; management; life sciences; mathematics and physical sciences; social sciences; art; law and jurisprudence; writing; and entertainment and recreation.[4] However, most visas, nearly 60 percent in FY 2012, go to employers hiring workers in computer-related occupations.
  • The H-1B is issued for three years and can be renewed for another three years.[5] If the H-1B beneficiary’s employer sponsors the worker for a green card (permanent residence), then the H-1B visa can be extended in one-year increments until the green card is issued.[6]
  • There is an annual cap on the number of H-1Bs that can be issued. The cap is 65,000 workers per fiscal year.[7] However, there are several exceptions.
    • There are 20,000 H-1Bs available for workers holding a master’s degree or higher from an American institution of higher education.[8]
    • Nonprofits and government organizations that conduct research and institutions of higher education are exempt from the annual cap.[9]
    • The cap does not apply to renewed applications.[10]
    • There are 6,800 visas set aside within the cap under the terms of the U.S.—Chile and U.S.—Singapore free trade agreements and unused visas are made available for use in the next fiscal year.

H-1Bs Available Under Fixed Cap

H-1Bs Available to Workers with a Master’s Degree or Higher from an American Institute of Higher Education

H-1Bs Available to Institutions of Higher Education and  Nonprofit and Government Research Organizations

65,000

20,000

Unlimited*

 

 

 

 

 

*    In 2011, over 50,000 visas were issued in the “unlimited” category. Specifically, there were 84,081 initial H-1B visas approved subject to the cap and a total of 106,445 H-1B visas issued.[11]

  • An H-1B beneficiary must either have a bachelor’s degree or higher (from a U.S. or foreign institution), have a state license or certification that permits practice in the specialty occupation, OR have training or experience (with progressively responsible positions) in the specialty occupation that is equivalent to completion of a degree.[12]
  • H-1B employers must attest: (1) “that they will pay H-1B workers the amount they pay other employees with similar experience and qualifications or the prevailing wage; (2) that the employment of H-1B workers will not adversely affect the working conditions of U.S. workers similarly employed; (3) that no strike or lockout exists in the occupational classification at the place of employment; and (4) that the employer has notified employees at the place of employment of the intent to employ H-1B workers.”[13]
  • The requirements for H-1B “dependent employers” and “willful violators” are slightly different (more about these employers below). These employers must attest: (1) “that 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) that they took good-faith steps prior to filing the H-1B application to recruit U.S. workers” and “offered the job to any [U.S.] worker who applies and is equally or better qualified for the job” than an H-1B worker; and (3) that in the event the worker is placed with a third-party employer, the original employer inquired with the third-party employer that it did not displace or intend to displace a U.S. worker within the 90 days before and 90 days after the placement.[14]

The L-1 Visa

  • The L-1 is used to transfer employees of multinational corporations who have been employed by the company abroad to a branch, parent, affiliate, or subsidiary of that same employer in the U.S. The L-1 beneficiary must have been employed by the company within the three preceding years and have been employed abroad by the sponsoring firm continuously for one year.[15]
  • The L-1 is used by companies to facilitate “knowledge transfer,” which means enabling guest workers to come to the U.S. and then take the knowledge and skills they learned in the U.S. to their home country.[16] For example, Intel uses the L-1 so American workers can “train L-1 workers who staff the company’s offices in Russia, India, China and other high-growth markets.”[17]
  • As with the H-1B, the L-1 is held by the employer, not the worker.[18] There is no cap on the number of L-1 visas that may be issued. The visa is renewable for up to six years for specialty workers and seven years for managers[19] and there is no wage minimum.[20] The L-1 may be utilized by persons in managerial, executive, or specialized knowledge fields.[21]
  • A worker who comes to the U.S. on an L-1 visa can be sponsored by the employer for permanent U.S. citizenship, but very few receive sponsorship.[22]

The Guest Worker Workforce

There are a staggering number of skilled guest workers in the U.S.; estimates are as high as 900,000.[23] In the broad occupation groups that make up the science, technology, engineering, and mathematics (STEM) workforce (business and financial operations, computer and mathematical science, architecture and engineering, and life, physical, and social science occupations), there were 1,050,377 non-U.S. citizens employed (nearly 15 percent of workers) in June 2013.[24]

Proponents argue that guest workers actually create jobs for U.S. workers because guest workers are the “best and the brightest.” However, there is no evidence that guest workers create jobs for U.S. workers. In fact, there is no system for ensuring that the guest workers are only employed when no qualified U.S. worker is available.

H-1B Visa Workforce

  • USCIS approved 262,569 H-1B petitions in FY 2012, a three percent decrease over FY 2011.[25] Petitions for initial employment numbered 136,890. Of those, nearly 75,000 of the approved petitions were for aliens outside of the U.S. (55 percent of initial petitions).[26]
  • In FY 2012, among all H-1B beneficiaries, for 46 percent the highest degree held was a bachelor’s degree, 41 percent held a master’s degree, and 12 percent held a doctorate or professional degree.[27] Nearly three-quarters of approved H-1B beneficiaries were between 25 and 34 years old.
  • Of the 262,569 H-1B visas certified in 2012, 154,869 worked in computer-related occupations (59 percent of visas); 26,329 worked in architecture, engineering, and surveying occupations; 14,083 worked in medicine and health; 12,992 worked in college and university education; 7,363 worked in accounting, auditing, and related occupations; 1,874 worked in elementary and secondary schools.[28]
  • Among all H-1B beneficiaries, issuance of guest worker visas declined in every occupation category except computer-related occupations, which increased by 15 percent from FY 2011 to FY 2012.[29]

The “Best and the Brightest” Myth

Many supporters of guest worker visas justify the programs by arguing that the H-1B helps the U.S. to recruit and retain the best and brightest workers. However, there is little support for this claim.

  • Fifty-four percent, 130,528, of the H-1B visas in FY 2010 went to non-immigrants for “entry-level” positions.[30] Entry-level positions require a “basic understanding of duties and perform routine tasks requiring limited judgment.”[31]
  • Only six percent of the H-1B visa holders in FY 2010 received compensation in the top pay grade (level IV), a reflection of highly specialized skills.[32]
  • Employers have the option of sponsoring H-1B beneficiaries for permanent status, but few do. Just over 30,000 H-1B beneficiaries had their applications for permanent status certified in FY 2012 and for various reasons, not all of these certified petitions will lead to permanent status.[33] Considering the size of the H-1B workforce is likely over 500,000, this means that few workers transition to permanent status. If a skilled worker is exceptionally talented, a company should be motivated to keep the worker permanently. Instead the lack of sponsorship has fueled speculation that guest workers are used as cheap, temporary labor.

Body Shops

  • “Body shop” is the term used to describe staffing companies that hire H-1B beneficiaries, who are then placed with a third-party employer.[34]
  • Many of the body shops are Indian-owned companies that provide information technology services to U.S. customers. Of the top 10 H-1B employers in FY 2012, six were body shops headquartered in India.[35]
  • Body shops are also an abundant source of Department of Labor (DOL) complaints. According to the DOL, a large majority of the wage and hour complaints it receives are related to activities at body shops.[36] In the Northeast region, where body shops predominate, “nearly all of the complaints [DOL] receive involve staffing companies and that the number of complaints are growing.”[37]
  • The use of body shops makes it difficult to enforce H-1B laws. Body shops may contract out H-1B workers to a third-party employer who then contracts out the H-1B worker to a different employer. “[O]nly the staffing company, as the employer who has petitioned for the visa and made the attestations to comply, is technically accountable and ultimately liable for complying with program requirements.”[38]

Offshore Outsourcers

Offshore outsourcing is a term used to describe the practice of a U.S. company contracting with a foreign corporation to move in-house professional and technical jobs to a lower-cost foreign country. H-1B and L-1 visas are used to facilitate the movement of U.S. jobs offshore. India is regarded as the center for offshore outsourcing.

  • In 2012, the top 10 users of H-1B visas were mostly India-based companies specializing in offshore outsourcing.[39]
  • The occupations most susceptible to offshore outsourcing receive the most H-1B visas. In 2005, it was estimated that 27.4 percent of all employment in service occupations (computer and mathematical; architecture and engineering; legal; life, physical, and social sciences; business and financial operations; and office/administrative support) were offshorable.[40]

L-1 Visa Workforce

The L-1 visa is largely a black box. From an employer’s perspective, L-1 visas are desirable, because there are no minimum wage requirements. There is no data available showing how much L-1 visa workers are paid or the duration of their stay. The U.S. Department of State issued 62,430 L-1 visas in 2012.[41]

Company

L-1 Use Rank in FY 2008

L-1s Received in FY 2008

Tata Consultancy Services Limit

1

1,998

Cognizant Tech Solutions

2

1,839

Wipro Limited

3

662

Satyam Computer Services Limited

4

604

Infosys Technologies Limited

5

377

Source: “The H-1B and L-1 Visa Programs: Out of Control,” Ron Hira, Economic Policy Institute, October 2010.

The OPT Workforce

OPT offers practical experience to F-1 college student visa holders, through optional temporary employment in their fields of study, for up to 12 months at each education level (i.e. 12 months for a bachelor’s degree and 12 months for a master’s degree). Under a new rule established in 2008, students working in STEM fields are eligible for a 17-month extension at the end of the initial 12-month period, with the option of later applying for an H-1B visa.[42] There are no wage standards nor any data on how much OPT recipients are paid or their working conditions.

USCIS Approvals for OPT Employment Authorization Fiscal Years: 2009-2011
Fiscal Year Pre-Completion OPT Post-Completion OPT 17-Month STEM Extension Grand Total
2009 3,370 81,868 5,902 91,140
2010 3,067 83,624 10,423 97,114
2011 3,143 89,237 13,179 105,559
Grand Total 9,580 254,729 29,504 293,813

Source: USCIS, Office of Performance & Quality, Data Analysis & Reporting Branch, May 23, 2012.

Lack of Protection for U.S. Workers

The H-1B and L-1 visa programs provide no real protections for U.S. workers. The visas actually create an incentive for employers to hire guest workers in lieu of U.S. workers or to replace U.S. workers with guest workers. The guest worker wage standards are so low that it is easy for employers to replace experienced U.S. workers with entry-level guest workers, saving employers thousands of dollars. Employers who hire guest workers actually boast that guest workers work for lower pay than their U.S. counterparts. It is not surprising then that in computer occupations, employment is up, and wages are flat.Changes in Employment and Wages in Selected Computer Occupations

While employers make unsubstantiated claims of worker shortages, studies repeatedly show that labor market indicators do not demonstrate a labor shortage and that there are plenty of applicants who meet the requirements for open positions.[43]

Absence of a Labor Market Test

  • Employers are permitted to hire H-1B workers when there is ample supply of U.S. workers. For example, in June 2013, the unemployment rate for computer-related occupations was 4.4 percent with 166,000 unemployed.[44] This only includes those individuals on layoff and those looking for work and not those who have become discouraged or are underemployed. Despite the unemployment rate, which is high for this field, nearly 155,000 new H-1B visas were issued to hire guest workers in computer-related occupations in FY 2012.[45] This is a 15 percent increase from FY 2011.[46]
  • A May 2013 report by the Georgetown University Center on Education and the Workforce found that in 2010 – 2011, the unemployment rate for recent college graduates with a degree in engineering was 7.4 percent; unemployment for recent college graduates in life and physical sciences was 7.3 percent; and the unemployment rate for recent college graduates in computers and mathematics was 9.1 percent.[47]
  • In 2010, over 500,000 bachelor’s degrees and over 100,000 master’s degrees were awarded to U.S. citizens and permanent residents in science and engineering fields.[48]
  • With one small exception, there is no requirement that employers take steps to recruit U.S. workers before seeking guest workers for a position.[49] Only “H-1B dependent employers” and “willful violators” must attest that they have “taken good faith steps to recruit…[U.S.] workers for the job for which the non-immigrant or non-immigrants is or are sought.”[50]
  • An “H-1B dependent employer” is defined as:
    1. An employer who has 25 or fewer full-time employees of which more than seven are H-1B workers;
    2. An employer who has between 20 to 50 full-time employees of which more than 12 are H-1B workers; or
    3. An employer who has more than 50 full-time employees of which 15 percent or more are H-1B workers.[51]
  • A “willful violator” is defined as an employer who has willfully failed to follow or misrepresented the H-1B rules.[52]
  • H-1B dependent employers and willful violators made up between three and five percent of all employers between 2002 and 2008.[53] Data is not available as to how many H-1B visas these employers sponsor.

Low or Non-Existent Wage Requirements

Inadequate wage standards create incentives for employers to replace U.S. workers with guest workers.

  • H-1B rules require that employers pay “the actual wage level paid by the employer to all other individuals with similar experience and qualifications” or “the prevailing wage level.”[54]
  • “Prevailing wage” is “the average wage paid to similarly employed workers in a specific occupation in the area of intended employment.”[55] The prevailing wage does not take into account specialized skills or education, but is instead an average wage for workers in an occupation. Analysts often argue that the prevailing wage makes it possible for H-1B employers to undercut U.S. wage rates because it is less than the market wage for labor. “Market wage” is defined as the wage earned by a worker in the open labor market. Market wages take into account the skills, experience, and education of the worker.
  • Experts have estimated that the prevailing wage is at least 20 percent lower than the market wage. Phiroz Vandrevala, an executive with Indian IT firm Tata Consultancy Services, remarked in an interview that “our wage per employee is 20-25 percent less than U.S. wage for a similar employee.”[56]

Mistreatment of the H-1B Workforce

One factor that enables employers to take advantage of H-1B beneficiaries is that the beneficiaries can lose their legal status and be forced to return to their home country if they are terminated by their employer. The GAO noted that “[a]ccording to agency officials, H-1B workers are likely to be reluctant to file complaints against employers for fear that the company might be disbarred, which in turn could result in the complainant and fellow H-1B workers at the company losing their jobs and potentially having to leave the United States.”[57] The H-1B workers are also reluctant to cooperate after a complaint has been filed “for fear of similar repercussions.”[58]

DOL Wage and Hour Violations

  • According to the GAO, in 2009, the DOL required H-1B employers to pay $11 million “in unpaid wages to 1,202 workers and $739,929 in civil penalties.”[59] That is over nine thousand dollars per worker.
  • The DOL has cited numerous obstacles to its ability to protect H-1B workers, including lack of authority to initiate investigations, inability to access the Labor Condition Application database, inadequate fines for employer noncompliance with a DOL investigation, and lack of subpoena authority to obtain employer records.[60]

USCIS: Site Visit Verification Program

  • In FY 2010, USCIS conducted 15,175 site inspections. Initial results indicated a 13 percent rate of fraud and non-compliance.

Where to Go from Here?

The Department for Professional Employees, AFL-CIO (DPE), the AFL-CIO, and former Secretary of Labor Ray Marshall endorse the creation of an independent commission to assess and manage future labor needs. (For the detailed proposal, see: Marshall, Ray, “Immigration for Shared Prosperity: A Framework for Comprehensive Reform.” Economic Policy Institute. 2009.) Congress should incorporate the framework laid out by Secretary Marshall into any immigration reform initiatives.

This framework calls for: an independent commission to assess and manage future flows, based on labor market shortages that are determined on the basis of actual need; a secure and effective worker authorization mechanism; rational operation and control of the border; adjustment of status for the current undocumented population; and improvement, not expansion of temporary worker programs, limited to temporary or seasonal, not permanent jobs.

For a more in-depth analysis of these issues, see DPE’s report: Gaming the System: Guest Worker Visa Programs and Professional and Technical Workers in the U.S. 2012.



[a] In FY 2012, 32,235 H-1B and L-1 employers filed certified PERM applications. This is a fraction of the H-1B and L-1 workforce, which numbered 324,999 in just FY 2012.



[1] U.S. Citizenship and Immigration Services. H-1B Specialty Occupations, DOD Cooperative Research and Development Project Workers, and Fashion Models? Web. Aug. 2012.

[2] 8 CFR §214.2(h)

[3] U.S. Citizenship and Immigration Services. U.S. Department of Homeland Security.  What is a Specialty Occupation?” Web. Aug. 2009.

[4] U.S. Citizenship and Immigration Services, U.S. Department of Homeland Security. Characteristics of H-1B Specialty Occupation Workers: Fiscal Year 2012 Annual Report to Congress, June 26, 2013.

[5] What is a Specialty Occupation? op. cit.

[6] Government Accountability Office, GAO 11-26, H-1B Program: Reforms Needed to minimize the Risks and Costs of Current Program. January 2011.

[7] Characteristics of H-1B Specialty Occupation Workers, pg. 3. op. cit.

[8] Ibid., p. 4.

[9] Ibid.

[10] Ibid.

[11] USCIS, Form I-129, Petition for Temporary Worker (H-1B) Cap Processing Receipts, Approvals, Denials, Withdrawn, Administratively Closed and Other Status. Fiscal Year(s): 2009-2012; Characteristics of H-1B Specialty Occupation Workers, op. cit.

[12] U.S. Citizenship and Immigration Services. H-1B Specialty Occupations, DOD Cooperative Research and Development Project Workers, and Fashion Models. August 2012.

[13] H-1B Program: Reforms Needed to Minimize the Risks and Costs of Current Program, p. 8. op. cit.

[14].Ibid.

[15] Daniel Costa, Abuses in the L-Visa Program: Undermining the U.S. Labor Market. EPI Briefing Paper. August 13, 2010. Pg. 3.

[16] Ron Hira, Bridge to Immigration or Cheap Temporary Labor? The H-1B & L-1 Visa Programs are a Source of Both. Economic Policy Institute. February 17, 2010. P. 10.

[17] USA Today, “Ultimate job-loss insult: training your own replacement.” August 10, 2003.

[18] U.S. Citizenship and Immigration Services. L-1A Intracompany Transferee Executive or Manager. Web.

[19] Ibid.

[20] See 8 CFR § 214.2(l)

[21] 8 CFR § 214.2(l)

[22] 8 CFR §214.2(l)(16); U.S. Department of Labor, Employment & Training Administration. Foreign Labor Certification, OFLC Case Disclosure Data. PERM Program. Web. Retrieved August 7, 2012.

[23] Ashwini Sukthankar and Philip J. Simon, Visas, Inc.: Corporate Control and Policy Incoherence in the U.S. Temporary Foreign Labor System. Global Workers Justice Alliance. 2012.

[24] U.S. Census Bureau, DataFerrett, Current Population Survey, Basic Monthly Microdata, June 2013.

[25] Characteristics of H-1B Specialty Occupation Workers: Fiscal Year 2012 Annual Report to Congress, op. cit.

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] Ibid.

[30] United States Government Accountability Office. H-1B Visa Program: Reforms are Needed to Minimize the Risks and Costs of Current Program, GAO-11-26. January 2011.

[31] Ibid.

[32] Ibid.

[33] U.S. Department of Labor, Foreign Labor Certification, OFLC Case Disclosure Data. PERM Case Data FY 2012.

[34] Steve Hamm and Moira Herbst, “America’s High-Tech Sweatshops.” Bloomberg Businessweek. October 1, 2009.

[35] Foreign Labor Certification, OFLC Case Disclosure Data. LCA Programs (H-1B, H-1B1, E-3).

[36] H-1B Program: Reforms Needed to Minimize the Risks and Costs of Current Program, p. 53.

[37] Ibid.

[38] Ibid., p. 52.

[39] Sharon Machlis and Patrick Thibodeau, “Top Users of H-1B Visas are Offshore Outsourcers.” Computerworld. February 25, 2013.

[40] Linda Levine, Offshoring (or Offshore Outsourcing) and Job Loss Among U.S. Workers. Congressional Research Service. December 17, 2012.

[41] U.S. Department of State, Nonimmigrant Visa Statistics. NIV Workload by Visa Category FY 2012.

[42] U.S. Department of Homeland Security, U.S. Immigration and Customs Enforcement. Practical Training. Web. March 6, 2012.

[43] Globalization of R&D and Innovation: Implications for U.S. STEM Workforce and Policy, p. 9-12. November 2007.

[44] U.S. Census Bureau, DataFerrett, Current Population Survey, Basic Monthly Microdata, June 2013.

[45] Characteristics of H-1B Specialty Occupation Workers, 2012. p. 12. op. cit.

[46] Ibid.

[47] Anthony P. Carnevale & Ban Cheah, “Hard Times 2013: College Majors, Unemployment and Earnings,” Georgetown University Center on Education and the Workforce. May 2013.

[48] National Science Foundation, National Center for Science and Engineering Statistics. 2013. Women, Minorities, and Persons with Disabilities in Science and Engineering: 2013. Special Report NSF 13-304. Arlington, VA.

[49] 8 U.S.C. § 1182(n)(1)(G)(i).

[50] Ibid.

[51] 8 U.S.C. § 1182(n)(3)(A)(i)-(iii).

[52] 8 U.S.C §1182(n)(1)(E)(ii).

[53] H-1B Program: Reforms Needed to minimize the Risks and Costs of Current Program, p. 19. op. cit.

[54] 8 U.S.C. §1182(n)(1)(A)(i)(I) and (II)

[55] U.S. Department of Labor, Employment & Training Administration. Foreign Labor Certification, Prevailing Wages (PERM, H-2B, H-1B, H-1B1 and E-3), Overview. Web.

[56] Ron Hira and Anil Hira. “Outsourcing America.” New York. Amacom, 2005. Print. 87-88.

[57] H-1B Program: Reforms Needed to minimize the Risks and Costs of Current Program, p. 48. op. cit.

[58] Ibid.

[59] Ibid.

[60] Ibid., p. 47, 49.

 

For further information on professional workers, check the DPE website: www.dpeaflcio.org.

 

The Department for Professional Employees, AFL-CIO (DPE) comprises 20 AFL-CIO unions representing over four million people working in professional, technical and administrative support occupations. DPE-affiliated unions represent: teachers, college professors, and school administrators; library workers; nurses, doctors, and other health care professionals; engineers, scientists, and IT workers; journalists and writers, broadcast technicians and communications specialists; performing and visual artists; professional athletes; professional firefighters; psychologists, social workers, and many others. DPE was chartered by the AFL-CIO in 1977 in recognition of the rapidly growing professional and technical occupations.

 

Source: 
DPE Research Department
815 16th Street, N.W., 7th Floor
Washington, DC   20006

 

Contact: 
Jennifer Dorning                                                                                                                                                 August 2013
(202) 683-0320, extension 114 jdorning@dpeaflcio.org