Guest worker visas come under fire

L-1 visas and other guest-worker visas have been misused by companies to harm U.S. workers, witnesses tell a congressional panel.

Ed Frauenheim Former Staff Writer, News
Ed Frauenheim covers employment trends, specializing in outsourcing, training and pay issues.
Ed Frauenheim
5 min read
L-1 visas and other guest-worker visas have been misused by companies to harm U.S. workers, witnesses told a congressional panel on Wednesday.

And a number of members of Congress made it clear they are ready to change the visas, which have been described by critics as a vehicle for shipping middle-class jobs overseas.

"We can certainly do better for America's workers," Rep. Henry Hyde, R-Ill., said at the hearing. "It's time for reform."

The hearing of the House Committee on International Relations focused on concerns that the L-1 visa program is fraught with fraud and abuse. L-1 visas allow companies to temporarily bring in employees from other countries for managerial or executive work, or for work that entails specialized knowledge.

There is no annual cap on L-1 visas, nor is there a required pay rate. The number of L-1 visas issued by the U.S. government has tripled during the past 20 years, to about 113,000 in 2002, according to Hyde's office.

Another controversial guest-worker visa program is the H-1B program. It lets U.S. employers import highly skilled workers, such as computer programmers, for a period of up to six years. There is an annual cap this year of 65,000 new H-1B visas, although some exceptions apply. Employers also are supposed to pay the prevailing wage for the job.

Both programs have come under scrutiny after massive job losses hit the technology sector. Defenders of the visas say they help keep U.S. employers competitive and that more work would transfer offshore if the programs were eliminated.

According to Hyde's office, a State Department memo from 1996 presents documentation indicating that, at that time, "ninety percent of the L petitions investigated by the American Consulate in Guangzhou proved to be fraudulent."

"Window dressing"
Two witnesses at the hearing said they were directly harmed by L-1 visas. Sona Shah, a U.S. citizen and computer programmer, told the committee that a former employer had abused the L-1 and other visas in the course of underpaying foreign guest workers and failing to give U.S. employees work assignments or training. Shah said a subsidiary of computer services company Automatic Data Processing had kept her and other U.S. technology professionals around temporarily to obscure its use of cheap foreign labor.

"Our skills (and) morale deteriorated from this lack of training and hands-on work," Shah said. "Periodically, batches of us American workers, hired as window dressing, were terminated."

Shah and her fianc?, Kai Barrett, who worked for ADP subsidiary Wilco Systems as an H-1B visa holder, are suing the company. ADP, which has declined to comment on the suit, did not immediately return a call on Wednesday seeking comment about Shah's testimony.

Patricia Fluno, also a technology professional, said she lost her job at a Siemens unit in Florida to a worker on an L-1 visa. Fluno said Siemens replaced her and other U.S. employees with lower-paid employees of India-based Tata Consultancy Services. Fluno also said she was directed to train her replacement. "This was the most humiliating experience of my life," she said.

Siemens spokeswoman Paula Davis said the company did outsource some functions of its Lake Mary, Fla., operation to Tata, partly to cut costs. She said a total of 12 positions were eliminated, but that Siemens helped five of the affected employees find comparable positions within the company.

Davis suggested that asking workers to train people in an outsourcing transition is not unusual. She could not speak to the pay levels of Tata employees or their visa status.

A representative of Tata Consultancy Services did not immediately return a call for comment.

Michael Gildea, the AFL-CIO's executive director of the department for professional employees, said guest-worker visas are fueling the shift of highly skilled work overseas. In particular, he said several India-based companies are using visas to gain knowledge in the United States.

"Once the team of temporary workers has the knowledge and technical skills--sometimes after being trained by U.S. workers--as much of the work that is technically feasible to offshore is then carted back to India," Gildea said in written testimony to the committee.

Gildea's point echoes an argument made by Ron Hira, a public policy professor at the Rochester Institute of Technology. According to Hira, as well as to publicly available information, Indian information technology companies with operations in the United States are some of the biggest applicants for H-1B visas and are heavy users of L-1 visas.

India isn't the only lower-wage country that is taking on technology work from the United States. Other countries gaining from the trend include Ireland and China.

Defend and protect?
Technology leaders have defended the practice of sending work abroad, saying that protectionist measures lead to lower economic growth and higher unemployment.

Not everyone at Wednesday's hearing argued for an overhaul of the L-1 visa program. Harris Miller, president of the Information Technology Association of America, said he's heard concerns that visas have been given out to individuals without "specialized" knowledge. In response, the ITAA has issued a paper with examples of what does and does not qualify as specialized knowledge in the IT industry. But legislative reforms aren't needed, he said. "The overall program is not broken and doesn't need to be fixed," he said.

Miller also argued that tampering with the L-1 program could reduce the amount of foreign direct investment made in the United States.

"Unless U.S. and foreign companies are able to bring key personnel to their American operations, U.S. companies will be put at a competitive disadvantage and foreign companies will be unlikely to establish or expand their presence in our country," Miller said in written testimony. "(Foreign direct investment) means more U.S. factories, offices and jobs, and the L-1 program facilitates these investments."

A number of visa program reforms already have been introduced. For example, Sen. Christopher Dodd, D-Conn., and Rep. Nancy Johnson, R-Conn., have proposed a bill that would end the practice of allowing L-1 visa holders to be subcontracted by one employer to another, require L-1 workers to be paid the prevailing wage, and require all companies that hire H-1B employees to comply with lay-off protections and recruitment requirements that had been reserved for certain firms that relied heavily on H-1B visas.

During the hearing, Rep. Tom Lantos, D-Calif., suggested that a change of the L-1 definition and a cap may be in order. "We are dealing with a scandal," Lantos said.

Yet another proposal on the horizon that could affect the L-1 and H-1B visa programs is President Bush's call for a new temporary worker program, which could extend to cover skilled workers such as programmers.