Some H-1B workers underpaid, federal auditors say

Some petitions for temporary foreign labor were approved, despite the employers' intention to pay lower wages.

Anne Broache Staff Writer, CNET News.com
Anne Broache
covers Capitol Hill goings-on and technology policy from Washington, D.C.
Anne Broache
4 min read
More than 3,200 petitions for the H-1B visa workers much used by technology companies have gained approval even though the employers involved didn't commit to paying wages at the prevailing rate, government auditors have reported.

Those certifications represented far less than 1 percent of the approximately 960,000 H-1B applications approved by the U.S. Department of Labor between 2002 and 2005, according to a 20-page report released Thursday by the Government Accountability Office (GAO).

"This error rate, by most standards, does not signal a significant program weakness," Assistant Secretary of Labor Emily Stover DeRocco said in a written response to the report.

Despite the tiny fraction of violations, the auditors indicated that the situation poses concerns. "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," the report said.

The H-1B program permits foreigners with at least a bachelor's degree in their area of specialty to be employed in the United States for up to six years. Under federal regulations, all such workers must receive pay equal or higher to the "local prevailing wage," and employers are supposed to ensure that they're not displacing qualified Americans in the process.

The GAO report didn't name which employers or industries were at fault. Kara Calvert, the director of government relations for the Information Technology Industry Council, emphasized that her organization's member companies don't abuse the system and use the visas only for "legitimate purposes." ITIC's members include Apple Computer, Dell, Cisco Systems, IBM, Intel and Microsoft.

Four examples cited in the report showed that Labor Department officials in recent years have approved applications even though the salaries listed on the forms ranged from $3,000 to nearly $24,000 lower than the annual prevailing rate. In fiscal year 2005, for instance, a petition for an employee who should have been paid at least $75,000 went through even though the application listed an offer of only $55,000.

The Labor Department reviews the vast majority of its applications through an electronic system that promises results in minutes but "does not consistently identify all obvious inaccuracies," the report said. Labor officials, for their part, told GAO investigators that "if they conducted a more in-depth review of the applications, they could overreach their legal authority and increase the processing time for applications."

The number of complaints filed against H-1B employers by the visa holders or others also has climbed slightly, from 117 in 2000 to 173 in 2005, according to the GAO's findings. The most common violation determined by Labor Department investigators was failure to pay the prevailing wage. Companies owed $5.2 million in back pay to 604 employees in 2005, as opposed to $1.2 million owed in back wages to 226 employees in 2000.

Earlier this week, the Programmers Guild, which represents information technology workers, said it filed more than 300 complaints of its own this year with the Justice Department alleging discrimination against U.S. workers in favor of H-1B holders. Those complaints target online job postings that the organization claims demonstrate a clear preference toward hiring foreign workers.

Other critics of the visa program said the GAO report's findings demonstrate what they've been charging for years--that the system allows companies to recruit foreign labor on the cheap.

"Implementation of the H-1B program fails every test of the principles its advocates have asserted," said Ralph Wyndrum Jr., the president of IEEE-USA, an organization that represents high-tech professionals. "Employers can and do give preference to H-1Bs over U.S. workers."

The organization urged Congress to pass new laws that would impose greater oversight over the application process. A number of pending proposals already address that issue, though they haven't yet proceeded to votes.

One of them is the USA Jobs Protection Act, introduced last summer in the House of Representatives, which would require employers to certify that they're paying foreign workers at least the prevailing wage and are not displacing any Americans in the process.

The ITIC's Calvert said her organization agrees fully that stronger enforcement tools are also needed. "One visa used up by companies abusing the system is one less visa (our companies) can use for scientists and engineers to help them innovate," she said.

Large high-tech companies have been pressuring Congress to elevate the existing H-1B limit, saying access to additional foreign workers is the only sure way to fill key gaps in their staffs. The cap on such visas, which was recently exhausted for fiscal year 2007, currently stands at 65,000, a far cry from its peak of 195,000 between 2001 and 2003. Microsoft Chairman Bill Gates, for one, has been a proponent of eradicating the restrictions entirely.

The U.S. Senate voted recently to raise the cap to 115,000 as part of a sweeping immigration bill, but that measure has stalled so far in the House.