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Beware: New H-1B Visa Restrictions Accompany Federal Stimulus Funds

06.01.2009

In February, President Barack Obama signed into law the $787 billion American Recovery and Reinvestment Act of 2009, often referred to as the stimulus package. One aspect of the stimulus package that has been largely overlooked is the impact it may have on foreign workers, primarily under the Employ American Workers Act (EAWA).

Cross your heart and hope to comply

The EAWA makes it unlawful for any recipient of Troubled Asset Relief Program funding under the Emergency Economic Stabilization Act of 2008 or the Federal Reserve Act to hire any non- immigrant with an H-1B visa unless it’s in compliance with the H-1B-dependent employer requirements. Companies that hire a large percentage of H-1B workers (15% or more) are deemed “H-1B-dependent” and have special restrictions placed on them by the federal government. Under the stimulus package, however, companies receiving federal funds will be classified as H-1B-dependent regardless of the number of foreign workers they employ.

The stimulus package requires employers to jump through additional hoops when recruiting and hiring H-1B visa holders, and it gives the government much greater scrutiny over hiring practices when it comes to foreign workers. Specifically, the new rules in the stimulus package require you to make various attestations about your recruiting, hiring, and layoff practices.

First, you must confirm that no American workers have been displaced by an H-1B employee. Indeed, an employer receiving stimulus funds must state that it hasn’t — and that it won’t — lay off a U.S. worker in a similar job within 90 days before or after filing an H-1B petition. If you laid off employees in January 2009, before the restrictive provisions were added to the stimulus package, the earliest you could have filed H-1B petitions would have been April (at least 90 days later).

Second, the stimulus package requires you to confirm that you have made a “good-faith” effort to recruit U.S. workers for the jobs to be filled by H-1B candidates. Your recruiting effort must meet industry standards, including those for posting and advertising the job, and must include salary offers that are as high as or higher than the salary offered to the H-1B candidate. A good-faith recruiting attestation ultimately requires affirmative ongoing labor market testing, which can be a huge burden on companies seeking to hire H-1B candidates.

Furthermore, the stimulus package eliminates two important exemptions from the original H-1B-dependent rules.

Normally, the nondisplacement and good-faith rules don’t apply to (1) jobs paying at least $60,000 a year in cash compensation or (2) jobs that require a master’s degree or higher in a specialty related to the intended employment and generally accepted by the industry as a necessary credential for the job. Those two exemptions cover many H-1B positions, but they aren’t allowed for employers receiving federal stimulus funds.

Bottom line

The government will conduct regular audits for compliance with the new restrictions. Companies found in violation of the rules face stiff fines and loss of their H-1B workers. If you’re receiving federal stimulus funds, you should reevaluate your H-1B recruiting programs and seek the advice of qualified counsel about compliance with the new restrictions.


If you have any questions or need help, please contact any member of the Greenebaum Doll & McDonald Labor and Employment Department. Find us online at www.gdm.com.


Copyright 2009 M. Lee Smith Publishers LLC 
KENTUCKY EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but rather to provide information about current developments in Kentucky employment law.  Questions about individual problems should be addressed to the employment law attorney of your choice.

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