Executive Order Limits Federal Contractors’ Use of Foreign Labor

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On August 3, 2020, the White House issued an Executive Order on Aligning Federal Contracting and Hiring Practices with the Interests of American Workers, directing federal agencies to contract with those who prioritize the hiring of U.S. citizens and green card holders over foreign workers for contract positions.

The order requires that each federal department and agency review, “to the extent practicable, performance of contracts (including subcontracts) awarded by the agency in fiscal years 2018 and 2019” and assess whether they “used temporary foreign labor for contracts performed” in the United States. If they did, the agencies are directed to evaluate “the nature of the work performed by temporary foreign labor on such contracts” to determine “whether opportunities for United States workers were affected by such hiring; and any potential effects on the national security caused by such hiring.” There is no clear guidance how this this process will be implemented.

Likewise, the review should include whether contractors performed work in foreign countries that was previously performed in the United States and if opportunities for U.S. workers were affected by such offshoring. The heads of such departments are required to issue a report within 120 days to the Director of the Office of Management and Budget, who will then review and recommend changes and presidential action if deemed necessary.

The executive order also requires that the Secretaries of Homeland Security and Labor “take action” within 45 days of the order “to protect United States workers from any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at job sites (including third-party job sites), including measures to ensure that all employers of H-1B visa holders, including secondary employers, adhere to the requirements of section 212(n)(1)1 of the Immigration and Nationality Act . . .” A disconcerting aspect of this is that it may require specific information—e.g., immigration status and I-9 compliance—from third-party employers.  This sets a potential direction of joint employer liability. The order does not address whether this is limited to federal contracts. This recent order aligns with the White House’s June 22 “Proclamation Suspending Entry of Aliens Who Present a Risk to the U.S. Labor Market Following the Coronavirus Outbreak.”

The “action” to be taken after the reviews are completed is not defined in the executive order. Those employers with federal contracts should be aware of impending reviews of those contracts, to include vetting vendor employees on visas assigned to federal contracts, and advising subcontractors that they must determine numbers of employees potentially impacted by the review. Employers should expect some future action to be taken in connection with any foreign labor providing services on such contracts, and determine the potential for staffing shortfalls.

 

Footnotes

​1 Section 212(n)(1) covers requirements under the Labor Condition Application.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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