A wave of new federal initiatives—including the proposed HIRE Act and the Equal Employment Opportunity Commission (EEOC)’s renewed focus on anti-American bias—signals a significant shift in how outsourcing practices and labor protections for United States citizens are being scrutinized.
The Proposed HIRE Act: Financial Penalties for Outsourcing
Introduced in September 2025 by Senator Bernie Moreno (R-OH), the Halting International Relocation of Employment (HIRE) Act seeks to curb labor outsourcing by United States companies through aggressive tax measures. If enacted, the legislation would:
- Impose a 25 percent excise tax on payments made by United States entities to foreign persons for services that benefit United States consumers; and
- Prohibit companies from deducting this excise tax from their taxable income.
Revenue generated from these taxes would be allocated to a fund supporting domestic workforce training.
Additionally, businesses would be required to report outsourced income on their tax returns. Failure to comply would result in a steep penalty—50 percent of the unreported amount per month, with no cap.
While the bill’s passage remains uncertain, its introduction reflects growing bipartisan concern over the erosion of domestic employment opportunities due to globalization and offshoring.
EEOC’s Enforcement Shift: Addressing Anti-American Bias
On February 19, 2025, EEOC Acting Chair Andrea Lucas announced a landmark enforcement initiative targeting national origin discrimination against American citizens. Key elements of the initiative include:
- Investigating employers and staffing agencies that favor foreign workers over qualified United States citizens;
- Pursuing litigation against entities that misuse immigration programs to bypass American labor; and
- Reaffirming that Title VII of the Civil Rights Act protects United States nationals from discriminatory hiring practices based on national origin.
This marks a notable expansion of the EEOC’s traditional focus, which has historically emphasized protections for immigrant and minority groups.
The H-1B $100K Program: Raising the Cost of Foreign Labor
On September 19, 2025, President Donald Trump signed a proclamation imposing a $100,000 fee on new H-1B visa petitions submitted after September 21, 2025. According to USCIS guidance, the fee applies to new applicants living abroad and affects both initial and renewal petitions filed after the effective date.
This measure significantly increases the cost of hiring foreign talent—particularly for tech and consulting firms that rely heavily on H-1B workers—and is intended to deter abuse of the program while protecting American jobs.
Implications for Outsourcing
Together, these proposed and active initiatives create substantial legal and financial disincentives for outsourcing. If passed, the HIRE Act would dramatically raise the cost of offshore labor by eliminating tax advantages and imposing new penalties, prompting companies to reassess their global labor strategies and consider reshoring certain functions.
Simultaneously, the EEOC’s new enforcement posture introduces legal risk for companies that systematically exclude American workers or rely on staffing firms that prioritize foreign nationals. Violations could result in investigations, fines, and reputational harm.
These developments reflect a broader effort to rebalance labor market incentives in favor of domestic hiring and to encourage investment in United States-based talent pipelines—particularly in sectors like technology, customer service, and back-office operations.
Strategic Considerations for Employers
To navigate this evolving regulatory landscape, employers should:
- Review internal policies to ensure compliance with the Trump administration’s stance on “illegal DEI” practices;
- Audit hiring and outsourcing practices for alignment with Title VII and the proposed tax provisions;
- Reevaluate contracts with foreign vendors to assess potential exposure under the HIRE Act; and
- Train HR and hiring managers on EEOC guidance regarding national origin discrimination.
Companies considering outsourcing should carefully weigh the potential legal and financial consequences the HIRE Act will cause, if passed, before finalizing such plans.
