New Executive Order on Federal Contractors Employing H-1B Visa Workers and Other Temporary Foreign Labor

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President Trump recently signed an Executive Order focused on a government-wide review of federal contractors’ hiring and staffing practices, specifically taking aim at the H-1B visa program.  The Executive Order states that “[i]t is the policy of the executive branch to create opportunities for United States workers to compete for jobs, including jobs created through Federal contracts.”  This general statement is not new policy, but rather an attempt to influence the way in which employers – specifically federal contractors – use the H1-B visa program. It is important to note that aside from this stated general policy, the Executive Order does not, as some early media coverage represents, “bar” workers on H-1B visas from working on federal contracts or subcontracts.

What does the new Executive Order do?

The Executive Order does (1) create a requirement for the head of each executive department and agency to perform an assessment and report back to the Director of the Office of Management and Budget (OMB) on the findings, and (2) requires the Secretaries of Labor and Homeland Security to “take action . . . to protect United States workers from any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at jobsites.” These two requirements could lead to additional substantive policy from OMB, the Department of Labor (DOL), or the Department of Homeland Security (DHS).

The first requirement, that all executive departments and agencies perform an assessment and report back to the Director of OMB within 120 days, is an information collection requirement so that “if necessary, corrective actions may be taken” in response to the results of the assessment.  The assessment requires departments and agencies to review contracts and subcontracts awarded in fiscal years 2018 and 2019 to:

  1. Assess whether contractors (including subcontractors) used temporary foreign labor for contracts performed in the United States, and, if so, the nature of the work performed by temporary foreign labor on such contracts; whether opportunities for United States workers were affected by such hiring; and any potential effects on the national security caused by such hiring; and
  2. Assess whether contractors (including subcontractors) performed in foreign countries services previously performed in the United States, and, if so, whether opportunities for United States workers were affected by such offshoring; whether affected United States workers were eligible for assistance under the Trade Adjustment Assistance Program authorized by the Trade Act of 1974; and any potential effects on the national security caused by such offshoring; and
  3. Assess any negative impact of contractors’ and subcontractors’ temporary foreign labor hiring practices or offshoring practices on the economy and efficiency of Federal procurement and on national security; and
  4. Review, in coordination with the Director of the Office of Personnel Management, the employment policies of the agency to assess the agency’s compliance with Executive Order 11935 of September 2, 1976 (Citizenship Requirements for Federal Employment), and section 704 of the Consolidated Appropriations Act, 2020, Public Law 116-93.

The second requirement, for DOL and DHS to “take action” within 45 days, is more open-ended and could result in any number of future substantive policy enactments (or none). The “action” required of DOL and DHS is “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) of the Immigration and Nationality Act [(INA)] (8 U.S.C. 1182(n)(1)).”

This initial 45-day call to action assumes that there are inherent “adverse effects on wages and working conditions caused by the employment of H-1B visa holders,” but it will be difficult for DOL and DHS to assess whether there are in fact any adverse effects without the data-call in the to-be-provided agency reports to OMB coming in 120 days. The second call to action simply requires the enforcement – or confirmation of enforcement – of the H-1B laws that already exist: section 212(n)(1) of the INA. Accordingly, this section of the Executive Order does not create any new substantive policy, but rather requires DOL and DHS to increase scrutiny on whether the existing immigration laws are being enforced.

What are the key takeaways?

It remains to be seen whether the two requirements in the Executive Order will create any direct impacts on federal contractors who are currently employing foreign temporary workers. However, the Executive Order is, if nothing else, signaling the intent and direction of the administration’s approach to temporary foreign workers employed by federal contractors, and could be a harbinger of more restrictive policy proscriptions to come from OMB, DOL, or DHS. As such, federal contractors that currently rely on temporary foreign labor to staff their government contracts should continue to monitor the situation for substantive policy developments.

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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