Late Notice: Monday, August 3, 2020: President Trump Issues Executive Order Requesting Agency Heads to Review Contractor Use of Temporary Foreign Labor or Services
On August 3, 2020, President Donald J. Trump signed Executive Order 13940, directing federal departments and agencies to review contracts and subcontracts the departments awarded during fiscal years 2018 and 2019. The purpose of the review is to ascertain whether any use of temporary foreign labor in the performance of the contracts or subcontracts adversely affected employment opportunities otherwise available to American workers. The Executive Order is a further attempt by the Trump Administration to promote and emphasize America-first employment policies.
Specifically, the head of each federal executive department and agency is required to review whether contractors, including subcontractors:
- used temporary foreign labor in the performance of the federal contract or subcontract, and if so the nature of the work being performed by temporary foreign labor;
- whether the use of any such temporary foreign workers had any adverse effect on job opportunities available to American workers;
- whether the use of temporary foreign workers had any potential effect on national security; and
- whether contractors, including subcontractors, performed services outside the United States that were previously performed in the United States, and whether such offshoring impacted job opportunities for American workers.
Within 120 days of August 3rd (i.e. not later than December 1, 2020), the head of each federal agency to which EO 13940 applies must then submit a report to the Director of the Office of Management and Budget (“OMB”) summarizing the results of their agency’s review. If necessary, the agency head must also recommend corrective actions the agency may undertake to offset the impact of the agency’s contracting on American workers.
Upon close examination, the Executive Order’s practical implications are limited. First, the Executive Order’s instruction to department heads to review contracts is limited to what is practicable; in other words, there is no mandate to review every contract or subcontract from fiscal years 2018 and 2019, or even some minimum number of contracts. If the department head finds it impractical to review contracts from fiscal years 2018 and 2019 due to unavailability of resources within the time provided for review, the department could apparently review no contracts without sanction.
Second, even if a federal department head did review some contracts or subcontracts, the Executive Order’s instructions are more analogous to the request for a study on the performance of these contracts to determine what the Administration can do in the future to assist American workers to become employed on federal contracts or subcontracts (without defining any jurisdictional limits as to what “contracts” or “subcontracts” are subject to review or potential future regulatory action). In other words, there is no identification of any punitive actions any federal agency would take against contractors or subcontractors for the use of temporary foreign workers in the performance of these 2018 or 2019 agreements.
Third, the federal Courts have previously struck down the Administration’s previous attempts to limit the use of H-1B workers. This new attempt may be subject to the same judicial review, especially given the lack of any clear definitions or the identification of any reasoned justification for the Executive Order.
Furthermore, the Executive Order is nebulous as to what actions agencies can undertake even if one or more were to find that the use of temporary foreign labor “adversely affected” American workers (what is “adverse” is undefined in the Executive Order, and unclear). The Executive Order does provide, however, that the Secretary of Labor and the Secretary of the Department of Homeland Security (DHS) may, within 45 days of August 3rd (i.e. on or before September 17, 2020), take action appropriate and consistent with applicable law to ensure compliance with Section 212(n)(1) of the Immigration and Nationality Act. However, the timeframe during which the Secretary of Labor and the DHS Secretary may act is well before any of the reports are finally due from the federal department heads. Thus, it is most likely that the Secretaries of Labor and DHS would have no evidence of H-1B violations upon which to proceed as to any contract or subcontract under review before their commissions under this Executive Order time out. Moreover, the only action the Executive Order charges the Labor and DHS Secretaries to undertake would be to ensure compliance with existing H-1B employment law. Accordingly, the Executive Order requests oversight and prosecution actions that are already authorized as to requirements with which contractors and subcontractors are already obligated to comply.
What does this mean for contractors and subcontractors? For now, contractors and subcontractors awarded a federal contract or subcontract during fiscal years 2018 or 2019 and using H-1B visa workers or performing services related to the contract outside the United States (a very narrow set of entities) should gather their documentation related to the use of any temporary foreign workers or offshoring of services should a federal agency contact them for information. These contractors and subcontractors should also consult with their immigration counsel to ensure proper compliance with the H-1B visa application process for any temporary foreign workers in their employ working on a federal contract.