Executive Order Reviews of H-1B Visa Approvals Will Affect Federal Contractors

Published: August 19, 2020

Federal Market AnalysisIT WorkforcePolicy and Legislation

Hiring foreign employees instead of Americans could have implications for some companies.

Key Takeaways

  • An August 3, 2020 executive order signed by the president is likely to require the review of foreign employees hired on H-1B visas.
  • Technology firms will feel the weight of this E.O. the most since they hire the most foreign employees.
  • Contractors could be forced to replace previously hired foreign employees with U.S. citizens possessing the same skill set.
  • Contractors should get records in order to respond to federal government reviews of their foreign employee hiring practices.

Last week’s post discussed the potential impact on contractors of President Trump’s “Executive Order Aligning Federal Contracting and Hiring Practices With the Interests of American Workers,” which he signed on August 3. One of the order’s requirements directed the Secretaries of Labor and Homeland Security to take all necessary actions by September 17, 2020 “to protect U.S. workers from any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at job sites.” The wording of the order is vague, but it implies the hiring of foreign workers by U.S. companies may be reviewed in order to ensure that jobs which could have gone to American citizens did not go to foreigners and that the employment of foreign employees is not pressuring wages that U.S. workers are paid.

Technology contractors, those working in research and development, and other highly-skilled professional services could be adversely affected by the provision concerning H-1B visa holders, including the levying of fines by the U.S. government and/or other penalties, but how many workers are we talking about and which companies could most feel the impact of a hiring review?

The U.S. Citizenship and Immigration Service (USCIS) publishes a data set that details the number of companies which applied for and received approval to hire H-1B visa employees. The chart below shows how many employers received approval for H-1B visas over the last three fiscal years.

As we can see, the number of H-1B visa approvals has risen each year, with the total number of approvals reaching 164,887 by the end of fiscal 2019. Although most of the companies in this data set received visa approval for only one foreign employee, the total number of approvals is eye-catching at a time when the COVID-19 public health crisis has thrown millions of Americans out of work.

Concerning the companies that request H-1B visas the most, it is probably not surprising that they are large technology firms. The chart below shows data for the top 10 firms by approved H-1B visa requests. 

Not all of the employers on this chart are federal contractors, but many of them are, meaning the president’s executive order will have an impact. Some of these companies also do work of national security importance, although there is no way to know if the employees for whom the visas were requested are performing work on those tasks.

The bottom line is that the Departments of Labor and Homeland Security will be asking these and other companies to open their books and review the files of the foreign employees they have recently hired. If discrepancies are found in background checks and/or the hiring of foreign employees is found to have cost a U.S. citizen the possibility of employment, or if a foreign employee was hired at a lower rate than a U.S. employee would command, those foreign employees may need to be let go, which could disrupt deliverable schedules, etc. Contractors may want to get on top of this issue before any potential issues emerge that could cause trouble down the line.