On August 3, 2020, President Trump issued an Executive Order (“EO” or the “Order”) directing the heads of all agencies that enter into contracts to review the impact of contractors and their subcontractors employing H-1B visa holders on the wages and employment opportunities of US workers. Specifically, the EO directs all federal agencies to review whether US workers were negatively impacted or national security risks were created by the contracting and offshoring practices of federal agencies. The EO further directs the Secretaries of Labor and Homeland Security take action to prevent any adverse effects produced by the employment of H-1B visa holders on the wages and working conditions of US workers.

The theme is not a new one. On April 18, 2017, the President issued an EO announcing the policy of the executive branch as “Buy American Hire American” (“BAHA”). For a full description, visit our client alert concerning the BAHA order. The BAHA EO was an early signal of the new administration’s focus on limiting the admission of foreign workers, both temporary and permanent:

In order to create higher wages and employment rates for workers in the United States, and to protect their economic interests, it shall be the policy of the executive branch to rigorously enforce and administer the laws governing entry into the United States of workers from abroad, including section 212(a)(5) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(5)) [the ground of inadmissibility for intending workers who lack labor certification].

The new EO follows closely on the heels of the recent Presidential Proclamation that bars the entry of non-immigrant workers in several categories, including H-1Bs.

A “Fact Sheet” released by the White House in conjunction with the latest EO, describes the Administration’s position that the H-1B visa category is being “misused” and “cost[ing] millions of Americans their jobs.” Having already reached that conclusion, the President’s call for a mere review of the impact of H-1B visa holders on the wages and availability of public sector jobs for US workers almost seems half-hearted.

  1. What Are The Actions Directed By The EO?

The EO directs the heads of all executive departments and agencies to review the performance of contracts in fiscal years 2018 and 2019, with a particular focus on the following aspects.

i.   Whether contractors or subcontractors used temporary foreign labor in the United States, and if so:

      • The nature of the services performed by temporary foreign labor;
      • Whether opportunities for US workers were impacted by the hiring of temporary foreign labor; and
      • Whether the hiring led to any effects on national security.

ii.   Whether contractors or subcontractors are performing work in foreign countries that was previously performed in the United States, and if so:

      • Whether opportunities for US workers were impacted by the offshoring practice;
      • Whether affected US workers were eligible for assistance under the Trade Adjustment Assistance program; and
      • Whether the offshoring led to any effects on national security.

iii.   Whether either the hiring or offshoring practices listed above negatively impacted the economy and efficiency of Federal procurement or national security.

iv.   Whether the executive department or agency remains compliant with citizenship requirements for federal workers and the salary appropriations for federal workers under the Consolidated Appropriations Act.

After the assessment, executive department and agency heads are to submit a report that summarizes findings and recommends corrective actions, if necessary.

In addition to the review and reporting requirements, the EO requests the Secretaries of Labor and Homeland Security take action to prevent any potential impacts on US workers caused by the employment of H-1B visa holders, including to ensure that the employers of these visa holders are in compliance with the H-1B employer attestation requirements of section 212(n) of the Immigration and Nationality Act (“INA”).

2.  What Should Employers Know About This EO?

Contractors and subcontractors should prepare for additional reporting requirements that may originate from the agency reviews directed by the EO. These new requirements may impose additional time and resource expenditures on federal contractors that would need to produce extensive reports on its workforce hiring and offshore practices.

The EO may also serve as a jumping-off point to revise the federal acquisition regulations to flat out ban the usage of H-1B workers and offshoring practices for government contractors and subcontractors. If this becomes reality, contractors with H-1B workers and offshore services should anticipate significant difficulties in procuring federal contracts. That approach is more likely than the Trump Administration imposing additional hurdles on federal contractors who may wish to sponsor foreign nationals for H-1B status, as the Trump Administration has routinely taken the most straightforward approach to enforce new restrictions on temporary labor.

Although private sector employers of H-1B visa holders (including government contractors and subcontractors whose workforces will be the subjects of the EO’s required reviews) are not directly impacted by the EO, the reviews and recommendations of the executive branch agencies could lead to further restrictions on the availability of needed talent for US employers in general.

The EO likely portends additional scrutiny of the H-1B visa category more broadly. The language used in the Order suggests that the Administration may be signalling prospective changes to the rules and regulations pertaining to employer-employee relationships for H-1B employers and additional measures to prevent H-1B visa holders from working at third-party job sites. This is particularly relevant to large employers of technology professionals that travel to client sites for installation, development, and maintenance, a major sector within the temporary foreign labor population in the United States.

Finally, the Order’s reference to section 212(n) may be a nod to future Immigration and Customs Enforcement inspections of H-1B employers. This section of the INA requires employers of H-1B workers to make certain attestations, including, for example, that the available H-1B position does not undercut American wages. As such, employers of H-1B workers should consider reviewing their H-1B compliance file sooner rather than later.