California lawmakers are considering a bill that would make it difficult for state-regulated utilities to replace U.S. workers with H-1B workers. It may be one of the most significant anti-offshoring measures in years.
In the absence of federal action, states have long tried to put the brakes on the shift of jobs to offshore. Legislative efforts began in earnest with the burst of the dotcom bubble in 2001. Many state bills were never adopted, but that hasn't stopped some from trying.
In New Jersey, for instance, lawmakers in 2012 approved legislation intended to impede call center outsourcing. The Communication Workers of America, which spurred the effort, said that it had represented about 3,000 New Jersey call center workers in 2002, but by 2012, that figure had fallen to 725.
The New Jersey CWA said telecommunications providers, notably Verizon, were shifting DSL call-center support jobs to India and other countries. New Jersey lawmakers responded by passing, in both houses, the "Save New Jersey Call Centers Jobs Act." But Gov. Chris Christie, who announced Tuesday that he is seeking the Republican presidential nomination, vetoed the bill with little explanation.
The New Jersey bill required any employer relocating a call center to a foreign country to notify the state, and give up any grants, loans or tax benefits. A similar bill first introduced in Congress in late 2011, the U.S. Call Center Worker and Consumer Protection Act, gained nearly 140 co-sponsors, mostly Democrats, but was not adopted. The bill was subsequently reintroduced in the following Congress, and once again failed to pass.
California's anti-offshoring bill (AB 853), sponsored by Assembly member Roger Hernandez (D-West Covina), is aimed at IT operations. It requires an electric or gas company "to use direct employees for any work associated with the design, engineering, and operation of its nuclear, electrical, and gas infrastructure, including all computer and information systems, to the extent feasible."
Direct employees include contractor or subcontractors working under the direct supervision of the utility. If a utility wants to use non-direct employees (workers who aren't under the direct supervision of the utility), it has to demonstrate to the state utilities regulator that the work "can be performed safely and securely."
Legislative documents make clear the motivation for this bill: It is a direct response to Southern California Edison's hiring of two India-based IT outsourcing companies and the subsequent layoff of 400 workers and the voluntary departure of another 100. But the California legislative effort goes well past that issue.
The bill questions the use of offshore resources to manage part of the state's critical infrastructure. Notably, the measure calls electric and gas utilities "a paramount state interest," raising a security argument not unlike the U.S. Defense Department's reason for not sending its development work offshore.
The state's legislative analysis of the bill also notes that "the part of any computer system that is most vulnerable to being compromised is the personnel who operate the system."
This bill, if it becomes law, will complicate the offshoring of IT work by utilities. It may become difficult to use H-1B workers who are supervised by contractors, and not directly by the utilities, on utility IT projects.
AB 853 recently passed solidly in the state Assembly by a 50-25 vote and awaits action in the state Senate. If it clears its remaining hurdles, California may be building an anti-offshoring firewall around its utility industry.