Is the IT offshore industry’s business model illegal?

Outsourcing crowd moving toward the United States
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Professional organization asks U.S. Justice Dept. to examine the displacement of workers

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The IEEE-USA is asking the U.S. Department of Justice to consider whether the business model used by many offshore outsourcing firms -- replacing U.S. workers with visa holders -- violates the law.

Former U.S. Rep. Bruce Morrison (D-CT), who represents the IEEE-USA, recently sent a "technical assistance letter" to the DOJ's Office of Special Counsel for Immigration-Related Unfair Employment Practices. This letter is a formal request for help interpreting the law. But the DOJ isn't obligated to answer the questions posed in the technical assistance request.

Morrison wrote the 1990 immigration law creating the H-1B program. But Morrison has said that they had no idea, 25 years ago, that this temporary work visa would help create the IT offshoring industry. The IEEE-USA has become a strong critic of the visa program, and has opposed legislative efforts to raise the cap.

In the absence of any legislative actions to change how the H-1B program operates, IT workers are going to court, arguing that U.S. workers who are replaced by foreign workers are victims of discrimination. Morrison's letter represents another twist in this attack.

There is a "widespread practice in high skilled workplaces," wrote Morrison, "by which jobs of United States citizens and lawful permanent residents are terminated, often in large groups, and whose work is transferred to contract workers who are present in or brought to the U.S. as employees of firms providing these contract services." These workers are predominantly on H-1B visas.

The use of contract workers on temporary visas "is not incidental to the process," wrote Morrison. "Rather, it is the explicit business model of the contracting companies to staff their contracts with such temporary workers."

The questions posed to the Justice Dept., ask whether this replacement constitutes citizenship discrimination.

The letter also cuts into another key issue. A U.S. employer, such as a Southern California Edisonor Disney, will hire an IT services firm. It is the services firm that brings in the H-1B workers. The employer that hires the IT services firm can argue that the makeup of the contractor's workforce is the contractor's business. Morrison challenges this.

Among the questions that DOJ is asked to answer is whether employers can use contractual terms "to shield themselves from knowledge of the immigration status of contract workers."

Morrison said, that in effect, "using a contractor does not get the original employer off the hook" when its employees are replaced by foreign workers. The letter is asking the Justice Dept. to clarify "that the so-called outsourcing loophole doesn't exist."

If the Justice Dept. makes this clarification and agrees that there is no loophole that protects employers, these employers will want to avoid their liability under the anti-discrimination provisions of the Immigration Reform and Control Act of 1986, said Morrison. "No more firing Americans and hiring an H-1B contractor to replace them," he said.

The IEEE-USA's letter to the DOJ is here.

Separate from Morrison's letter, there is also the possibility that the DOJ may be looking at this citizenship discrimination question independent of any effort by the IEEE-USA. The discrimination question was raised by 10 Senators in a letter in April requesting an investigation in the use of H-1B workers at Southern California Edison. The DOJ has not responded to an earlier request for comment on whether it is conducting this investigation or not.

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