Senate raises H-1B fees to fund border security

$2,000 H-1B fee increase hits any firm with 50% of employees on the visa

WASHINGTON -- The U.S. Senate approved a large H-1B fee increase on Thursday to help offset a $600 million "emergency package" to improve security along the Mexican border.

The fee increases, which also affect the L-1 visa, will help pay for 1,000 new border patrol agents and drones or unmanned aircraft, as well as long list of agencies, including prisons.

The Senate measure increases the H-1B visa application fees by $2,000 per application on those firms that have 50% of their employees on this visa.

This fee increase will have the biggest impact on the large Indian offshore firms, such as Infosys Technologies Ltd., Wipro Ltd., and Tata Consultancy Services, which use thousands of H-1B visas to service U.S. customers.

Firms such as Microsoft and Google also hire many H-1B visas holders, but they are relatively a smaller fraction of their U.S. workforces.

The legislation, introduced by U.S. Senators Charles Schumer (D-NY), Claire McCaskill (D-Mo.), and some other Democrats, passed by unanimous consent.

The House also passed a border security funding measure, one that calls for $701 million in spending, but it did not include an H-1B visa fee increase. Both chambers must now reconcile the two versions.

While the Senate's fee increase will also apply to the L-1 visa, it is uncertain whether it would only apply to those firms that are also H-1B dependent. The text of the legislation has not been released.

Another group of H-1B users that may be impacted by this increase are smaller outsourcing firms that dot office parks around the U.S. They include firms such as Logic Planet Inc., a New Jersey company that employs 95 software engineers, developers, and analysts, 89 of whom (93%) hold H-1B visas.

Logic Planet disclosed its headcount in court documents as one of the firms, along with the TechServe Alliance, an IT services industry group, which is challenging the U.S. Citizenship and Immigration Services over its interpretation H-1B rules.

The $2,000 increase may be added to the $320 H-1B filing fee, said Sarah Hawk, who heads the immigration practice at Fisher & Phillips LLP in Atlanta.

An H-1B visa's fees can add up. There are a number of other existing add-on fees as well: a $500 anti-fraud fee that is required for any new H-1B and L-1 visa user, and a fee for training U.S. workers that scales from $750 to $1,500, depending on the size of the company applying for a visa.

Many companies also pay $1,000 extra for what's called premium processing to accelerate handling of the visa. And legal fees can range as high as $2,000.

Hawk said she suspects companies will try to recoup the fee from salaries or see if the individual can pay for it.

Ron Hira, an associate professor of public policy at the Rochester Institute of Technology, said the fee is a step in the right direction but doesn't go far enough to deter the "exploitive practices" of the visa program.

"A $2,000 fee per visa may cut slightly into the bottom lines of these extraordinarily profitable firms but it isn't large enough to alter their business models," Hira said.

"The cost savings of importing a guest worker versus hiring an American worker is at least an order of magnitude higher than this additional fee, especially with L-1 visas," he said.

The $2,000 in additional revenue pays only a small fraction of the tax revenues lost due to the unemployment of underemployment "of American workers directly harmed by these visas," Hira said.

Hira said most significant is that the legislation is an acknowledgement by its sponsors that "that the H-1B and L-1 visa programs have loopholes that are being exploited to offshore jobs."

Bob Sakaniwa, associated director of advocacy at the American Immigration Lawyers Association, said what impacts use of the H-1B program "first and foremost" is the economy. The cap isn't being hit at anywhere near the same pace it was during better times, he said. The U.S. has received about 35,000 petitions for the 85,000 visas available this year.

The H-1B fee increase is only going to cover a fraction of the $600 million the Senate wants for border security. The largest H-1B user in 2008 was Infosys, which accounted for 4,500 visas that year. A $2,000 fee increase would have added about $9 million to its visa bill.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is .

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Copyright © 2010 IDG Communications, Inc.

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