Stakes rise in the 25-year-old H-1B battle

The H-1B visa turns 25 this year, and while it has seen many ups and downs during that quarter-century, what hasn't changed is the fury IT workers feel after being displaced by people who hold H-1Bs.

Two recent cases, both in the utility industry, illustrate the problem. At Northeast Utilities (now Eversource Energy) in Connecticut and at Southern California Edison (SCE), IT workers trained their visa-holding replacements as a condition of layoff agreements. Both cases have garnered public attention, but similar actions involving offshore workers elsewhere get only scant attention -- or escape notice altogether.

Senate action

If anything, the fight over the H-1B visa is ramping up. There is a new push in the Senate by lawmakers from both parties to raise the H-1B visa cap from 65,000 to 195,000 per year. This bill includes no restrictions on offshoring, and the IEEE-USA has said that, if passed, the proposal will "destroy" the U.S. tech workforce by making it easier to replace U.S. citizens with guest workers, mostly young men, who are paid less.

In addition to the 65,000 H-1B visas that are currently issued each year, an additional 20,000 visas are allowed for people from other countries who hold advanced degrees in STEM fields.

Proponents of the program say the U.S. suffers from a skills shortage. Try telling that to SCE workers who just lost their jobs.

By the California utility's count, some 500 workers have so far been affected, mostly through layoffs. Others left voluntarily. As one laid-off Edison worker said: "Not one of these jobs being filled by India was a job that an Edison employee wasn't already performing."

The H-1B visa was created in 1990 as part of an immigration reform effort. Prior to that, the U.S. had a visa for foreign nationals, the H-1, which was issued to people of "distinguished merit and ability." But Congress broadened its scope to make it easier to bring in people who had at least a bachelor's degree in a specialty occupation.

The law is supposed to protect U.S. workers from displacement. The Immigration and Nationality Act requires that "the hiring of a foreign worker will not adversely affect the wages and working conditions of U.S. workers comparably employed."

Critics say that's not how things are playing out at SCE. "There isn't a clearer case of adverse impacts -- American workers are losing their jobs to H-1Bs from another country," Ron Hira, an associate professor of public policy at Howard University, wrote in a blog post for the Economic Policy Institute.

Former Rep. Bruce Morrison (D-Conn.), the author of the 1990 legislation that created the H-1B visa, said in an interview that under the law it would be illegal for a company to directly fire workers and replace them with H-1B holders.

Contractor loophole

So what employers do instead is contract out the work. Two SCE contractors, Tata Consultancy Services and Infosys, are the companies that are bringing in H-1B workers. SCE requires its workers to train a contractor's temporary visa-holding employees if they want to receive severance compensation -- about two weeks of pay for each year worked up to 52 weeks, according to employees.

The U.S. Department of Labor defines the term "adversely affect" narrowly, asserting that it means that a business can't "directly" bring in an H-1B holder to replace a U.S. worker. And SCE, in a statement, contends that it is in compliance with the law under that interpretation. The company says it is "not hiring H-1B visa workers to replace displaced employees." And that's technically true -- it's using contractors to replace its workers.

John Klossner

Morrison believes that the Labor Department could broaden its interpretation. But he also points out that "the real problem" is that none of the recent H-1B bills in Congress deal with the issue of contractors.

The bottom line

Morrison said there is no reason for U.S. workers to be replaced if they "clearly are qualified and able to do the job" -- whether they work for a company directly or as contractors. "The only motivation for this is cost-cutting," he said.

Why are there no protections against the practice in the law? Because in 1990, there wasn't an offshore IT services industry and worker displacement wasn't an issue, said Morrison.

There is another directive in the H-1B law that's designed to protect U.S. workers, but it too has been ineffective. That rule says that if H-1B visa holders account for 15% or more of an employer's workforce, the employer is classified as "H-1B dependent" by the U.S. government and is subject to additional requirements, including a mandate to make a good-faith effort to hire U.S. citizens. But there's an exemption if H-1B workers are paid at least $60,000 or hold master's degrees.

John Miano, the founder of the Programmers Guild, said in a recent blog post for the Center for Immigration Studies that if the wage or education hurdle is met, "then American workers can be displaced at will."