Trump’s “Buy American and Hire American” Executive Order: What it Means for Employers of H-1Bs and other Foreign Workers

April 19, 2017

Yesterday, April  18, 2017, President Trump signed his fourth Executive Order relating to immigration.  The “Buy American and Hire American” Executive Order aims to impose additional restrictions on the employment of foreign workers. The impact of this Order will likely be less severe and less sudden than the name of the Order implies, or has been reported in many press articles.  The Order is primarily aimed at government procurement contracts, and instructs government agencies to favor U.S. producers for such contracts. The provisions relating to immigration, which are similar to the language in a ‘draft’ Executive Order that was leaked in January but never signed by the President, instructs the heads of government agencies to rigorously enforce existing laws and to review current rules and policy relating to immigration and propose changes, where appropriate, to protect U.S. workers. 

A summary of the immigration-related provisions of the “Buy American and Hire American” Executive Order, and a discussion on the likely impact of these provisions on our clients, is provided below.

Rigorous Enforcement of Immigration Laws to Protect US Workers 

Section 2(b) of the Executive Order reiterates the Trump Administration’s policy to “rigorously” enforce laws relating to the employment of foreign workers that are specifically designed to protect the wages and working conditions of U.S. workers.  The section cites Section 212(a)(5) of the Immigration and Nationality Act (“INA”), which relates to the labor condition application (LCA) process. An LCA must be filed and certified by the Department of Labor (“DOL”), and signed by the employer before the employer can sponsor an H-1B, H-1B1 or E-3 foreign worker. In signing the LCA, the employer attests that it will not pay the foreign worker less than similarly situated U.S. workers and that the employment of the foreign worker will not adversely affect similarly situated U.S. workers. The LCA process also requires the employer to create and maintain a publicly accessible file (Public Access Files) to document its compliance with the LCA requirements. The DOL may audit these files - in addition to payroll and other internal records - to ensure that the LCA requirements are being met.  

INA Section 212(a)(5) also relates to the PERM labor certification application (“PERM”), which in most cases is the first step in the employer-sponsored green card process.  The PERM process requires employers to demonstrate to the DOL that the employer was unable to find a suitably qualified, willing, and able U.S. worker before it can sponsor a foreign worker for a permanent position.

We believe that Section 2(b) of the Executive Order may result in increased enforcement by the DOL in auditing LCA public access files. Additionally, the DOL may also increase the number of PERM applications selected for auditing, which may slow down the green card process for some employees.

Ensuring the Integrity of the Immigration System in Order to “Hire American”

Section 5 of the “Buy American and Hire American” Executive Order instructs the government agencies involved in the immigration process to propose new rules and issue new guidance to protect U.S. workers.  Subsection 5(a) addresses immigration generally and instructs the Secretary of State, Secretary of Labor, Secretary of Homeland Security, and the Attorney General to - “as soon as practicable” - “propose new rules, and issue new guidance to supersede or revise previous rules and guidance […] to protect the interests of U.S. workers.”

Because subsection 5(a) calls for new proposals and new guidance but  does not actually provide specific instruction on what changes to make, it is difficult to assess how this part of the order might impact employers of foreign workers. The language of this subsection and earlier statements by the President suggest that the Administration may seek to roll back some Obama rule-making, which was generally favorable to foreign workers, including open market work authorization for spouses of certain H-1B workers and expanded STEM OPT work authorization.  The Executive Order acknowledges that it would need go through the rule-making process to undo prior rules granting work authorization. This process would require providing notice to the public and offering the public an opportunity to comment on the proposed changes. The rule-making process normally takes several months or longer and depending on the changes contemplated, may face strong opposition from many stakeholders.

Subsection 5(b) is specifically aimed at the H-1B program. It instructs the Secretary of State, Secretary of Labor, Secretary of Homeland Security, and the Attorney General “as soon as practicable” to “suggest reforms to help ensure that the H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.”  The presumed targets of this subsection are the software consulting companies that employ high numbers of H-1B workers and assign these workers to work at other companies.

Changes to the current H-1B cap selection process in order to favor higher skilled and higher paid workers would require an act of Congress, which would likely take at least several months and may not ultimately survive the legislative process. If such a law is passed, employers who hire workers with advanced degree and offer higher salaries would be well positioned. Startups, which tend to offer lower salary in exchange for equity, would likely be disadvantaged by such a law.

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