Economic Policy Institute analysts Ron Hira, a Howard University associate professor, and his colleague Daniel Costa, EPI’s director of U.S. immigration law, international labor migration, farm labor and a forced migration specialist, recently published their research study titled “New Evidence of Widespread Wage Theft in the H-1B Program.” The title’s key words are “new,” because H-1B wage theft is a long-standing abuse, and “widespread” because incidents similar to those Hira and Costa exposed have occurred for years, and at some of the nation’s most well-known and deep-pocketed corporations.
A small sampling among the offenders includes Disney, Google, FedEx, Caterpillar and Facebook. The estimated, accumulated wage theft, Hira and Costa calculated, is $95 million, a devastating underpayment to H-1B holders. In this case, the Indian employer HCL, referred to as a “body shop,” cheated its fellow Indian nationals. Foreign-born visa holders aren’t the only victims. U.S. workers displaced by H-1Bs or who experienced wage depression because of the abundant availability of cheaper H-1B labor also lose.
The latest H-1B-related scandal came from the India-based HCL Technologies, full name Hindustan Computers Limited, an IT staffing firm that, in 2020, earned $11 billion. HCL’s Santhosh Jayaram, the company’s Global Head of Sustainability will, according to its website, enable the company “to refine and focus its current agenda and strategy in the key areas of environmental, social and governance (ESG).
Despite the lofty language, after EPI reviewed an internal HCL document, released as part of a whistleblower lawsuit against the firm, Hira and Costa found that large-scale and criminal illegal H-1B worker underpayment “is a core part of the firm’s competitive strategy.” The lawsuit’s discovery process revealed that HCL engaged in non-payment of Social Security, Medicare and federal unemployment insurance taxes on wages paid and that the company fraudulently used B-1 tourist visa holders as workers, and hired L-1 international executive visas, which cost less than H-1B workers. H-1B statutes mandate that employers pay their H-1B workers no less than the actual wages paid to their similarly employed U.S. workers.
But unscrupulous employers elude those federal guidelines by contracting with IT outsourcing firms. That tactic essentially puts outsourced H-1B workers in a different DOL category for evaluation, and allows them to avoid the wage requirements. The loophole that Hira and Costa identified is treating “contractor hires differently than direct hires when enforcing the wage and other provisions in the H-1B statute,” which leads to the extensive wage theft.
Because DOL considers contract hires different than direct hires, the agency doesn’t view the abuses as actionable violations that would normally lead to sanctions. The outsourcing loophole allows firms like HCL and the big tech companies that use outsourcing firms to get around those provisions. Because of its failure to enforce the wage laws or close the outsourcing loophole, DOL is in effect subsidizing and encouraging the offshoring of high-paying U.S. jobs in information technology that once served as a pathway to the increasingly elusive middle class.
The question that Hira and Costa, as well as other H-1B critics and U.S. tech workers’ defenders, want answered is when will the Department of Labor acknowledge that employers have and will continue to commit crimes that violate federal law as long as the federal government aids and abets them. DOL has idly stood by, watched passively as H-1B abuses that harm middle-class American IT workers have piled up. DOL’s indifference has, in effect, subsidized the offshoring of white-collar jobs to overseas workers.
Companies like HCL that earn billions of dollars annually can afford to pay a fair salary to their employees without sacrificing much if anything to their bottom lines. But the blame isn’t all on HCL. DOL’s role in the ongoing H-1B wage scandal must be emphasized. DOL’s Labor Secretary is Marty Walsh, the former Boston mayor who once declared that his city would be a “safe place” for illegal immigrants. Walsh went further, offering his office as shelter for illegal aliens facing deportation. An open borders advocate like Walsh is the wrong person to appoint Labor Secretary.
In 2017, under President Trump, DOL announced actions to increase protections for American workers, and more aggressively confront entities committing visa program fraud and abuse. The Biden administration has unfairly and inexplicably dashed the goal of protecting U.S. tech workers and salvaging their jobs. With the recent nixing of the H-1B lottery rule that would prioritize selection based on highest wages, the new Biden standard is to use any of a variety of employment-based visas to add as many foreign-born workers as possible to the labor pool even though Americans will suffer. Look no further to the immigration provisions added to the House passed Build Back Better bill that Biden eagerly wants passed soon.