Jag Venugopal's Blog

June 17, 2010

More Proof of H1B Misuse

Filed under: Information Technology — Jag @ 7:00 am

A while ago, the USCIS issued what is now known as the Neufeld Memo that set out various scenarios where an employer-employee relationship existed.

This memorandum was met with much opposition from the IT “Body Shopping” industry that specializes in importing workers on the H1B visa, and subcontracting them out to various temporary positions. This is in violation of the laws because there is no job opening when they are hired; most are hired, then spend a couple months applying on job sites for a temp job. When that is over, they move on to the next temp job. Additionally, in violation of the law, such “employees” are not paid when they are between projects, i.e. on the bench.

The Neufeld memo has significantly impacted body shops’ ability to conduct business as usual. Proof can be seen in the number of filings for H1B visas in 2010, which is running lower at the same point in time than it did in 2009. One would have expected the opposite situation to be true, because of the recovery in 2010, and the consequent demand for temporary jobs.

Faced with a memo that, for all intents and purposes, destroyed the business model of the body shops, they have filed suit. It is quite possible that the Neufeld memo may be overruled by the courts on various technicalities (though in the opinion of this commentator, the reasons and rationale were sound).

It is interesting to look at some of the plaintiffs in the suit:

  • Company A has 89 H1B visa holders out of 95 employees
  • Company B employs 45 H1B visa holders out of a total staff of 50

 Now, if these firms were legitimate businesses, providing staffing to the IT industry, one would find a healthy proportion of US-based workers among their staff (Green Card holders and US Citizens). Why is it that they don’t employee either of these two categories of workers? One could argue that the business model is based on providing legal cover for imported labor, and not necessarily providing any consulting services per se. Another possibility is that wages are so poor that no one with a choice of working for another employer would prefer to work with such companies (H1B visa holders are in a period of indentured servitude until they get a Green Card; for some, this process takes over a decade).

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