A Price to Pay


Q How does the Comprehensive Immigration Reform Bill (The Bill) affect H-1B and L-1 staffed companies?

A The Bill, introduced by Senator Chuck Schumer and seven bipartisan colleagues from the Senate (known as the Gang of Eight) on April 17, 2013 has some glaring issues, which will affect Indian IT companies adversely.

One of the provisions which has caused quite a stir within H-1B and L-1 dependent companies is the increase in fees for such companies. Beginning fiscal year 2015 to 2024, fees for companies employing more than 30% and less than 50% H-1B and L-1 workers would increase to $5,000. For fiscal 2015 through 2017, there would be a staggering $10,000 fee for employers with more than 50% and less than 75% H-1B and L-1 workers. Currently, companies with more than 50% H-1B and L-1 workers pay an additional fee of $2,250 and $2,000 for L-1 and H-1B petitions respectively.

This bill also imposes greater limitations on the number of H-1B and L-1 workers that can make-up a company’s employees in the United States, with limits of no more than 75% from October 1, 2014 to September 30, 2015; no more than 65% from October 1, 2015, to September 30, 2016, and no more than 50% from October 1, 2016 onwards. In addition, the Bill’s “Outplacement” provision will prove highly detrimental to IT consulting companies.

Under these provisions, H-1B dependent companies will be banned from placing H-1B workers at client sites and they would not be able to place any L-1 workers at client sites unless the hiring United States Company attests that it has not displaced and will not displace a U.S. worker for 90 days before or after the date of filing.

Finally, the Bill contemplates converting the current four-tier “Prevailing Wage System” to a three-tier one, which will have a spiraling effect of increasing the wages at each level. Consequently, the employers will be required to pay substantially higher salaries to H-1B workers.

As such, dramatically increased fees coupled with the above restrictions could surely impact the manner in which H-1B/L-1 dependent companies will hire and operate. Though it is still too early to predict what will be left in this extensive bill, one can be hopeful of favorable changes, after various parties and committees debate and amend the bill before the Senate has an opportunity to vote on it.

Immigration and business attorney Indu Liladhar-Hathi has an office in San Jose. (408) 453-5335.

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