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Wage Thieves Steal $95M From H-1B Holders

By Joe Guzzardi 

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.

Joe Guzzardi is a Progressives for Immigration Reform analyst who has written about immigration for more than 30 years. Contact him at jguzzardi@pfirdc.org.

Wage Thieves Steal $95M From H-1B Holders

Wage Thieves Steal $95M From H-1B Holders

Clock Ticking On Biden Build Back Better
By Joe Guzzardi

If only Congress would take its winter break, then the rest of the nation – in other words, the non-elite – could enjoy the Christmas season. But, a congressional recess much before December 23 may be as improbable as a down-the-chimney visit from jolly Old St. Nick. Senate Majority Leader Chuck Schumer (D-NY), the quintessential Christmas grinch, has vowed to keep the Upper Chamber in session until Build Back Better (BBB) gets a full floor vote.

Schumer may be optimistic, but he’s also stubborn. Several road blocks stand in Schumer’s way. First, Senate parliamentarian Elizabeth MacDonough who has ruled twice against including amnesty in the $1.7 trillion social spending bill must be favorably swayed. The parliamentarian decides what can be included in Senate legislation, and has rejected two previous proposals. Most congressional Democrats, Senate and House, want amnesty as well as other affirmative benefits including work permission granted to about seven or eight million unlawfully present foreign nationals. But when amnesty is the goal, Democrats’ never-say-die commitment evolved into a third iteration for MacDonough’s review. Plan C’s fate is unknown.

Schumer’s second Senate hurdle is West Virginia’s Joe Manchin who has sent various signals that he’s leery. Most recently, Manchin said that he wouldn’t defy the parliamentarian’s immigration decision. Manchin: “The bottom line is the parliamentarian; you stick with the parliamentarian, that’s all. You stick on every issue. You can’t pick and choose.”

From the outset, Manchin has expressed concerns over what’s now a nearly $2 trillion package; he was influential in cutting the price tag from its original $3.5 trillion. But despite the $1.5 trillion cut, Manchin, concerned about hyperinflation and the nation’s tenuous economy, is still edgy. Manchin also reiterated his long-held concern that that Democrats are using budget gimmicks to conceal the true, higher cost of the president’s spending bill.

For months, President Biden assured Americans that BBB wouldn’t cost a penny. In September, Biden tweeted that his then $3.5 trillion BBB agenda “costs zero dollars,” a claim that Republicans bluntly labeled “a lie.” Rep. Claudia Tenney (R-NY) quickly countered Biden with the impossible-to-dispute calculation that a $3.5 trillion cost can’t possibly translate to zero dollars.

The nonpartisan Congressional Budget Office and the Joint Committee on Taxation gave Tenney a figurative A+ math grade. They projected that the modified version of the bill they reviewed would increase the national deficit by $3 trillion over the 2022 – 2031 period, a total that includes the effect of interest cost.

BBB’s amnesty provisions alone will cost taxpayers $124 billion over the first decade, and would create an additional $359 billion in net costs during the second post-passage decade, making amnesty’s total net cost over 20 years a whopping $483 billion.

As the Center for Immigration Studies observed, amnesty costs increase over time as illegal immigrants become eligible for more and more social programs, especially Social Security and Medicare. The millions of illegal immigrants that BBB covers will also immediately qualify for parole, an immigration status that includes work permission, protection from deportation and other affirmative benefits. An already-weak labor market that the latest Bureau of Labor Statistics report reflected will expand when millions of newly work-authorized immigrants enter the employment market to compete with or displace Americans.

Little if anything in BBB will enhance American lives. On the other hand, Biden, congressional Democrats, D.C. bureaucrats, the big businesses that hire cheap labor, illegal immigrants and the immigration lawyers they’ll hire to advise them will all gain significantly.

The best thing BBB opponents have in their favor, Republicans and Democrats alike, is that if Manchin votes “yea,” he’ll be out of his Senate job in 2024. In 2016, heavily Republican West Virginia rejected Biden; Trump carried the state by nearly 40 points, a margin that Manchin can’t hope to make up if he endorses BBB.

Joe Guzzardi is a Progressive for Immigration Reform analyst who has written about immigration for more than 30 years. Contact him at jguzzardi@pfirdc.org.

Clock Ticking On Biden Build Back Better