What Employers Can Expect Following Trump’s “Hire American” Executive Order

On April 18, 2017, President Trump signed the Presidential Executive Order on Buy American and Hire American. In essence, President Trump’s “Buy American, Hire American” Order is aimed at maximizing the use of goods produced in the United States while creating higher wages and employment rates for American workers – key promises made by Trump during his election campaign. 

Employers across a wide range of industries are likely now wondering what the “Hire American” portion of President Trump’s Executive Order really entails.  In industries such as medical, technology, construction, manufacturing, and restaurants, a large number of workers are foreign nationals. What should employers in these industries and in other affected industries expect following President Trump’s Order, and how can they best prepare themselves for the changes that are coming?

First, employers should understand that the Executive Order does not enact any substantive changes to their rights to hire foreign employees – at least not yet.  Instead, it directs certain federal agencies to conduct a review of existing immigration laws and propose new rules or guidance to prevent fraud or abuse in the immigration system. The Order also specifically directs those federal agencies to suggest reforms to the H-1B visa program to ensure that H-1B visas are awarded to the most-skilled or highest-paid candidates.   

In other words, nothing has changed yet, but changes are likely coming, particularly with regard to the H-1B visa.  The H-1B visa is an employment-based, non-immigrant visa category for temporary workers. To obtain one, an employer must offer a job to a foreign national and then apply for his or her H-1B visa. While such visas are capped at 85,000 per year, workers are permitted to stay for three years and are eligible, in many circumstances, for an extension after the expiration of those three years. Further, about two-thirds of qualified H-1B visa holders eventually apply for a green card.

H-1B visas are meant to be given to workers in specialty occupations. The workers must have highly specialized knowledge and, usually, a degree in that field of knowledge. With some exceptions, an employer is not required to recruit American workers before applying for an H-1B visa for a foreign worker. However, an employer must attest to the department of labor that they will pay the foreign worker the prevailing wage for the occupation in the area of intended employment or wages that are at least equal to the actual wage paid by the employer to other similarly-qualified workers, whichever is greater. 

President Trump and other critics nationwide have expressed a number of concerns about the current H-1B visa program. First, according to a recent report from Goldman Sachs, anywhere from 900,000 to 1 million individuals are currently working in the United States under H-1B visas today, despite the annual cap.  Second, many believe that employers are hiring foreign workers even where there are American workers who are qualified and ready to fill those positions.  Third, critics believe that the program is widely used to hire cheap foreign labor, and employers are not paying the H-1B workers prevailing or equivalent wages as required by the law. It is believed that a significant percentage of H-1B workers are employed by technology outsourcing firms that typically pay low wages. 

We can expect that any changes implemented to the H-1B visa will be designed to curb these problems. For example, the Trump administration might choose to do any of the following in reforming the program: lower the annual cap, require employers to first recruit American workers, raise the prevailing wage rates, award visas to those applicants that are the most qualified or that will receive the highest wages (rather than on a lottery system), and/or prohibit the use of third-party/outsourcing placement of H-1B workers.  Or perhaps it will come up with something entirely new in reforming the program. We will have to wait and see.

In the meantime, employers should expect that the government will step up its enforcement efforts to ensure employer compliance with the current laws. Employers who have a large number of H-1B workers or who outsource such workers to third parties should be particularly diligent in ensuring that their practices comply with the current law.  

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