H-1B Visa Program: Labor Could Improve Its Oversight and Increase Information Sharing with Homeland Security
Published: 2006-06-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The H-1B visa program assists U.S. employers in temporarily filling certain occupations with highly-skilled foreign workers. There is considerable interest regarding how Labor, along with Homeland Security and Justice, is enforcing the requirements of the program. This report describes: (1) how Labor carries out its H-1B program responsibilities; and (2) how Labor works with other agencies involved in the H-1B program. We interviewed officials and analyzed data from all three agencies.
section_title: What GAO Found
paragraphs: While Labor's H-1B authority is limited in scope, the agency could improve its oversight of employers' compliance with program requirements. Labor's review of employers' applications to hire H-1B workers is timely, but lacks quality assurance controls and may overlook some inaccuracies. From January 2002 through September 2005, Labor electronically reviewed more than 960,000 applications and certified almost all of them. About one-third of the applications were for workers in computer systems analysis and programming occupations. By statute, Labor's review of the applications is limited to searching for missing information or obvious inaccuracies and it does this through automated data checks. However, our analysis of Labor's data found certified applications with inaccurate information that could have been identified by more stringent checks. Although the overall percentage was small, we found 3,229 applications that were certified even though the wage rate on the application was lower than the prevailing wage for that occupation. Additionally, approximately 1,000 certified applications contained erroneous employer identification numbers, which raises questions about the validity of the application. In its enforcement efforts, Labor's Wage and Hour Division (WHD) investigates complaints made against H-1B employers. From fiscal year 2000 through fiscal year 2005, Labor reported an increase in the number of H-1B complaints and violations, and a corresponding increase in the number of employer penalties. In fiscal year 2000 Labor required employers to pay back wages totaling $1.2 million to 226 H-1B workers; by fiscal year 2005, back wage penalties had increased to $5.2 million for 604 workers. Program changes, such as a higher visa cap in some years, could have been a contributing factor. In April 2006, WHD began the process of randomly investigating willful violators of the program's requirements. Labor, Homeland Security, and Justice all have responsibilities under the H-1B program, but Labor and Homeland Security could better address the challenges they face in sharing information. Homeland Security reviews Labor's certified application but cannot easily verify whether employers submitted petitions for more workers than originally requested on the application because USCIS's database cannot match each petition to Labor's application case number. Also, during the process of reviewing petitions, staff may find evidence that employers are not meeting their H-1B obligations. For example, Homeland Security may find that a worker's income on the W-2 is less than the wage quoted on the original application. Homeland Security may deny the petition if an employer is unable to explain the discrepancy, but it does not have a formal process for reporting the discrepancy to Labor. Additionally, current law precludes the Wage and Hour Division from using this information to initiate an investigation of the employer. Labor also shares enforcement responsibilities with Justice, which pursues charges filed by U.S. workers who allege they were displaced by an H-1B worker. From 2000 through 2005, Justice found discriminatory conduct in 6 out of the 97 investigations closed and assessed $7,200 in penalties.

section_title: Letter
paragraphs: Each year employers in the United States generally request more highly  skilled foreign workers than are able to come into the country under law.  The H-1B nonimmigrant visa program was established to assist U.S.  employers in temporarily filling certain positions with these workers.  Currently, the number of foreign workers authorized to enter the United  States annually through the H-1B program is 65,000, but in previous years  the cap has been as high as 195,000. The Congress is currently considering  legislation to overhaul U.S. immigration policy, which could have an  impact on the cap in future years.
To ensure that U.S. workers are not adversely affected by the hiring of   H-1B workers, all employers must attest to meeting certain labor  conditions, such as notifying all employees of the intention to hire H-1B  workers and offering their H-1B workers the same benefits as U.S.  workers. These conditions are designed to protect both the jobs of  domestic workers and the rights and working conditions for foreign  temporary workers. The Departments of Labor (Labor), Homeland  Security (Homeland Security), and Justice (Justice) each have specifically  defined responsibilities during certain stages of the H-1B visa process,  which range from reviewing and approving an employer’s request to hire  an H-1B worker, to investigating complaints from both U.S. and foreign  workers regarding employers’ non-compliance with H-1B program  requirements. The Department of State also has a role in the process,  specifically, to issue the visa. These responsibilities help ensure that  employers comply with the requirements of the program.
However, there has been considerable interest regarding how Labor, in  conjunction with the other agencies, is ensuring that employers comply  with the requirements of the H-1B program. To better understand this  process, you asked us to describe: (1) how Labor carries out its H-1B  program responsibilities and (2) how Labor works with other agencies  involved in the H-1B program.
To understand the H-1B certification, adjudication, and enforcement  processes and the responsibilities of each agency involved, we hosted a  joint meeting with officials from Labor, Homeland Security’s U.S.  Citizenship and Immigration Services (USCIS), and Justice. We also  reviewed laws and regulations pertaining to the H-1B program. To obtain  information on the characteristics of employers who filed Labor Condition  Applications (applications) and the positions they sought to fill with H-1B  workers, we analyzed Labor’s Efile H-1B Disclosure Data from January  2002 through September 2005.
To analyze the number and type of H-1B complaints received by Labor’s  Wage and Hour Division (WHD) and the outcomes of the associated  investigations, we received a data extract from WHD’s Wage and Hour  Investigative Support and Reporting Database (WHISARD). We also  interviewed WHD officials on the complaint and investigation process, the  appeal process, educational outreach to improve employer compliance,  and the WHD resources used to process and investigate complaints.
To determine the number and type of H-1B petitions submitted by  employers and adjudicated by USCIS, we analyzed service center data  from the Computer Linked Application Information Management System,  Version 3.0 (CLAIMS 3) database from fiscal years 2000 through 2005. We  conducted site visits to two USCIS service centers, including the one that  processes the most H-1B visa petitions.
To determine the type of violations and the process for investigations of  U.S. worker displacement violations we interviewed Justice officials. We  reviewed complaint and investigation data from Justice. We reviewed and  analyzed summary reports provided by Justice on the number of  employers investigated from 2000 through 2005 and the outcomes of those  investigations.
To assess the reliability of the data from Labor, Homeland Security, and  Justice, we (1) reviewed existing documentation related to the data  sources, (2) tested the data for completeness and accuracy, and   (3) interviewed knowledgeable agency officials about the data. We  determined that the data were sufficiently reliable for the purposes of this  report. (See app. I for a more thorough discussion of our scope and  methodology.)
We conducted our work between August 2005 and May 2006 in accordance  with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: The H-1B program was created by the Immigration Act of 1990, which  amended the Immigration and Nationality Act (INA). The H-1B visa  category was created to enable U.S. employers to hire temporary workers  as needed in specialty occupations, or those that require theoretical and  practical application of a body of highly specialized knowledge. It also  requires a bachelor’s or higher degree (or its equivalent) in the specific  occupation as a minimum requirement for entry into the occupation in the  United States. The Immigration Act of 1990 capped the number of H-1B  visas at 65,000 per fiscal year.
Since the creation of the H-1B program, the number of H-1B visas  permitted each fiscal year has changed several times. Congress passed the  American Competitiveness and Workforce Improvement Act of 1998  (ACWIA), which increased the limit to 115,000 for fiscal years 1999 and  2000. In 2000, Congress passed the American Competitiveness in the  Twenty-First Century Act, which raised the limit to 195,000 for fiscal year  2001 and maintained that level through fiscal years 2002 and 2003. The  number of H-1B visas reverted back to 65,000 thereafter. An H-1B visa  generally is valid for 3 years of employment and is renewable for an  additional 3 years.
Filing an application with Labor’s Employment and Training  Administration is the employer’s first step in hiring an H-1B worker, and  Labor is responsible for either certifying or denying the employer’s  application within 7 days (see app. II for the Labor Condition Application).  By law, it may only review applications for omissions and obvious  inaccuracies. Labor has no authority to verify the authenticity of the  information. Employers must include on the application information such  as their name, address, rate of pay and work location for the H-1B worker,  and employer identification number. All employers are also required to  make four attestations on the application as to:  1.  Wages:  The employer will pay nonimmigrants at least the local  prevailing wage or the employer’s actual wage, whichever is  higher, and pay for nonproductive time caused by a decision made  by the employer; and offer nonimmigrants benefits on the same  basis as U.S. workers.  2.  Working conditions:  The employment of H-1B nonimmigrants will  not adversely affect the working conditions of U.S. workers  similarly employed.   3.  Strike, lockout, or work stoppage:  No strike or lockout exists in  the occupational classification at the place of employment.   4.  Notification: The employer has notified employees at the place of  employment of the intent to employ H-1B workers.
Certain employers are required to make three additional attestations on  their application. These additional attestations apply to H-1B employers  who: (1) are H-1B dependent, that is, generally those whose workforce is  comprised of 15 percent or more H-1B nonimmigrant employees; or   (2) are found by Labor to have committed either a willful failure to meet  H-1B program requirements or misrepresented a material fact in an  application during the previous 5 years. These employers are required to  additionally attest that: (1) they did not displace a U.S. worker within the  period of 90 days before and 90 days after filing a petition for an H-1B  worker; (2) they took good faith steps prior to filing the H-1B application  to recruit U.S. workers and that they offered the job to a U.S. applicant  who was equally or better qualified than an H-1B worker; and (3) prior to  placing the H-1B worker with another employer, they inquired and have no  knowledge as to that employer’s action or intent to displace a U.S. worker  within the 90 days before and 90 days after the placement of the H-1B  worker with that employer.
After Labor certifies an application, the employer must submit to USCIS an  H-1B petition for each worker it wishes to hire (see App. III for the H-1B  petition and supplement).  On March 1, 2003, Homeland Security took over  all functions and authorities of Justice’s Immigration and Naturalization  Service under the Homeland Security Act of 2002 and the Homeland  Security Reorganization Plan of November 25, 2002. Employers submit to  Homeland Security the application, petition, and supporting  documentation along with the appropriate fees. When Congress passed  ACWIA in 1998, it imposed a filing fee of $500 on H-1B petitions. In 2000,  Congress passed legislation to increase the amount of filing fees to   $1,000 then increased the amount again to $1,500 in 2004. Along with a  $1,500 filing fee, an employer must also submit a $500 fraud prevention  and detection fee to Homeland Security. Information on the petition must  indicate the wages that will be paid to the H-1B worker, the location of the  position and the worker’s qualifications. Through a process known as  adjudication, Homeland Security reviews the documents for certain  criteria, such as whether the petition is accompanied by a certified  application from Labor, whether the employer is eligible to employ an   H-1B worker, whether the position is a specialty occupation, and whether  the prospective H-1B worker is qualified for the position.
The Wage and Hour Division of Labor’s Employment Standards  Administration performs investigative and enforcement functions to  determine whether an employer has complied with its attestations on the  application. An aggrieved individual or entity or certain non-aggrieved  parties may file a complaint with Labor that an employer violated a  requirement of the H-1B program. To conduct an investigation, the  Administrator must have reasonable cause to believe that an employer did  not comply with or misrepresented information on its application.  Employers who violate any of the attestations on the application may be  subject to civil money penalties or administrative remedy, such as paying  back wages to H-1B workers or debarment, which disqualifies an employer  from participating in the H-1B program for a specified period of time.  Employers, the person who filed the complaint, or other interested parties  who disagree with the findings of the investigation then have 15 days to  appeal by requesting an administrative hearing.
The Office of Special Counsel for Immigration Related Unfair Employment  Practices (OSC) of the Department of Justice also has some enforcement  responsibility. Under statutory authority created by the Immigration  Reform and Control Act of 1986, OSC pursues charges of citizenship  discrimination brought by U.S. workers who allege that an employer  preferred to hire an H-1B worker.
Figure 1 gives an overview of the H-1B visa process. The figure highlights  the major steps that an employer takes when hiring an H-1B worker.  Figure 2 highlights the process for investigations when a violation has  been alleged.
section_title: Labor Has Limited H-1B Authority, but the Agency Could Improve Its Oversight of Employers’ Compliance with Program Requirements
paragraphs: Labor’s H-1B authority is limited in scope, but the agency could improve  its oversight of employers’ compliance with program requirements. While  Labor’s review of employers’ applications to hire H-1B workers is timely, it  lacks quality assurance controls and may overlook some inaccuracies,  such as applications containing employer identification numbers with  invalid prefix codes. Labor’s Wage and Hour Division investigates  complaints made against H-1B employers and keeps a database of  employers with prior violations. Labor has the authority to conduct  random investigations of some of these employers and began doing so in  April 2006. Labor uses education as the primary method of promoting  compliance with the H-1B program. In addition to conducting compliance  assistance programs for employers, it also coordinates with the  Department of State to provide H-1B workers with information about their  employee rights.
subsections: section_title: Labor’s Review of Employers’ Requests Is Fast, but May Overlook Some Inaccuracies
paragraphs: Labor has reduced the time it takes to certify employers’ applications by  reviewing them electronically and subjecting them to data checks. Labor  increased the percentage of applications reviewed within the required  seven days from 56 percent in fiscal year 2001 to 100 percent in fiscal year  2005. As of January 2006, all applications must be submitted electronically  and Labor’s website informs employers that it will certify or deny  applications within minutes based on the information entered. Our  analysis of Labor’s data found that of the 960,563 applications that Labor  electronically reviewed from January 2002 through September 2005,   99.5 percent were certified, as shown in table 1. Not all applications  continue through the process and result in H-1B visas—employers can  withdraw their applications, petitions can be denied, or the visa may not  be issued. Therefore, Labor officials told us the number of applications  submitted represents employers’ interest in the H-1B program rather than  the actual number of H-1B visas that are issued.
In addition to agreeing to certain attestations on the application,  employers must provide information about themselves, such as address  and employer identification number, as well as information about each  position they are seeking to fill, the time period they will need the worker,  the prevailing wage and location for the position, the wage the worker will  be paid, and the number of workers they want to hire. On the applications  submitted electronically from January 2002 through September 2005,  approximately 90 percent of employers requested only one worker even  though they are allowed to request multiple workers for the same  occupation on an application. Approximately one-third of the applications  were for workers in computer system analysis and programming  occupations, with the next most frequent request, for college and  university education workers, at 7 percent. About 30 percent of the  positions were located in either California or New York. See appendix IV  for more information on H-1B workers.
Labor’s review of the application is limited by law to identifying omissions  or obvious inaccuracies. Labor will not certify an application if the  employer has failed to check all the necessary boxes or not filled in  required information such as wage rate, prevailing wage or period of  intended employment. Labor’s system will also deny an application if it  contains obvious inaccuracies. In addition to checks to ensure that data  fields have the correct number of digits or are numerical when required,  Labor has defined obvious inaccuracies as when an employer:  files an application after being debarred, or disqualified, from  participating in the H-1B program;    submits an application more than 6 months before the beginning date  of the period of employment;  identifies multiple occupations on a single application;    states a wage rate that is below the Fair Labor Standards Act minimum  wage;  identifies a wage rate that is below the prevailing wage on the  application; and  identifies a wage range where the bottom of the range is lower than the  prevailing wage on the application.
Despite these checks, Labor’s system does not consistently identify all  obvious inaccuracies. For example, although the overall percentage was  small, we found 3,229 applications that were certified even though the  wage rate on the application was lower than the prevailing wage for that  occupation in the specific location. Table 2 shows the wage rates and  corresponding prevailing wages from a sample of applications Labor  incorrectly certified because the wage rate was not equal to or greater  than the prevailing wage.
Additionally, Labor does not identify other errors that may be obvious.  Specifically, Labor told us its system reviews an application’s employer  identification number to ensure it has the correct number of digits and  that the number does not appear on the list of employers who are  ineligible to participate in the H-1B program. However, our analysis of  Labor’s data found that Labor’s review may not identify numbers that are  erroneous. For example, we found 993 certified applications with invalid  employer identification number prefixes. While an invalid employer  identification number could indicate a fraudulent application, Labor does  not consider it an obvious inaccuracy. Officials told us that in other  programs, such as the permanent employment program, Labor matches  the application’s employer identification number to a database with valid  employer identification numbers; however, they do not formally do this  with H-1B applications because it is an attestation process, not a  verification process.
According to Labor, most of the process of reviewing applications is  automated—the primary reason an analyst will review an application is if  the employer’s prevailing wage source is not recognized by Labor’s  database. The analyst reviews the source of the prevailing wage provided  by the employer just to ensure the source meets Labor’s criteria, not to  verify that the prevailing wage is correct. The employer may obtain a  prevailing wage from a state workforce agency, a collective bargaining  agreement, or another source, such as a private employment survey. If the  employer uses a private employment survey and the analyst finds the  survey meets Labor’s criteria—such as having been conducted in the last   2 years and using a statistically valid methodology to collect the data—the  survey will be added to Labor’s database and used to approve future  applications. Officials also told us that analysts review from three to five  applications per day. In an effort to promote consistency in prevailing  wage determinations, Labor has issued guidance for its state workforce  agencies as well as for employers using surveys. Labor officials told us  they always advise employers to obtain prevailing wage rates from the  state workforce agency, but they also said that because the application is  an attestation process, employers are responsible for doing the required  analysis to determine the prevailing wage and maintaining the proper  documentation to support the prevailing wage provided on the application.
We and others have previously reported that Labor’s review of the labor  condition application is limited and provides little assurance that  employers are fulfilling their H-1B responsibilities. In 2000, given Labor’s  limited review of the application, we suggested Congress consider  streamlining the H-1B approval process by requiring employers to submit  the application directly to the Immigration and Naturalization Service,  now the USCIS. Similarly, in 2003, Labor’s Inspector General reported  that either Labor should have authority to verify the accuracy of the  application information or employers should file their applications directly  to USCIS. While Labor officials told us they frequently review the  application process to determine where improvements can be made, they  rely on a system of data checks rather than a formal quality assurance  process because of the factual nature of the form and the number of  applications received. Additionally, they said if they conducted a more in- depth review of the applications, they could overreach their legal authority  and increase the processing time for applications. Officials also said the  integrity of the H-1B program is ensured through enforcement and by the  fact that there is actual review by staff when the employer submits the  paperwork to USCIS.
section_title: Labor Investigates Complaints and Has Begun the Process of Randomly Investigating Previous Violators
paragraphs: Labor enforces H-1B program requirements primarily by investigating  complaints filed against employers. H-1B workers or certain others with  knowledge of an employer’s practices who believe an employer has  violated program requirements can file a complaint with Labor’s Wage and  Hour Division, which received 1,026 complaints from fiscal year 2000  through fiscal year 2005. If the complaint meets certain criteria—such as  being filed within 12 months of the violation—Labor said it notifies the  employer of the investigation and requests information, including payroll  records, prevailing wage determinations, and Labor’s certified  applications. Labor also interviews the employer and workers, checks its  violations database to determine if the employer has any previous  violations, and assesses the employer’s compliance with all H-1B program  requirements. As a result, an investigation may result in more than one  violation. Once the investigation is complete, Labor told us it meets with  the employer to explain the findings and follows up with a letter to the  employer listing violations and penalties, such as payment of back wages  due to H-1B workers who were not paid the required wage, civil money  penalties, debarment, or other administrative remedies (see table 3).
While the number of H-1B complaints and violations has increased from  fiscal year 2000 through fiscal year 2005, the overall numbers remain small  and may have been affected by changes to the program. As shown in table  4, our analysis of Labor’s data found the number of complaints increased  from 117 in fiscal year 2000 to 173 in fiscal year 2005. The number of cases  with violations more than doubled over the same period. The most  common violation was not paying H-1B workers the required wage. With  the increase in violations, the amount of penalties also increased. In fiscal  year 2000, 226 H-1B workers were found to be due back wages of   $1.2 million, by fiscal year 2005 the number had increased to 604 workers  with back wages due of $5.2 million. In addition to the payment of back  wages, employers were required to pay civil money penalties of more than  $400,000 over the same period.
From fiscal year 2002 through fiscal year 2005, Labor requested over   50 debarment periods from Homeland Security for employers that  committed certain violations—for example, willfully failing to pay an   H-1B worker the required wage—that resulted in their being disqualified  from participating in the H-1B program for a specified period of time.  Labor officials told us it is difficult to attribute changes in complaints and  violations to any specific cause because of multiple legislative changes to  the program, such as the temporary increase in the number of H-1B  workers allowed to enter the country and the additional attestations for  certain employers that expired and then were reinstated.
In addition to investigating complaints, Labor’s Wage and Hour Division  has recently begun randomly investigating employers who have willfully  violated the program’s requirements. Labor has had the statutory authority  to conduct random investigations of these employers since 1998. Under  this authority, Labor can subject employers on a case-by-case basis to  random investigations up to 5 years from the date the employer first  willfully violated the requirements of the H-1B program or willfully  misrepresented a material fact in the labor condition application. Officials  told us that the WHD did not schedule random H-1B investigations of  willful violators until recently because, by definition, such employers are  debarred from employing H-1B workers for a fixed number of years (they  often go out of business due to the debarment), the number of such  employers is very small (the total didn’t reach 50 nationwide until late in  fiscal year 2005) and trained H-1B investigators have heavy case loads.  However, Labor said that it will initiate random investigations nationwide  in fiscal year 2006. Labor has an existing database that it plans to use for  targeting employers for investigations. The database contains information  about employers who have previously violated their obligations under the  H-1B program, including the types of violations and the penalties that were  assessed. Although cases with willful violations represent a small number  of all cases with violations, they have increased from 8 percent in fiscal  year 2000 to 14 percent in fiscal year 2005. (See fig. 3) Officials said that  they now have 59 cases on which they can follow-up to determine if the  employer has committed another violation. Labor said that, in addition to  initiating random investigations of willful violators nationwide, it will set  up a system to track the data in its database and train its employees in  fiscal year 2006. In April 2006, Labor sent a letter to its regional offices  directing them each to initiate an investigation of at least one case prior to  September 30, 2006.
section_title: Labor Relies Primarily on Education to Promote Employer Compliance
paragraphs: Labor uses education as the primary method of promoting employer  compliance with the H-1B program. For example, Labor conducts  compliance assistance programs, posts guidance on its website, and  explains employers’ obligations under the law during complaint  investigations.
Labor held a total of 6 H-1B compliance assistance programs for H-1B  employers from fiscal year 2000 through fiscal year 2005. Typically,  compliance assistance programs are conducted by Labor’s district offices  based upon requests by employers, employer associations, or employee  groups. For example, in fiscal year 2002, Labor gave two presentations in  Massachusetts, attended by 290 participants, mostly attorneys. In addition,  Labor presented at two continuing education events for attorneys in Los  Angeles and New Jersey in fiscal year 2004. Labor also holds seminars in  response to requests for compliance information from employer  associations and discusses compliance with H-1B program requirements  with companies that do not have pending lawsuits related to the H-1B  program.
Labor provides information to employers through its website, such as  employer guidance and fact sheets that describe employer responsibilities  and employee rights under the H-1B program. Some of the fact sheets have  not been updated since the program was amended by the H-1B Visa  Reform Act in 2004, but officials told us they have developed 26 new fact  sheets that will be made available on the agency’s website this fiscal year.  Labor also publicizes violation cases by issuing press releases on its  website, particularly when it debars an employer. Labor officials told us  that the purpose of the press releases is to show that there are  consequences for not complying with the law.
Labor takes the opportunity to explain employer obligations under the law  during its investigations of complaints filed against H-1B employers. At the  beginning, an investigator sends the employer the regulations that pertain  to the H-1B program and, during the investigation, highlights the law and  regulations that are relevant to the case. The investigator also answers any  questions the employer may have. At a final conference, Labor tells the  employer which parts of the law the employer violated. Additionally,  Labor always asks the employer it is investigating how it plans to change  to come into compliance with the program.
Labor is working with the Department of State to provide information  cards to H-1B workers about their employment rights. Workers receive the  information cards with their visas. Labor also distributes the cards to  employers so that they are aware of an H-1B worker’s rights. The cards  include information on employees’ rights regarding wages and benefits,  illegal deductions, working conditions, records, and discrimination. (See   fig. 4.)
Homeland Security and Justice also provide information to employers in a  variety of ways such as publishing newsletters, responding to written  inquiries from employers and their counsel, informational bulletins,  answering questions for employers who call, and providing information on  their websites. Homeland Security publishes informational bulletins for  employers seeking to hire foreign workers. The Department also uses its  website to advise the public of any changes in the H-1B program regarding  filing fees or eligibility resulting from changes in the law. Justice engages  in educational activities through public service announcements aimed at  employers, workers, and the general public. The agency also trains  employers, and works with other federal agencies to coordinate education  programs for employers. Justice also has a telephone intervention hotline  for U.S. workers and H-1B employers to call when disputes arise. Justice  uses the hotline to quickly address questions and to resolve problems. In  addition, Justice answers e-mails, issues guidance, and provides  information on its website.
section_title: Labor and Homeland Security Face Challenges Sharing Information
paragraphs: Labor, Homeland Security, and Justice all have responsibilities under the   H-1B program, but Labor and Homeland Security could better address the  challenges they face in sharing information. After Labor certifies an  application, Homeland Security’s USCIS reviews the information but  cannot easily verify how many times the employer has used the  application. Also, USCIS staff told us that, during their review, they may  find evidence that employers are not meeting their H-1B obligations.  However, current law precludes the Wage and Hour Division from using  this information to initiate an investigation of the employer. In addition to  Homeland Security, Labor also shares enforcement responsibilities with  Justice, which pursues charges filed by U.S. workers who allege that they  were not hired, or were displaced, so that an H-1B worker could be hired  instead. From 2000 through 2005, Justice entered six out-of-court  settlements to remedy violations and assessed $7,200 in penalties.
subsections: section_title: Labor and Homeland Security Coordinate to Process Employers’ Requests to Hire H-1B Workers, but Do Not Use Certain Information to Investigate Possible Violations
paragraphs: Homeland Security’s USCIS reviews Labor’s certified application as part of  the adjudication process; however, it lacks the ability to easily verify  whether employers have submitted petitions for more workers than  originally requested on the application. Labor can certify applications for  multiple workers and, therefore, employers can use one application in  support of more than one petition. However, USCIS’ data system, CLAIMS  3, does not match each petition to its corresponding application because  the system does not include a field for the unique number Labor assigns  each application. As a result, USCIS cannot easily verify how many times  the employer has used a given application or which petitions were  supported by which application, potentially allowing employers to use the  application for more workers than they were certified to hire. USCIS staff  told us that when employers do not provide the names of the other H-1B  workers approved using the same certified application, the adjudicator  may request it from the employer.  USCIS staff also told us that a letter is  sent to the employer requesting the information and the employer has  approximately 12 weeks to respond. Consequently, a request for  information requires staff time and slows down the adjudication process.  While USCIS told us it has attempted to add Labor’s application case  number to its database, it has not been able to because of the system’s  memory limitations. USCIS told us it is currently transforming its  information technology system; however, it will be several years before  the new system is operational.
During the process of reviewing employers’ petitions, USCIS may find  evidence the employer is not meeting the requirements of the   H-1B program, but current law precludes the Wage and Hour Division  from using this information to initiate an investigation of the employer.  For example, to extend an H-1B worker’s stay in the United States, an  employer may submit a petition with the worker’s W-2 form as  supporting documentation. USCIS staff told us they have reviewed  petitions where the wage on the W-2 form was less than the wage the  employer indicated it would pay on the original Labor application. In these  cases, USCIS asks the employer to explain the wage discrepancy. If the  employer has a legitimate explanation and documentation—for example  the worker was on some type of extended leave—the petition may be  approved. However, if the employer is unable to adequately explain the  discrepancy, USCIS said it may deny the petition but generally does not  report these employers to Labor for investigation. USCIS does not have a  formal process for reporting the discrepancy to Labor. According to officials  from Labor, it does not consider Homeland Security to be an aggrieved  party; therefore, Labor would not initiate an investigation based on  information received from, or a complaint filed by, Homeland Security.
Labor and Homeland Security also coordinate when employers have  committed violations resulting in debarment. After Labor’s Wage and Hour  Division determines that an employer has committed a debarrable  offense—such as willfully not paying an H-1B worker the required wage— Labor notifies USCIS, which in turn provides dates for the period of time  that it will automatically deny petitions from the employer. Labor’s Wage  and Hour Division then sends a letter informing the employer that it is  ineligible to sponsor workers for the H-1B program for that period of time.  A copy of the letter is sent to Labor’s Employment and Training  Administration so that it will not certify any applications from the  employer for the same period.
Both Labor and USCIS officials said they are working to improve  communication between the two agencies. For example, Labor, Homeland  Security, and the State Department convened a multi-agency fraud  working group, which met in March 2006, to discuss strategies for dealing  with fraud in the H and L visa programs.
section_title: Justice Handles U.S. Workers’ Cases
paragraphs: Justice pursues charges filed by U.S. workers who allege that an H-1B  worker was hired in their place. The Immigration and Nationality Act, as  amended, gives U.S. workers the right to file a charge against an employer  when they believe an employer preferred to hire an H-1B visa holder.  When a charge has been filed, Justice’s Office of Special Counsel opens an  investigation for 120 or 210 days, as determined by statute. Charges may  be resolved through a complaint before an administrative law judge, an  out of court settlement, or a dismissal for lack of reasonable cause to  believe a violation has occurred. Between 2000 and 2005, no cases were  heard in court by an administrative law judge. Most of the 101  investigations started by Justice from 2000 through 2005 were found to be  incomplete, withdrawn, untimely, dismissed, or investigated without  finding reasonable cause for a violation. If Justice finds that an employer  hired an H-1B worker instead of a U.S. worker, Justice may assess  penalties, impose debarment, or seek administrative remedies such as  back wages. Justice may assess penalties on cases settled out of court if it  finds that an employer hired an H-1B worker over a better-qualified U.S.  worker. From 2000 through 2005, Justice found discriminatory conduct in  6 out of the 97 investigations closed. Justice assessed a total of $7,200 in  penalties in three of the six cases, all in 2003.
section_title: Conclusion
paragraphs: U.S. employers continue to request high numbers of foreign temporary  workers under the H-1B nonimmigrant visa program. Labor, along with  Homeland Security and Justice, must address the desires of U.S.  employers for skilled foreign workers as well as ensure the program’s  integrity and protect both domestic and foreign workers. Labor’s authority  to review the Labor Condition Application is restricted to looking for  completeness and obvious inaccuracies, but it could improve its oversight  of employers’ compliance with program requirements. Additionally, USCIS  may find information in the materials submitted by an H-1B employer that  indicates the employer is not complying with program requirements.  However, current law restricts Labor from using such evidence to initiate  an investigation of the employer. USCIS also has an opportunity to  improve its oversight of employers’ petitions to hire H-1B workers by  matching information from its petition database with Labor’s application  case numbers to detect whether employers are requesting more H-1B  workers than they were originally certified to hire. As Congress  deliberates changes to U.S. immigration policy, ensuring that employers  are in compliance with the program’s requirements that protect both  domestic and H-1B workers is essential.
section_title: Matter for Congressional Consideration
paragraphs: To increase employer compliance with the H-1B program and protect the  rights of U.S. and H-1B workers, Congress should consider (1) eliminating  the restriction on using application and petition information submitted by  employers as the basis for initiating an investigation, and (2) directing  Homeland Security to provide Labor with information received during the  adjudication process that may indicate an employer is not fulfilling its   H-1B responsibilities.
section_title: Recommendations for Executive Action
paragraphs: To strengthen oversight of employers’ applications to hire H-1B workers,  we recommend that Labor improve its procedures for checking  completeness and obvious inaccuracies, including developing more  stringent, cost-effective methods of checking for wage inaccuracies and  invalid employer identification numbers.
To ensure employers are complying with program requirements, we  recommend that as USCIS transforms its information technology system,  the Labor application case number be included in the new system, so that  adjudicators are able to quickly and independently ensure that employers  are not requesting more H-1B workers than were originally approved on  their application to Labor.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Departments of Labor, Homeland  Security, and Justice for their review and comments. Each agency  provided technical comments, which we incorporated as appropriate.  Justice did not have formal comments on our report.
Homeland Security agreed with our recommendations and stated that  USCIS intends to include Labor’s application case number in its new  information technology system.
Labor questioned whether our recommendation for more stringent  measures is supported by the magnitude of the error rate that was found,  as well as whether the benefits of instituting such measures would equal  or exceed the added costs of implementing them. In addition, Labor said  that Congress intentionally limited the scope of Labor’s application review  in order to place the focus for achieving program integrity on USCIS.
We believe that Labor is at risk of certifying H-1B applications that contain  more errors than were found in the scope of our review. For example, we  checked only for employer identification numbers with invalid prefix  codes, and did not look for other combinations of invalid numbers or data.  Therefore, we do not know the true magnitude of the error rate in the  certification process.  We continue to believe there are cost-effective  methods that Labor could use to check the applications more stringently  that would enhance the integrity of the H-1B process.
We are sending copies of this report to the Secretary of Labor, the  Secretary of Homeland Security, the Attorney General, relevant  congressional committees, and others who are interested. Copies will also  be made available to others upon request. The report will be available on  GAO’s web site at http://www.gao.gov.
If you or your staff have any questions about this report please contact me  on (202) 512-7215 or nilsens@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix VII.
section_title: Appendix I: Scope and Methodology
paragraphs: To understand the H-1B certification, adjudication, and enforcement  processes and the responsibilities of each agency involved, we hosted a  joint meeting with officials from the Departments of Labor, Homeland  Security U.S. Citizen and Immigration Services (USCIS), and Justice. We  also reviewed laws and regulations related to the H-1B program.
To obtain information on the characteristics of employers who filed Labor  Condition Applications (applications) and the positions they sought to fill  with H-1B workers, we analyzed the Efile H-1B Disclosure Data from the  Employment and Training Administration (ETA) of the Department of  Labor. These data included all the applications filed electronically from  January 2002 through September 2005. We analyzed the data from a total  of 960,563 applications to determine (1) the number that had been  certified or denied, (2) the employers who requested the most workers,   (3) the most frequently requested occupation codes, (4) the locations of  the H-1B positions, (5) the source of the prevailing wage used by  employers, and (6) how many applications were certified with invalid  employer identification number prefixes when compared with a list of  valid prefix codes obtained from the Internal Revenue Service. We also  analyzed how prevailing wages compared to actual wage rates. The H-1B  Visa Reform Act, which was passed on December 8, 2004, requires  employers to pay H-1B workers at least 100 percent of the prevailing wage  for each specific occupation and location. Prior to the enactment of this  law, Labor’s regulations permitted employers to pay actual wages that  were only 95 percent of the prevailing wage. Accordingly, to ensure we did  not incorrectly identify any applications as erroneously certified during  the time between the passage of the H-1B Visa Reform Act and Labor’s  implementation of the new 100 percent requirement, our analysis only  identified those cases where the actual wage rate was less than 95 percent  of the prevailing wage.
Additionally, we interviewed officials from ETA regarding the application  approval process, including the circumstances under which applications  are reviewed by an analyst for discrepancies, how prevailing wage sources  are determined to be legitimate, and the ETA resources that are used to  process and review applications. Additionally, we accessed the application  online system to determine when the employer would receive error  notices when filling out the application. We conducted a data reliability  assessment of the H-1B Disclosure Data by testing for completeness and  accuracy, reviewing documentation, and interviewing knowledgeable  officials. We found it to be sufficiently reliable for our purposes.
To analyze the number and type of H-1B complaints received by Labor’s  Wage and Hour Division (WHD) and the outcomes of the associated  investigations, we received a data extract from WHD’s Wage and Hour  Investigative Support and Reporting Database (WHISARD). From fiscal  years 2000 through 2005, we analyzed the number of H-1B complaints,  violations, and the penalties assessed including the number of employees  due back wages, the amount of back wages due, civil money penalties, the  most common violation, and the trend in the number of willful violations  as a percentage of all violations. We also interviewed WHD officials on the  complaint and investigation process, the appeal process, educational  outreach to improve employer compliance, and the WHD resources used  to process and investigate complaints. We conducted a data reliability  assessment of the WHISARD data by testing for completeness and  accuracy, reviewing documentation, and interviewing knowledgeable  officials. We found it to be sufficiently reliable for our purposes.
To determine the number of employers who had been debarred, or  disqualified from participating in the H-1B program for a specified period  of time, we requested that WHD officials provide the number of times per  fiscal year from 2000 through 2005 that they sent a letter to USCIS  requesting a debarment period. We also requested that USCIS provide the  number of request letters it had received from WHD.
To determine the number and type of H-1B petitions submitted by  employers and adjudicated by the Department of Homeland Security US  Citizenship and Immigration Service, we analyzed service center data from  the Computer Linked Application Information Management System,  Version 3.0 (CLAIMS 3) database from fiscal years 2000 through 2005. We  analyzed (1) the number of petitions approved or denied; (2) the basis for  the classification of the worker, such as whether the petition was for a  new H-1B employee or for a continuation of a worker’s stay; (3) the  employer’s requested action; (4) the educational level of the H-1B workers;  (5) the number of H-1B workers requested on each petition; and (6) the  occupation codes requested. Additionally, we conducted a data reliability  assessment of selected variables by testing for completeness and  accuracy, reviewing documentation, and interviewing knowledgeable  officials. We reported on the variables that we found to be reliable enough  for our purposes. To understand the policies and procedures of the  program, we interviewed officials at USCIS headquarters. To understand  the petition adjudication process, we conducted site visits at the USCIS  Service Centers in Saint Albans, Vermont, and Laguna Niguel, California.  According to USCIS, from October 2004 through December 2005 these  service centers combined processed 63 percent of the H-1B petitions. To  obtain context and facilitate our understanding of the electronic CLAIMS 3  data, we requested to review a non-probability sample of 48 petition files  representing a variety of H-1B adjudication processes. During our site  visits, we reviewed those that were available.
To determine the type of violations and the process for investigations of  U.S. worker displacement allegations we interviewed Department of  Justice officials. We analyzed a summary report provided by Justice of the  number of employers investigated from 2000 through 2005 and the  outcomes of those cases. To determine the number and outcomes of  investigations, and the types and amounts of penalties assessed on  employers, we obtained documentation from Justice.
section_title: Appendix II: Department of Labor Labor Condition Application
section_title: Appendix III: Department of Homeland Security USCIS Petition for a Nonimmigrant Worker and H-Classification Supplement
section_title: Appendix IV: Data Tables
paragraphs: The following tables provide additional information on analyses  conducted on the application data from the Department of Labor’s Efile   H-1B Disclosure Database and the petition data from USCIS’s Computer  Linked Application Information Management System, Version 3.0.
section_title: Appendix V: Comments from the Department of Labor
section_title: Appendix VI: Comments from the Department of Homeland Security
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: Alicia Puente Cackley, Assistant Director; Gretta L. Goodwin, Senior  Economist; Amy J. Anderson, Senior Analyst; and Pawnee Davis, Analyst,  made significant contributions to all phases of this report. In addition,  William J. Schneider, Intern, assisted with data collection and analysis;  Sheila R. McCoy provided legal assistance; Luann M. Moy provided  methodological assistance; Susan F. Baker, Cynthia L. Grant,   Lynn M. Milan, and Melinda L. Cordero provided data analysis; and   Rachael C. Valliere, Communications Analyst, assisted in report  development.
section_title: Related GAO Products
paragraphs: Homeland Security: Better Management Practices Could Enhance DHS’s  Ability to Allocate Investigative Resources. GAO-06-462T. Washington,  D.C.: March 28, 2006.
Immigration Benefits: Additional Controls and a Sanctions Strategy  Could Enhance DHS’s Ability to Control Benefit Fraud. GAO-06-259.  Washington, D.C.: March 10, 2006.
Homeland Security: Visitor and Immigrant Status Program Operating,  but Management Improvements Are Still Needed. GAO-06-318T.  Washington, D.C.: January 25, 2006.
Immigration Benefits: Improvements Needed to Address Backlogs and  Ensure Quality of Adjudications. GAO-06-20. Washington, D.C.:  November 21, 2005.
Immigration Enforcement: Weaknesses Hinder Employment  Verification and Worksite Enforcement Efforts. GAO-05-813. Washington,  D.C.: August 31, 2005.
Department of Homeland Security, U.S. Citizenship and Immigration  Services: Allocation of Additional H-1B Visas Created by the H-1B Visa  Reform Act of 2004. GAO-05-705R. Washington, D.C.: May 18, 2005.
Homeland Security: Some Progress Made, but Many Challenges Remain  on U.S. Visitor and Immigrant Status Indicator Technology Program.  GAO-05-202. Washington, DC: February 23, 2005.
Alien Registration: Usefulness of a Nonimmigrant Alien Annual  Address Reporting Requirement Is Questionable. GAO-05-204.  Washington, D.C.: January 28, 2005.
Highlights of a GAO Forum: Workforce Challenges and Opportunities  For the 21st Century: Changing Labor Force Dynamics and the Role of  Government Policies. GAO-04-845SP. Washington, D.C.: June 1, 2004.
H-1B Foreign Workers: Better Tracking Needed to Help Determine H-1B  Program’s Effects on U.S. Workforce. GAO-03-883. Washington, D.C.:  September 10, 2003.
Information Technology: Homeland Security Needs to Improve Entry  Exit System Expenditure Planning. GAO-03-563. Washington, D.C.:   June 9, 2003.
High-Skill Training: Grants from H-1B Visa Fees Meet Specific  Workforce Needs, but at Varying Skill Levels. GAO-02-881. Washington,  D.C.: September 20, 2002.
Immigration Benefits: Several Factors Impede Timeliness of Application  Processing. GAO-01-488. Washington, D.C.: May 4, 2001.
H-1B Foreign Workers: Better Controls Needed to Help Employers and  Protect Workers. GAO/HEHS-00-157. Washington, D.C.: September 7, 2000.