The H1-B Quagmire?

With hidden costs, rising government fees, and increased regulation around hiring foreign workers, IT executives should beware.
With hidden costs, rising government fees, and increased regulation around hiring foreign workers, IT executives should beware.

The H1-B employment visa for foreign nationals is often characterized as a boon for companies looking to hire ''affordable'' help, and a bane to technology workers at home. Controversy and public policy aside, H1-Bs have potentially costly surprises for technology executives as hiring foreign workers is becoming more expensive and increasingly regulated.

Steven Friedman, CFO and CTO at The Pain Institute & The Ohio Valley Pain Consortium, helped to sponsor hundreds of H1-Bs during his previous job as an area technical manager for a large international technology consultancy. Over those years, Friedman learned some lessons involving H1-B workers.

For example, when the project finished the company had no new projects for the workers. Rather then bench them, Friedman wanted to send them home.

''We encountered a lot of unexpected costs,'' said Friedman. ''When we went to terminate the consultants, we were informed by INS (now Citizenship and Immigration Services) that we couldn't. Because we had agreed to sponsor (the foreign workers), we had actually guaranteed them a position for which they were entitled to be paid -- whether we had work for them or not. We didn't know this at the time.''

Today companies can avoid that particular expense, if they first notify the government by sending a notice to the CIS and withdraw the labor condition application (LCA) with the Department of Labor (DOL), according to attorney Cynthia Lange, a managing partner at Fragomen, a law firm specializing in corporate immigration and nationality law.

Another ''gotcha'' with H1-Bs is that companies are legally obligated to return foreign workers to their country of origin if a visa expires before workers can secure work from another U.S. employer. But employers are only required to pay transportation costs for the worker, not the worker's spouse, children or furniture and other positions, notes Lange.

Cultural Clashing

Conflicts arising from cultural differences between H1-B workers also can create unexpected costs. Lawsuits arising from discrimination and harassment can easily blindside an executive who hires foreign workers without training them in the cultural norms and legalities of the U.S. workplace.

Executives also may be tempted to low ball salaries for their H1-B workers but the practice is illegal, according to Lange. The DOL demands that companies pay foreign workers the prevailing wage or a wage equal to an employee performing the same job, whichever is higher.

Even if a company does offer a foreign worker a lower salary, when the worker discovers their American counterparts make more money, they usually want parity, said Friedman.

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