The Truth About the H-1B and L-1 Visa Reform Act of 2009

Will the proposed legislation address the problems some American IT workers have with the H-1B visa program? Will it damage business relations between the U.S. and India? What are the odds of the H-1B and L-1 Visa Reform Act of 2009 passing? CIO.com has the answers.

By Stephanie Overby
Tue, August 18, 2009

CIO — Since the H-1B and L-1 Visa Reform Act of 2009 was introduced in Congress this spring, business and political leaders on both sides of the non-immigrant visa issue have interpreted the bill to support their respective causes. Thus, the proposed legislation is either a cure to the job losses and salary declines afflicting American IT workers, or it's a work of overzealous xenophobia destined to do irreparable harm to U.S. global business relations, depending on who is providing the analysis.

The truth is, it's neither.

So as Congress spends its dog days of August in recess, CIO.com takes a closer look at what the bill is and what it isn't.

It isn't a referendum on the H-1B and L-1 visa programs—or on offshore outsourcing.

Sam Mittal, president of India's National Association of Software and Services Companies (NASSCOM), has said that the H-1B and L-1 Visa Reform Act includes "unfair trade practices" that will damage business relations between the U.S. and India. Mittal's point is of course debatable, but the bill is actually rather limited in scope.

The legislation, introduced by Senators Chuck Grassley (R-Iowa) and Richard Durbin (D-Ill.) in April, targets loopholes in the H-1B and L-1 visa programs. It does not propose lowering the annual cap on the non-immigrant professional visas. In fact, Sen. Grassley has said in the past that he would support an increase in the number of H-1B and L-1 visas granted each year "if and only if the loopholes in the programs are fixed."

Some of the specific changes Grassley and Durbin propose to the visa programs include:

  • authorizing the Labor Department to review H-1B applications for fraud and to conduct random audits of sponsoring companies (at least 1 percent of all applications)

  • requiring the Labor Department to conduct annual audits of companies who employ large numbers of H-1B workers (those with more than 100 U.S.-based employees, if more than 15 percent of such employees are H-1B visa holders)

  • eliminating "H-1B only" job ads

  • prohibiting employers from hiring additional H-1B and L-1 guest-workers if they employ more than 50 U.S.- based employees and if more than half of them are H-1B and L-1 visa holders (the so-called "50/50 rule")

It is only a bill.

That old Schoolhouse Rock song was right: It is a long journey to the capital city and a long, long wait, sitting in committee. (Indeed, the H-1B and L-1 Visa Reform Act of 2009 is currently in committee.) But unlike the optimistic Saturday morning cartoon jingle, most bills never make it past that point.

The last bill solely focused on H-1B and L-1 visas to break through was the L-1 Visa and H-1B Visa Reform Act of 2004, which President George W. Bush signed into law. It raised application fees, required employees to pay H-1B workers 100 percent of the prevailing wage, and effectively increased the number of visas awarded annually by exempting from the cap an additional 20,000 H-1B petitions for foreign nationals with advanced degrees from U.S. institutions.

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