< Return To Hearing
Mr. Michael Gildea
July 29, 2003
MICHAEL W. GILDEA, EXECUTIVE DIRECTOR
DEPARTMENT FOR PROFESSIONAL EMPLOYEES, AFL-CIO
BEFORE THE SENATE JUDICIARY SUBCOMMITTEE ON IMMIGRATION
REGARDING THE L-1 VISA PROGRAM
JULY 29, 2003
Chairman Chambliss and members of the Subcommittee:
Thank you for the opportunity to present the views of our organization on the matter of the L-1 visa program. The Department for Professional Employees, AFL-CIO is a consortium of 25 national unions representing nearly 4 million professional and technical employees in both the public and private sectors.
Mr. Chairman let me begin by thanking you for convening this hearing. We also appreciate your comments and those of Senator Feinstein as well as other members of this subcommittee that were made last week during the full committee hearing and markup of the Chile-Singapore Free Trade Agreements. You and other Senators recognized that the USTR had overstepped its authority and trampled on yours when it embedded within those agreements new policies related to the "temporary" entry of professionals from those two nations. Hopefully the USTR will refrain from doing so in future agreements in light of the bi-partisan, bi-cameral backlash that has resulted.
Yet that confrontation served to raise a much larger issue relating to such guest worker visa policies. And that is that there is no coherent national policy regarding professional guest workers.
For example, what is particularly baffling about these programs is that none of them connect to the realities of current U.S. labor market conditions. There is no nexus between the unusually high current rate of unemployment among professional and technical workers and the fact that the guest worker population now numbers over 1 million according to some estimates. As a result, these existing guest worker programs in effect force well qualified, American professionals to compete against foreign workers here in the U.S. for domestic jobs. In our opinion, there's something seriously wrong with that picture.
I strongly urge the Subcommittee to address these and other public policy anomalies as you consider badly needed reforms in both the L-1 and H-1B programs. Now is the time to be asking tough questions. Chief among them are what is the total number of guest workers that should be allowed into the U.S. under all such programs in periods of high and low unemployment? To what extent should there be uniformity across all programs with regard to worker protections, employer eligibility, visa duration and fees, guest worker qualifications and credentials, enforcement and penalty protocols, etc? Should U.S.-based employers be limited in the total number of temporary foreign workers they can have on the payroll from all guest worker programs? We sincerely hope the Subcommittee will address these overarching issues as your review and assessment of guest worker programs unfolds.
As to L-1, as we all know that it was originally intended to facilitate the "intra-company transfer" of strategic personnel within global corporations that have U. S. facilities. The L-1 non-immigrant worker is then supposed to undertake training in the U.S. side of the operation and then return for re-employment at an overseas location.
Our unions have no problem with this basic concept. But we vehemently object to how this program has morphed into something that now victimizes highly skilled, well educated American professionals. What follows is a brief summary of what we consider to be some of the more blatant abuses that have evolved under the L-1 program along with some suggestions for reform.
The problem is that the L-1 program has few limitations and as such it is ripe for fraud and abuse. For example, there are no statutory prohibitions against laying-off an American worker and replacing him or her with an L-1. Nor is there any requirement that the employer pay the occupational prevailing wage as is the case under H-1B. It is exactly the absence of these and other protections and limitations that make the L-1 program far more attractive to employers than H-1B and is a major reason for the explosive growth in this visa category.
The simple solution is an outright ban on the dislocation of American workers by L-1 visa holders with stiff penalties including civil fines and debarment for violations. This should be coupled with beefed up Department of Labor (DoL) enforcement authority to monitor L-1 usage through random surveys and compliance audits, investigate and adjudicate complaints and impose penalties where warranted. In addition the "dependent employer" requirement under H-1B should also be applied. That standard mandates that an employer attest that no layoffs have or will occur at the jobsite where the L-1 is to be employed 90 days before or after the H-1b petition is filed.
Another of the more blatant abuses of the program is perpetrated by outsourcing companies who bring in foreign workers and then subcontract them out to other businesses. I doubt that the Congress envisioned the likes of Tata Consultancy Services, Wipro Technologies, and Infosys Technologies--all Indian owned firms--when it created this program 33 years ago. As some of the more senior members of this committee know, some of these firms and others like them have had a troubled history under the H-1B program. In fact, prior legislation relating to H-1B has specifically addressed abusive practices by them such as benching.
Yet these firms are now among the biggest users of the L-1 program supplying Indian IT talent to the likes of Bank of America, Hewlett-Packard, Dell and Apple Computer, General Electric, Cisco Systems, Visa International, Merrill Lynch, Boeing, Bank One, Eli Lilly, Chevron-Texaco, Sun Microsystems and of course Siemens. Their access to L-1s appears to contradict the original intent of the program as described earlier. In fact, spokespersons for the State Department and the Bureau of Customs and Immigration Services (BCIS) have publicly stated that this kind of L-1 outsourcing is fraudulent.
On this point, the statutory language seems clear. Title 8 of the uniform Code of Federal Regulations, Part 214, Section 214.2(l) entitled "Intracompany Transfers" states the following under subsection (ii) entitled "Definitions":
Intracompany transferee means an alien who, within three years preceding the time of his or her application for admission into the United States, has been employed abroad continuously for one year by a firm or corporation or other legal entity or parent, branch, affiliate, or subsidiary thereof, and who seeks to enter the United States temporarily in order to render his or her services to a branch of the same employer or a parent, affiliate, or subsidiary thereof in a capacity that is managerial, executive, or involves specialized knowledge.
That seems clear enough but to stop the outsourcing epidemic it seems reasonable to restrict access to these visas to the primary employer whose international operations require U.S. based training and to--if necessary--specifically outlaw subcontracting. Rep John Mica (R-FL) has gotten the ball rolling on this reform by introducing legislation recently in the House to address this problem. The standard proposed in the pending DeLauro-Shays L-1 reform bill--H.R. 2702--appears to be more comprehensive. We urge the Subcommittee to close this loophole and keep the body shops out of this program.
Requiring the payment of a prevailing wage to the L-1 workers would discourage those who would try to use the program as a back door to cheap labor. Although the H-1B program does have a prevailing wage requirement, it is ineffective because employers can fabricate a wage by supplying their own wage data instead of relying upon government wage information. Instead we would recommend for your review the prevailing wage standard proposed under H.R. 2702 which is the greater of the following: the locally determined prevailing wage level for the occupational classification in the area of employment; the median average wage for all workers in the occupational classification in the area of employment; the median wage for skill level two in the occupational classification found in the most recent Occupation Employment Statistics survey. We would also advocate that the L-1 worker be assured of receiving the same benefits that are extended to other similarly situated workers at the host company.
QUALIFICATIONS AND CREDENTIALS
OTHER ENFORCEMENT AND OVERSIGHT REMEDIES
Mr. Chairman, there is one last issue that hopefully the Subcommittee will also take time to consider. Your Judiciary Committee colleague--Senator Lindsey Graham--raised this issue at each of the recent full committee sessions on the trade agreements. That subject was the outsourcing of U.S. professional and technical jobs overseas. This matter was recently the subject of a hearing in the House Small Business Committee.
In addition to the media exposés about L-1, there has been a spate of articles recently about this phenomenon. The reason I raise it in the context of your hearing is that there is a connecting thread. And that is Tata Consultancy Services, Wipro Technologies, and Infosys Technologies--the Indian- owned firms I mentioned earlier.
These firms are not just brokerage houses for L-1 and H-1B visas. They are among the primary culprits involved in the heist of hundreds of thousands of U.S. jobs and tens of millions in payroll. It goes something like this: First they contract with a complicit American firm to perform a tech related service like software maintenance. They will do this work here in the U.S. at bargain basement rates using guest workers. Then they bring in the Indian guest workers by the thousands; they've been doing that for many years. As you may already know, India is by far the largest user H-1B and L-1 visas. Once the team of temporary workers has got the knowledge and technical skills--sometimes after being trained by U.S. workers--as much of the work that is technically feasible is then carted back to India. There, the same Indian firms that stoke the visa pipeline are facilitating the creation high tech centers that employ hundreds of Indian nationals to do the work formally done by American professionals.
A recent study by Forrester Research estimates that if current trends continue over the next 15 years the U.S. will lose 3.3 million high end service jobs and $136 billion in wages. In one key segment of the tech industry, Jon Piot CEO of Impact Innovations Group in Dallas says that "software development in the U. S. will be extinct by mid-2006, with gradual job losses much like the U.S. textile industry experienced during the last quarter of the 20th century." Today major U.S. firms from many sectors are falling all over themselves to get into the outsourcing bonanza.
As they used to say in one of this nation's' greatest technology initiatives, the space program--"Houston we've got a problem". And I would suggest it's a big one. Only this time it's not those textile, steel, machine tool and other manufacturing jobs; many of them are long gone. Now it's the high tech, high end, high paying jobs that are headed out of town. The question for this Subcommittee is to what extent are the guest worker programs under your jurisdiction contributing to the outsourcing tidal wave. I would suggest that it is significant.
In conclusion, professional and technical workers in this nation have made enormous personal sacrifices to gain the education and training necessary to compete for the knowledge jobs in the so-called new American economy. They deserve better than to be victimized by immigration programs like L-1 and H-1B. Congress can make a long, overdue starts in cleaning up guest worker visa programs by implementing badly-needed reforms. At a time when so many American professionals are out of work, from our perspective a public policy failure in this arena is not an option.