Replacing Americans with Cheaper Foreigners is Legal

DOL Closes Infosys Investigation: Replacing Americans with Cheaper Foreigners is Legal

Last Tuesday, Infosys Ltd announced that the Department of Labor (DOL) had closed its investigation into whether the company had broken the law when Southern California Edison laid off about 500 American technology workers and replaced them with H-1B visa holders from the Indian software exporters TCS and Infosys. (Reuters, Sept. 8, 2015; The Economic Times, Sept. 8, 2015) The investigation was spurred by an April bipartisan letter from 10 Senators calling for the Obama administration to look into potential wrongdoing. (The Hill, Apr. 9, 2015; see Senators’ Letter, Apr. 9, 2015). However, the Labor Department cleared Infosys of all wrongdoing because the H-1B program is statutorily written in a way that allows employers to legally replace Americans with cheaper foreign workers. (Reuters, Sept. 8, 2015; The Economic Times, Sept. 8, 2015)

Congress created the H-1B visa program in 1990 to allow U.S. employers to hire foreign workers, purported on a “temporary” basis, for “specialty occupations.” The visa is most commonly associated with “high-skilled” jobs in the science, technology, engineering, and mathematics (STEM) fields. (Immigration and Nationality Act (INA) § 101(a)(H)(15)) The law was written to appear to provide protections for American workers by requiring companies to pay H-1B workers the “prevailing wage” for their job and not adversely affect the working conditions of American workers “similarly employed.” (See INA Section 212 (n)(1) (emphasis added); see also, Nov. 20, 2013; Wall Street Journal, Feb. 1, 2011; analysis by John Miano, July 1, 2015)

However, these protections are misleading because of the way Congress defined the “prevailing wage.” According to the statute, the “prevailing wage” is calculated using a governmental survey that provides “at least four levels of wages commensurate with experience, education, and the level of supervision.” (INA § 212(p)(4)) This language allows the employer to determine the prevailing wage based on the position description rather than the H-1B worker’s actual skill level. Therefore, employers can legally replace Americans with cheaper foreign workers by claiming that the H-1B position is different than the displaced American worker’s (regardless of actual job responsibilities) and not in violation of the “similarly employed” provision.

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