Stricter H-1B Visa Rules for Outsourcing Businesses

Since March of 2017, the Trump Administration has issued multiple orders to outsourcing and staffing firms that use H-1B non-immigration visas, the most popular type of employment-based visa sought out by foreign professional workers. The new directives have imposed stricter requirements on such firms.

U.S. companies employ outsourcing and staffing firms instead of having to hire workers on an individual basis. These firms acquire H-1B visas and hire groups of highly-skilled foreign workers to work for companies in the U.S. The Trump Administration’s restrictions threaten this particular business model.

Buy American, Hire American

The Administration has started targeting outsourcing and staffing firms that use H-1B visas to follow through with its promise to protect the U.S. workforce and prevent the abuse of immigration programs, an initiative put forward in the “Buy American, Hire American” Executive Order. The Administration is determined to crack down on abuses of the H-1B program because it believes these actions are detrimental to the U.S. workforce and are more likely to occur at third-party worksites. such as. Actions considered as program abuse by the Administration include not paying the required wages or having workers do “non-specialty occupation” work.

2017 Guidance

In a new guidance published on March 31, 2017, the U.S. Citizenship and Immigration Services (USCIS) issued new information aimed at outsourcers and others potentially trying to bring technology workers (i.e., computer programmers) into the U.S. at lower salary ranges. The guidance suggested that computer programmer positions could potentially no longer be eligible for H-1B visas since their designation as “specialty occupations” was in question. Employers were warned that H-1B petitions for computer programmers would be subjected to greater scrutiny. USCIS issued more than 85,000 Requests for Evidence (REFs) seeking more evidence on H-1B petitions within the first eight months of 2017. This number represents a 45-percent increase from the number of requests made the previous year and the largest number of requests made since 2009.

Subsequently, the Department of Justice issued a notification on April 3, 2017 reminding employers not to discriminate against U.S. workers by engaging in hiring practices that favor H-1B workers. An example of this behavior provided was preferring the use of outsourcing firms. The agency emphasized its commitment to “vigorously prosecuting” any such discriminatory claims.

The USCIS announced on the same day that Fraud Detection and National Security (FDNS) would be more targeted and would focus more heavily on H-1B workers working off-site at another company or organization’s location.

2018 Guidance

In March of 2018, the USCIS issued an additional guidance which provided clarification of the requirements for H-1B petitions involving third-party worksites. The guidance informed companies that evidence would now be required to prove that the beneficiaries working at third-party locations will be employed in a specialty occupation for the duration of the requested period. It also said that evidence would be required to prove that the petitioner maintains an employer-employee relationship with the beneficiary throughout the requested period as well. These new evidentiary requirements will place arduous responsibilities on those involved in the process. They include:

  • Detailed evidence of work assignments;
  • Copies of all contractual agreements between all parties;
  • Itineraries with specific dates and locations; and
  • Copies of detailed statements of work signed by the end-user client.

The USCIS also confirmed along with the guidance that no deference would be given to prior adjudications.

The USCIS has also introduced restrictions on staffing agencies hiring OPT STEM students in April of 2018. International F-1 visa students with U.S. degrees in science, technology, engineering, or mathematics (STEM) seek to participate in the optional practical training (OPT) program which allows them to remain in the U.S. for up to 36 months following the receival of their degree to pursue work experience related to their degree. The most recent restriction requires that for someone to be eligible for OPT STEM training, there must be a bona fide employment relationship and that the training take place on-site at the employer’s place of business, unless it can be proven that the trainee was actively supervised by the employer at a third-party location.

The Small and Medium Enterprise Consortium, a trade organization, as well as several small technology staffing companies have filed suit in New Jersey federal court seeking a temporary restraining order against the USCIS enforcing the new requirements. While the case is still pending, the plaintiffs stated that the H-1B program was designed to ease the critical shortage of technology workers in the U.S.

More Coming

H-1B workers at third-party worksites could potentially experience even more changes soon. One of the changes rumored to be under consideration is the addition of a section to the H-1B Labor Condition Application (LCA) forms that will require the name and address of third-party worksites. This will require employers seeking to hire under the H-1B visa program to first complete an LCA to provide certain information to the Department of Labor regarding wages, working conditions, and benefits available to the foreign workers. The current LCA form asks for an address but not a company name. If this change were to be implemented, the names of companies using outsourcing and staffing firms would become public record and at risk of being subject to the Administration’s “name and shame” agenda.


According to the U.S. Department of Labor, the number of U.S. job openings exceeds the number of job seekers for the first time on record. Further, in May of 2018 the unemployment rate reached the lowest it has been since 2000, at 3.3 percent for adult men and women.

The Trump Administration’s stricter targeting of outsourcing and staffing firms is inexplicable when the current low level of unemployment in the U.S. is taken into consideration. The latest guidance and restrictions imposed on the OPT STEM program are going to limit technology staffing companies’ abilities to properly serve their clients.