[Congressional Record Volume 144, Number 152 (Thursday, November 12, 1998)]
[Extensions of Remarks]
[Pages E2323-E2328]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         AMERICAN COMPETITIVENESS AND WORKFORCE IMPROVEMENT ACT

                                 ______
                                 

                          HON. LAMAR S. SMITH

                                of texas

                    in the house of representatives

                      Thursday, November 12, 1998

  Mr. SMITH of Texas. Mr. Speaker, The H-1B visa bills passed by the 
Senate and by the House Judiciary Committee both proposed to increase 
the quota of H-1B temporary visas for foreign professional workers. 
Both bills responded to the fact that demand has exceeded the annual 
quota of 65,000 in each of the past two fiscal years. The reason for 
this increased demand is thought to be a shortage in America's 
information technology workforce. While evidence for this shortage is 
inconclusive, it was my belief that we should give the industry the 
benefit of the doubt and grant the additional visas.
  The Senate and House Judiciary Committee bills did have large 
differences. The Judiciary Committee bill (H.R. 3736, which I 
introduced in my capacity as chairman of the Subcommittee on 
Immigration and Claims) required that employers comply with two new 
attestations when petitioning for H-1B workers. Employers would have 
had to promise not to lay off (displace) American workers and replace 
them with aliens on H-1B visas, and to recruit American workers before 
petitioning for foreign workers. I felt that these protections for 
American workers were necessary because of the large number of 
documented abuses of the H-1B program--instances of companies actually 
laying off Americans to be replaced by H-1Bs and companies recruiting 
workers exclusively from overseas. The Senate bill (introduced by 
Senator Spencer Abraham) contained no comparable provisions.
  With the assistance and support of the leadership of the House and 
Senate along with House and Senate Judiciary Committee Chairmen Henry 
Hyde and Orrin Hatch, Senator Abraham and I drafted a workable 
compromise between the two bills. We then agreed to further changes 
after negotiations with the White House in order to gain Administration 
support. H.R. 3736 was brought to the House floor on September 24, 
1998. The base text was the compromise worked out with Senator Abraham 
along with as many of the acceptable changes requested by the White 
House as could be drafted in time. The bill passed by a vote of 288-
133. Language was then drafted to make the bill fully consistent with 
the agreement with the White House. A bill encompassing this latter 
language was included in H.R. 4328, as enacted, which makes omnibus 
consolidated and emergency supplemental appropriations for fiscal year 
1999.
  The final bill, entitled the American Competitiveness and Workforce 
Improvement Act of 1998, is a negotiated agreement. That is the nature 
of any legislative process. What is important is that we have come up 
with a bill that both responds to the needs of American industry and 
adds protections for American workers.
  Under the American Competitiveness and Workforce Improvement Act, the 
H-1B quota will be set at 115,000 in 1999 and 2000, and 107,500 in 
2001. Then the quota will return to 65,000 (at which time the 
attestations will sunset).
  The employers most prone to abusing the H-1B program are called ``job 
contractors'' or ``job shops''. Much, or all, of their workforces are 
composed of foreign workers on H-1B visas. Many of these companies make 
no pretense of looking for American workers and are in business to 
contract their H-1Bs out to other companies. The companies to which the 
H-1Bs are contracted benefit in that the wages paid to the foreign 
workers are often well below what comparable Americans would receive. 
Also, the companies don't have to shoulder the obligations of being the 
legally recognized employers--the job contractors/shops remain the 
official employers.
  Under the American Competitiveness and Workforce Improvement Act, the 
no-lay off/non-displacement and recruitment attestations will apply 
principally to job contractors/shops, defined in the bill (for larger 
companies) as those employers 15% or more of whose workforces are 
composed of H-1B workers. These businesses, designated as ``H-1B-
dependent'', will be subject to the attestations in those instances 
where they petition for H-1Bs without masters degrees in high 
technology fields or where they plan to pay the H-1Bs less than $60,000 
a year. Thus, the attestations are being targeted to hit the companies 
most likely to abuse the system--job contractors/shops who are seeking 
aliens without extraordinary talents (only bachelors degrees) or 
offering relatively low wages (below $60,000). Other employers, who use 
a relatively small number of H-1Bs, will not have to comply with the 
new attestations unless they have been found to have willfully violated 
the rules of the H-1B program.
  Since a Conference Committee Report was never prepared for the 
American Competitiveness and Workforce Improvement Act, I felt it 
important to supplement the existing legislative history (such as H. 
Rep. No. 105-657) with the present document. What follows is an 
explanatory statement as to some of the provisions of the Act.
  Let me start off by saying that when interpreting the statutory 
language, each provision should be read in the light most protective of 
American workers. This was, in my view, the intent of the House of 
Representatives and the way in which the body would want the Secretary 
of Labor, the Attorney General, and the Commissioner of the Immigration 
and Naturalization Service to interpret the language. On September 24, 
1998, the House passed H.R. 3736. As consistent with the compromise 
agreement I had helped negotiate, I supported the bill and opposed the 
Democratic substitute offered by Representative Watt. However, it 
should be remembered that a majority of the members of the House that 
day either voted in favor of the Watt amendment or against H.R. 3736 on 
final passage (or both).
  The Watt amendment contained the heightened protections for American 
workers contained in H.R. 3736 as passed by the Judiciary Committee. It 
is clear that the members--constituting a majority of the House--who 
voted for the Watt amendment or against final passage were very 
concerned about the impact of a large-scale increase in the H-1B quota 
on American workers in the impacted professional fields. Many of the 
members who voted against the Watt amendment and in favor of H.R. 3736 
on final passage were also concerned about American workers and only 
voted as they did because they understood that the worker protections 
in the final compromise would be reasonably interpreted and vigorously 
enforced. Thus, a large majority of the House of Representatives would 
want H.R. 3736 read in the light most protective of American workers.

  Finally, the following legislative history ends after section 413 of 
the bill. The remaining provisions were deemed self-explanatory, and 
thus, not in need of further explanation.

   The American Competitiveness and Workforce Improvement Act of 1998


SECTION 401. SHORT TITLE; TABLE OF CONTENTS; AMENDMENTS TO IMMIGRATION 
                          AND NATIONALITY ACT

       This section specifies the short title, the ``American 
     Competitiveness and Workforce Improvement Act of 1998,'' the 
     table of contents for the legislation, and the rule that, 
     unless otherwise specified, the legislation amends the 
     Immigration and Nationality Act.

         Subtitle A--Provisions Relating to H-1B Nonimmigrants

       Subtitle A contains the changes the legislation is making 
     to current law regarding H-1B visas.


    SECTION 411. TEMPORARY INCREASE IN ACCESS TO TEMPORARY SKILLED 
                      PERSONNEL UNDER H-1B PROGRAM

       This section specifies the new ceilings for these visas: 
     115,000 in FY 1999 and 2000, 107,500 in FY 2001, and 65,000 
     thereafter.


 SECTION 412. PROTECTION AGAINST DISPLACEMENT OF UNITED STATES WORKERS 
                  IN CASE OF H-1B-DEPENDENT EMPLOYERS

       This section provides for three new obligations that 
     covered employers must attest to prior to sponsoring 
     temporary foreign workers who either do not have a master's 
     degree or who are paid less than $60,000 annually.
       Subsection 412(a) amends section 212(n)(1) of the 
     Immigration and Nationality Act to

[[Page E2324]]

     add three new attestations, and provisions relating to these 
     attestations, that must be included on H-1B applications 
     filed by certain employers on behalf of certain H-1B 
     nonimmigrants. Subsection 412(b) contains definitions 
     relating to the new requirements. Given the close nexus 
     between these two subsections, they are discussed here 
     together, so as to allow the discussion of the substantive 
     provisions to be illuminated by the discussion of the 
     definitions.
       1. The ``no-lay off/non-displacement'' attestation. 
     Subsection (a)(1) first adds a new attestation by amending 
     section 212(n)(1) of the Immigration and Nationality Act to 
     add a new subparagraph (E)(i). This provision requires a 
     covered employer to attest that its hiring of an H-1B worker 
     is not displacing an American (United States) workers. The 
     term ``displace'' is defined in new subparagraph (4)(B) of 
     section 212(n), added by section 412(b) of this legislation. 
     That paragraph states that an employer ``displaces'' an 
     American worker in hiring an H-1B worker if it lays off an 
     American worker with substantially equivalent qualifications 
     and experience whose job has ``essentially the same 
     responsibilities'' (although it is not necessarily the same 
     job the H-1B worker is being hired to do) and is located in 
     the same area of employment.
       It is the intent of the Congress through this provision to 
     prevent covered employers from replacing or displacing 
     American workers with H-1B nonimmigrants. The legislation 
     clearly states that an ``employer is considered to `displace' 
     a United States worker from a job if the employer lays off 
     the worker from a job that is essentially the equivalent of 
     the job for which the nonimmigrant or nonimmigrants is or are 
     sought.'' By defining displacement in such a way, Congress 
     makes clear that the prohibition is directed to circumstances 
     in which a covered employer hires H-1B workers with similar 
     qualifications to those of laid off American workers in 
     similar jobs.
       This language should not be interpreted as prohibiting and 
     preventing only a on-for-one replacement of a particular laid 
     off American worker; such an interpretation would be an 
     overly rigid reading and a mischaracterization of 
     Congressional intent. The focus of the provision is on the 
     placement of H-1B workers in the kinds of jobs previously 
     held by American workers. If an American worker was laid off 
     from a job and the employer then hires an alien (on an H-1B 
     visa) with sufficiently similar skills and experience to 
     perform a sufficiently similar job, a prohibited displacement 
     has taken place. This is a violation of the attestation 
     regardless of whether the replacement was intentional or 
     unintentional, or whether it was done in bad faith or not.
       A covered employer, of course, is prohibited from 
     concealing a lay off/displacement making a modest or cosmetic 
     change in job duties and responsibilities. The covered 
     employer, is also prohibited by concealing a layoff/
     displacement by some other subterfuge or pretense. This point 
     is made clear by Congress' stipulation that the expiration of 
     a temporary employment contract will be treated as a lay off 
     (as discussed below) if an employer enters into such a 
     contract with the intent of evading the anti-displacement 
     attestations contained in new paragraphs (E) and (F) of 
     subsection 212(n)(1).
       For similar reasons, the geographical reach of the 
     prohibitions is extended so as to include work sites within 
     normal commuting distance of the work site where the H-1B 
     worker is or is to be employed. This provision is intended to 
     cover the possibility of an employer trying to evade this 
     prohibition by displacing an American worker with an H-1B 
     worker assigned to a nearby work site.
       It should also be noted that under new paragraph (E)(i), 
     displacement is prohibited only if it occurs within 90 days 
     before or after the employer files an H-1B petition supported 
     by the application. Congress decided that 180 days around the 
     filing of such petition is the period of time during which 
     such displacement would be most likely to occur as a 
     practical matter.
       The definition of ``lays off'' set out in new subparagraph 
     (4)(D) of 212(n) (added by section 412(b) of this 
     legislation), while excluding the expiration of a temporary 
     employment contract from the definition, clarifies that the 
     expiration of such a contract will be treated as a lay off if 
     an employer enters into such a contract with the specific 
     intent of evading the anti-displacement attestations 
     contained in new paragraphs (E) and (F) of subsection 
     212(n)(1).
       Finally, the legislation expressly states that its 
     definition of ``lay off'' is not intended to supersede the 
     rights which employees may have under collective bargaining 
     agreements or other employment contracts; private rights 
     under such contracts are preserved for the American worker to 
     pursue through appropriate channels. However, the 
     preservation of such contractual rights is not intended by 
     Congress to negate the protections or remedies available to 
     that worker under this or any other Act. Thus, in those 
     circumstances where Department of Labor has jurisdiction, 
     those remedies, in addition to the private rights of 
     employees under collective bargaining or other employment 
     contracts, are to continue to be available. Congress 
     anticipates that, in reviewing complaints and other credible 
     information, the Department should look carefully at any 
     evidence of lay offs, including those which may have 
     implications for collective bargaining or other employment 
     contracts.
       The legislation specifies that an American worker who is 
     offered a ``similar employment opportunity'' as an 
     alternative to loss of employment has not been ``laid off'' 
     for purposes of this provision. The intent of Congress is 
     that the ``similar employment opportunity with the same 
     employer at equivalent or higher compensation and benefits'' 
     would be a meaningful offer. It is Congress' intent that an 
     employer should not be able to evade liability for a 
     violation of the displacement attestation by making an offer 
     of an alternative employment opportunity without 
     considerations such as relocation expenses and cost of living 
     differentials if the alternative position was in a different 
     geographical location.
       2. The ``secondary non-displacement'' attestation. In 
     addition to a covered employer's attestation that it has not 
     displaced an American worker, the legislation prohibits a 
     covered employer in certain circumstances fro placing an H-1B 
     nonimmigrant with another employer where the ``other'' 
     employer has or will displace an American worker. Therefore, 
     Section 412(a) adds a ``secondary non-displacement'' 
     attestation by amending section 212(n)(1) of the Immigration 
     and Nationality Act to include a new subparagraph (F), 
     requiring a covered employer to attest to not placing an H-1B 
     employee with another employer (at another employer's 
     worksite) without having inquired as to, and having no 
     knowledge of, any such displacement or intention to displace 
     by the other employer before and after the date of placement.
       In enacting this provision, Congress intends that the 
     employer make a reasonable inquiry and give due regard to 
     available information. Simply making a pro forma inquiry 
     would not insulate a covered employer from liability should 
     be ``other'' employer displace an American worker form a job 
     sufficiently similar to the one which would be performed by 
     an H-1B worker. That is one of the reasons why subsection 
     412(a)(2) of the legislation requires that the employer be 
     notified through a clear statement on the labor condition 
     application (LCA) regarding the scope of a covered employer's 
     liability with respect to a lay off by a secondary employer. 
     Through the LCA form, the Department of Labor will make clear 
     to covered employers their obligation to exercise due 
     diligence in ascertaining whether the placement of H-1B 
     nonimmigrants may correspond with the lay off or displacement 
     of American workers in similar jobs. Some of the most 
     egregious cases involving the abuse of the H-1B visa program 
     have involved American workers being retained only long 
     enough to train their H-1B replacements under contract with a 
     different employer. A covered employer making this 
     attestation must exercise due diligence in meeting its 
     responsibilities regarding the secondary employer.
       However, as discussed later, the attesting employer will 
     still be subject to a penalty if the ``other'' employer has 
     engaged in or does engage in a prohibited lay off/
     displacement even if the attesting employer has made a 
     reasonable inquiry of the other employer and had reasonably 
     concluded that the lay/off displacement has not taken place 
     and will not take place. That is the other reason why 
     subsection 412(a)(2) of the legislation requires that the 
     employer be notified through a clear statement on the labor 
     condition application (LCA) regarding the scope of a covered 
     employer's liability with respect to a lay off by a secondary 
     employer.
       3. The ``recruitment'' attestation. The last new required 
     LCA statement added by section 412(a) is a ``recruitment'' 
     attestation, set out in new subparagraph (G) of section 
     212(n)(1). It requires a covered employer to attest that it 
     has taken good faith steps to recruit American workers for 
     the job for which it is seeking the H-1B worker, and has 
     offered the job to any equally or better qualified American 
     worker. Congress intends for an employer to at least use 
     industry-wide recruiting practices (unless the employer's own 
     recruitment practices are more successful in attracting 
     American workers), and, in particular, to use those 
     recruitment strategies by which employers in an industry have 
     successfully recruited American workers. The Department of 
     Labor, in defining and determining whether certain 
     recruitment practices meet the statutory requirements, should 
     consider the views of major industry associations, employee 
     organizations, and other interest groups.
       Section 412(a)(3) of this legislation adds language at the 
     end of section 212(n)(1), stating that the recruitment 
     attestation is not to be construed to preclude an employer 
     from making employment decisions based upon ``legitimate 
     selection criteria relevant to the job that are normal or 
     customary to the type of job involved, so long as such 
     criteria are not applies in a discriminatory manner.'' The 
     employer's recruitment and selection criteria therefore 
     must be relevant to the job (not merely preferred by the 
     employer), must be normal and customary (in the relevant 
     industry) for that type of job, and must be applied in a 
     non-discriminatory manner. Just because an employer in 
     good faith believes that its selection criteria meet such 
     standards does not necessarily mean that they in fact do. 
     Any criteria that would, in itself, violate U.S. law can 
     clearly not be applied, including criteria based on race, 
     sex, age, or national origin. The employer cannot impose 
     spurious hiring criteria that discriminate against 
     American applicants in favor of H-1Bs, thereby subverting 
     employer obligations to hire an equally or better 
     qualified American worker.
       Any ``good faith'' recruitment effort, as required by this 
     legislation, must include fair,

[[Page E2325]]

     adequate and equal consideration of all American applicants. 
     The Act requires that the job must be offered to any American 
     applicant equally or better qualified than a nonimmigrant. 
     Congress recognizes that ``good faith'' recruitment does not 
     end upon receipt of applications, but rather must include the 
     treatment of the applicants. In evaluating this treatment, 
     the Department should consider the process and criteria for 
     screening applicants, as well as the steps taken to recruit 
     for the position and obtain those applicants. It is 
     Congress's intent that employers be able to demonstrate that 
     they have recruited in ``good faith'' by maintaining a fair 
     and level playing field for all applicants and by not skewing 
     their recruitment process against American workers. Employers 
     who consistently fail to find American workers to fill 
     positions should receive the Department's special attention 
     in this context of ``good faith'' recruitment.
       In the Act, the Attorney General is separately charged with 
     the adjudication of claims by American workers who believe 
     that they were ``equally or better qualified'' than H-1B 
     workers who were hired.
       4. Employers and H-1B workers covered by the new 
     statements. Section 412(a) of this legislation adds a new 
     subparagraph (E)(ii) to section 212(n)(1) which specifies 
     which employers are subject to the new attestation 
     requirements. There are two categories of covered employers: 
     (1) ``H-1B-dependent'' employers and (2) employers who, after 
     enactment of the Act, have been found to have committed a 
     willful failure to meet a condition set out in section 
     212(n)(1) or a willful misrepresentation of material fact on 
     an LCA. These two categories encompass those employers most 
     likely to abuse the H-1B program.
       The first category, ``H-1B-dependent employers,'' is 
     defined in new paragraph (3)(A) of section 212(n), added by 
     section 412(b) of this legislation. Under that definition, an 
     employer is H-1B-dependent if it has 51 or more full-time 
     equivalent employees, 15% or more of whom are H-1B workers. 
     Employers with 25 or fewer full-time equivalent employees are 
     H-1B-dependent if they have more than 7 H-1B employees, and 
     employers with between 26 and 50 full-time equivalent 
     employees are H-1B-dependent if they have more than 12 H-1B 
     employees.
       The second category of covered employers is those who have 
     been found to have committed a willful failure or a willful 
     misrepresentation under section 212(n)(2)(C) or 212(n)(5). 
     These employers are subject to the new attestation elements 
     for five years after the finding of violation. Of course, in 
     order to trigger the coverage of these elements, the finding 
     of willful violation must have been made in a manner 
     consistent with the procedural requirements in the Act, 
     including the 12-month statute of limitations on the 
     investigation of complaints or other information (section 
     212(n)(2)(A); 212(n)(2)(G); 212(n)(5)).
       Under new subparagraph (E)(ii) of 212(n)(1), employers 
     required to include the new statements on their applications 
     are excused from doing so on applications that are filed only 
     on behalf of ``exempt'' H-1B nonimmigrants. An ``exempt'' H-
     1B nonimmigrant is defined in new paragraph (3)(B) of section 
     212(n) as one whose annual wages, including cash bonuses and 
     other similar compensation, will be equal to at least $60,000 
     (and will remain at such level for the duration of his or her 
     employment while under an H-1B visa) or who has a master's or 
     higher degree (or its equivalent) in a specialty related to 
     the intended employment. It is important to note that the 
     term ``or its equivalent'' is intended to mean an equivalent 
     degree from a foreign university, and does not mean to imply 
     that any amount of work experience can be substituted for 
     such a degree. It is also important to note that the degree 
     must be in a specialty which has a legitimate, commonly 
     accepted connection to the employment for which the H-1B 
     nonimmigrant is to be hired.
       Exempt H-1B nonimmigrants are entirely excluded from the 
     computation by which their employer's H-1B dependency is to 
     be determined under new paragraph (3)(C) (also added by 
     section 412(b) of this legislation) for the first six months 
     after enactment of this Act, or until promulgation of final 
     regulations, whichever is longer. However, once this 
     transition period ends, they are included in the calculation 
     of whether an employer is H-1B dependent.
       Subsection 412(c) modifies subparagraph (1)(C)(ii) to 
     authorize employers to post their required notices 
     electronically. This provision is intended to allow employers 
     a choice of methods for informing employees of the intended 
     employment of H-1B nonimmigrants. An employer may either post 
     a physical notice in the traditional manner, or may 
     electronically notify employees of the identical information. 
     By providing this flexibility, Congress intended to improve 
     the effectiveness of posting in the protection of American 
     workers. Therefore, the electronic notification must actually 
     be transmitted to the employees, not merely be made available 
     through electronic means such as inclusion on an electronic 
     bulletin board.
       Subsection 412(d) makes the new attestation requirements 
     effective on the date of the Secretary's issuance of final 
     regulations to carry them out, and the other provisions of 
     the Act effective upon enactment. Subsection 412(e) allows 
     the Secretary of Labor and the Attorney General to reduce the 
     period for public comment on proposed regulations to no less 
     than 30 days so that the necessary regulations may be 
     promulgated in a timely manner.


           SECTION 413. CHANGES IN ENFORCEMENT AND PENALTIES

       This section specifies the penalty structure for failures 
     (both willful and nonwillful) to meet the new labor condition 
     attestations added by section 412 (as well failures to meet 
     the pre-existing attestations or the misrepresentation of a 
     material fact in an application). A special penalty is 
     imposed for a willful violation in the course of which an 
     employer displaces an American worker. The provision 
     clarifies that certain kinds of employer conduct constitute a 
     violation of the prevailing wage attestation, and that other 
     kinds of employer conduct are also prohibited in the H-1B 
     program. Finally, the provision grants certain new 
     authorities to the Secretary of Labor and establishes a 
     special enforcement mechanism administered by the Attorney 
     General to address alleged violations of the selection 
     portion of the recruitment attestation.
       Subsection 413(a) revises the penalty structure set out in 
     subparagraph 212(n)(2)(C) of the Immigration and Nationality 
     Act. In that subparagraph as amended, clause (i) specifies 
     the penalties for a failure to meet a condition of 
     subparagraph (1)(B) (strike or lockout) or a substantial 
     failure to meet a condition of subparagraph (1)(C) (posting) 
     or (1)(D) (contents of application), or a misrepresentation 
     of material fact. These penalties remain as they were under 
     the prior law: administrative remedies including a $1000 fine 
     per violation, and (at least) a one-year debarment. The 
     clause is expanded to make these penalties also apply to a 
     failure to meet a condition of new subparagraphs (1)(E) or 
     (1)(F) (non-displacement) and to a substantial failure to 
     meet a condition of new subparagraph (1)(G)(i)(I) (good faith 
     recruitment). New clause (ii) of section 212(n)(2)(C) sets 
     out the new increased penalties for willful failures to meet 
     any condition in paragraph (1), willful misrepresentations of 
     material fact, or violations of new clause (iv) prohibiting 
     retaliation against whistle blowers. These penalties consist 
     of administrative remedies including a $5000 civil fine per 
     violation, and (at least) a two year debarment.
       New clause (iii) of section 212(n)(2)(C) sets out a further 
     enhanced penalty for willful failures to meet a condition of 
     paragraph (1) or willful misrepresentation of material fact 
     in the course of which violation the employer displaces an 
     American worker within 90 days before or after the date of 
     the filing of a visa petition. This penalty consists of 
     administrative remedies including a $35,000 civil fine per 
     violation, and (at least) a three year debarment. Congress 
     intends that this new penalty will assure that there are 
     adequate sanctions for (and hence adequate deterrence 
     against) any willful violation of the existing wage-payment 
     requirements in the course of which an employer ``displaces'' 
     an American worker with an H-1B worker.
       It is important to note that in clauses (i), (ii), and 
     (iii), authorizing the Secretary to impose ``administrative 
     remedies * * * as [she] determines to be appropriate,'' 
     Congress intends that such remedies will include ``make-
     whole'' relief for affected American workers (such as, in 
     appropriate circumstances, monetary compensation to the 
     American worker or reinstatement to the job from which the 
     American worker was dismissed or placement in the job to 
     which the American worker should have been hired).
       New clause (iv) essentially codifies current Department of 
     Labor regulations concerning whistle blowers in the H-1B 
     program. This statutory provision is included not in order to 
     change current standards concerning whistle blowers, but to 
     provide an unarguable statutory basis for the existing 
     regulations. New clause (v) is intended to complement clause 
     (iv) by directing the Secretary of Labor and the Attorney 
     General to devise a process to make it easy for someone who 
     has filed a complaint under clause (iv) to seek a new job in 
     the U.S. It is contemplated that this process would be 
     expeditious and easy to use, so that the employee does not 
     need to wait for a new employer to obtain approval for a new 
     petition in order to change jobs in these circumstances.
       New clause (vi) prohibits employers from obtaining payments 
     of money from H-1B workers in specified circumstances. 
     Subclause (I) prohibits employers from requiring H-1B workers 
     to pay a penalty for leaving an employer's employ before a 
     date agreed to between the employer and the worker. It 
     directs that the Secretary is to determine whether a payment 
     is a prohibited ``penalty'' or a permissible ``liquidated 
     damages'' clause under relevant State law. This provision was 
     added because of numerous cases that have come to light where 
     visa holders or their families were required to make large 
     payments to employers because the worker secured other 
     employment. The Secretary may impose a penalty of $1,000 and 
     require that the employer refund the payment to the worker 
     (or to the Treasury if the worker can not be located) under 
     new subclause (vi)(III).
       New subclause (vi)(II) prohibits employers from accepting 
     reimbursement from H-1B workers for the filing fees imposed 
     under new section 214(c)(9) of the INA. Congress included 
     this prohibition to make it very clear that these fees are to 
     be borne by the employer, not passed on to the workers. If 
     the Secretary determines that the worker has reimbursed or 
     otherwise compensated the employer for the filing fee, the 
     Secretary may impose a penalty of $1,000 and require that the 
     employer refund the payment to the

[[Page E2326]]

     worker (or to the Treasury if the worker can not be located) 
     under new subclause (vi)(III).
       New clause (vii) addresses an issue known colloquially as 
     ``benching,'' which means holding an H-1B worker after 
     admission for employment in underpaid or unpaid status. An 
     extreme example of ``benching'' occurs where an employer 
     brings an H-1B worker to the U.S. on the promise of a certain 
     wage, but then pays the worker only a fraction of that wage 
     or no wage at all because the employer does not have enough 
     work for the H-1B worker. While the full extent of this 
     practice is not known, ``benching'' is a frequent cause of 
     wage violations found in Department of Labor investigations. 
     This is a very serious situation. H-1B nonimmigrants are only 
     allowed to be employed by the petitioning employer and 
     admitted to the U.S. on the basis of an employer's claim of 
     an urgent need for the worker. Therefore, ``benching'' both 
     reflects a less than honest claim and often results in 
     foreign workers being in this country without adequate means 
     (sometimes without any means) of support.
       Subclause (I) clarifies that ``benching'' is a violation of 
     the employer's obligation to pay the prevailing or actual 
     wage. An employer's failure to pay wages during an H-1B 
     worker's non-productive status, due to a decision by the 
     employer (based on factors such as lack of work for the 
     worker) or due to the worker's lack of a license or permit, 
     is included in the definition of ``benching.'' It is the 
     intent and understanding of Congress that in such 
     circumstances the employer has an obligation to provide 
     full wages as well as the benefits package that the 
     employer would provide to an American worker as required 
     under clause (viii) discussed below.
       Subclause (II) further clarifies that in the case of an H-
     1B worker designated as part-time on a visa petition, an 
     employer commits a ``benching'' violation if it fails to pay 
     the H-1B worker for the full number of hours and at the full 
     rate of pay stated on the petition. Nothing in subclause (II) 
     is intended to preclude part-time H-1B employment, as long as 
     that was the agreement made by the employer and the H-1B 
     worker prior to the submission of the visa petition. The 
     employer should accurately designate a worker as full or 
     part-time, and the employer's misrepresentation of this 
     material fact should be scrutinized by the Secretary in her 
     determination of whether any ``benching'' violation has 
     occurred or misrepresentation has been made, and to pay 
     particular attention to whether the fringe benefits provided 
     by the employer to American workers would include paid leave 
     for such nonproductive time (see clause (viii) regarding 
     benefits).
       The Congress anticipates that the Secretary will look 
     closely at circumstances that appear to be contrived to take 
     advantage of non-paid time. Subclause (IV) provides that the 
     employer is not required to pay wages where the H-1B worker's 
     nonproductive status is due to non-work-related reasons, such 
     as the worker's voluntary request for leave of absence or 
     ``circumstances rendering the nonimmigrant unable to work.'' 
     The alleged ``voluntariness'' of the worker's request would, 
     of course, be determined in the context of the employment 
     circumstances. Further, this H-1B provision regarding non-
     paid status must be consistent with any other applicable law, 
     such as the Rehabilitation Act or the Family and Medical 
     Leave Act, which may require payment of wages in some 
     circumstances.
       Subclause (III) describes the manner in which the 
     provisions of subclauses (I) and (II) apply to an H-1B worker 
     who has not yet entered into employment with an employer. In 
     such cases, the employer's obligation is to pay the H-1B 
     worker the required wage beginning no later than 30 days 
     after the H-1B worker is first admitted to the U.S., or in 
     the case of a nonimmigrant already in the United States and 
     working for a different employer, 60 days after the date the 
     H-1B worker becomes eligible to work for the new employer. 
     Such ``eligibility'' is to be understood to mean the 
     completion of the visa process, and not other formalities, 
     such as obtaining a license or permit.
       Subclause (V) is intended to make clear that a school or 
     other educational institution that customarily pays employees 
     an annual salary in disbursements over fewer than 12 months 
     may pay an H-1B worker in the same manner without violating 
     clause (vii), provided that the H-1B worker agrees to this 
     payment schedule in advance. Congress specifically limited 
     this exemption to schools and educational institutions in 
     recognition of their unique salary patterns.
       The intent of the ``benching'' provision is to prevent the 
     exploitation of H-1B workers. It is not the intent of 
     Congress that a circumstance be created under which an 
     employer could avoid compliance with the ``benching'' 
     provision by laying off an American worker. If an employer 
     were to do so, this would trigger the enforcement and penalty 
     provisions of the Act.
       Clause (viii) adds an additional clarification concerning 
     an employer's obligations under the attestation on wages and 
     working conditions set forth in 212(n)(1)(A). The new 
     provision states that it is a violation of those obligations 
     for an employer to fail to offer ``benefits and eligibility 
     for benefits'' to H-1B workers ``on the same basis, and in 
     accordance with the same criteria,'' as the employer offers 
     to American workers. The statement ``on the same basis'' is 
     intended to mean equal or equivalent treatment, not 
     preferential treatment for any group of workers. Thus, if an 
     employer offers benefits to American workers, it must offer 
     those same benefits to H-1B workers. Similarly, if an 
     employer offers performance-based bonuses to American 
     workers, it must give similarly-situated H-1B workers the 
     same opportunity to earn such a bonus.
       Clause (viii)'s phrasing of the employer's duty as an 
     obligation to provide ``benefits and eligibility for 
     benefits,'' rather than just one or the other, was chosen to 
     cover two eventualities. On the one hand, it would not be 
     proper for an employer to make an H-1B worker ``eligible'' 
     for benefits on the same basis as its American workers but 
     then actually provide the benefits only to American workers. 
     On the other hand, ``providing'' or delivering the benefits 
     is required and is to be done in accordance with whatever 
     criteria apply to American workers. In order to actually 
     receive many kinds of benefits, employees are required to 
     take some kind of action such as to select a plan, to provide 
     partial payment for the benefits, to work for the employer 
     for a certain period of time, or to perform at a high level. 
     The receipt of other kinds of benefits may turn on other 
     contingencies such as, in the case of some kinds of bonuses 
     and stock options, the company's year-end performance. 
     Accordingly, the employer's obligation is to make H-1B 
     workers ``eligible'' for the benefits and to actually provide 
     the benefits ``on the same basis, and in accordance with the 
     same criteria'' as American workers.
       The underlying principle for this requirement is to protect 
     American workers from having their wages and working 
     conditions eroded by the presence of nonimmigrant workers who 
     are not being treated equally, and being compensated in the 
     same manner. There is particular concern regarding such 
     erosion in instances where a foreign affiliate of a 
     petitioning employer is involved as the agent for payment of 
     wages and provision of benefits to the H-1B workers. The 
     statutory obligations must be fully met in such instances. 
     Congress intends that the ultimate and complete 
     responsibility for all employer obligations under this Act, 
     including the provision of benefits to the H-1B worker equal 
     to those offered the employer's American workers based in the 
     U.S., lies with the American (United States) employer who 
     brings nonimmigrant workers into the country. Ultimately, it 
     is the American employer, not the foreign subsidiary, 
     pledging a benefit package similar to that of its American 
     workers. Congress would expect the Secretary to look with 
     particular care at circumstances involving a foreign 
     subsidiary where there is an appearance of contrivance to 
     avoid the obligation to provide equal wages and benefits to 
     H-1B and American workers.
       Section 413(b) adds a new paragraph (5) at the end of 
     212(n) that sets out the exclusive remedial mechanism for 
     violations of the selection portion of the recruitment 
     attestation set out in new paragraph 212(n)(1)(G)(i)(II) or 
     any alleged misrepresentations relating to that attestation. 
     It also contains a savings clause that states that the 
     provision should not be construed to affect the authority of 
     the Secretary or the Attorney General with respect to ``any 
     other violations.'' This savings clause means that while the 
     Secretary is not authorized to remedy a violation of 
     (1)(G)(i)(II) regarding an individual American worker, the 
     Secretary retains the broad authority to investigate and take 
     appropriate steps regarding the employer's ``good faith'' 
     recruitment efforts, including ``good faith'' consideration 
     of American applicants.
       The Congress anticipates that the Secretary will exercise 
     her enforcement discretion so as not to use the ``good 
     faith'' recruitment investigation as a ``back door'' way 
     around the exclusivity or the arbitration remedy set out in 
     212(n)(5) for a violation of (1)(G)(i)(II) regarding an 
     individual American worker. It should also be noted that by 
     setting up separate mechanisms, one lodged at the Department 
     of Labor concerning recruitment and one lodged at the 
     Department of Justice concerning selection, Congress 
     contemplates that the separate enforcement mechanisms will be 
     operated in a cooperative, non-duplicative manner. In this 
     context, we recognize that evidence tending to establish a 
     non-selection violation would be pertinent to the matter of 
     whether the recruitment, overall, had been conducted in 
     ``good faith.'' Finally, Congress would expect that both the 
     Attorney General and Department of Labor, in promulgating 
     their regulations concerning recruitment procedures and 
     selection criteria, will provide clear guidance to employers, 
     including recognition that employers may use job-relevant 
     standards and industry-wide recruitment practices.
       Under the enforcement scheme set up by paragraph (5), any 
     person aggrieved by an alleged violation of 
     212(n)(1)(G)(i)(II) or a related misrepresentation and who 
     has applied in a reasonable manner for the job at issue may 
     file a complaint with the Attorney General within 12 months 
     of the date of the violation or misrepresentation. The 
     Attorney General is charged with establishing a mechanism for 
     examination of such a complaint to determine whether it 
     provides reasonable cause to believe that such a violation or 
     misrepresentation has occurred.
       If the Attorney General does find reasonable cause, she is 
     charged with initiating binding arbitration proceedings by 
     requesting the Federal Mediation and Conciliation Service to 
     appoint an arbitrator from the Service's roster. The 
     arbitrator is to be selected in accordance with the 
     procedures and rules of the Service. The fees and expenses

[[Page E2327]]

     for the arbitrator are to be paid by the Attorney General.
       The arbitrator is charged with deciding whether the alleged 
     violation or misrepresentation occurred and, if it occurred, 
     whether it was willful. The complainant has the burden of 
     establishing such violation or misrepresentation by clear and 
     convincing evidence, but the complainant does not need to 
     allege or prove that the violation or misrepresentation was 
     willful. Congress intends that the arbitrator would not 
     simply substitute his or her judgment for the employer's 
     judgment concerning the relative qualifications of potential 
     employees, but would carefully consider all the evidence 
     presented, in accordance with section 212(n)(1) which permits 
     the employer to use job-relevant standards applied in a non-
     discriminatory manner. However, just because an employer in 
     good-faith believes that an American worker is not as well 
     qualified as an H-1B alien does not necessarily mean that the 
     American worker is in fact not as well qualified.
       The arbitrator's decision is subject to review by the 
     Attorney General only to the same extent as arbitration 
     awards are subject to vacation or modification under sections 
     10 or 11 of title 9 of the United States Code, and to 
     judicial review only in an appropriate court of appeals on 
     the grounds described in section 706(a)(2) of title 5 of the 
     United States Code.
       The remedies for violations resemble those established for 
     the other violations of the labor condition attestations. 
     Congress anticipates that the authorized ``administrative 
     remedies'' could include not only the specified $1,000 fine 
     per violation or $5,000 fine per willful violation, but also 
     other appropriate ``make-whole'' remedies. Further, a 
     debarment penalty of one year (or two years for a willful 
     violation) is authorized. A finding of a willful violation 
     will subject an employer to the no-lay off/non-displacement 
     attestation and the recruitment attestation for a period of 
     five years (as provided in section 212(n)(1)(E)(ii)) and to 
     random inspections for a period of five years (as provided in 
     section 212(n)(2)(F), to be discussed later).
       The Attorney General is prohibited from delegating the 
     responsibilities assigned to her to anyone else unless she 
     submits a plan for such a delegation 60 days before its 
     implementation to the Committees on the Judiciary of each 
     House of Congress. This is in order to assure that Congress 
     has an adequate opportunity to be involved in the decision 
     regarding where at the Department of Justice the Attorney 
     General plans on lodging this function.
       Section 413(c) adds a new section 212(n)(2)(E) describing 
     the liability of an employer who has executed the ``secondary 
     non-displacement attestation'' for placing a non-exempt H-1B 
     worker with respect to whom it has filed an application 
     containing such an attestation with another employer under 
     the circumstances described in paragraph (1)(F). If the other 
     employer has displaced an American worker (under the 
     definitions used in this legislation) during the 90 days 
     before or after the placement, the attesting employer is 
     liable as if it had violated the attestation.
       In all instances, the sanction may be an administrative 
     remedy (including civil monetary penalties and ``make-whole'' 
     remedies to the American worker affected). The attesting 
     employer can only receive a debarment, however, if it is 
     found to have known or to have had reason to know of the 
     secondary displacement at the time of the placement of the H-
     1B worker with the other employer, or if the attesting 
     employer was previously sanctioned for a secondary 
     displacement under 212(n)(2)(E) for placing an H-1B 
     nonimmigrant with the same other employer. If an employer has 
     conducted the required inquiry prior to any placement with a 
     ``secondary'' employer, and has no information or reason to 
     know of that employer's past or intended displacement of U.S. 
     workers, then the attesting employer should ordinarily 
     be presumed not to have willfully violated the secondary 
     displacement attestation. Congress anticipates that the 
     Department of Labor, in promulgating and enforcing 
     regulations, would require a reasonable level of inquiry.
       Subsection 413(d) adds a new section 212(n)(2)(F) granting 
     the Secretary authority to conduct random investigations of 
     certain employers in certain situations. This authority is in 
     addition to the existing investigative authority in section 
     212(n)(2)(A), as heretofore exercised by the Secretary. This 
     ``random investigation'' provision is applicable for a five-
     year period following a finding by the Secretary that the 
     employer in question committed a willful violation or made a 
     willful misrepresentation, or a finding in the Attorney 
     General's arbitration proceedings that the employer willfully 
     violated paragraph (n)(1)(G)(i)(II).
       Subsection 413(e) specifies a particular investigative 
     process, to be used by the Secretary during the three-year 
     period following enactment of this legislation. This process 
     does not supplant or curtail the Secretary's existing 
     authority in paragraph (2)(A) and does not affect the 
     Secretary's newly-created authority under paragraph (2)(F) 
     (``random investigations''). Under the new provision, 
     subparagraph (G) of 212(n)(2), added by paragraph (1) of 
     subsection 413(e) of this Act, the Secretary is authorized 
     under certain circumstances to initiate a 30 day 
     investigation on allegations of willful failures to meet a 
     condition of paragraph (1)(A), (1)(B), (1)(E), (1)(F), or 
     (1)(G)(i)(I), allegations of a pattern or practice by an 
     employer of failures to meet such a condition, or allegations 
     of a substantial failure to meet such a condition that 
     affects multiple employees.
       This provision does not address the matter of ``self-
     directed'' or ``self-initiated'' investigations by the 
     Secretary. Rather, as specified in clause (ii) and (iii), an 
     investigation under this provision can be initiated only on 
     the basis of a communication by a person outside the 
     Department of Labor, or on the basis of information the 
     Secretary acquires lawfully in the course of another 
     investigation within the scope of any of her statutory 
     investigative authorities. The source's identity must be 
     known to the Secretary, but need not be revealed to the 
     employer in certain circumstances (However, the Secretary may 
     seek to ascertain the identity of a person who has submitted 
     credible information anonymously so that the Secretary may 
     pursue an investigation under this provision.). Under this 
     investigative process, the Secretary is not to act upon 
     information received from the employer in paperwork filed to 
     obtain an H-1B visa.
       Congress anticipates that in promulgating and enforcing 
     regulations for this process, the Secretary will provide 
     guidance as to the types of situations which would be 
     appropriate for investigation, such as an intentional 
     ``posting'' violation which affects numerous employees (a 
     ``substantial failure to meet such a condition that affects 
     multiple employees''), or perhaps a more significant 
     violation that affects only one or a handful of people. For 
     purposes of interpreting ``a substantial failure to meet such 
     a condition that affects multiple employees'', the more 
     substantial the failure is, the fewer employees need be 
     affected. For a very substantial failure, only two employees 
     need be affected.
       Congress' intent in enacting this special enforcement 
     process was to endorse the Secretary's efforts to be more 
     vigilant and effective in the enforcement of this Act, 
     especially given the authorization of a substantial increase 
     in temporary foreign workers. The presence of almost twice as 
     many H-1B workers during the coming years could undercut the 
     wages, working conditions and job opportunities of American 
     workers and Congress is concerned that American workers be 
     protected.
       Subparagraph (G) prescribes several procedural steps 
     governing this new process. First, under clause (i), there 
     must be a finding of reasonable cause to believe that an 
     employer is committing one of the covered violations. Second, 
     the Secretary (or the Acting Secretary, in the case of the 
     Secretary's absence or disability) must personally certify 
     that this requirement and the other requirements of clause 
     (i) have been met before an investigation may be launched. 
     Third, the investigation is to be completed in 30 days. 
     Fourth, the Secretary's investigation should focus on the 
     alleged violation or violations. Fifth, the information 
     provided by the source must be put in writing, either by the 
     source itself or by a Department of Labor employee on behalf 
     of the source. Sixth, a 12-month statute of limitations 
     applies.
       Additionally, the Secretary is directed to provide notice 
     to the employer of information, including the identity of the 
     person who provided the information, that may lead to the 
     launching of an investigation and an opportunity to respond 
     to that information before the investigation is actually 
     initiated. However, the Secretary is authorized to forgo this 
     notice where she determines that to do so will interfere with 
     her efforts ``to secure compliance by the employer with [the 
     H-1B program requirements].'' It is Congress' expectation 
     that the Secretary will forgo notice of the information where 
     she has a reasonable belief that the employer may frustrate 
     the investigation and avoid compliance as a result of the 
     notice, and will forgo notice of the identity of the person 
     providing the information where the person has a credible 
     fear that he or she will be retaliated against. While many 
     employers would correct a problem brought to their attention, 
     it cannot be assumed that the simple disclosure of 
     allegations of wrongdoing would, in itself, be sufficient to 
     assure compliance. When the Secretary provides the name of 
     the person providing the information, notice should also be 
     provided as to the penalties for retaliation and blacklisting 
     of individuals included in the Act.
       Finally, the new procedure includes the employer's right to 
     an administrative fact-finding hearing within 60 days after 
     the investigative determination.
       One last point must be made in regard to the H-1B 
     enforcement processes. In requiring that the Secretary act 
     where there is ``reasonable cause to believe'' that a 
     violation has been committed, Congress does not intend to 
     impose on the Secretary the same level of justification or 
     proof as it required under the Fourth Amendment's ``probable 
     cause'' for search and seizure of persons or property. These 
     legal standards have well-established, distinctly different 
     meanings. Employers who enter into the H-1B program as 
     sponsors of temporary foreign labor have an obligation to be 
     cooperative in furnishing the Department with the appropriate 
     records and information. The structure and language of this 
     Act make it clear that employers are expected to cooperate 
     fully with the Secretary and the Attorney General in all 
     investigations and proceedings. The Secretary and the 
     Attorney General are, of course, required to exercise their 
     discretion in an appropriate manner within the scope of their 
     authority.

[[Page E2328]]

       Subsection 413(f) clarifies that none of the enforcement 
     authorities granted in subsection 212(n)(2) as amended should 
     be construed to supersede or preempt other enforcement-
     related authorities the Secretary of Labor or the Attorney 
     General may have under the Immigration and Nationality Act or 
     any other law.

     

                          ____________________