H-1B Visa Program: Labor Could Improve Its Oversight and Increase
Information Sharing with Homeland Security (22-JUN-06,
GAO-06-720).
The H-1B visa program assists U.S. employers in temporarily
filling certain occupations with highly-skilled foreign workers.
There is considerable interest regarding how Labor, along with
Homeland Security and Justice, is enforcing the requirements of
the program. This report describes: (1) how Labor carries out its
H-1B program responsibilities; and (2) how Labor works with other
agencies involved in the H-1B program. We interviewed officials
and analyzed data from all three agencies.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-720
ACCNO: A55845
TITLE: H-1B Visa Program: Labor Could Improve Its Oversight and
Increase Information Sharing with Homeland Security
DATE: 06/22/2006
SUBJECT: Data integrity
H-1B Visas
Interagency relations
Internal controls
Pay rates
Program management
Employment of foreign nationals
DOL H-1B Visa Program
INS Computer Linked Application
Information Management System 3.0
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GAO-06-720
* Results in Brief
* Background
* Labor Has Limited H-1B Authority, but the Agency Could Impr
* Labor's Review of Employers' Requests Is Fast, but May Overl
* Labor Investigates Complaints and Has Begun the Process of R
* Labor Relies Primarily on Education to Promote Employer Comp
* Labor and Homeland Security Face Challenges Sharing Informat
* Labor and Homeland Security Coordinate to Process Employers'
* Justice Handles U.S. Workers' Cases
* Conclusion
* Matter for Congressional Consideration
* Recommendations for Executive Action
* Agency Comments and Our Evaluation
* GAO Contact
* Acknowledgments
* GAO's Mission
* Obtaining Copies of GAO Reports and Testimony
* Order by Mail or Phone
* To Report Fraud, Waste, and Abuse in Federal Programs
* Congressional Relations
* Public Affairs
Report to Congressional Requesters
United States Government Accountability Office
GAO
June 2006
H-1B VISA PROGRAM
Labor Could Improve Its Oversight and Increase Information Sharing with
Homeland Security
GAO-06-720
Contents
Letter 1
Results in Brief 3
Background 5
Labor Has Limited H-1B Authority, but the Agency Could Improve Its
Oversight of Employers' Compliance with Program Requirements 12
Labor and Homeland Security Face Challenges Sharing Information 23
Conclusion 26
Matter for Congressional Consideration 26
Recommendations for Executive Action 26
Agency Comments and Our Evaluation 27
Appendix I Scope and Methodology 29
Appendix II Department of Labor Labor Condition Application 32
Appendix III Department of Homeland Security USCIS Petition for a
Nonimmigrant Worker and H-Classification Supplement 35
Appendix IV Data Tables 42
Appendix V Comments from the Department of Labor 45
Appendix VI Comments from the Department of Homeland Security 47
Appendix VII GAO Contact and Staff Acknowledgments 49
Related GAO Products 50
Tables
Table 1: Labor Condition Applications Electronically Reviewed from 2002
through 2005 13
Table 2: Wage Rates and Prevailing Wages from a Sample of Labor Condition
Applications That Were Incorrectly Certified 14
Table 3: Possible Penalties for Violations of the H-1B Program 17
Table 4: H-1B Complaints, Violations, Back Wages Due, and Fines Assessed
18
Table 5: Companies Electronically Filing Applications for the Most H-1B
Workers from January 2002 to September 2005 42
Table 6: Prevailing Wage Sources Used by Employers on Labor Condition
Applications 42
Table 7: Number of H-1B Petitions Approved and Denied 43
Table 8: Basis for Workers' H-1B Classification 43
Table 9: Employers' Requested Action on Petitions for H-1B Workers 44
Table 10: Workers' Education Level on H-1B Petitions 44
Table 11: Top Five Occupation Codes Requested on H-1B Petitions, FY 2000
through FY 2005 44
Figures
Figure 1: An Overview of the H-1B Visa Process 10
Figure 2: H-1B Investigatory Process 11
Figure 3: Willful and Nonwillful Violations from Fiscal Year 2000 through
Fiscal Year 2005 20
Figure 4: H-1B Worker Information Card 22
Abbreviations
ACWIA American Competitiveness and Workforce Improvement Act of 1998 ALJ
Administrative Law Judge DHS Department of Homeland Security EIN Employer
Identification Number ETA Employment and Training Administration ESA
Employment Standards Administration INA Immigration and Nationality Act
LCA Labor Condition Application OSC Office of Special Counsel USCIS U.S.
Citizenship and Immigration Services WHD Wage and Hour Division WHISARD
Wage and Hour Investigative Support and Reporting Database
This is a work of the U.S. government and is not subject to copyright
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separately.
United States Government Accountability Office
Washington, DC 20548
June 22, 2006
The Honorable F. James Sensenbrenner, Jr. Chairman Committee on the
Judiciary House of Representatives
The Honorable John N. Hostettler Chairman The Honorable Sheila Jackson Lee
Ranking Minority Member
Subcommittee on Immigration, Border Security and Claims Committee on the
Judiciary House of Representatives
The Honorable Lamar Smith House of Representatives
Each year employers in the United States generally request more highly
skilled foreign workers than are able to come into the country under law.
The H-1B nonimmigrant visa program was established to assist U.S.
employers in temporarily filling certain positions with these workers.
Currently, the number of foreign workers authorized to enter the United
States annually through the H-1B program is 65,000, but in previous years
the cap has been as high as 195,000. The Congress is currently considering
legislation to overhaul U.S. immigration policy, which could have an
impact on the cap in future years.
To ensure that U.S. workers are not adversely affected by the hiring of
H-1B workers, all employers must attest to meeting certain labor
conditions, such as notifying all employees of the intention to hire H-1B
workers and offering their H-1B workers the same benefits as U.S. workers.
These conditions are designed to protect both the jobs of domestic workers
and the rights and working conditions for foreign temporary workers. The
Departments of Labor (Labor), Homeland Security (Homeland Security), and
Justice (Justice) each have specifically defined responsibilities during
certain stages of the H-1B visa process, which range from reviewing and
approving an employer's request to hire an H-1B worker, to investigating
complaints from both U.S. and foreign workers regarding employers'
non-compliance with H-1B program requirements. The Department of State
also has a role in the process, specifically, to issue the visa. These
responsibilities help ensure that employers comply with the requirements
of the program.
However, there has been considerable interest regarding how Labor, in
conjunction with the other agencies, is ensuring that employers comply
with the requirements of the H-1B program. To better understand this
process, you asked us to describe: (1) how Labor carries out its H-1B
program responsibilities and (2) how Labor works with other agencies
involved in the H-1B program.
To understand the H-1B certification, adjudication, and enforcement
processes and the responsibilities of each agency involved, we hosted a
joint meeting with officials from Labor, Homeland Security's U.S.
Citizenship and Immigration Services (USCIS), and Justice. We also
reviewed laws and regulations pertaining to the H-1B program. To obtain
information on the characteristics of employers who filed Labor Condition
Applications (applications) and the positions they sought to fill with
H-1B workers, we analyzed Labor's Efile H-1B Disclosure Data from January
2002 through September 2005.
To analyze the number and type of H-1B complaints received by Labor's Wage
and Hour Division (WHD) and the outcomes of the associated investigations,
we received a data extract from WHD's Wage and Hour Investigative Support
and Reporting Database (WHISARD). We also interviewed WHD officials on the
complaint and investigation process, the appeal process, educational
outreach to improve employer compliance, and the WHD resources used to
process and investigate complaints.
To determine the number and type of H-1B petitions submitted by employers
and adjudicated by USCIS, we analyzed service center data from the
Computer Linked Application Information Management System, Version 3.0
(CLAIMS 3) database from fiscal years 2000 through 2005. We conducted site
visits to two USCIS service centers, including the one that processes the
most H-1B visa petitions.
To determine the type of violations and the process for investigations of
U.S. worker displacement violations we interviewed Justice officials. We
reviewed complaint and investigation data from Justice. We reviewed and
analyzed summary reports provided by Justice on the number of employers
investigated from 2000 through 2005 and the outcomes of those
investigations.
To assess the reliability of the data from Labor, Homeland Security, and
Justice, we (1) reviewed existing documentation related to the data
sources, (2) tested the data for completeness and accuracy, and (3)
interviewed knowledgeable agency officials about the data. We determined
that the data were sufficiently reliable for the purposes of this report.
(See app. I for a more thorough discussion of our scope and methodology.)
We conducted our work between August 2005 and May 2006 in accordance with
generally accepted government auditing standards.
Results in Brief
While Labor's H-1B authority is limited in scope, the agency could improve
its oversight of employers' compliance with program requirements. Labor's
review of employers' applications to hire H-1B workers is timely, but
lacks quality assurance controls and may overlook some inaccuracies. From
January 2002 through September 2005, Labor's Employment and Training
Administration electronically reviewed more than 960,000 applications and
certified almost all of them. Approximately one-third of the applications
were for workers in computer system analysis and programming occupations,
with the next most frequent request, for college and university education
workers, at 7 percent. About 30 percent of the positions were located in
either California or New York. By statute, Labor's review of the
applications is limited to searching for missing information or obvious
inaccuracies and it does this through certain data checks. However, in our
analysis of Labor's data we found certified applications with inaccurate
information that could have been identified by more stringent checks.
Although the overall percentage was small, we found 3,229 applications
that were certified even though the wage rate on the application was lower
than the prevailing wage for that occupation in the specific location. In
addition, during this time period, approximately 1,000 certified
applications contained employer identification numbers with improper
prefix codes, which raises questions about the validity of the
applications. In its enforcement efforts, WHD investigates complaints made
against H-1B employers. From fiscal year 2000 through fiscal year 2005,
Labor reported an increase in the number of H-1B complaints and
violations, and a corresponding increase in the number of employer
penalties. In fiscal year 2000, Labor required employers to pay back wages
totaling $1.2 million to 226 H-1B workers; by fiscal year 2005, back wage
penalties had increased to $5.2 million for 604 workers. However, program
changes, such as a higher visa cap in some years, could have been a factor
in the increase. In April 2006, WHD began the process of randomly
investigating employers who have willfully violated the program's
requirements. Labor uses education as its primary method of promoting
compliance with the H-1B program. For example, Labor conducts compliance
assistance programs and posts guidance on its website. To educate workers
about their rights, Labor is coordinating with the Department of State to
provide worker information cards with the H-1B visas.
Labor, Homeland Security, and Justice all have responsibilities under the
H-1B program, but Labor and Homeland Security could better address the
challenges they face in sharing information between the agencies. After
Labor certifies an application for a specific number of workers, the
employer submits it, along with an H-1B petition for each worker, to
USCIS. USCIS reviews this information but lacks the ability to easily
verify whether employers submitted petitions for more workers than they
originally requested because its system does not match each petition to
Labor's application case number. Additionally, during the process of
reviewing H-1B petitions, USCIS staff told us they may find evidence that
employers are not meeting their obligations. Specifically, USCIS may find
that a worker's income on the W-2-which may be used as supporting
documentation to extend an H-1B worker's stay in the United States-is less
than the wage quoted on the original application. Because an employer is
not allowed to pay a lower wage than that which was quoted on the original
application, USCIS may deny the petition if an employer is unable to
explain the discrepancy. However, USCIS does not have a formal process for
reporting the discrepancy to Labor. Additionally, current law precludes
the Wage and Hour Division from using this information to initiate an
investigation of the employer. Labor also shares enforcement
responsibilities with Justice, which pursues charges filed by U.S. workers
who allege that they were not hired or were displaced so that an H-1B
worker could be hired instead. Justice may assess penalties if it finds
that an employer hired an H-1B worker over a better-qualified U.S. worker.
From 2000 through 2005, Justice found discriminatory conduct in 6 out of
the 97 investigations closed, and assessed a total of $7,200 in penalties
in 3 of the 6 cases, all in 2003.
To enhance employer compliance with the H-1B program and protect the
rights of U.S. and H-1B workers, Congress should consider: (1) eliminating
the restriction on using application and petition information submitted by
employers as the basis for initiating an investigation, and (2) directing
Homeland Security to provide Labor with information received during the
adjudication process that may indicate an employer is not fulfilling its
H-1B responsibilities.
To strengthen oversight of employers' applications to hire H-1B workers,
we recommend that Labor improve its procedures for checking completeness
and obvious inaccuracies, including developing more stringent, cost
effective methods of checking for wage inaccuracies and invalid employer
identification numbers.
To ensure employers are complying with program requirements, we recommend
that as USCIS transforms its information technology system, the Labor
application case number be included in the new system, so that
adjudicators are able to quickly and independently ensure that employers
are not requesting more H-1B workers than were originally approved on
their application to Labor.
The agencies gave us technical comments and Homeland Security agreed with
our recommendations. Labor questioned whether more stringent checks were
necessary and believes Congress intentionally limited Labor's role and
placed program integrity with USCIS.
We believe there are cost-effective methods that Labor could use to check
the applications more stringently that would enhance the integrity of the
H-1B process.
Background
The H-1B program was created by the Immigration Act of 1990, which amended
the Immigration and Nationality Act (INA).1 The H-1B visa category was
created to enable U.S. employers to hire temporary workers as needed in
specialty occupations, or those that require theoretical and practical
application of a body of highly specialized knowledge. It also requires a
bachelor's or higher degree (or its equivalent) in the specific occupation
as a minimum requirement for entry into the occupation in the United
States.2 The Immigration Act of 1990 capped the number of H-1B visas at
65,000 per fiscal year.
1 The H-1 nonimmigrant category was created under the Immigration and
Nationality Act of 1952 to assist U.S. employers needing workers
temporarily. Nonimmigrants are foreign nationals who come to the United
States on a temporary basis and for a specific purpose, such as to attain
education and work.
2 Fashion models of distinguished merit and ability also qualify for H-1B
visas and do not need to meet the definition of specialty occupation.
Since the creation of the H-1B program, the number of H-1B visas permitted
each fiscal year has changed several times. Congress passed the American
Competitiveness and Workforce Improvement Act of 1998 (ACWIA), which
increased the limit to 115,000 for fiscal years 1999 and 2000. In 2000,
Congress passed the American Competitiveness in the Twenty-First Century
Act, which raised the limit to 195,000 for fiscal year 2001 and maintained
that level through fiscal years 2002 and 2003. The number of H-1B visas
reverted back to 65,000 thereafter.3 An H-1B visa generally is valid for 3
years of employment and is renewable for an additional 3 years.
Filing an application with Labor's Employment and Training Administration
is the employer's first step in hiring an H-1B worker,4 and Labor is
responsible for either certifying or denying the employer's application
within 7 days (see app. II for the Labor Condition Application). By law,
it may only review applications for omissions and obvious inaccuracies.
Labor has no authority to verify the authenticity of the information.
Employers must include on the application information such as their name,
address, rate of pay and work location for the H-1B worker, and employer
identification number. All employers are also required to make four
attestations on the application as to:
1. Wages: The employer will pay nonimmigrants at least the local
prevailing wage or the employer's actual wage, whichever is
higher, and pay for nonproductive time caused by a decision made
by the employer; and offer nonimmigrants benefits on the same
basis as U.S. workers.
2. Working conditions: The employment of H-1B nonimmigrants will
not adversely affect the working conditions of U.S. workers
similarly employed.
3. Strike, lockout, or work stoppage: No strike or lockout exists
in the occupational classification at the place of employment.
4. Notification: The employer has notified employees at the place
of employment of the intent to employ H-1B workers.
3 However, under the H-1B Visa Reform Act of 2004, some H-1B workers--such
as those being hired by institutions of higher education, nonprofit or
government research organizations, or those with a master's or higher
degree from a U.S. institution--may be exempt from the annual cap.
4 Employers can submit applications to Labor up to 6 months prior to the
H-1B worker's intended employment date.
Certain employers are required to make three additional attestations on
their application. These additional attestations apply to H-1B employers
who: (1) are H-1B dependent, that is, generally those whose workforce is
comprised of 15 percent or more H-1B nonimmigrant employees; or (2) are
found by Labor to have committed either a willful failure to meet H-1B
program requirements or misrepresented a material fact in an application
during the previous 5 years. These employers are required to additionally
attest that: (1) they did not displace a U.S. worker within the period of
90 days before and 90 days after filing a petition for an H-1B worker; (2)
they took good faith steps prior to filing the H-1B application to recruit
U.S. workers and that they offered the job to a U.S. applicant who was
equally or better qualified than an H-1B worker; and (3) prior to placing
the H-1B worker with another employer, they inquired and have no knowledge
as to that employer's action or intent to displace a U.S. worker within
the 90 days before and 90 days after the placement of the H-1B worker with
that employer.5
After Labor certifies an application, the employer must submit to USCIS an
H-1B petition for each worker it wishes to hire (see App. III for the H-1B
petition and supplement). On March 1, 2003, Homeland Security took over
all functions and authorities of Justice's Immigration and Naturalization
Service under the Homeland Security Act of 2002 and the Homeland Security
Reorganization Plan of November 25, 2002. Employers submit to Homeland
Security the application, petition, and supporting documentation along
with the appropriate fees. When Congress passed ACWIA in 1998, it imposed
a filing fee of $500 on H-1B petitions. In 2000, Congress passed
legislation to increase the amount of filing fees to $1,000 then increased
the amount again to $1,500 in 2004.6 Along with a $1,500 filing fee, an
employer must also submit a $500 fraud prevention and detection fee to
Homeland Security.7 Information on the petition must indicate the wages
that will be paid to the H-1B worker, the location of the position and the
worker's qualifications. Through a process known as adjudication, Homeland
Security reviews the documents for certain criteria, such as whether the
petition is accompanied by a certified application from Labor, whether the
employer is eligible to employ an H-1B worker, whether the position is a
specialty occupation, and whether the prospective H-1B worker is qualified
for the position.
5 These additional requirements first applied from January 19,
2001--September 30, 2003. However, the provision requiring these
attestations sunsetted, or expired, and was not reinstituted until March
8, 2005. Consequently, from October 1, 2003, to March 7, 2005, H-1B
dependent employers and willful violator employers were not required to
make the additional attestations, and, in effect, were able to hire H-1B
workers even if they displaced U.S. workers and did not make efforts to
recruit U.S. workers.
6 Pub. L. No. 106-311 (Oct. 17, 2000); The H-1B Visa Reform Act of 2004,
Pub. L. No. 108-447 (Dec. 8, 2004).
The Wage and Hour Division of Labor's Employment Standards Administration
performs investigative and enforcement functions to determine whether an
employer has complied with its attestations on the application. An
aggrieved individual or entity8 or certain non-aggrieved parties may file
a complaint with Labor that an employer violated a requirement of the H-1B
program. To conduct an investigation, the Administrator must have
reasonable cause to believe that an employer did not comply with or
misrepresented information on its application. Employers who violate any
of the attestations on the application may be subject to civil money
penalties or administrative remedy, such as paying back wages to H-1B
workers or debarment, which disqualifies an employer from participating in
the H-1B program for a specified period of time. Employers, the person who
filed the complaint, or other interested parties who disagree with the
findings of the investigation then have 15 days to appeal by requesting an
administrative hearing.
The Office of Special Counsel for Immigration Related Unfair Employment
Practices (OSC) of the Department of Justice also has some enforcement
responsibility. Under statutory authority created by the Immigration
Reform and Control Act of 1986, OSC pursues charges of citizenship
discrimination brought by U.S. workers who allege that an employer
preferred to hire an H-1B worker.
7 The H-1B Visa Reform Act of 2004, Pub. L. No. 108-447 (Dec. 8, 2004).
8 An aggrieved individual can be an H-1B worker, a U.S. worker, or a
bargaining representative for workers; an aggrieved entity can be another
federal agency, such as the Department of State, or a competitor who is
adversely affected by the employer's alleged non-compliance with the
application.
Figure 1 gives an overview of the H-1B visa process. The figure highlights
the major steps that an employer takes when hiring an H-1B worker. Figure
2 highlights the process for investigations when a violation has been
alleged.
Figure 1: An Overview of the H-1B Visa Process
Figure 2: H-1B Investigatory Process
Labor Has Limited H-1B Authority, but the Agency Could Improve Its Oversight of
Employers' Compliance with Program Requirements
Labor's H-1B authority is limited in scope, but the agency could improve
its oversight of employers' compliance with program requirements. While
Labor's review of employers' applications to hire H-1B workers is timely,
it lacks quality assurance controls and may overlook some inaccuracies,
such as applications containing employer identification numbers with
invalid prefix codes. Labor's Wage and Hour Division investigates
complaints made against H-1B employers and keeps a database of employers
with prior violations. Labor has the authority to conduct random
investigations of some of these employers and began doing so in April
2006. Labor uses education as the primary method of promoting compliance
with the H-1B program. In addition to conducting compliance assistance
programs for employers, it also coordinates with the Department of State
to provide H-1B workers with information about their employee rights.
Labor's Review of Employers' Requests Is Fast, but May Overlook Some
Inaccuracies
Labor has reduced the time it takes to certify employers' applications by
reviewing them electronically and subjecting them to data checks. Labor
increased the percentage of applications reviewed within the required
seven days from 56 percent in fiscal year 2001 to 100 percent in fiscal
year 2005. As of January 2006, all applications must be submitted
electronically9 and Labor's website informs employers that it will certify
or deny applications within minutes based on the information entered. Our
analysis of Labor's data found that of the 960,563 applications that Labor
electronically reviewed from January 2002 through September 2005, 10 99.5
percent were certified, as shown in table 1. Not all applications continue
through the process and result in H-1B visas-employers can withdraw their
applications, petitions can be denied, or the visa may not be issued.
Therefore, Labor officials told us the number of applications submitted
represents employers' interest in the H-1B program rather than the actual
number of H-1B visas that are issued.
9 Special mail application filing procedures are available for employers
without Internet access or with physical disabilities.
10 Our analysis included applications filed electronically from January
14, 2002, through September 30, 2005, except for five applications with a
decision date of October 2, 2005.
Table 1: Labor Condition Applications Electronically Reviewed from 2002
through 2005
Fiscal Total number of Applications Percentage Applications Percentage
yeara applications certifiedb certified deniedb denied
2002 123,060 122,305 99.4 755 0.6
2003 221,262 220,234 99.5 1,026 0.5
2004 308,470 306,645 99.4 1,040 0.3
2005 307,771 306,927 99.7 844 0.3
Source: GAO analysis of Department of Labor data.
aRepresents data from January 2002 through September 2005, with the
exception of five applications that were reviewed by Labor on October 2,
2005.
bNumber of applications certified and denied may not equal the total
number of applications because some applications were not recorded as
either certified or denied.
In addition to agreeing to certain attestations on the application,
employers must provide information about themselves, such as address and
employer identification number, as well as information about each position
they are seeking to fill, the time period they will need the worker, the
prevailing wage and location for the position, the wage the worker will be
paid, and the number of workers they want to hire. On the applications
submitted electronically from January 2002 through September 2005,
approximately 90 percent of employers requested only one worker even
though they are allowed to request multiple workers for the same
occupation on an application. Approximately one-third of the applications
were for workers in computer system analysis and programming occupations,
with the next most frequent request, for college and university education
workers, at 7 percent. About 30 percent of the positions were located in
either California or New York.11 See appendix IV for more information on
H-1B workers.
Labor's review of the application is limited by law to identifying
omissions or obvious inaccuracies. Labor will not certify an application
if the employer has failed to check all the necessary boxes or not filled
in required information such as wage rate, prevailing wage or period of
intended employment. Labor's system will also deny an application if it
contains obvious inaccuracies. In addition to checks to ensure that data
fields have the correct number of digits or are numerical when required,
Labor has defined obvious inaccuracies as when an employer:
11 Does not include additional or subsequent work locations.
o files an application after being debarred, or disqualified,
from participating in the H-1B program;
o submits an application more than 6 months before the beginning
date of the period of employment;
o identifies multiple occupations on a single application;
o states a wage rate that is below the Fair Labor Standards Act
minimum wage;
o identifies a wage rate that is below the prevailing wage on the
application; and
o identifies a wage range where the bottom of the range is lower
than the prevailing wage on the application.
Despite these checks, Labor's system does not consistently identify all
obvious inaccuracies. For example, although the overall percentage was
small, we found 3,229 applications that were certified even though the
wage rate on the application was lower than the prevailing wage for that
occupation in the specific location. Table 2 shows the wage rates and
corresponding prevailing wages from a sample of applications Labor
incorrectly certified because the wage rate was not equal to or greater
than the prevailing wage.
Table 2: Wage Rates and Prevailing Wages from a Sample of Labor Condition
Applications That Were Incorrectly Certified
Sample Application wage Application Application
applications rate prevailing wage certification status
Application 1 FY $60,163 per year $83,833 per year Certified
2002
Application 2 FY $37,784 per year $52,876 per year Certified
2003
Application 3 FY $32,000 per year $35,000 per year Certified
2004
Application 4 FY $55,000 per year $75,000 per year Certified
2005
Source: GAO analysis of Department of Labor data.
Additionally, Labor does not identify other errors that may be obvious.
Specifically, Labor told us its system reviews an application's employer
identification number12 to ensure it has the correct number of digits and
that the number does not appear on the list of employers who are
ineligible to participate in the H-1B program. However, our analysis of
Labor's data found that Labor's review may not identify numbers that are
erroneous. For example, we found 993 certified applications with invalid
employer identification number prefixes. While an invalid employer
identification number could indicate a fraudulent application, Labor does
not consider it an obvious inaccuracy. Officials told us that in other
programs, such as the permanent employment program, Labor matches the
application's employer identification number to a database with valid
employer identification numbers; however, they do not formally do this
with H-1B applications because it is an attestation process, not a
verification process.
According to Labor, most of the process of reviewing applications is
automated-the primary reason an analyst will review an application is if
the employer's prevailing wage source is not recognized by Labor's
database. The analyst reviews the source of the prevailing wage provided
by the employer just to ensure the source meets Labor's criteria, not to
verify that the prevailing wage is correct. The employer may obtain a
prevailing wage from a state workforce agency, a collective bargaining
agreement, or another source, such as a private employment survey. If the
employer uses a private employment survey and the analyst finds the survey
meets Labor's criteria-such as having been conducted in the last 2 years
and using a statistically valid methodology to collect the data-the survey
will be added to Labor's database and used to approve future applications.
Officials also told us that analysts review from three to five
applications per day. In an effort to promote consistency in prevailing
wage determinations, Labor has issued guidance for its state workforce
agencies as well as for employers using surveys. Labor officials told us
they always advise employers to obtain prevailing wage rates from the
state workforce agency, but they also said that because the application is
an attestation process, employers are responsible for doing the required
analysis to determine the prevailing wage and maintaining the proper
documentation to support the prevailing wage provided on the application.
12 The employer identification number is used by the Internal Revenue
Service to identify taxpayers who are required to file business tax
returns. The number has nine digits and is issued in the XX-XXXXXXX
format.
We and others have previously reported that Labor's review of the labor
condition application is limited and provides little assurance that
employers are fulfilling their H-1B responsibilities. In 2000, given
Labor's limited review of the application, we suggested Congress consider
streamlining the H-1B approval process by requiring employers to submit
the application directly to the Immigration and Naturalization Service,
now the USCIS.13 Similarly, in 2003, Labor's Inspector General reported
that either Labor should have authority to verify the accuracy of the
application information or employers should file their applications
directly to USCIS.14 While Labor officials told us they frequently review
the application process to determine where improvements can be made, they
rely on a system of data checks rather than a formal quality assurance
process because of the factual nature of the form and the number of
applications received. Additionally, they said if they conducted a more
in-depth review of the applications, they could overreach their legal
authority and increase the processing time for applications. Officials
also said the integrity of the H-1B program is ensured through enforcement
and by the fact that there is actual review by staff when the employer
submits the paperwork to USCIS.
Labor Investigates Complaints and Has Begun the Process of Randomly
Investigating Previous Violators
Labor enforces H-1B program requirements primarily by investigating
complaints filed against employers. H-1B workers or certain others with
knowledge of an employer's practices who believe an employer has violated
program requirements can file a complaint with Labor's Wage and Hour
Division, which received 1,026 complaints from fiscal year 2000 through
fiscal year 2005. If the complaint meets certain criteria-such as being
filed within 12 months of the violation-Labor said it notifies the
employer of the investigation and requests information, including payroll
records, prevailing wage determinations, and Labor's certified
applications. Labor also interviews the employer and workers, checks its
violations database to determine if the employer has any previous
violations, and assesses the employer's compliance with all H-1B program
requirements. As a result, an investigation may result in more than one
violation. Once the investigation is complete, Labor told us it meets with
the employer to explain the findings and follows up with a letter to the
employer listing violations and penalties, such as payment of back wages
due to H-1B workers who were not paid the required wage, civil money
penalties, debarment, or other administrative remedies (see table 3).
13 GAO, H-1B Foreign Workers: Better Controls Needed to Help Employers and
Protect Workers, GAO/HEHS-00-157 (Washington, D.C.: September 2000).
14 Department of Labor, Office of Inspector General, Overview and
Assessment of Vulnerabilities in the Department of Labor's Alien Labor
Certification Programs, 06-03-007-03-321 (Washington, D.C.: September
2003).
Table 3: Possible Penalties for Violations of the H-1B Program
Civil money Debarment
Violation/penalties Back wages penalties period
Failure to meet certain Due to Not to exceed For at least
attestations or misrepresentation employees not $1,000 per 1 year
of fact in an application paid the violation
required wage
Willful failure to meet Due to Not to exceed For at least
attestations or a willful employees not $5,000 per 2 years
misrepresentation of fact in an paid the violation
application required wage
Willful failure to meet Due to Not to exceed For at least
attestations or a willful employees not $35,000 per 3 years
misrepresentation of fact in an paid the violation
application that resulted in the required wage
displacement of a U.S. worker
either 90 days before or after
hiring an H-1B worker
Source: GAO analysis of 8 U.S.C. S: 1182(n)(2)(C).
While the number of H-1B complaints and violations has increased from
fiscal year 2000 through fiscal year 2005, the overall numbers remain
small and may have been affected by changes to the program. As shown in
table 4, our analysis of Labor's data found the number of complaints
increased from 117 in fiscal year 2000 to 173 in fiscal year 2005. The
number of cases with violations more than doubled over the same period.
The most common violation was not paying H-1B workers the required wage.
With the increase in violations, the amount of penalties also increased.
In fiscal year 2000, 226 H-1B workers were found to be due back wages of
$1.2 million, by fiscal year 2005 the number had increased to 604 workers
with back wages due of $5.2 million. In addition to the payment of back
wages, employers were required to pay civil money penalties of more than
$400,000 over the same period.
Table 4: H-1B Complaints, Violations, Back Wages Due, and Fines Assessed
Number of Civil
Number of Amount of back employees money H-1B
Fiscal Number of cases with wages due due back penalties fiscal
year complaints violations (millions) wages assessed year cap
2000 117 93 $1.2 226 $21,000 115,000
2001 192 67 0.6 135 17,750 195,000
2002 238 210 3.8 830 48,350 195,000
2003 148 264 4.0 552 136,890 195,000
2004 158 271 4.2 390 114,125 65,000
2005 173 217 5.2 604 103,350 65,000
Total 1,026 1,122 $19.0 2,737 $441,465
Source: GAO analysis of Department of Labor, Wage and Hour Division data,
the American Competitiveness and Workforce Improvement Act of 1998, and
the American Competitiveness in the Twenty-First Century Act of 2000.
From fiscal year 2002 through fiscal year 2005, Labor requested over 50
debarment periods from Homeland Security for employers that committed
certain violations-for example, willfully failing to pay an H-1B worker
the required wage-that resulted in their being disqualified from
participating in the H-1B program for a specified period of time.15 Labor
officials told us it is difficult to attribute changes in complaints and
violations to any specific cause because of multiple legislative changes
to the program, such as the temporary increase in the number of H-1B
workers allowed to enter the country and the additional attestations for
certain employers that expired and then were reinstated.
In addition to investigating complaints, Labor's Wage and Hour Division
has recently begun randomly investigating employers who have willfully
violated the program's requirements. Labor has had the statutory authority
to conduct random investigations of these employers since 1998. Under this
authority, Labor can subject employers on a case-by-case basis to random
investigations up to 5 years from the date the employer first willfully
violated the requirements of the H-1B program or willfully misrepresented
a material fact in the labor condition application. Officials told us that
the WHD did not schedule random H-1B investigations of willful violators
until recently because, by definition, such employers are debarred from
employing H-1B workers for a fixed number of years (they often go out of
business due to the debarment), the number of such employers is very small
(the total didn't reach 50 nationwide until late in fiscal year 2005) and
trained H-1B investigators have heavy case loads. However, Labor said that
it will initiate random investigations nationwide in fiscal year 2006.
Labor has an existing database that it plans to use for targeting
employers for investigations. The database contains information about
employers who have previously violated their obligations under the H-1B
program, including the types of violations and the penalties that were
assessed. Although cases with willful violations represent a small number
of all cases with violations, they have increased from 8 percent in fiscal
year 2000 to 14 percent in fiscal year 2005. (See fig. 3) Officials said
that they now have 59 cases on which they can follow-up to determine if
the employer has committed another violation. Labor said that, in addition
to initiating random investigations of willful violators nationwide, it
will set up a system to track the data in its database and train its
employees in fiscal year 2006. In April 2006, Labor sent a letter to its
regional offices directing them each to initiate an investigation of at
least one case prior to September 30, 2006.
15 Homeland Security does not have a record of the number of debarment
requests received in fiscal years 2000 and 2001. Labor does not have a
record of its number of debarment requests for fiscal year 2000.
Figure 3: Willful and Nonwillful Violations from Fiscal Year 2000 through
Fiscal Year 2005
Labor Relies Primarily on Education to Promote Employer Compliance
Labor uses education as the primary method of promoting employer
compliance with the H-1B program. For example, Labor conducts compliance
assistance programs, posts guidance on its website, and explains
employers' obligations under the law during complaint investigations.
Labor held a total of 6 H-1B compliance assistance programs for H-1B
employers from fiscal year 2000 through fiscal year 2005. Typically,
compliance assistance programs are conducted by Labor's district offices
based upon requests by employers, employer associations, or employee
groups. For example, in fiscal year 2002, Labor gave two presentations in
Massachusetts, attended by 290 participants, mostly attorneys. In
addition, Labor presented at two continuing education events for attorneys
in Los Angeles and New Jersey in fiscal year 2004. Labor also holds
seminars in response to requests for compliance information from employer
associations and discusses compliance with H-1B program requirements with
companies that do not have pending lawsuits related to the H-1B program.
Labor provides information to employers through its website, such as
employer guidance and fact sheets that describe employer responsibilities
and employee rights under the H-1B program. Some of the fact sheets have
not been updated since the program was amended by the H-1B Visa Reform Act
in 2004, but officials told us they have developed 26 new fact sheets that
will be made available on the agency's website this fiscal year. Labor
also publicizes violation cases by issuing press releases on its website,
particularly when it debars an employer. Labor officials told us that the
purpose of the press releases is to show that there are consequences for
not complying with the law.
Labor takes the opportunity to explain employer obligations under the law
during its investigations of complaints filed against H-1B employers. At
the beginning, an investigator sends the employer the regulations that
pertain to the H-1B program and, during the investigation, highlights the
law and regulations that are relevant to the case. The investigator also
answers any questions the employer may have. At a final conference, Labor
tells the employer which parts of the law the employer violated.
Additionally, Labor always asks the employer it is investigating how it
plans to change to come into compliance with the program.
Labor is working with the Department of State to provide information cards
to H-1B workers about their employment rights. Workers receive the
information cards with their visas. Labor also distributes the cards to
employers so that they are aware of an H-1B worker's rights. The cards
include information on employees' rights regarding wages and benefits,
illegal deductions, working conditions, records, and discrimination. (See
fig. 4.)
Figure 4: H-1B Worker Information Card
Homeland Security and Justice also provide information to employers in a
variety of ways such as publishing newsletters, responding to written
inquiries from employers and their counsel, informational bulletins,
answering questions for employers who call, and providing information on
their websites. Homeland Security publishes informational bulletins for
employers seeking to hire foreign workers. The Department also uses its
website to advise the public of any changes in the H-1B program regarding
filing fees or eligibility resulting from changes in the law. Justice
engages in educational activities through public service announcements
aimed at employers, workers, and the general public. The agency also
trains employers, and works with other federal agencies to coordinate
education programs for employers. Justice also has a telephone
intervention hotline for U.S. workers and H-1B employers to call when
disputes arise. Justice uses the hotline to quickly address questions and
to resolve problems. In addition, Justice answers e-mails, issues
guidance, and provides information on its website.
Labor and Homeland Security Face Challenges Sharing Information
Labor, Homeland Security, and Justice all have responsibilities under the
H-1B program, but Labor and Homeland Security could better address the
challenges they face in sharing information. After Labor certifies an
application, Homeland Security's USCIS reviews the information but cannot
easily verify how many times the employer has used the application. Also,
USCIS staff told us that, during their review, they may find evidence that
employers are not meeting their H-1B obligations. However, current law
precludes the Wage and Hour Division from using this information to
initiate an investigation of the employer. In addition to Homeland
Security, Labor also shares enforcement responsibilities with Justice,
which pursues charges filed by U.S. workers who allege that they were not
hired, or were displaced, so that an H-1B worker could be hired instead.
From 2000 through 2005, Justice entered six out-of-court settlements to
remedy violations and assessed $7,200 in penalties.
Labor and Homeland Security Coordinate to Process Employers' Requests to Hire
H-1B Workers, but Do Not Use Certain Information to Investigate Possible
Violations
Homeland Security's USCIS reviews Labor's certified application as part of
the adjudication process; however, it lacks the ability to easily verify
whether employers have submitted petitions for more workers than
originally requested on the application. Labor can certify applications
for multiple workers and, therefore, employers can use one application in
support of more than one petition. However, USCIS' data system, CLAIMS 3,
does not match each petition to its corresponding application because the
system does not include a field for the unique number Labor assigns each
application. As a result, USCIS cannot easily verify how many times the
employer has used a given application or which petitions were supported by
which application, potentially allowing employers to use the application
for more workers than they were certified to hire. USCIS staff told us
that when employers do not provide the names of the other H-1B workers
approved using the same certified application, the adjudicator may request
it from the employer. USCIS staff also told us that a letter is sent to
the employer requesting the information and the employer has approximately
12 weeks to respond. Consequently, a request for information requires
staff time and slows down the adjudication process. While USCIS told us it
has attempted to add Labor's application case number to its database, it
has not been able to because of the system's memory limitations. USCIS
told us it is currently transforming its information technology system;
however, it will be several years before the new system is operational.
During the process of reviewing employers' petitions, USCIS may find
evidence the employer is not meeting the requirements of the H-1B program,
but current law precludes the Wage and Hour Division from using this
information to initiate an investigation of the employer.16 For example,
to extend an H-1B worker's stay in the United States, an employer may
submit a petition with the worker's W-2 form17 as supporting
documentation. USCIS staff told us they have reviewed petitions where the
wage on the W-2 form was less than the wage the employer indicated it
would pay on the original Labor application. In these cases, USCIS asks
the employer to explain the wage discrepancy. If the employer has a
legitimate explanation and documentation-for example the worker was on
some type of extended leave-the petition may be approved. However, if the
employer is unable to adequately explain the discrepancy, USCIS said it
may deny the petition but generally does not report these employers to
Labor for investigation. USCIS does not have a formal process for
reporting the discrepancy to Labor. According to officials from Labor, it
does not consider Homeland Security to be an aggrieved party; therefore,
Labor would not initiate an investigation based on information received
from, or a complaint filed by, Homeland Security.
Labor and Homeland Security also coordinate when employers have committed
violations resulting in debarment. After Labor's Wage and Hour Division
determines that an employer has committed a debarrable offense-such as
willfully not paying an H-1B worker the required wage-Labor notifies
USCIS, which in turn provides dates for the period of time that it will
automatically deny petitions from the employer. Labor's Wage and Hour
Division then sends a letter informing the employer that it is ineligible
to sponsor workers for the H-1B program for that period of time. A copy of
the letter is sent to Labor's Employment and Training Administration so
that it will not certify any applications from the employer for the same
period.
16Under the INA, as amended, information submitted by an employer for
purposes of securing the employment of an H-1B nonimmigrant is prohibited
from being considered a receipt of information for purposes of initiating
an investigation based on a credible source under the INA. 8 U.S.C. S:
1182(n)(2)(G).
17The W-2 form is the Internal Revenue Service's wage and tax statement.
Both Labor and USCIS officials said they are working to improve
communication between the two agencies. For example, Labor, Homeland
Security, and the State Department convened a multi-agency fraud working
group, which met in March 2006, to discuss strategies for dealing with
fraud in the H and L visa programs.18
Justice Handles U.S. Workers' Cases
Justice pursues charges filed by U.S. workers who allege that an H-1B
worker was hired in their place. The Immigration and Nationality Act, as
amended, gives U.S. workers the right to file a charge against an employer
when they believe an employer preferred to hire an H-1B visa holder. When
a charge has been filed, Justice's Office of Special Counsel opens an
investigation for 120 or 210 days, as determined by statute. Charges may
be resolved through a complaint before an administrative law judge, an out
of court settlement, or a dismissal for lack of reasonable cause to
believe a violation has occurred. Between 2000 and 2005, no cases were
heard in court by an administrative law judge. Most of the 101
investigations started by Justice from 2000 through 2005 were found to be
incomplete, withdrawn, untimely, dismissed, or investigated without
finding reasonable cause for a violation. If Justice finds that an
employer hired an H-1B worker instead of a U.S. worker, Justice may assess
penalties, impose debarment, or seek administrative remedies such as back
wages. Justice may assess penalties on cases settled out of court if it
finds that an employer hired an H-1B worker over a better-qualified U.S.
worker. From 2000 through 2005, Justice found discriminatory conduct in 6
out of the 97 investigations closed. Justice assessed a total of $7,200 in
penalties in three of the six cases, all in 2003.19
18 The H visa program also includes categories for other types of
temporary workers, including agricultural workers (H-2A) and
non-agricultural (H-2B) workers. The L visa program allows companies to
transfer employees into the United States.
19 In the three cases where penalties were assessed, employers advertised
for only H-1B workers for various IT positions. Upon receiving notice of
the charges, the employers immediately agreed not to post discriminatory
advertising in the future and to take steps to recruit U.S. workers (as
well as permanent and temporary residents, refugees, and asylees). In
these cases, minimum penalties were imposed because there were no
identifiable victims and by law, penalties are capped at $2,200 per
violation or individual. In the three cases where penalties were not
assessed, discrimination against U.S. workers appeared to be inadvertent,
not intentional.
Conclusion
U.S. employers continue to request high numbers of foreign temporary
workers under the H-1B nonimmigrant visa program. Labor, along with
Homeland Security and Justice, must address the desires of U.S. employers
for skilled foreign workers as well as ensure the program's integrity and
protect both domestic and foreign workers. Labor's authority to review the
Labor Condition Application is restricted to looking for completeness and
obvious inaccuracies, but it could improve its oversight of employers'
compliance with program requirements. Additionally, USCIS may find
information in the materials submitted by an H-1B employer that indicates
the employer is not complying with program requirements. However, current
law restricts Labor from using such evidence to initiate an investigation
of the employer. USCIS also has an opportunity to improve its oversight of
employers' petitions to hire H-1B workers by matching information from its
petition database with Labor's application case numbers to detect whether
employers are requesting more H-1B workers than they were originally
certified to hire. As Congress deliberates changes to U.S. immigration
policy, ensuring that employers are in compliance with the program's
requirements that protect both domestic and H-1B workers is essential.
Matter for Congressional Consideration
To increase employer compliance with the H-1B program and protect the
rights of U.S. and H-1B workers, Congress should consider (1) eliminating
the restriction on using application and petition information submitted by
employers as the basis for initiating an investigation, and (2) directing
Homeland Security to provide Labor with information received during the
adjudication process that may indicate an employer is not fulfilling its
H-1B responsibilities.
Recommendations for Executive Action
To strengthen oversight of employers' applications to hire H-1B workers,
we recommend that Labor improve its procedures for checking completeness
and obvious inaccuracies, including developing more stringent,
cost-effective methods of checking for wage inaccuracies and invalid
employer identification numbers.
To ensure employers are complying with program requirements, we recommend
that as USCIS transforms its information technology system, the Labor
application case number be included in the new system, so that
adjudicators are able to quickly and independently ensure that employers
are not requesting more H-1B workers than were originally approved on
their application to Labor.
Agency Comments and Our Evaluation
We provided a draft of this report to the Departments of Labor, Homeland
Security, and Justice for their review and comments. Each agency provided
technical comments, which we incorporated as appropriate. Justice did not
have formal comments on our report.
Homeland Security agreed with our recommendations and stated that USCIS
intends to include Labor's application case number in its new information
technology system.
Labor questioned whether our recommendation for more stringent measures is
supported by the magnitude of the error rate that was found, as well as
whether the benefits of instituting such measures would equal or exceed
the added costs of implementing them. In addition, Labor said that
Congress intentionally limited the scope of Labor's application review in
order to place the focus for achieving program integrity on USCIS.
We believe that Labor is at risk of certifying H-1B applications that
contain more errors than were found in the scope of our review. For
example, we checked only for employer identification numbers with invalid
prefix codes, and did not look for other combinations of invalid numbers
or data. Therefore, we do not know the true magnitude of the error rate in
the certification process. We continue to believe there are cost-effective
methods that Labor could use to check the applications more stringently
that would enhance the integrity of the H-1B process.
We are sending copies of this report to the Secretary of Labor, the
Secretary of Homeland Security, the Attorney General, relevant
congressional committees, and others who are interested. Copies will also
be made available to others upon request. The report will be available on
GAO's web site at http://www.gao.gov .
If you or your staff have any questions about this report please contact
me on (202) 512-7215 or [email protected] . Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this report
are listed in appendix VII.
Sigurd R. Nilsen Director, Education, Workforce and Income Security Issues
Appendix I: Scope and Methodology Appendix I: Scope and Methodology
To understand the H-1B certification, adjudication, and enforcement
processes and the responsibilities of each agency involved, we hosted a
joint meeting with officials from the Departments of Labor, Homeland
Security U.S. Citizen and Immigration Services (USCIS), and Justice. We
also reviewed laws and regulations related to the H-1B program.
To obtain information on the characteristics of employers who filed Labor
Condition Applications (applications) and the positions they sought to
fill with H-1B workers, we analyzed the Efile H-1B Disclosure Data from
the Employment and Training Administration (ETA) of the Department of
Labor. These data included all the applications filed electronically from
January 2002 through September 2005.1 We analyzed the data from a total of
960,563 applications to determine (1) the number that had been certified
or denied, (2) the employers who requested the most workers, (3) the most
frequently requested occupation codes, (4) the locations of the H-1B
positions, (5) the source of the prevailing wage used by employers, and
(6) how many applications were certified with invalid employer
identification number prefixes when compared with a list of valid prefix
codes obtained from the Internal Revenue Service. We also analyzed how
prevailing wages compared to actual wage rates. The H-1B Visa Reform Act,
which was passed on December 8, 2004, requires employers to pay H-1B
workers at least 100 percent of the prevailing wage for each specific
occupation and location. Prior to the enactment of this law, Labor's
regulations permitted employers to pay actual wages that were only 95
percent of the prevailing wage. Accordingly, to ensure we did not
incorrectly identify any applications as erroneously certified during the
time between the passage of the H-1B Visa Reform Act and Labor's
implementation of the new 100 percent requirement, our analysis only
identified those cases where the actual wage rate was less than 95 percent
of the prevailing wage.
Additionally, we interviewed officials from ETA regarding the application
approval process, including the circumstances under which applications are
reviewed by an analyst for discrepancies, how prevailing wage sources are
determined to be legitimate, and the ETA resources that are used to
process and review applications. Additionally, we accessed the application
online system to determine when the employer would receive error notices
when filling out the application. We conducted a data reliability
assessment of the H-1B Disclosure Data by testing for completeness and
accuracy, reviewing documentation, and interviewing knowledgeable
officials. We found it to be sufficiently reliable for our purposes.
1 Our analysis included applications filed electronically from January 14,
2002, through September 30, 2005, with the exception of five applications
that were reviewed by Labor on October 2, 2005.
To analyze the number and type of H-1B complaints received by Labor's Wage
and Hour Division (WHD) and the outcomes of the associated investigations,
we received a data extract from WHD's Wage and Hour Investigative Support
and Reporting Database (WHISARD). From fiscal years 2000 through 2005, we
analyzed the number of H-1B complaints, violations, and the penalties
assessed including the number of employees due back wages, the amount of
back wages due, civil money penalties, the most common violation, and the
trend in the number of willful violations as a percentage of all
violations. We also interviewed WHD officials on the complaint and
investigation process, the appeal process, educational outreach to improve
employer compliance, and the WHD resources used to process and investigate
complaints. We conducted a data reliability assessment of the WHISARD data
by testing for completeness and accuracy, reviewing documentation, and
interviewing knowledgeable officials. We found it to be sufficiently
reliable for our purposes.
To determine the number of employers who had been debarred, or
disqualified from participating in the H-1B program for a specified period
of time, we requested that WHD officials provide the number of times per
fiscal year from 2000 through 2005 that they sent a letter to USCIS
requesting a debarment period. We also requested that USCIS provide the
number of request letters it had received from WHD.
To determine the number and type of H-1B petitions submitted by employers
and adjudicated by the Department of Homeland Security US Citizenship and
Immigration Service, we analyzed service center data from the Computer
Linked Application Information Management System, Version 3.0 (CLAIMS 3)
database from fiscal years 2000 through 2005. We analyzed (1) the number
of petitions approved or denied; (2) the basis for the classification of
the worker, such as whether the petition was for a new H-1B employee or
for a continuation of a worker's stay; (3) the employer's requested
action; (4) the educational level of the H-1B workers; (5) the number of
H-1B workers requested on each petition; and (6) the occupation codes
requested. Additionally, we conducted a data reliability assessment of
selected variables by testing for completeness and accuracy, reviewing
documentation, and interviewing knowledgeable officials. We reported on
the variables that we found to be reliable enough for our purposes. To
understand the policies and procedures of the program, we interviewed
officials at USCIS headquarters. To understand the petition adjudication
process, we conducted site visits at the USCIS Service Centers in Saint
Albans, Vermont, and Laguna Niguel, California. According to USCIS, from
October 2004 through December 2005 these service centers combined
processed 63 percent of the H-1B petitions. To obtain context and
facilitate our understanding of the electronic CLAIMS 3 data, we requested
to review a non-probability sample of 48 petition files representing a
variety of H-1B adjudication processes. During our site visits, we
reviewed those that were available.
To determine the type of violations and the process for investigations of
U.S. worker displacement allegations we interviewed Department of Justice
officials. We analyzed a summary report provided by Justice of the number
of employers investigated from 2000 through 2005 and the outcomes of those
cases. To determine the number and outcomes of investigations, and the
types and amounts of penalties assessed on employers, we obtained
documentation from Justice.
Appendix II: Department of Labor Labor Condition Application Appendix II:
Department of Labor Labor Condition Application
Appendix III: Department of Homeland Security USCIS Petition for a
Nonimmigrant Worker and H-Classification Supplement Appendix III:
Department of Homeland Security USCIS Petition for a Nonimmigrant Worker
and H-Classification Supplement
Appendix IV: Data Tables Appendix IV: Data Tables
The following tables provide additional information on analyses conducted
on the application data from the Department of Labor's Efile H-1B
Disclosure Database and the petition data from USCIS's Computer Linked
Application Information Management System, Version 3.0.1
A. Analyses on the application data obtained from the Department of
Labor's Efile H-1B Disclosure Data:
Table 5: Companies Electronically Filing Applications for the Most H-1B
Workers from January 2002 to September 2005
Company Number of workers requested
1 187,337
2 39,569
3 29,353
4 20,062
5 20,039
6 19,791
7 18,523
8 18,446
9 17,200
10 16,717
Source: GAO analysis of Department of Labor data.
Table 6: Prevailing Wage Sources Used by Employers on Labor Condition
Applications
Fiscal yeara State workforce agency Collective bargaining agreement Other
2002 24% 2% 74%
2003 21% 2% 77%
2004 18% 1% 80%
2005 16% 2% 82%
Source: GAO analysis of Department of Labor data.
aJanuary 2002 through September 2005.
bOther sources of prevailing wages used by employers include the
Department of Labor's Occupational Employment Statistics Survey and
private employment surveys.
1 Values may not total to 100 percent due to rounding.
B. Analyses on the H-1B petition data obtained from USCIS's Computer
Linked Application Information Management System Version 3.0 (CLAIMS 3):
Table 7: Number of H-1B Petitions Approved and Denied
Fiscal Total Petitions Percentage Petitions Percentage
year petitions approveda approved denieda denied
2000 293,857 284,845 97 9,012 3
2001 329,972 316,894 96 13,078 4
2002 209,746 199,410 95 10,336 5
2003 225,768 216,225 96 9,543 4
2004 307,466 294,544 96 12,922 4
2005 258,142 253,450 98 4,692 2
Total 1,624,951 1,565,368 96 59,583 4
Source: GAO analysis of Department of Homeland Security data.
aPetitions were included in the fiscal year based on the date they were
received by USCIS.
Table 8: Basis for Workers' H-1B Classification
Continued
employment New
Fiscal New with same Change in concurrent Change of Amended
year employment employer employment employmenta employerb petitionb
2000 71% 15% 13% 0.8% N/A N/A
2001 73% 15% 12% 0.7% N/A N/A
2002 66% 21% 12% 0.9% N/A N/A
2003 60% 29% 11% 0.8% N/A N/A
2004 64% 27% 8% 0.7% N/A N/A
2005 55% 31% 6% 0.6% 6% 0.6%
Source: GAO analysis of Department of Homeland Security data.
Note: N/A=not applicable.
aConcurrent employment is when an H-1B worker is employed by multiple
employers with overlapping approved dates of employment.
bThe change of employer and amended petition categories were not on the
Form I-129 H-1B petition until March 2005.
Table 9: Employers' Requested Action on Petitions for H-1B Workers
Notify the Change and extend Extend the Amend the
Fiscal year officea status worker's stay worker's stay
2000 32% 24% 44% 0.4%
2001 33% 27% 41% 0.1%
2002 18% 34% 48% 0.2%
2003 20% 29% 52% 0.1%
2004 26% 27% 47% 0%
2005 21% 23% 54% 1.6%
Source: GAO analysis of Department of Homeland Security data.
aEmployers check `notify the office' to indicate whether the petition
approval should be sent to a consulate, a port of entry, or preflight
inspection.
Table 10: Workers' Education Level on H-1B Petitions
Fiscal Less than a Bachelor's Bachelor's Master's Professional Doctorate
yeara degree degree degree degree degree
2003 2% 50% 30% 6% 12%
2004 1% 50% 34% 5% 10%
2005 1% 44% 37% 5% 12%
Source: GAO analysis of Department of Homeland Security data.
aWe did not report on fiscal year 2000 through fiscal year 2002 because of
missing data.
Table 11: Top Five Occupation Codes Requested on H-1B Petitions, FY 2000
through FY 2005
Number of times
requested on
Occupational code title Occupation code petitions
1 Occupations in Systems Analysis and 030 674,805
Programming
2 Occupations in College and University 090 94,685
Education
3 Accountants, Auditors, and Related 160 68,256
Occupations
4 Electrical/Electronics Engineering 003 65,974
Occupations
5 Other Computer Related Occupations 039 58,429
Source: GAO analysis of Department of Homeland Security data.
Appendix V: Comments from the Department of Labor Appendix V: Comments
from the Department of Labor
Appendix VI: Comments from the Department of Homeland Security Appendix
VI: Comments from the Department of Homeland Security
Appendix VII: A Appendix VII: GAO Contact and Staff Acknowledgments
GAO Contact
Sigurd R. Nilsen, Director, 202-512-7215, [email protected]
Acknowledgments
Alicia Puente Cackley, Assistant Director; Gretta L. Goodwin, Senior
Economist; Amy J. Anderson, Senior Analyst; and Pawnee Davis, Analyst,
made significant contributions to all phases of this report. In addition,
William J. Schneider, Intern, assisted with data collection and analysis;
Sheila R. McCoy provided legal assistance; Luann M. Moy provided
methodological assistance; Susan F. Baker, Cynthia L. Grant, Lynn M.
Milan, and Melinda L. Cordero provided data analysis; and Rachael C.
Valliere, Communications Analyst, assisted in report development.
Related GAO Products Related GAO Products
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to Allocate Investigative Resources. GAO-06-462T . Washington, D.C.: March
28, 2006.
Immigration Benefits: Additional Controls and a Sanctions Strategy Could
Enhance DHS's Ability to Control Benefit Fraud. GAO-06-259 . Washington,
D.C.: March 10, 2006.
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Management Improvements Are Still Needed. GAO-06-318T . Washington, D.C.:
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Worksite Enforcement Efforts. GAO-05-813 . Washington, D.C.: August 31,
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Services: Allocation of Additional H-1B Visas Created by the H-1B Visa
Reform Act of 2004. GAO-05-705R . Washington, D.C.: May 18, 2005.
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Visitor and Immigrant Status Indicator Technology Program. GAO-05-202 .
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Reporting Requirement Is Questionable. GAO-05-204 . Washington, D.C.:
January 28, 2005.
Highlights of a GAO Forum: Workforce Challenges and Opportunities For the
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Policies. GAO-04-845SP . Washington, D.C.: June 1, 2004.
H-1B Foreign Workers: Better Tracking Needed to Help Determine H-1B
Program's Effects on U.S. Workforce. GAO-03-883 . Washington, D.C.:
September 10, 2003.
Information Technology: Homeland Security Needs to Improve Entry Exit
System Expenditure Planning. GAO-03-563 . Washington, D.C.: June 9, 2003.
High-Skill Training: Grants from H-1B Visa Fees Meet Specific Workforce
Needs, but at Varying Skill Levels. GAO-02-881 . Washington, D.C.:
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(130515)
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Highlights of GAO-06-720 , a report to congressional requesters
June 2006
H-1B VISA PROGRAM
Labor Could Improve Its Oversight and Increase Information Sharing with
Homeland Security
The H-1B visa program assists U.S. employers in temporarily filling
certain occupations with highly-skilled foreign workers. There is
considerable interest regarding how Labor, along with Homeland Security
and Justice, is enforcing the requirements of the program. This report
describes: (1) how Labor carries out its H-1B program responsibilities;
and (2) how Labor works with other agencies involved in the H-1B program.
We interviewed officials and analyzed data from all three agencies.
What GAO Recommends
The Congress should consider eliminating the restriction on Labor using
information from Homeland Security to initiate an investigation and
directing Homeland Security and Labor to share information on employers
that may not be fulfilling program requirements. GAO also recommends that
Labor improve its checks of employers' applications and that Homeland
Security's U.S. Citizenship and Immigration Services (USCIS) include
Labor's application case number in its new information technology system.
Homeland Security agreed with our recommendations. Labor questioned
whether more stringent checks were necessary and believes Congress
intentionally limited Labor's role and placed program integrity with
USCIS. We believe there are cost-effective methods that Labor could use to
check the applications more stringently that would enhance the integrity
of the H-1B process.
While Labor's H-1B authority is limited in scope, the agency could improve
its oversight of employers' compliance with program requirements. Labor's
review of employers' applications to hire H-1B workers is timely, but
lacks quality assurance controls and may overlook some inaccuracies. From
January 2002 through September 2005, Labor electronically reviewed more
than 960,000 applications and certified almost all of them. About
one-third of the applications were for workers in computer systems
analysis and programming occupations. By statute, Labor's review of the
applications is limited to searching for missing information or obvious
inaccuracies and it does this through automated data checks. However, our
analysis of Labor's data found certified applications with inaccurate
information that could have been identified by more stringent checks.
Although the overall percentage was small, we found 3,229 applications
that were certified even though the wage rate on the application was lower
than the prevailing wage for that occupation. Additionally, approximately
1,000 certified applications contained erroneous employer identification
numbers, which raises questions about the validity of the applications. In
its enforcement efforts, Labor's Wage and Hour Division (WHD) investigates
complaints made against H-1B employers. From fiscal year 2000 through
fiscal year 2005, Labor reported an increase in the number of H-1B
complaints and violations, and a corresponding increase in the number of
employer penalties. In fiscal year 2000 Labor required employers to pay
back wages totaling $1.2 million to 226 H-1B workers; by fiscal year 2005,
back wage penalties had increased to $5.2 million for 604 workers. Program
changes, such as a higher visa cap in some years, could have been a
contributing factor. In April 2006, WHD began the process of randomly
investigating willful violators of the program's requirements.
Labor, Homeland Security, and Justice all have responsibilities under the
H-1B program, but Labor and Homeland Security could better address the
challenges they face in sharing information. Homeland Security reviews
Labor's certified application but cannot easily verify whether employers
submitted petitions for more workers than originally requested on the
application because USCIS's database cannot match each petition to Labor's
application case number. Also, during the process of reviewing petitions,
staff may find evidence that employers are not meeting their H-1B
obligations. For example, Homeland Security may find that a worker's
income on the W-2 is less than the wage quoted on the original
application. Homeland Security may deny the petition if an employer is
unable to explain the discrepancy, but it does not have a formal process
for reporting the discrepancy to Labor. Additionally, current law
precludes the Wage and Hour Division from using this information to
initiate an investigation of the employer. Labor also shares enforcement
responsibilities with Justice, which pursues charges filed by U.S. workers
who allege they were displaced by an H-1B worker. From 2000 through 2005,
Justice found discriminatory conduct in 6 out of the 97 investigations
closed and assessed $7,200 in penalties.
*** End of document. ***