New Executive Order & Information Sharing Practices Increase Inspections of Federal Contractors’ Use of Temporary Foreign Workers & H-1B Workers

On August 3, 2020, President Trump signed an Executive Order requiring each executive department and federal agency to review the performance of contracts and subcontracts awarded in fiscal years 2018 and 2019 to determine whether temporary foreign workers displaced or affected opportunities for US workers and whether their employment affects national security. 

The agencies may examine, for example, a foreign worker’s pay versus a similarly employed US worker’s pay, the hiring practices of both federal contractors and subcontractors to see how a foreign worker was chosen to fill a job opening over a US worker (even though the H-1B program generally has no requirement to test the US labor market for a US worker), and whether the foreign worker is working on information technology projects that could implicate national security concerns. 

In a broader application, the Executive Order also directs the Department of Labor (DOL) and Department of Homeland Security (DHS) to generally review the use of H-1B workers at any job site (not just federal worksites) to ensure that their employment does not adversely affect the wages and working conditions of US workers (the H-1B program already has this requirement). The DOL and DHS will be looking, for example, to ensure that H-1B workers are working in the jobs and job sites listed in the H-1B petition and that they are being paid properly, that they are offered the same benefits and bonus/commission opportunities as US workers, that they are actively employed and paid within 60 days of an approved change or extension of status within the US or within 30 days of their entry into the US in H-1B status, that Labor Condition Applications were properly posted to notify US workers of the job opportunity and that Public Access Files are properly maintained, and that they are not “benched” or furloughed (meaning, in general, being put into unproductive, unpaid status for business reasons). H-1B dependent employers have more stringent compliance requirements, and the DOL and DHS will be examining H-1B dependent employers to ensure their compliance. These examinations will involve H-1B workers at both primary employer worksites as well as those placed at third-party worksites.

Federal agencies will also assess any negative impact of federal contractors’ offshoring practices on the United States economy, on the efficiency of Federal procurement practices, and on national security, as well as proposing action to improve these practices and protect national security. In addition, they will ensure that, where a federal contract requires that only US citizens, US nationals, green card holders, refugees, and/or asylees be used to fulfill the services required, that contractors and subcontractors adhere to this staffing restriction.

In a Fact Sheet issued by the White House on the same date, the Trump Administration noted that the order follows the federally-owned Tennessee Valley Authority’s (TVA) recent announcement that it planned to outsource 20% of its technology jobs to companies based overseas, which is “detrimental in the middle of a pandemic, which has already cost millions of Americans their jobs.” As another basis for the Order, the Administration states that “[g]iven the current climate of rampant intellectual property theft, outsourcing IT jobs that involve sensitive information could pose a national security risk.”

The Order comes on the heels of another federal announcement on July 31st stating that, for the first time, the DOL will give the DHS access to its nonimmigrant and immigrant petition records and foreign labor certification database, listing, for example, all the terms and conditions (hours of work, pay rate, worksite address, etc.) of each foreign national’s employment. The DHS will also refer suspected employer violations of the H-1B program to the DOL to allow further investigation and adjudication of potential H-1B violations. As stated by the DOL in its announcement, this will result in “administrative and targeted site visits.” The DOL’s power to “personally initiate investigations of potential violations is a unique authority” and “[n]o previous Secretary of Labor has ever exercised this authority.”

In light of this, employers can expect an increase in DOL and DHS site inspections and audits. In preparation for that, all employers (not just federal contractors) should proactively audit their hiring and staffing practices as well as the employment terms and conditions of its workforce (particularly their H-1B and other foreign workers), and have a protocol in place if there is an on-site inspection.


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