The H-1b process: How it works
A company wishing to hire a foreign worker must post its intention to do so within the company. Then, a Labor Condition Application (LCA) must be filed with the U.S. Department of Labor.
The LCA stipulates that “you’re going to treat the foreign worker like everybody else doing the same job,” said Boulder attorney Brad Hendrick, who specializes in the process. “It’s meant to both protect the (foreign) worker from being exploited and to protect the U.S. workers.”
Along with working conditions, the LCA assesses wage information to set the minimum wage for the H-1B employee, which will be the higher of the actual wage paid to employees at the company already in that particular task, or the prevailing wage for that occupation in the geographical area.
Andy Nguyen a Galvanize graduate and current IBM employee speaks to a class at the company in Boulder on Monday. (Paul Aiken / Staff Photographer)
Hendrick explained: “If you have four engineers in the same job and they’re all making $60,000 and the prevailing minimum wage comes back at $55,000, you have to pay the H-1B worker $60,000. Similarly, if everyone’s making $60,000 and the prevailing minimum comes in at $65,000, you have to pay the H-1B worker $65,000.”
Once the LCA is certified — typically within days — the process then shifts to the U.S. Department of Homeland Security’s U.S. Citizenship and Immigration Services (USCIS), which runs the lottery by which H-1B applications are selected for processing. A cap, established by Congress, is set at 85,000 visas, with 20,000 of those reserved for advanced degree-holders.
The 20,000 advance degree visas are awarded via random selection first; those not chosen from the advanced degree pool are then entered into the general lottery, from which 65,000 more applications are selected randomly.
If a case is selected for processing in the lottery, the USCIS works to determine whether the prospective employee is eligible for H-1B immigration status. Visas are issued for three years and some qualify for extensions, which Hendrick said are common.
The use of foreign workers by American companies — hotly debated from the White House to local boardrooms — is controversial, to say the least. Critics claim that companies using the most visas bring in cheaper workers and displace U.S. citizens from high-paying jobs. The local tech community, plagued with a labor shortage, contends that’s not the case.
But a review of H-1B records filed by Boulder, Longmont and Broomfield businesses since 2010 shows more than a dozen so-called outsourcing companies operating locally — and posting pay scales that were, on average, 11 percent less than other top H-1B sponsors, according to data from the U.S. Department of Labor.
CEOs who struggle to fill open positions every day of the week, say they would hire American workers if they had the requisite skills. To focus on the visa program’s viability misses the bigger problem, they say.
The real issue, according to Dave DuPont, CEO and founder of Boulder’s TeamSnap, “is why can’t we get the people we need?”
Overall, the Boulder Valley is a small player in the H-1B market. Just over 4,000 applications have been submitted in the past seven years in Boulder, Longmont and Broomfield. For comparison, the California tech hub of Mountain View (population 78,000 and home to Google, Microsoft and LinkedIn, among others) recorded 28,572.
A look at regional companies seeking to hire the most H1-B visa holders. (Stephanie Swartz)
“The visa makes America such a special place, that talented, creative people from all over the world can come here to be educated and work,” said Dan Caruso, CEO of Boulder’s Zayo Group. “It’s kind of crazy we wouldn’t want them to be welcomed here.”
Hundreds of area companies are impacted, and not just in tech. Visa applications in the H-1B category have been filed for human resource professionals, accountants, executives — even a dentist and a police officer.
Critics say the program is being misused and has veered off its original mission: to find workers for jobs Americans can’t fill. Instead, they argue that the tech industry has become dependent on the visa to fill positions at all skill-levels, including starter jobs that Americans could easily be trained for.
Adam Smith, left, works with Brennen Bull on their solo projects at Galvanize in Boulder on Monday. The two were using similar Google mapping software so they were collaborating (Paul Aiken / Staff Photographer)
“It’s been distilled down into this program for entry-level positions,” said Heather Terenzio, CEO and co-founder of Boulder’s Techtonic Group. “I do think H-1B is necessary, but it was meant to be for highly-skilled workers, not kids right out of college.”
Proponents, including many in the tech industry, say businesses are simply utilizing a tool to help them deal with a tight labor market created by a dysfunctional national education system. In other words, they say, don’t hate the players: hate the game.
The H-1B visa category was created by the Immigration Act of 1990 to allow American companies access to skilled foreign workers — at the time, often in health care. Today, use of the program is dominated by so-called STEM fields, science, technology, engineering and mathematics.
Demand is intense: Only 85,000 visas are issued each year, a cap that has been reached every year since at least ’06, according to the Department of Homeland Security. Over 236,000 applications were received in 2016, exceeding supply in five days. This year, it took just four days to hit the ceiling.
Tech leaders say they are starved for talent, particularly in Boulder County’s superheated economy — unemployment was at 2 percent as of March, according to the Department of Labor. Poaching talent from competitors has become common practice.
“Our rehire rate is relatively high,” said Meredith Chavel, managing director at Boulder’s Markit Digital. “We do see (people) bounce back and forth a lot.”
Scarcity has also pushed up wages. Denver and Boulder are in the top 25 cities for highest-paid software engineers, reports Glassdoor, with median base pay of $90,000 and $92,360, respectively. The national median, according to salary.com, is $64,698.
“The job market is extraordinarily hot,” said Zayo’s Caruso. “We have to be very proactive and creative when it comes to attracting talent.”
Boulder Valley tech firms appear to use the H-1B visa system sparingly. Two dozen of the area’s largest companies have filed applications for fewer than 1,000 foreign workers in seven years, and the overwhelming majority of businesses have submitted fewer than 10 applications each since 2010.
Zayo is within that latter group. The company has attempted to hire 10 H-1B workers, according to a review of Labor Condition Applications (LCA) filed with the Department of Labor. Zayo declined to confirm whether it had hired or was currently employing any of the individuals under those applications, and there’s no way to know how many H-1B visa holders are currently employed at Zayo or any other Boulder Valley companies.
The topic is a sensitive one: businesses are loathe to disclose employee information. And because the H-1B applications themselves are not public record, the best indicator of a company’s intent to hire a foreign worker comes from the LCA employers are required to submit.
LCAs are forms containing the employment details of the position a company wishes to fill. They establish that wages, benefits and working conditions will be comparable for domestic and foreign workers, and help determine how much the H-1B holder will be paid.
One LCA can be filed for multiple workers doing the same job, and the more LCAs a company gets approved, the more H-1B applications it can submit. Even then, applications are subject to a random lottery, so prospective employees may or may not be selected to receive a visa.
“It’s a tossup,” said Boulder attorney Brad Hendrick, who specializes in the H-1B process at Boulder firm Caplan & Earnest. “I had one client last year that filed four applications, and three got approved. I had another client submit seven and get zero.”
Large companies dominate process
Critics charge that the lack of transparency around the visa program shields businesses from disclosing how they are using foreign labor. Compounding the problem is that the majority of visas (32,000 of the 85,000 issued in 2014, the New York Times reported) went to just 20 companies.
The local market is similarly dominated. Six percent of companies accounted for 62 percent of filed applications. Among the heavier users were 16 “outsourcing” firms, including Infosys, Wipro, Accenture, Capgemini and others.
Those and other firms operating in the Boulder Valley have been accused by the New York Times and other national media as dominating the visa process and gaming the system for cheaper labor. They recruit workers for other companies that in turn have been criticized for laying off Americans — often older employees with bigger salaries — and replacing them with lower-wage H-1B visa holders.
None of the outsourcing companies with a presence in Boulder County that were contacted for this story agreed to answer questions or provide requested information.
Boulder Chamber President and CEO John Tayer said he doesn’t believe that wage abuses are happening locally, though he admits he could be “oblivious.” Most workers contracted locally by these types of firms are being used for temporary or part-time work, he said.
“Their work is more project-oriented: they’re coming in when a business has need for set period of time,” he said. “They fill an important niche.”
Still, there is some evidence that workers sponsored by these companies locally are earning less than their peers at more traditional companies. The average base salary at the identified outsourcers was $76,209, lower than the $84,844 average base salary disclosed by area tech employers, according to data from the Department of Labor.
It’s unclear where individuals sponsored by outsourcing firms eventually end up or what jobs they do. The salaries could be lower because these firms are generally hiring for entry-level positions that would otherwise be left unfilled.
Techtonic’s Terenzio said many of the jobs most commonly taken by H-1B holders — at outsourcing firms or traditional businesses — are early-stage, and this is her chief complaint of the program.
“We could be training (coal) miners and factory workers for those jobs, easily,” she said. “People that would be happy to make $50,000 a year.”
Proponents of H-1B counter that while Americans could be trained in technical skills, the labor imbalance exists because, by and large, they haven’t been. A mere 4 percent of the world’s engineering bachelor’s degree are earned in the United States, according to a 2012 report from the Brookings Institution. More than half (56 percent) are earned in Asia.
Even within American universities, international students earn more than half of advanced STEM degrees, a 2015 Pew Research report found. For example, at the University of Colorado Boulder, 56 percent of STEM graduates in the fall 2016 semester were international students, up from 38 percent in 2010.
“We’ve left a whole bunch of people behind,” said TeamSnap’s Dupont. “Our education system has not prepared a majority of Americans for new skills.
“The tech community, I don’t think we alone have that responsibility, but we can play a significant role. I think it’s all of our responsibility.”
Best of the best
Foreign workers are working in more industries than tech, across the nation and at home. STEM dominates, of course, with 64.7 percent of visas nationally. Financial and operations careers take 11.6 percent of the visas, while “other professions” — everything from life sciences to education and the arts — claim 24 percent.
The definition of a “speciality occupation,” set by the U.S. Citizenship and Immigration Services, is broad: essentially any job that requires a bachelor’s degree or equivalent experience. And companies — with the exception of those with heavy concentration of foreign talent — are not required to prove they could not fill the position with an American workers.
(That is mandated for other immigration programs, such as when a company sponsors a worker for permanent residency.)
That means the use of H-1B visas is open to nearly every industry. Locally, they have been used to hire human resource professionals, executives, accountants, a therapist and even a dentist.
In some cases, there is a technical element to the job that makes an international candidate a better fit. Louisville’s Rogue Wave hired a vice president of corporate development under the program.
The position requires an “interesting mix of financial knowledge with a degree in computer science,” said Communications Manager Amanda Boughey, a “rare and very specialized” background.
Other non-tech hires are less clearly specialized, but employers say the impetus for hiring comes down to the same thing: Finding the top candidate, regardless of country of origin. All the companies interviewed for this article said they do not actively seek out international applicants. Most commonly, foreign workers are found the same way domestic ones are: by responding to an advertised job posting.
“We’re looking for the best of the best, and that sometimes happens to be a foreigner,” said Leif Steiner, owner of Boulder creative agency Moxie Sozo, which hired a Venezuelan designer in 2014. “When we find that person, we’re willing to do whatever it takes to get (him or her) on board.”
That often includes spending thousands to navigate the bureaucracy. Filing fees range from $1,575 to $4,325, the Brookings report found. Those fees are returned if the application is not selected in the lottery, but many companies utilize lawyers to handle the process.
Those costs are non-refundable. New York-based immigration law firm Taylor & Associates advertises a $995 attorney fee in addition to the government charges. (Boulder’s Hendrick declined to disclose his fee.)
Boulder’s Paladin Press has paid out roughly $35,000 in attorney and regulatory fees over nearly six years to employ Romanian Mark Gongea, who moved from Canada to take a job as a video editor and gradually worked his way up to head of video production.
Said Paladin owner Peder Lund: “We placed an advertisement and I received no responses from the U.S. Not one.”
Will the door stay open?
Gongea recently attained permanent residency for himself and his family, which Paladin also sponsored. As part of that process, the company was required to post the position in an attempt to fill it with an American worker. It was a nerve-wracking time for Gongea, who would be displaced in that event. But in the end, no domestic replacement could be found.
Other times, it is the foreign workers themselves that seek out the businesses to sponsor them. That’s how the Longmont Police Department sponsored its first H-1B worker, at least in recent memory.
A constable from Australia contacted the department looking for work last year. Officer Gregg Ferrill oversaw the process, which did not ultimately result in a hiring: The applicant could not get approval from the Australian government.
Ferrill was not aware the applicant was under an H-1B visa; being from Australia, the individual qualified for a subset of the program known as the E3. But the department has hired non-U.S. citizens before, and would do so again.
“Our motto is hiring the best and the brightest,” Ferrill said. “We’re an equal opportunity employer and we invite everyone to come in and test with us. Whether they’re from U.S. or England, we just want the best.”
Paladin’s Gongea hopes that, in the future, all companies will continue to consider candidates from outside the country whose best opportunity lies here, in the world’s largest economy.
“I had done pretty much everything I could do to move up the chain (in Romania). There were no more opportunities,” he said. “There are lots of people out there who have something to offer and contribute to the growth of this country.
“I think the door should be kept open if we want this country to become greater.”
Shay Castle: 303-473-1626, firstname.lastname@example.org or twitter.com/shayshinecastle