Congress Imposes H-1b Hiring Restrictions on Recipients of TARP Funds

In approving President Obama’s economic stimulus package, the American Recovery and Reinvestment Act of 2009 (H.R.1), Congress took one step forward and one step back in regards to H-1b nonimmigrant visas. On the positive side, Congress rejected a flat prohibition on new H-1b hiring by TARP fund recipients, which could easily have led to a more broad-based attack on the popular and essential program. Instead, the final stimulus bill restricts for two years - but does not prohibit - hiring of H-1b employees by banks receiving TARP funds. When hiring new H-1b employees or extending the terms of existing employees, TARP recipients will be treated as “H-1b dependent” employers. Before hiring an H-1b worker or extending their period of stay, the TARP recipient must therefore attest that:

• They will not displace a U.S. worker in a similar job within the six month period beginning three months before filing the H-1b petition and ending three months after filing;

• They will not contract out an H-1b worker to a third party or place the worker at another employer’s worksite unless the H-1b employer first makes a good faith inquiry as to whether the other employer has, or expects to displace a US worker in the same six month period, and the H-1b employer has no actual knowledge to the contrary; and
  
• They have attempted unsuccessfully to recruit equally qualified U.S. workers at the same or higher salary.

The stimulus bill also expressly bars TARP recipients from using an existing exemption from the H-1b dependent attestations and which in many cases negates them. The exemption applies to H-1b hires who hold a Masters Degree or who are paid more than $60,000 per year, who may be hired without the employer attestations.

The new restrictions may have some impact on the availability of H-1b visas for in the upcoming 2010 fiscal year or the likely H-1b lottery. A widely circulated list of the top 100 H-1b petitioners in 2007, compiled by InformationWeek (probably based on published Labor Department data), indicates that TARP recipients accounted for 3,108 H-1b petitions during 2007. (The top ten filers in 2007 accounted for 24,669 petitions.) While it is difficult to gauge how these numbers work in the real world, a drop in 3,108 from the 85,000 approved annually, would account for a 3.7% reduction in the total. On the other hand, if the InformationWeek numbers are derived from Labor's list of all Labor Conditional Applications certified in 2007, then the impact of the TARP restriction will probably be very slight.

With high unemployment in the financial industry, it may be difficult for the TARP banks to overcome the good faith recruitment requirement before filing an H-1b petition. If the 2010 lottery does have several thousand fewer entries, the net effect could be a smaller lottery pool and a higher probability of selection for everyone who is permitted to file this year.

The restriction may have a chilling effect on bank H-1b hires even if the banks can make the required attestations. Banks may now avoid H-1b hiring out of concerns over Congressional and public perceptions that they are using taxpayer money to undercut job opportunities for US workers.

Perhaps the greater concern stemming from the TARP restriction is the demonstration of Congress’ willingness to tie H-1b eligibility to grant of a legislative benefit. While significant that the H-1b hiring restriction applies to no other element of the stimulus package, the genie may be out of the bottle and we may expect future efforts by Congress to impose comparable restrictions on a wider range of industries receiving benefits under economic legislation.

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