H-1B Visa Program:

Labor Could Improve Its Oversight and Increase Information Sharing with Homeland Security

GAO-06-720: Published: Jun 22, 2006. Publicly Released: Jun 22, 2006.

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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.

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 application. 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.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matter for Congressional Consideration

    Matter: To increase employer compliance with the H-1B program and protect the rights of U.S. and H-1B workers, Congress may wish to 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.

    Status: Closed - Not Implemented

    Comments: As of August 2010, the Congress has not given consideration to the specific recommendations we made. Although several legislative proposals have been made regarding the H-1B program, none of them have touched on our particular suggestions.

    Recommendations for Executive Action

    Recommendation: To strengthen oversight of employers' applications to hire H-1B workers, Labor should 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.

    Agency Affected: Department of Labor

    Status: Closed - Implemented

    Comments: In 2009, the Department of Labor's (Labor) Office of Foreign Labor Certification (OFLC) introduced iCERT Visa Portal System, a new electronic filing system, to improve customer service, reduce long-term IT costs, and enhance the review of LCAs for completeness and obvious inaccuracies. When an H-1B Labor Condition Application (LCA) is filed by an employer, the iCERT System's LCA Module checks a number of data points against established business rules and, where obvious errors or inconsistencies are found, the case is flagged for review by analysts in Labor's Chicago National Processing Center (Chicago NPC). The level of integrity in the new LCA Module represents a significant improvement over the legacy LCA on-line system, with more than 103 unique edit controls to identify obvious errors or inaccuracies. Furthermore, OFLC staff continually examine the need for enhanced edit controls in response to real-time LCA filing patterns and case processing activities, and perform additional data mining queries on active LCAs to review for inconsistencies. OFLC formalized the process for developing and implementing new edit controls through written standard operating procedures effective February 12, 2010. When OFLC is considering implementing new edit controls, it will consult with the Office of the Solicitor to determine whether such controls would be permitted under Labor's statutory authority for the H-1B program. If sufficient authority exists to implement such new edit controls, each proposed edit control will be specified and scheduled for IT development and implementation in accordance with the formalized written procedures and Labor's Software Development Life Cycle Management (SDLCM) process. In FY10, OFLC has received more than 217,100 LCAs for processing and documented a denial rate of more than 13% -- significantly higher than in each of the last three years (1-2%) under the legacy system. In addition, iCERT has edit checks for wage inaccuracy and the Federal Employer Identification Number (FEIN). The wage inaccuracy checks ensure that the rate of pay meets or exceeds the prevailing wage and federal and state minimum wages. The FEIN check ensures that the FEIN entered on the LCA is recognized by OFLC. An employer's FEIN that does not match the electronic business existence table must present proof of a valid FEIN to the Chicago NPC before future applications can be certified. OFLC's Chicago NPC is dedicated to reviewing LCAs and all federal staff have been cross-trained to provide support to the processing of LCAs during any filing.

    Recommendation: To ensure employers are complying with program requirements, as USCIS transforms its information technology system, the Labor application case number should 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 Affected: Department of Labor

    Status: Closed - Implemented

    Comments: In 2006, the Department of Homeland Security (DHS) commented that it intends to capture the Labor Condition Application case number as it develops a technology solution to support a transformed business process. In March 2007, Labor's requirements for a new case management system indicated that the Labor Condition Application case numbers will be included in the new system. Although that system has not been fully implemented yet, DHS took action to address this recommendation. On March 19, 2008, US Citizenship and Immigration Services (USCIS), DHS, issued an interim final rule in the Federal Register that prohibits employers from filing multiple H-1B petitions for the same employee. These changes will ensure that companies filing H-1B petitions subject to congressionally mandated numerical limits have an equal chance to employ an H-1B worker. To ensure a fair and orderly distribution of available H-1B visas, USCIS will deny or revoke multiple petitions filed by an employer for the same H-1B worker and will not refund the filing fees submitted with multiple or duplicative petitions.

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