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H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program

GAO-11-26 Published: Jan 14, 2011. Publicly Released: Jan 14, 2011.
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Congress created the H-1B program in 1990 to enable U.S. employers to hire temporary, foreign workers in specialty occupations. The law capped the number of H-1B visas issued per fiscal year at 65,000. Since then, the cap has fluctuated with legislative changes. Congress asked GAO to assess the impact of the cap on the ability of domestic companies to innovate, while ensuring that U.S. workers are not disadvantaged. In response, GAO examined what is known about (1) employer demand for H-1B workers; (2) how the cap affects employer costs and decisions to move operations overseas; (3) H-1B worker characteristics and the potential impact of raising the cap; and (4) how well requirements of the H-1B program protect U.S. workers. GAO analyzed data from 4 federal agencies; interviewed agency officials, experts, and H-1B employers; and reviewed agency documents and literature.

In most years, demand for new H-1B workers exceeded the cap: From 2000 to 2009, demand for new H-1B workers tended to exceed the cap, as measured by the numbers of initial petitions submitted by employers who are subject to the cap. There is no way to precisely determine the level of any unmet demand among employers, since they tend to stop submitting (and the Department of Homeland Security stops tracking) petitions once the cap is reached each year. When we consider all initial petitions, including those from universities and research institutions that are not subject to the cap, we find that demand for new H-1B workers is largely driven by a small number of employers. Over the decade, over 14 percent of all initial petitions were submitted by cap-exempt employers, and only a few employers (fewer than 1 percent) garnered over one-quarter of all H-1B approvals. Most interviewed companies said the H-1B cap and program created costs, but were not factors in their decisions to move R&D overseas: The 34 H-1B employers GAO interviewed reported that the cap has created some additional costs, though the cap's impact depended on the size and maturity of the company. For example, in years when visas were denied by the cap, most large firms reported finding other (sometimes more costly) ways to hire their preferred job candidates. On the other hand, small firms were more likely to fill their positions with different candidates, which they said resulted in delays and sometimes economic losses, particularly for firms in rapidly changing technology fields. Limitations in agency data and systems hinder tracking the cap and H-1B workers over time: The total number of H-1B workers in the U.S. at any one time--and information about the length of their stay--is unknown, because (1) data systems among the various agencies that process such individuals are not linked so individuals cannot be readily tracked, and (2) H-1B workers are not assigned a unique identifier that would allow for tracking them over time--particularly if and when their visa status changes. Restricted agency oversight and statutory changes weaken protections for U.S. workers: Elements of the H-1B program that could serve as worker protections--such as the requirement to pay prevailing wages, the visa's temporary status, and the cap itself--are weakened by several factors. First, program oversight is fragmented and restricted. Second, the H-1B program lacks a legal provision for holding employers accountable to program requirements when they obtain H-1B workers through a staffing company. Third, statutory changes made to the H-1B program have, in combination and in effect, increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility. Taken together, the multifaceted challenges identified in this report show that the H-1B program, as currently structured, may not be used to its full potential and may be detrimental in some cases. This report offers several matters for congressional consideration, including that Congress re-examine key H-1B program provisions and make appropriate changes as needed. GAO also recommends that the Departments of Homeland Security and Labor take steps to improve efficiency, flexibility, and monitoring of the H-1B program. Homeland Security disagreed with two recommendations and one matter, citing logistical and other challenges; however, we believe such challenges can be overcome. Labor did not respond to our recommendations.


Matter for Congressional Consideration

Matter Status Comments
To ensure that the H-1B program continues to meet the needs of businesses in a global economy while maintaining a balance of protections for U.S. workers, Congress may wish to consider reviewing the merits and shortcomings of key program provisions and making appropriate changes as needed. Such a review may include, but would not necessarily be limited to (1) the qualifications required for workers eligible under the H-1B program, (2) exemptions from the cap, (3) the appropriateness of H-1B hiring by staffing companies, (4) the level of the cap, and (5) the role the program should play in the U.S. immigration system in relationship to permanent residency.
Closed – Implemented
In March 2015, Senator Grassley introduced a budget amendment (S.Amdt.958 and S.Amdt. 1068 to S.Con.Res.11) calling for revised allocations for resolutions, amendments, etc. relating to protecting the wages and employment of U.S. workers, which may include measures to require employers to recruit or retain qualified workers before petitioning for H-1B foreign guest workers. The amendment requests that Congress review program provisions, including the qualifications required for workers eligible under the H-1B program. In addition, Senator Hatch introduced another budget amendment in March 2015 (S.Amdt.1017 to S.Con.Res.11) seeking revisions to increase the annual cap, exempt advanced STEM degree holders from the H-1B cap, and capture unused green cards or allow spouses of H-1B visa holders to work.
To reduce duplication and fragmentation in the administration and oversight of the H-1B application process, consistent with past GAO matters for congressional consideration, Congress may wish to consider eliminating the requirement that employers first submit a Labor Condition Application (LCA) to the Department of Labor for certification, and require instead that employers submit this application along with the I-129 application to the Department of Homeland Security's U.S. Citizenship and Immigration Services for review.
Closed – Not Implemented
Congress has considered H-1B issues but not this particular issue.
To improve the Department of Labor's ability to investigate and enforce employer compliance with H-1B program requirements, Congress may wish to consider granting the department subpoena power to obtain employer records during investigations under the H-1B program.
Closed – Not Implemented
Congress has considered H-1B issues but not this particular issue.
To help ensure the full protection of H-1B workers employed through staffing companies, Congress may wish to consider holding the employer where an H-1B visa holder performs work accountable for meeting program requirements to the same extent as the employer that submitted the LCA form.
Closed – Not Implemented
Congress has considered H-1B issues but not this particular issue.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Homeland Security To help ensure that the number of new H-1B workers who are subject to the cap--both entering the United States and changing to H-1B status within the United States--does not exceed the cap each year, U.S. Citizenship and Immigration Services should take steps to improve its tracking of the number of approved H-1B applications and the number of issued visas under the cap by fully leveraging the transformation effort currently under way, which involves the adoption of an electronic petition processing system that will be linked to the Department of State's tracking system. Such steps should ensure that linkages to the Department of State's tracking system will provide Homeland Security with timely access to data on visa issuances, and that mechanisms for tracking petitions and visas against the cap are incorporated into U.S. Citizenship and Immigration Services' business rules to be developed for the new electronic petition system.
Closed – Not Implemented
In 2016, USCIS officials reported that, according to their current timeframes, the business rules associated with the nonimmigrant visa petition process (including Form I-129) in the USCIS Electronic Immigration System (ELIS) were slated to be developed in late 2017, with implementation projected for the beginning of 2018. They stated that during the requirements-gathering phase, the Service Center Operations officials and the Office of Transformation Program officials planned to discuss potential options for improving the tracking of the number of approved H-1B applications and the number of issued visas under the cap, including assessing the feasibility of linking DHS and State Department data. However, in October 2017, USCIS reported there is no identifiable and practical path to implement this recommendation given USCIS's challenges with ELIS deployment. USCIS notified us that challenges in developing and implementing ELIS have made any GAO recommendations regarding specific benefits, including the I-129F petition, being incorporated into the system not feasible. In particular, USCIS stated that such challenges prohibit USCIS from providing us with any realistic time frame as to when, if at all, the nonimmigrant line of business will be under development or operational within ELIS.
Department of Homeland Security To address business concerns without undermining program integrity, U.S. Citizenship and Immigration Services should, to the extent permitted by its existing statutory authority, explore options for increasing the flexibility of the application process for H-1B employers, such as (1) allowing employers to rank their applications for visa candidates so that they can hire the best qualified worker for the jobs in highest need; (2) distributing the applications granted under the annual cap in allotments throughout the year (e.g. quarterly); and (3) establishing a system whereby businesses with a strong track-record of compliance with H-1B regulations may use a streamlined application process.
Closed – Implemented
To address this recommendation, USCIS has considered options and taken steps to increase the flexibility of the application process for H-1B employers. Specifically, in April 2011, USCIS implemented the Validation Instrument for Business Enterprises (VIBE) system, an adjudicative tool that provides USCIS with the means to verify the petitioner's business information. VIBE helps to reduce the need for petitioners to submit duplicative paper documentation to establish their current level of business operations, and reduces the number of follow-up requests to businesses for additional evidence to support their petitions. In addition, USCIS has helped streamline the H-1B process by providing the same information about petitioners to all four service centers at the same time. Finally, in March, 2011, USCIS explored an option of issuing a rule to establish an advance electronic registration process for U.S. employers seeking to file H-1B petitions subject to either the 65,000 statutory cap or the 20,000 statutory visa cap exemption. However, after reviewing public comment on the proposed rule, USCIS decided to postpone the issuance of a final rule so that the registration process might be incorporated into the electronic petition system that is being developed as part of the USCIS?s Transformation effort.
Department of Labor To improve the transparency and oversight of the posting requirement on the Labor Condition Application (LCA), as part of its current oversight role, the Employment and Training Administration should develop and maintain a centralized Web site, accessible to the public, where businesses must post notice of the intent to hire H-1B workers. Such notices should continue to specify the job category and worksite location noted on the LCA and required by statute on current noncentralized postings.
Closed – Implemented
The Department of Labor (DOL) reported that in June 2011 it put into production a federal staff user account profile to the iCERT Visa Portal System that will allow DOL's Division of Wage and Hour staff access to more than 580,000 LCA decisions issued by the Employment and Training Administration's Office of Foreign Labor Certification ( In 2013, DOL reported that, although ETA cannot mandate additional employer disclosures of LCAs without notice and comment rulemaking, it has taken steps to disclose certain LCA records to the general public. As part of the agency's Open Government Initiative, ETA invested in the design and development of an interactive, web-based tool called the Labor Certification Registry (LCR), to make publicly available copies of approved LCAs, as well as labor certification documents in certain other visa programs. On January 24, 2013, the Department published a notice in the Federal Register announcing the implementation of the iCERT Labor Certification Registry (LCR) on July 1, 2013. The iCERT LCR is intended to provide the public with a single, easy to search, location for accessing LCA certification documents that have been appropriately redacted to ensure compliance with the Privacy Act, the Trade Secrets Act and the Confidential Information Protection and Statistical Efficiency Act.
Department of Labor To improve the efficiency and effectiveness of its investigations of employer compliance with H-1B requirements, the Employment and Training Administration should provide Labor's Wage and Hour Division searchable access to the LCA database.
Closed – Implemented
To address this recommendation, in June 2011, the Employment and Training Administrations Office of Foreign Labor Certification released a new web-based tool allowing authorized Federal staff users including WHD staff to search, analyze, and retrieve LCAs decisions for H-1B visa applications.

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AccountabilityAdministrative costsImmigrant laborEmployeesEmployment of foreign nationalsHomeland securityImmigrationLabor costsLabor statisticsMonitoringProgram managementTemporary employmentComplianceGovernment agency oversightProgram costsTransparencyTemporary worker visas