As reported by the New York Times on Friday, June 5, 2015, Disney layoffs and replacement by H-1B workers provided by HCL Americas (HCL) drew a flood of comments. Not less than 2,800 comments were received in response to the original New York Times article, Pink Slips at Disney. But First, Training Foreign Replacements, by Julia Preston. As expected, most of the comments raised concerns and suspicions about the H-1B visa program. The story traces its origin to a Senate Judiciary Committee hearing, presided by Senator Chuck Grassley (R-IA), on March 17, 2015, to examine whether employers were displacing American tech workers by hiring immigrants at lower wages on H-1B visas. As reported by the New York Times, after the hearing, former employees from several companies, including Disney, were prompted to contact Ms. Julia Preston, a national correspondent who has covered immigration law issues for The Times since 2006.
First and foremost, it is important to clarify that H-1B regulations do not allow U.S. employers to replace American workers with H-1B workers who could work at lower wages. The H-1B visa program has safeguards to address this issue. However, there are certain gaps in the program which allow such replacement using a different employer, commonly referred to as Independent Contractor(s). Rather than focusing on the safeguards in the H-1B program which are designed to protect the wages and working conditions of similarly employed U.S. workers (in cases where the employer wants to supplement its workforce through the employment of H-1B worker), Disney, like other U.S. employers in the past, utilized the loopholes in this nonimmigrant visa program to replace its’ laid-off employees with H-1B workers through its independent contractor, HCL. This article will focus on such gaps in the H-1B regulations which could have deterred, if not prevented, the layoff of the Disney’s tech employees.
As many are aware, the H-1B program applies to employers seeking to hire nonimmigrant aliens as workers in specialty occupations or as fashion models of distinguished merit and ability. A specialty occupation is one that requires the application of a body of highly specialized knowledge and the attainment of at least a bachelor’s degree or its equivalent. The intent of the H-1B provisions is to help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce by authorizing the temporary employment of qualified individuals who are not otherwise authorized to work in the United States.
Clearly, Disney was not suffering from skills shortage, otherwise it would not have laid-off its tech employees to replace them with worker through its contractor, HCL. Had a skill shortage been the issue, Disney could always have supplemented its workforce by hiring additional H-1B tech workers, and pay them wages equivalent to its other U.S. workers with similar experience and qualifications. The answer to the question why Disney took this step is known to everybody: “Cost Cutting”.
The question next to ask is: How is it possible when the H-1B regulations clearly establishes certain standards in order to protect similarly employed U.S. workers from being adversely affected by the employment of the nonimmigrant workers. Specifically, the employers are required to attest to the Department of Labor (DOL), through Labor Condition Application (LCA), that they will pay wages to the H-1B nonimmigrant workers that are at least equal to the actual wage paid by the employer to other workers with similar experience and qualifications for the job in question, or the prevailing wage for the occupation in the area of intended employment – whichever is greater.
If H-1B employers are required to pay the higher of either the actual wage or the prevailing wage, how did Disney benefit from replacing its own tech workers with H-1B workers of HCL?
The answer to this question lies in the fact