Tech Sector Braces for Possible Impact from President-Elect Trump’s Immigration Agenda
As most of the American public, and indeed the world at large, watches President-elect Donald Trump in an effort to discern what his specific plans will be upon taking office, one of the groups that will be watching with particular interest is the high-tech sector. At the moment, and for some time into the future, President-elect Trump is going to be drinking from the proverbial fire hose when it comes to the details of public policy. While he comes into office with strongly held views and clearly espoused positions on a range of immigration issues, most of those are aimed at enforcement and border security—to wit, his pledge to build a wall along the U.S.-Mexico border and to deport millions of undocumented immigrants with criminal records. Less fully formed—or at least less fully discussed and vetted—are the President-elect’s specific intentions with regard to business immigration. With ongoing reliance on a steady supply of highly educated and highly skilled foreign professionals to fuel their growth and innovation, technology companies from Silicon Valley to Boston and in virtually every city in between are poring over President-elect Trump’s various statements and appointments in order to prepare for what is to come.
Those seeking detailed clarity on President-elect Trump’s intended approach on specific business-immigration issues, however, may find a less-than-satisfying reality where partial pronouncements on policy and shifting reports from the transition team yield a response that has less in common with the finely tuned policy positions with which political observers have become accustomed than it does with a Magic 8 Ball answer: “Reply hazy. Try again.” Make no mistake; there could be repercussions for the tech sector from any number of actions that President-elect Trump might take on immigration. There could even be impact from his actions taken in other areas such as trade and national security. What is less clear—for now—are the exact parameters of those possible impacts. Fortunately, there are indicators that should help the technology sector plan and prepare for what is ahead.
Increased Scrutiny and Hurdles for H-1B Visas
President-elect Trump highlighted the theme of protecting American jobs as a key platform of his campaign. In a recent video that the President-elect released to YouTube in which he shared an update on the presidential transition and an outline of some of his policy plans for the first 100 days in office, he signaled that he “will direct the Department of Labor to investigate all abuses of visa programs that undercut the American worker.” This has been widely interpreted as a reference to perceived abuses of the H-1B visa program that is used commonly throughout the tech sector and, indeed, throughout many sectors of the economy where so-called STEM (Science, Technology, Engineering, and Math) skills are in demand. This pronouncement is consistent with other statements the President-elect made during the course of his campaign wherein he called for: (1) increasing the prevailing wages employers must pay to their H-1B workers in order to protect the wages of their American counterparts from being undercut, and (2) requiring that all employers recruit U.S. workers before hiring an H-1B worker. At a rally in Cincinnati, Ohio, on December 1, 2016, President-elect Trump again echoed these themes when he said, “[W]e will ask Congress to reform our visa and immigration programs to protect jobs and wages for American workers.”
As currently in force, the purpose of the existing prevailing wage requirement is to help ensure that the pay received by foreign nationals is on a par with that of similarly employed American workers in a specific occupation. Should the President-elect push to increase the prevailing wage determination, it would make the prospect of bringing on an H-1B employee even more expensive for U.S. employers. To President-elect Trump’s other point, while recruitment is part of the current labor certification process that can lead to a green card in cases involving employment-based permanent residency, its use in temporary business visa contexts has been more limited. The recruitment requirement is currently a condition applied only to those H-1B employers found to have willfully violated their H-1B obligations, or those deemed to be “H-1B dependent.” For example, an employer with at least 51 full-time equivalent employees in the United States is considered “H-1B dependent” if at least 15 percent of its workforce is comprised of H-1B nonimmigrants. Expanding the recruitment requirement to all employers seeking to bring on an H-1B worker would saddle the temporary business visa program with an additional burden. For the tech sector, this would translate to lost time and increased cost—two factors that are anathema to most industries, let alone one whose members must keep up with the constant demands of Moore’s law concerning the steadily driving pace of technological growth and advancement.
It is worth noting that in the same video where President-elect Trump issued his clarion call to have the U.S. Department of Labor investigate all abuses of visa programs, he also declared, “I want the next generation of production and innovation to happen right here on our great homeland, America, creating wealth and jobs for American workers.” As he looks to fill in the details of his approach on business immigration, President-elect Trump is certain to hear a strong case from technology companies and many other businesses that the popular H-1B visa is a key ingredient in their ability to deliver the very production and innovation that the President-elect has said he wants to keep here at home. If this appeal strikes a chord with the President-elect, particularly given his generally pro-business leaning, then that could tip the scale in favor of H-1B reforms and investigations that are either more modest or more targeted.
While the exact nature and extent of any actions the President-elect will ultimately direct his administration to take on H-1B visas remains to be seen, concern over those potential changes could boost the number of H-1B petitions that companies file in the short-term as companies attempt to secure visas ahead of any pending reforms that could make visas harder to obtain.
Outsourcing on the Hot Seat
If the tech community, in concert with a broader business coalition, is able to persuade President-elect Trump of the value of the H-1B program to their businesses and of the role that H-1B workers play in creating jobs and wealth in the United States, then those tech companies that hire highly skilled foreign nationals to work for them directly (and that frequently go on to sponsor those workers for green cards) may be spared some of the more potentially disruptive reforms rumored to be under consideration by the incoming administration. Instead, foreign-owned outsourcing firms that hire the largest numbers of employees on H-1B visas in order to provide them, in turn, as outsourced contract workers to other companies in various sectors may find themselves the primary focus of new reforms and restrictions. It bears repeating that, as with the details concerning other possible policy actions the Trump administration may take, this focus is also still a matter of conjecture.
Despite President-elect Trump’s ties to the business community, his campaign’s emphasis on protecting American jobs as a key platform could also provide renewed impetus within Congress for enacting legislation aimed at tightening some aspects of business immigration beyond just the H-1B visa. Although no specific proposals have yet been put forward, and none may even emerge, a brief case study could help to illustrate one potential scenario. For example, in November of 2015, Senators Charles Grassley (R-IA) and Richard Durbin (D-IL) reintroduced legislation (S.2266, the “H-1B and L-1 Visa Reform Act of 2015”) intended to crack down on perceived abuses of the H-1B program and to reform aspects of the L-1 visa program. Although earlier bids to pass that legislation were unsuccessful, President-elect Trump’s arrival in the White House, combined with increases in the Republican control of Congress, could help the reform proposals find new cover. The nomination of Senator Jeff Sessions (R-AL), Chair of the Senate Immigration Subcommittee and cosponsor of the reform legislation, to become Attorney General of the United States could also encourage support for such reforms among his fellow Republican senators, albeit indirectly. Targets of any such renewed legislation could focus on a variety of potentially restrictive reforms including moves to increase fees, impose stricter numerical limits, establish new wage floors, create enhanced federal investigatory powers, or other measures aimed at curbing the perceived outsourcing of jobs.
Ironically, although many of the potential business immigration policies discussed above may be aimed at curbing outsourcing as a means of protecting American jobs, the cumulative effect of such efforts (should they ever come to pass) could prompt technology companies to offshore a growing number of projects rather than continue to face mounting hurdles and costs related to the hiring of high-skilled workers here at home. New projects could be slated for development outside of the United States if tech businesses see such a move as the best way to avoid the potentially damaging interruptions that could come from a major retrenchment of business immigration policy.
Mandatory E-Verify and Increased Form I-9 Audits
Technology companies should also prepare for a climate of increased investigations and enforcement actions. The President-elect’s pledge to triple the number of U.S. Immigration and Customs Enforcement (ICE) agents, found in his “10 Point Plan to Put America First,” signals the possibility of a significant increase in worksite enforcement efforts. This could include an escalation of Form I-9 worksite inspections by ICE agents as well as a shift from assessing fines for most violations to actually bringing more criminal prosecutions. The President-elect’s transition team has also put forward a proposal to make mandatory the use of E-Verify, an Internet-based system employers can use to confirm the employment eligibility of their employees. While this move would require legislation to be enacted, the fact that it is under consideration further underscores the likelihood that employers, including tech companies, may soon be operating in a climate where additional screening and increased scrutiny is the new normal.
Narrowing the Path to Employment Authorization
While not intended to target the tech community, President-elect Trump’s vow to undo President Barack Obama’s executive actions on immigration could also remove options for employment authorization that some in the tech workforce enjoy today. The President-elect has repeatedly stated that he will get rid of Deferred Action for Childhood Arrivals (DACA), a program initiated under President Obama that has provided temporary protection against removal from the country and conferred work authorization to qualifying foreign nationals who came to the United States unlawfully while they were still children.
Another of President Obama’s executive actions directed the U.S. Department of Homeland Security to create a so-called “start-up visa.” The visa is intended to encourage entrepreneurship by granting temporary permission to live and work in the United States to individuals on a case-by-case basis based on an individual’s recent formation of a start-up entity in which the applicant possesses at least 15 percent ownership. The “start-up visa” has been through the required regulatory notice-and-comment period, but has not yet been published in the Federal Register and so has not yet taken effect. Once in effect, the nature of this visa would make it a natural fit for people looking to start new technology companies. It is possible, however, that President-elect Trump may look to prematurely end this path to employment authorization by rescinding the executive action that created it. If the President-elect takes this action before the new rule creating the visa is published, then it would effectively die on the vine. However, if the rule creating the start-up visa is published and takes effect before President Obama leaves office, then the President-elect would need to follow the appropriate regulatory processes if he wanted to walk it back.
Elsewhere, if President-elect Trump makes good on his pledge to either renegotiate or repeal the North American Free Trade Agreement (NAFTA), that move could pull the rug out from under the TN visa which some foreign nationals from Canada and Mexico rely upon for work authorization. This is new territory, however, and there are still many considerations and complications that could militate against a total unravelling of NAFTA or that could, at a minimum, play out in a way that preserves core elements of the TN visa. Although the Free Trade Agreements (FTAs) that have been struck with Chile and Singapore do not figure as prominently on President-elect Trump’s radar screen, any actions to reopen their terms could have implications for the 6,800 H-1B visas set aside under current policy for foreign nationals from those countries. Even if the President-elect takes action on the underlying FTAs that results in the elimination of this set-aside of visas, it is possible that those 6,800 visas could simply be added back into the general pool of 65,000 H-1B visas under the annual cap.
Vigilance Will Be a Virtue
It would be premature to consider any of these possible changes as certain to occur. Using recent history as a guide, those interested in the full impact that the new administration could have on the technology sector may want to take predictions and prognostications from “insiders” with a healthy grain of salt. There are still many unknowns, and conventional wisdom has proven to be a very poor indicator of President-elect Trump’s actions or outcomes so far. For the time being, technology companies may want to (1) stay informed; (2) be proactive in getting their workforce needs filled as expeditiously as possible; and (3) take care to separate speculation from fact as rumors and reports of the President-elect’s immigration plans continue to come in over the ensuing months.
This article was first published in the December 7, 2016, edition of JD Supra® Business Advisor.