On Tuesday, President Trump issued an Executive Order called “Buy American and Hire American,” which requires the heads of various federal agencies to suggest reforms to the H-1B visa program aimed at preventing fraud or abuse of the program and changing the way H-1B visas are awarded.

On Tuesday, President Trump issued an Executive Order called “Buy American and Hire American,” which requires the Secretary of State, the Attorney General, the Secretary of Labor and the Secretary of Homeland Security to put their heads together and suggest reforms “to help ensure that H-1B visas are awarded to the most-skilled or highest paid” foreign workers. The Executive Order also directs the agencies to recommend changes to prevent fraud or abuse of the program. While there is no immediate impact of this Executive Order on the H-1B program, it signals that changes are coming.

How does the H-1B program work currently?

H-1B visas are designated for foreign workers who are coming to the United States temporarily to perform services in a “specialty occupation.” Qualifying occupations are defined as those that require theoretical and practical application of a body of highly specialized knowledge and the attainment of at least a bachelor’s degree or its equivalent in a specific specialty. In an effort to safeguard U.S. workers, H-1B employees must be paid at or above the prevailing wage as determined by the Department of Labor and there are only 85,000 H-1B visas available each fiscal year.

In the last several years, the demand for H-1B visas has far surpassed the number of visas available, resulting in a lottery. The Trump Administration, and others, have been critical of the lottery system for its failure to prioritize certain petitions. While the lottery does prioritize foreign workers with U.S. master’s or higher degrees, that is the only preference and petitions are otherwise randomly selected by U.S. Citizenship and Immigration Services (USCIS). The Executive Order directs the agencies to propose reforms that prioritize the highest-skilled or highest-paid foreign workers but the specifics are yet to be worked out.

Why does the administration feel the H-1B program needs to be reformed?

The White House’s background briefing on the Executive Order highlighted the administration’s concerns and gives a sense for the direction the administration thinks reforms should take. In the background briefing, the White House made much of the fact that about 80 percent of H-1B workers are paid less than the median wage in their fields and argued that these workers are brought in at below-market rates to replace American workers. Whether Americans are actually displaced by H-1B workers is hotly debated but that is certainly the position of the Trump administration. However, this position fails to consider that while many H-1B workers may be more junior and, therefore, paid on the lower-end of Department of Labor’s prevailing wage scale for their particular occupation, they are nonetheless performing in specialty occupations that require highly specialized knowledge consistent with the H-1B program requirements.

The White House also specifically called out IT consulting firms, who are awarded the lion’s share of H-1B visas in the lottery process simply because they file the largest number of petitions, as representing what’s wrong with the current lottery system. The White House’s background briefing confirms the administration’s belief that these firms allow U.S. employers to lay off U.S. employees and replace them with contract labor. IT consulting firms have consistently been in the Trump administration’s cross-hairs on this issue and some practitioners believe that the lower than expected number of H-1B petitions filed this year is the result.

What types of reforms might be proposed and how likely are they to be enacted?

While the specific reforms to the H-1B program that might result from this Executive Order remain to be seen, the directives are consistent with the public notices earlier this month from the U.S. Department of Justice (DOJ) cautioning employers seeking H-1B visas not to discriminate against U.S. workers; the U.S. Department of Labor (DOL) announcing plans to protect U.S. workers from H-1B program discrimination; and the Department of Homeland Security (DHS), and USCIS in particular, announcing additional measures to deter and detect H-1B visa fraud and abuse.

While some reforms could be carried out by the agencies themselves through rule changes, more dramatic changes, such as a change in the number of H-1B visas available each year, would require congressional action. Historically, Congress has been unable to reach consensus on what reforms to the H-1B and other visa programs should look like and those divisions persist.

The Executive Order directs the relevant agencies to suggest reforms to the H-1B program as soon as practicable but there is no defined timeline. What reforms will be proposed by the agencies and, of those, which are ultimately implemented remains to be seen.

What impact, if any, does this Executive Order have on other work visa categories?

While the “Buy American” sections of the Executive Order do not specifically address immigration, they do direct the Secretary of Commerce and the United States Trade Representative to “assess the impacts of all United States free trade agreements…on the operation of Buy American Laws.” There is no indication that this assessment will include a review of the TN visa, and other work visa programs authorized by free trade agreements, but any future renegotiation of the U.S.’s free trade agreements will need to be monitored carefully to determine any direct or indirect impacts on the work visa programs authorized by those agreements.