The Border Security, Economic Opportunity, and Immigration Modernization Act, SB 744, introduced in the Senate on April 17, 2013, is the largest and most complex piece of immigration legislation introduced in over 70 years.  All U.S. employers will feel the effect of the changes it augers --- including mandatory, universal E-Verify participation, increased fines and penalties for I-9 and immigration-related discrimination violations, new immigration workplace compliance certification requirements, new forums and procedures for challenging government fines and penalties, new categories of whistleblower and anti-retaliation complaints and causes of action, and new temporary and guest worker rules.

The Construction industry, however, stands out in terms of the limitations the bill places on the industry’s access to foreign guest workers – piling on difficulties the industry is currently experiencing under the H-2B foreign temporary worker program.  In this article, we focus on the H-2B and guest worker provisions in the bill.  In future articles for this Newsletter we will address other problematic aspects of the reform legislation.

H-2B Temporary Worker Issues

Under current law, the only way U.S. employers can lawfully obtain foreign temporary workers to fill construction jobs is the H-2B temporary worker program, subject to an annual quota of 66,000.  In general, employers work with foreign labor contractors (FLC’s) to locate and recruit qualified workers outside the United States for temporary and seasonal jobs in the U.S.  Further, three federal agencies are involved in the H-2B approval process:  The U.S. Department of Labor (DOL), The Department of Homeland Security/U.S. Citizenship and Immigration Service (USCIS), and The U.S. State Department Foreign Consular Office.

The DOL Temporary Labor Certification (TLC) process requires employer applicants to attest and document that prospective H-2B workers are coming temporarily to fill a seasonal or temporary need not occasioned by strike or lockout, are unable to find qualified U.S. workers for these positions, and have posted and advertised the job vacancies by DOL prescribed methods guaranteeing payment of prevailing wages and working conditions dictated by DOL.

In 2010, the Obama Administration proposed major changes in the H-2B program intended to make it more difficult for U.S. employers to obtain H-2B temporary labor certifications – including radically increasing  H-2B prevailing wage levels; auditing, fining and debarring  employers for alleged violations of the complex H-2B recordkeeping and pay and working condition rules; and suing employers for alleged minimum wage violations tied to imputed deductions for recruitment fees, travel and subsistence costs, and visa, passport and border crossing fees.  While litigation has stalled implementation of these rule changes, uncertainty about the future of the H-2B program and its usability, coupled with increased DOL scrutiny, has resulted in sharp declines in request and approval rates, as reflected in FY 2012 DOL disclosure data (the last period for which 12-month data is publicly available).

Sample FY 2012 DOL H-2B TLC Approvals for Construction Positions - Nationwide

Click here to view.

The Senate reform bill retains the H-2B temporary visa program and quota but amends the program to curb alleged abuses and to protect U.S. workers from unfair competition by requiring  that H-2B sponsoring employers to pay H-2B workers either the same wages they pay to U.S. workers with similar qualifications and experience or the DOL area prevailing wage rate, whichever is higher, and by prohibiting H-2B employers from displacing existing U.S. workers from the positions offered to H-2B workers in the 90-day period before H-2B workers begin employment and throughout their authorized employment.  The bill further requires H-2B employers to pay H-2B worker transportation and subsistence costs from the place of recruitment abroad to the place of employment in the U.S.; prohibits employers from passing on recruitment fee costs to workers; and requires employers – for the first time – to pay a $500 fee for TLC filings, beginning 30 days post-enactment.  In addition, the bill creates as comprehensive regulatory scheme governing employer use of FLCs to recruit foreign workers for employment in the U.S., including mandatory FLC registration and bonding, performance and disclosure obligations, cooperation with enforcement investigations, and payment of back wages and civil money penalties if rule violations are found and sustained.

The New “W” Guest Worker Program

In addition to retaining the H-2B program, the Senate bill also creates a new guest worker visa to address lower skilled occupational labor shortages within discrete metropolitan statistical areas, beginning in 2015.  The delay in implementation is intended to provide a hiatus period for unemployed U.S. workers, work-authorized temporary protected workers, and approximately 11 million previously undocumented workers who are expected to register for provisional immigrant status and obtain a U.S. work authorization document under the bill’s legalization program.

Construction industry employers will be subject to two types of restrictions in gaining access to guest workers.  First, the annual quota for construction jobs is specifically limited.  In Year 1 (2015-2016), the W-1 quota is set at 20,000, only 6,666 of which may be in construction.  In Year 2 (2016-2017), the quota increases to 35,000, only 11,666 can go to construction.  In Years 3 and 4, the annual construction job quota is capped at 15,000, notwithstanding the facts that the overall caps rise to 55,000 and 75,000, respectively.  In Years 5 and beyond, the overall annual quotas will float between 20,000 and 200,000 positions per year, based on a complex formula weighted primarily by U.S. unemployment statistics; however, in those out years, the construction industry quotas are capitated within the range of 6,666 and 15,000 positions annually. In addition to dealing with the annual quota limitations, construction employers will be prohibited from hiring guest workers for positions located in metropolitan statistical areas where the overall unemployment rate tops 8.5%.

To qualify to hire one or more guest workers, an employer must first register for approval with DHS.  Initial and renewal registration may be denied for a period up to 3 years based on a final adjudication against the employer within the 2 year period preceding the registration filing relating to child labor, willful wage and hour, or serious injury health and safety violations.  Conviction of human trafficking serves as a permanent bar.

Once registered, an employer seeking a permit to hire guest workers for employment in the U.S. would then file a fee-based application with DHS attesting that despite complying with recruitment requirements the employer has been unsuccessful in finding U.S. workers for the position(s) offered; will pay guest workers the higher of the actual wage paid to similarly situated U.S. workers of the employer or the applicable area prevailing wages and benefits; and the employer has had no strike, lockout, or layoffs in the same occupation in the area within the 90 days preceding or following the anticipated employment period.  If DHS grants the permits, prospective guest workers (recruited directly by the employer or indirectly through a foreign labor contractor) can make application for entry visas.

Post-admission, guest workers will not be tied to the permitted employer – but are fee to accept employment with any other registered employer with a permit to hire guest workers.  Guest workers will also be entitled to the protections of all federal, state and local labor and employment laws.  In addition, U.S. and guest workers will enjoy whistleblower protection based on disclosures they reasonably believe demonstrates a violation of the guest worker program and/or for their cooperation in any investigation or proceeding concerning compliance with program requirements.

If violations of the employer attestation provisions are discovered as a result of a whistleblower complaint or otherwise, the Senate bill authorizes fines and penalties ranging from $2,000 to $25,000 per affected worker, in addition to back wages.  Criminal fines of up to $25,000 per affected worker and one year imprisonment are also available based on a conviction for lying about the inability to recruit U.S. workers in order to obtain guest worker permits.

Conclusion

In summary, the H-2B and guest worker provisions contained in the Senate comprehensive immigration reform bill are far from friendly to employers, particularly in the construction industry.  If enacted, employers should seek legal advice regarding all costs, compliance requirements and enforcement penalties before electing to participate in these hiring programs.  Further, construction employers should seek legal advice as to how the new H-2B and guest worker rules fit within the overall public policy and enforcement schemes contained in the comprehensive immigration reform package.  Such a dialogue is an important predicate to major executive decisions regarding future contract commitments, manpower and labor relations issues, and compliance and risk management planning – topics to be addressed at greater length in future articles in this series.