Customers of IT service companies in the US see challenges in new H-1B visa rule

US-based companies, such as IT services companies and staffing companies, that sponsor H-1B visa holders and depute them to work at customer sites, face  new challenges, a Times of India report said.

The rule which was proposed by the US Department of Homeland Security (DHS) on January 14 has made it mandatory for customers of US-based companies, that sponsor H-1B visa holders, to bear the obligations of an employer. Therefore the customers who hire H-1B workers from primary companies will also have to file for Labor Condition Applications (LCAs) and H-1B applications (referred to as petitions). This costs them higher administrative burden and they have to comply with the obligations relating to wages and working conditions.

Currently the companies who depute the employees into various customer work sites only have to comply with the filing requirements and other obligations. The new guidance comes into effect in 180 days, i.e., for applications filed on or after July 14 (including applications for extensions H-1B visas).

US Tech Workers, a non-profit ‘representing American workers harmed by the H-1B program’ seems elated. “…Great way to target companies that use third party IT or staffing firms to displace Americans,” it tweeted.

“When Disney was sued for laying off American workers and replacing them with H-1B workers brought it from third party IT outsourcing firms (Cognizant and HCL), Disney’s defense was that they weren’t the ones who sponsored the H-1B visas. This regulation would now hold them accountable. We will see if these regulations hold long-term. The incoming administration could potentially zap this,” it added in another tweet.

A DOL release states that H-1B employment frequently involves primary employers, such as staffing agencies, that petition to hire H-1B workers, as well as secondary employers, such as staffing agencies’ clients (customers), where the H-1B workers are assigned to work.