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White House Executive Order Limits H-1B Workers in Federal Contracting Jobs White House Executive Order Limits H-1B Workers in Federal Contracting Jobs

White House Executive Order Limits H-1B Workers in Federal Contracting Jobs

On Monday, August 3, 2020, President Trump issued an Executive Order that seeks to ban federal contractors from replacing U.S. citizens and green card holders with foreign workers and also prohibit offshoring of work tied to federal contracts.[1]

Reportedly spurred by the Tennessee Valley Authority’s reported intentions to outsource up to 20 percent of its technology jobs to companies overseas, the President announced he intends to rely on the Order to limit federal contractors’ ability to outsource federal work in a couple of ways.

First, the Order instructs federal agencies to conduct an internal audit to assess the nature and extent to which federal contractors and subcontractors use foreign labor or send work outside the United States in the performance and satisfaction of federal contracts. Where a contractor is using foreign labor, “the nature of the work performed by temporary foreign labor on such contracts” will be assessed to determine “whether opportunities for United States workers were affected by such hiring; and any potential effects on the national security caused by such hiring.” Within 120 days of the Order, heads of each federal agency will submit reports summarizing the results of their internal audits and recommending follow up actions, if any.

Second, and more immediate, the Secretaries of Labor and Homeland Security have been instructed to take action to protect U.S. workers from “any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at jobs.” The Order requires the Secretaries to begin taking action within 45 days of the Order’s issuance.

What does this mean for my business?

While it is uncertain exactly how the White House intends to implement these outsourcing limitations, the White House stated the Labor Department “will also finalize guidance to prevent H-1B employers from moving H-1B workers to other employers’ job sites to displace Americans workers.” In conjunction with the reports and recommendations submitted by agency heads in the next four months, this Order could lead to more specific restrictions on contractors in the near future. 

Federal contractors who currently source labor, resources, or capital from outside the United States should consider anticipating the implications of the Order in several ways. First, beginning to identify the global footprint of their business as it relates to federal contracts. For labor matters, the employment of H-1B workers at federal contractor job sites may be further restricted. The H-1B visa classification is widely utilized by U.S. companies to sponsor foreign professionals in a wide variety of industries and specialty occupations, and it is the most regulated temporary work visa category. Third-party placement has long been targeted by the Department of Homeland Security in the H-1B context, and any new agency action under the Order may include additional employer and contractor attestations, increased scrutiny on H-1B petition adjudications, or other limitations on working conditions and worksites. Federal contractors and H-1B employers should evaluate their labor needs in anticipation of possible new restrictions.

In addition to the labor restrictions this Order might soon impose, contractors should review their contracting obligations related to domestic preferences to ensure any foreign resources—products and components—comply with the Buy American Act and Trade Agreements Act as applied to their contracts. More broadly, as economic security and national security concerns continue to be more closely linked in various policy contexts, analyzing reliance and impacts of outsourced work and critical supply chains involving countries of concern, primarily China but also Russia and the Middle East, is highly advisable.

Conclusion

Ice Miller has extensive experience with federal contracting as well as employment and immigration and the nexus to international trade and national security. Our team includes Christl Glier and Jenifer Brown, partners in our Labor, Employment and Immigration Practice Group who work with clients in various industries to secure appropriate visa status and employment authorization for foreign national professionals in the U.S. and abroad; Guillermo Christensen, a partner in our D.C. office with close to 20 years of national security experience in the CIA and the intelligence community with a focus on helping U.S. and international clients in complex cross-border business operations; Christian Robertson, a former U.S. Air Force intelligence officer who regularly advises clients on government contract matters; and Clayton Heil, a partner in our D.C. public affairs practice with prior experience in the Congress on defense and homeland security matters.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
 
[1] Executive Order on Aligning Federal Contracting and Hiring Practices With the Interests of American Workers, Aug. 3, 2020, available at https://www.whitehouse.gov/presidential-actions/executive-order-aligning-federal-contracting-hiring-practices-interests-american-workers/.
 
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