Executive Order Sets Stage for Restrictions on Government Contractor Visas and Offshoring (US)

On August 3, 2020, President Trump signed an Executive Order (“Aligning Federal Contracting and Hiring Practices With the Interests of American Workers” hereafter “Executive Order”) calling for a broad review of the government’s use of visa holders and outsourcing across its extensive government contracting networks.

The White House announced that the Executive Order is, at least in part, a response to the federally-owned Tennessee Valley Authority’s decision to begin outsourcing overseas one-fifth of its U.S.-based technology jobs. Outsourcing has become a more popular option for U.S. employers seeking a way to cut costs and in response to increasingly difficult visa adjudications created by president Trump’s restrictive immigration policies.

The Executive Order reiterates the President’s ongoing call to preserve U.S. jobs for U.S. workers, particularly during the economic crisis created by the COVID-19 pandemic. The meat of the Executive Order calls for all executive departments and agencies to review their contracting practices, but it also requires action to “protect” U.S. workers from potential harm caused by H-1B visa holders.

In particular, the Order requires:

1. The heads of departments and agencies to review all 2018-19 awarded contracts to determine whether any of its contractors and subcontractors:

• • Used foreign labor for U.S.-based contracts (i.e., workers on U.S. visas or in another employment-authorized status), including the type of work performed and whether foreign labor affected U.S. workers or U.S. national security.
  • Used offshore labor for work previously done in the U.S., including whether such offshoring affected opportunities for U.S. workers, whether affected U.S. workers were eligible for assistance under Trade Adjustment Assistance, and whether the offshoring affected U.S. national security.
  1. The heads of each agency to assess any negative impacts foreign labor or offshoring practices had on “the economy and efficiency of Federal procurement and on the national security” and propose any necessary action.
  2. The heads of each agency to review, along with the Office of Personnel Management, the agency’s compliance with (a) the September 2, 1976 Executive Order 11935 on Citizenship Requirements for Federal Employment and (b) Section 704 of Public Law 116-93, which covers limiting the use of appropriated funds to pay salaries of officers and employees of the U.S. government only when they are U.S. persons, as defined by law.
  3. The head of each agency to submit a report summarizing their findings above within 120 days with proposed corrective actions and timeframes as well as possible presidential actions.
  4. Within 45 days, the Secretaries of Labor and Homeland Security must take action “to protect United States workers from any adverse effects on wages and working conditions caused by the employment of H-1B visa holders[.]” This requirement includes third-party job sites and ensuring compliance with Section (n)(1) of the Immigration and Nationality Act, which covers an employer’s duties related to filing a Labor Condition Application (LCA) for workers in the H-1B, E-3, and H-1B1 visa categories.

  The Executive Order creates no immediate effect on visa holders or their employers, but it sets in motion the large and sometimes slow gears of government action, which could end up substantially altering the federal government’s willingness to permit employer sponsorship of visa holders and overseas workers to fulfill contracts in the future. While we await publication of agency actions and proposed rules, the reference to an Executive Order, issued in 1976 by President Ford, is very telling. The 1976 Executive Order, along with an accompanying Presidential statement, limited the selection of non-US citizens for competitive civil service jobs to situations “when necessary to promote the efficiency of the service” and when in the “national interest.” In other words, is the administration seeking to insert a “national interest” component into the visa eligibility criteria for positions that support federal contracts? Time will tell.

  Ultimately, the president’s actions will likely hinge on the results of the November presidential election and the ongoing effects of the COVID-19 pandemic. No matter those outcomes, one cannot doubt this administration’s willingness to take decisive immigration action and companies that rely on visas to fill government contracts would be well-served to consider government outreach to voice their views on the Executive Order.

  Copyright Squire Patton Boggs.

  The opinions expressed in this update are those of the author(s) and do not necessarily reflect the views of the Firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

  

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