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What You Should Know About the New Executive Order Impacting Federal Contractors and Immigration

By Michael Klazema on 8/18/2020

Companies that contract with the federal government should be aware of a new federal executive order that could have an impact on the employment of non-immigrant foreign labor. The “Executive Order on Aligning Federal Contracting and Hiring Practices with the Interests of American Workers” was issued by the Trump White House on August 3 with a stated goal of limiting and further regulating federal contractors in their use of H-1B non-immigrant foreign workers.

The H-1B visa program allows United States employers to engage non-immigrant foreigners temporarily in “specialty occupations,” or jobs that require a bachelor’s degree or similar mark of specialized knowledge or work experience. Once granted, an H-1B visa lasts for three years with an extension possible for to up to six years.

The federal government already limits the number of H-1B visas granted in any given year—a control in place to preserve domestic jobs for American citizens. In 2019, the H-1B visa program was capped at 188,100 new visas. The executive order is intended to prevent the use of the H-1B program if it has an adverse impact on United States workers.

In signing the executive order, President Trump spoke of a recent incident at the Tennessee Valley Authority (TVA). TVA employees alleged that the company was in the process of replacing American workers with foreign labor to save money.

The order requires all federal agencies to review their contractors (or sub-contractors) to determine if those entities have foreign labor policies that are taking U.S. jobs or hurting U.S. workers. Within 120 days of the signing of the executive order, all federal departments are required to conduct investigations and submit reports to the Office of Management and Budget. These reports must include details on whether each contractor is using H-1B workers, which roles H-1B workers are playing, and whether the policies are negatively impacting job opportunities for U.S. workers or potentially compromising matters of national security.

According to a White House briefing statement, the goal of the executive order is to “prioritize high-wage workers and close loopholes to ensure American workers are not displaced by low cost foreign labor.” The implication is that employers are not using H-1B labor to fill vital capacities that can’t be filled with local candidates, but rather, to save money by not hiring higher-cost domestic labor.

What does this executive order mean for federal contractors?

If your business contracts with the federal government, know that these investigations and reports will occur over the next four months. At the moment, the executive order does not directly impact contractors or subcontractors or require any steps from these parties. However, it is also vital to understand what this executive order could mean for the future of your business and your hiring efforts.

This post highlights many of the legal ramifications of this executive order and provides useful tips that federal contractors can start following right now to prepare themselves for greater scrutiny of their H-1B labor. Maintaining well-organized documentation concerning your use of the H-1B program and foreign workers is essential, as is complying with all immigration regulations.

Another critical consideration is contractor background checks. “Know Your Employee” protocols are crucial for avoiding greater scrutiny of H-1B foreign labor from potential investigators. Thorough criminal history checks and verification checks (including checks to verify educationprofessional licenses or certificationswork history, and other signs that you are securing “specialized labor” professionals) are essential.

At backgroundchecks.com, we are here if you need advice on how to design an effective background check strategy for foreign hires. We can provide tips for what your contractor background checks should resemble and the steps that you can take with domestic vetting, including security screening, to perform your due diligence.


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