Executive Order Increases Scrutiny on Federal Contractors and H-1B Workers

On August 3, 2020, President Trump signed an Executive Order requiring federal agencies to review the use of foreign temporary workers and overseas offshoring practices by federal contractors and subcontractors.

The order also directs the Department of Labor (DOL) and the Department of Homeland Security (DHS) to take action to enforce H-1B regulations and ensure that U.S. workers are not adversely impacted by the hiring of H-1B workers.

Review of Federal Agency Contracting and Hiring Practices

The order directs federal agencies to review federal government contracts to determine if federal contractors or subcontractors used temporary foreign labor, and, if so, the nature of the work performed by temporary foreign labor, whether opportunities for U.S. workers were affected, and the impact on national security.

The review is not limited to the use H-1Bs workers. It extends to all nonimmigrant hiring practices by federal contractors and subcontractors.

The order also directs federal agencies to ensure compliance with existing laws, including those regulating which federal jobs are required to be held by U.S. workers.

Federal agencies are required to submit a report summarizing the results of their review with recommendations for proposed action to implement the order by early December 2020.

Increased Scrutiny of H-1B Workers and Placement at Third-Party Jobsites

The order directs DOL and DHS to take action by mid-September to ensure that the wages and working conditions of U.S. workers are not adversely impacted by the employment of H-1B workers, including placement of H-1B workers at third-party job sites.

DHS and DOL are expected to advance regulations to restrict H-1B visas and to impose additional obligations on employers that sponsor H-1B workers, as well as employers that contract with other employers to place H-1B workers at end client sites.

Impact on Employers

The order and the expected  ensuing regulations are expected to pose a significant burden on employers who work with the federal government as contractors or subcontractors, and employers who utilize H-1B workers.

• Employers who contract with federal agencies may be required to provide extensive information concerning their workforce, including contingent workers, in connection with the agency review process.
• Employers who hire H-1B workers, and/or have contracts with employers that place H-1B workers at their job sites, may face new regulations imposing additional wage and recordkeeping obligations.
• Employers who contract with employers that place H-1B workers at their job sites may be required to assume additional employer liability associated with placement of these workers onsite.
• Employers who utilize H-1B workers should expect increased investigations from DOL and DHS, increased scrutiny of petitions, and denials.

Gibney will continue to monitor how the order is implemented and provide updates as they become available.  If you have any questions or require legal advice, please contact your Gibney representative.