What Does the Suspension of Microsoft from the Green Card Program Mean for Businesses?

On October 8, the Trump Administration suspended Microsoft and seven other large businesses—Adobe, Cognizant, Infosys, Tata, Wipro, HCL and Capgemini—from applying for Permanent Labor Certifications (PERM). Further, the U.S. Department of Labor stated it would not process any pending PERM applications involving these companies. This is a significant blow to these businesses as it means they cannot use a common method for sponsoring employees for permanent residence.

All eight of these companies sponsor hundreds to thousands of workers for H-1B visas and thereafter sponsor many of these H-1B workers for green cards. To sponsor these workers for green cards, employers must get a PERM labor certification from the U.S. Department of Labor. A labor certification involves three steps:

• filing for and receiving a Prevailing Wage Determination
• engaging in recruitment to determine if there is a quailed U.S. workers who wants this position and
• filing a PERM petition to get a certification that can be used to file an I-140 petition with U.S. Citizenship and Immigration Services (USCIS).

Why Did These Companies Become Suspended?

According to the Trump Administration, they are abusing the H-1B system, which allows those on the H-1B visa to work while they seek a green card by initially getting a PERM labor certification. Without PERM labor certification, these H-1B workers would run out of work eligibility after six years of H-1B status. However, employees from over-subscribed countries, China, India, and Philippines, receive three-year extensions if there is an approved I-140 petition, which cannot be sought without a PERM labor certification.

In announcing the suspensions, Vice-President J.D. Vance stated, "In the last year, Microsoft laid off 6,000 American workers, [while] at the same time, the company benefited from 6,300 H-1B visas and almost 3,000 green cards. In other words, if you do the math, for every worker that Microsoft laid off, they replaced that worker with one and a half foreign indentured servants."

The Trump Administration has sought to limit H-1B visas and argued that it is rife with abuse. Vance claimed workers hired through the H-1B program were making $20,000 less than U.S. workers in the same position. It is unclear whether the Trump Administration’s arguments are accurate.

Microsoft’s Response

Microsoft responded that 80% of the H-1B applications it filed in the last year were for extensions or status changes for people who already worked for the company. Furthermore, the company stated it “only files H-1B petitions for those who meet the rigorous standards of this visa category. We pay our employees some of the highest compensation in the tech sector, and our wages are among the highest of all H-1B filings. We pay our H-1B employees the same as any other employees doing comparable work.”

How Do These Suspensions Affect Other U.S. Businesses?

The suspension of Microsoft and the seven other businesses should give employers, who regularly sponsor employees for H-1B visas and green cards, pause and force these businesses to review its processes in sponsorship of foreign nationals. This reassessment does not mean an end to these sponsorships; rather, just to make sure all criteria and documentation are being met.

These suspensions can be compared to the millions of dollars in penalties that Apple and Google paid about five years ago due to their alleged discriminatory hiring practicing related to the different hiring procedures for U.S. workers versus foreign nationals. Those settlements did not mean an end to PERM labor certifications; rather, employers were forced to stop using different hiring procedures to avoid the ire of the federal government.

If you are concerned about your hiring practices related to H-1B workers and sponsorship of foreign nationals, please contact Bruce Buchanan, Brandon Davis or any member of the Phelps immigration team with questions or for advice and guidance.