Outsourcing: How to Skirt the Law

Moira Herbst, Business Week, June 22, 2007

The video looks as though it could have been shot at almost any sleepy corporate seminar in the country, with one camera panning between a man in a suit and tie standing at a podium and others seated nearby. But the dialogue is riveting: It’s a group of lawyers openly discussing strategies for helping their clients pretend that they’re trying to recruit American workers—as required by law—while they, in fact, hire cheaper foreign workers.

“[O]ur goal is clearly not to find a qualified and interested U.S. worker,” says Lawrence Lebowitz, director of marketing for the Pittsburgh law firm Cohen & Grigsby, before an audience of employers at the firm’s conference. The seminar provides details on how employers can meet the government’s requirements for the Permanent Labor Certificate program (PERM), which lets employers sponsor foreign workers for permanent residency if they can demonstrate no U.S. worker can fill a job. The trick, according to Cohen & Grigsby attorneys, is to only go through the motions of hiring Americans without ever intending to.

The video, which has been posted on YouTube (GOOG), is now sparking a sharp backlash. On June 21, Senator Chuck Grassley (R-Iowa) and Representative Lamar Smith (R-Tex.) fired off a letter to Cohen & Grigsby demanding an explanation for its advice, as well as going so far as to ask for the names of its clients. “Your firm’s video advises employers how to hire only foreign labor, while making it nearly impossible for a qualified American worker to get a job,” they wrote. “We look forward to hearing from you on how such advice is ethical and does not undermine the programs by enticing fraud and misuse.” A public relations firm representing Cohen & Grigsby did not return phone calls seeking comment.

Temp Work Program Under Fire

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The video may complicate the prospects for immigration reform this year. While most of the debate has been over what to do about low-skilled workers, including the 12 million illegal immigrants already in the U.S., the policies for high-skilled workers are now becoming controversial, too. Microsoft (MSFT), Intel (INTC), Google (GOOG), Oracle (ORCL), Motorola (MOT), and a host of other leading technology companies have called for new policies to make it easier for skilled workers to come into the U.S., including by making available more H-1B visas.

But the temporary worker program has come under heavy fire this year. The program was originally set up to help U.S. companies hire foreign workers with specialized skills that the companies couldn’t find among American workers. Now, however, the most active users of the program have become outsourcing companies, particularly those from India, including Infosys Technologies (INFY), Wipro (WIT), and Satyam Computer Services (SAY). That has led critics such as Grassley to question whether the U.S. program is being used to facilitate the outsourcing of American jobs (see BusinessWeek.com, 5/15/07, “Crackdown on Indian Outsourcing Firms”).

Tech Labor Shortage Called a Myth

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Employers don’t have to prove that they can’t hire Americans to employ an H-1B visa worker. But if they want to sponsor that worker for permanent residency, then they need to take a series of steps to prove no U.S. worker is qualified, including placing ads in newspapers, reviewing résumés, and interviewing potential candidates. That employers appear to be gaming that part of the immigration system, with its higher hurdles, is disconcerting to some experts. “What’s disturbing about this from a public policy standpoint is that the PERM is supposed to be the gold standard,” says Ron Hira, professor of public policy at Rochester Institute of Technology. “If you can circumvent those rules, it begs the question of what’s going on elsewhere.”

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[Editor’s Note: “Your Easy Guide to Hiring Immigrants—5-Step Solution” can be viewed here.]

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