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Firebell in the Night: The Coming L-1 Crisis and What We Can Do About It

by Gary Endelman

Gary Endelman One of the little-noticed side effects of the Special Registration controversy is that those who know most about immigration find it difficult to think about anything else. It does not trivialize the pain and anxiety that Special Registration is causing to suggest that pro-immigration advocates must think about other things and have other priorities. The most obvious candidate for our consideration is the H1B quota that, absent action by Congress, will plunge to 65,000 on October 1, 2003 from the current 195,000 level. There is another brewing crisis that has yet to emerge fully but, when it does, may prove even more dangerous to American employers: the L-1 intracompany transferee visa is under attack. Created by Congress in 1970 to allow US employers to rotate expatriate employees into and out of the United States, the L-1 has long been a stable and quietly accepted visa not troubled by the constant controversy that has plagued its more high profile H-1B cousin.

As the H-1B has become more radioactive, interested employers have increasingly turned to the L-1 as a less onerous alternative unburdened by labor union attack and DOL oversight. New L-1s soared by 50% between 1998 and 2002; the first 5 months of fiscal 2003 saw an additional 10% rise in L usage according to State Department data. Over this same period, by contrast, H-1B visas fell by 27% through 2002 and another 17% thus far in FY 2003. There were 384,000 H-1B temporary workers in 2001 while 329,000, nearly as many, were working here as L-1 intracompany transfers. The continuing debate over H-1Bs has so sucked all the oxygen out of employment based immigration that, below the radar, few have noticed that the L-1 has begun to replace it as the work visa of choice. Critical articles on the L1 are not new. What is different is that such negative treatment is no longer confined to the nativist fringe but has crossed over into the mainstream press. That is why the Business Week story on major US companies outsourcing their IT functions, laying off Americans and replacing them with L-1 international workers supplied by Tata Consulting, India's largest technology consulting firm, should be, to quote Thomas Jefferson's reaction to the Missouri Compromise, a "firebell in the night" to the immigration bar and its business clients. Sound like an overwrought exaggeration? Listen to the Business Week report and think again:

  • With the travails of the high-tech industry, and the jump in IT unemployment, fewer U.S. companies can tap the H-1B program these days by saying qualified Americans aren't available. At the same time, employers looking to slash costs have discovered that they can use firms that hire L-1s to dump high-paid Americans in favor of cheaper workers from abroad. As a result, many companies are subcontracting thousands of jobs to outsourcing companies such as Tata, Infosys Technologies and Wipro Technologies, the three largest Indian software servicing companies, which are all using more L-1s..."Is it OK to use L-1s for outsourcing to other firms? The answer is no" says State Department spokesman Stuart Patt. Legal or not, the growing use of L-1s has sparked a backlash...the Immigration and Naturalization Service is reviewing the L-1 visa program to "assess whether companies are using the L-1 to circumvent the H-1B program," says an INS official.

Representative John L. Mica (R-FL) vows to amend the L-1 law if the Justice Department does not prosecute Siemens Corporation for allegedly replacing US workers with cheaper L-1 Indian nationals at its Lake Mary, Florida office. Congressman Mica now condemns the L-1 as a "backdoor to cheap labor" while a sympathetic Business Week notes with obvious disapproval that "Companies like Tata have grabbed a US market share in IT consulting in part by exploiting the L-1s loophole." This comes at a time when America is poised to embark upon war with Iraq, the economy shows no signs of revival and the anti-immigration faction with the Republican Party seems to have gained the upper hand on Capitol Hill. The most recent issue of Immigration & Business News Comment lays out the legislative landscape for the 108th Congress as it begins work:

  • The Republicans have apparently chosen Rep. John Hostettler (R-IN) who has been tapped by the House Leadership to chair the immigration subcommittee...Rep. Hostettler gets an A- rating from NumbersUSA an advocacy group calling for significant restrictions on new immigration...Other immigration restrictionists on the immigration subcommittee include Rep. Lamar Smith (R-TX) and Rep. Elton Galleghy (R-CA). With former Majority Leader DIck Armey retired and gone from the House leadership, there are no overtly pro-immigration Republicans left at the top of the party in the House. In the Senate...the latest Washington rumors are that newly-elected Sen.Saxby Chambliss (R-GA) will head the Senate immigration subcommittee. Sen. Chambliss also gets a high rating from NumbersUSA...none of the traditional friends of immigration in the Republican Party, are being mentioned for the subcommittee.

Faced with such reports, the friends of the L-1 visa need not panic but must plan for the future. A rationale for keeping, even expanding, this visa must be fashioned while there is still time. A variety of possible solutions readily come to mind. Some may want to set a hard annual limit on L1 admissions. Others may favor a flexible cap that allows for any ceiling to be exceeded if clear national benefit can be demonstrated, perhaps as judged by a points system that places high emphasis upon cutting-edge skills in industries that are most actively in need of more workers. Skeptics may prefer to link the L-1 to rates of occupational unemployment when regional and local variations are factored in. If this happens, however, the price for such a check on L1 admissions should be that no subsequent test of the relevant job market need be repeated as a condition precedent for attaining green card status.

Precisely because the enemy has yet to strike, if we marshall our defenses now, all may not be lost. If we retreat into the false security of an illusory denial, and pretend that the future will always resemble the present, then the L-1 could be diffcult to save. To do nothing, to deny that the L is in danger, guarantees that, if a serious backlash against the L does come, it will be deeper and more painful that any of us either wants or expects. Our present immigration priorities must be reversed. It should be harder to come to America, but easier to stay. We need the L-1 and now is the time to tell the nation all the reasons why. Act now friends of the L, while there is still time.

About The Author

Gary Endelman practices immigration law at BP America Inc. The opinions expressed in this column are purely personal and do not represent the views or beliefs of BP America Inc. in any way.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.