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H-1Bs Exempt From Furloughs

by Rob Sanchez

An Atlanta Journal article brought to light a peculiar practice of employers who impose mandatory furloughs on their American employees to reduce labor costs, while exempting their H-1B employees from having to do the same. Specifically the article talks about how employees in the Georgia university system, with the exception of their H-1B counterparts, are undergoing reduced working hours and voluntary pay reductions in order to cut the operating budgets of the state's universities.

The AJC described the situation quite simply:

When employees of the University System of Georgia take their mandated furlough days, foreign workers with a special visa [H-1B} will not be joining them. Exempting H-1Bs from furloughs and/or salary cuts is not unusual. Most government employers who are going through mandatory furloughs have a stated policy on their website that explains who must comply to pay cuts and who is exempted. Employers often call it a voluntary program but there is very little choice involved because they give employees the option of working their full hours or being furloughed. Either way they will get less take home pay. Several examples of their stated policies are copied below.

This excerpt from a recent Arizona Republic article explains what is going on at their Phoenix location:

Phoenix-based computer-chip maker ON Semiconductor Corp. encountered the issue when it required employees to take four weeks of unpaid time off in the first half of the year. "We are not able to ask our H-1B visa holders to do the same without jeopardizing their visas," said Colleen McKeown, senior vice president of human resources and communications.

The same thing is happening at Microchip:

Like ON Semiconductor, Microchip has taken cost-cutting measures to weather the global slowdown in semiconductor sales. The company, which employs about 1,500 workers in Arizona and about 5,000 worldwide, has required all workers in its fabrication plants to take furloughs. The move has not affected H-1B workers, though, because those employees mostly are in engineering.

These furlough policies are discriminatory towards American workers because they are forced to bear the brunt of the pay cuts. H-1B co-workers are unaffected by the furloughs and pay cuts. It's not fair for Americans but surprisingly this kind of prejudicial behavior is supported by federal law. Most employers justify what they are doing on advice from lawyers who are telling them that furloughing H-1Bs could run afoul of the following regulation:

20 CFR 655.731 - "What is the first LCA requirement, regarding wages?"

Employers prefer to exempt H-1Bs from furloughs for two major reasons, and in both cases two sections of the regulation are referred to. It's important to keep in mind that lawyers are interpreting these two sections to give maximum legal protection for employers without regard to its affect on American workers. Even lawyers agree that the employers could petition the DOL to get a change of status for their H-1Bs, but they say it would be too much of a hassle compared to the ease of squeezing American workers.

20 CFR 655.731 (a) "Establishing the wage requirement."
This section leaves no doubt that the wages of H-1Bs must not drop below the prevailing wage. Most employers use this one to justify their actions, which on first blush looks OK, but it raises a big question:

One of the key arguing points the H-1B proponents use to argue that H-1Bs aren't just about cheap labor is that most employers supposedly pay their H-1Bs far more than the prevailing wage. If their claim is true then why is it that a 10%-20% drop in working hours would decrease the wage rate of their H-1Bs below the prevailing wage? Based on the evidence there are a whole lot of H-1Bs who get the minimum prevailing salary legally allowed -- no more and no less.

20 CFR 655.731(c)(7)(i) and (ii) "Wage obligation(s) for H-1B nonimmigrant in nonproductive status".
This section requires that H-1Bs be paid full salary even if they aren't working. This is often called the "benching" provision. Obviously employers won't save money if they send their H-1Bs home with a full pay check, so there is no cost advantage of furloughing them. Employers face another risk if they bench their H-1Bs because after 30 days of benching the H-1B visa goes out of status.

Generally speaking there is very little debate when universities and state governments use these regulations to justify their discrimination against American workers. You would think that furloughed employees who are having trouble putting food on the table or who can't make house payments would be raising a huge stink over the situation but so far rancor just hasn't happened. Oddly enough this quote is true just about everywhere:

There's been little discord over the exemptions, said Stuart Ivy, president of the UGA Staff Council, which advocates for the college's faculty and staff members. "There has been some discussion, but once the reasons are explained, their decision makes sense," Ivy said.

Ivy is correct in his assessment that university employees and state and city employees who are unionized haven't complained about these policies. It's yet to be seen if there will be ill feelings as more employers use furloughs to cut labor costs. The lack of dissent would seem to indicate that Americans remain very accommodating to the huge influx of foreign workers that come to this country for jobs. It is widely thought that Americans would never give up their homes or livlihoods to immigrants but that's exactly what they are doing. We are a very generous nation!

University system won't furlough foreign workers
Foreign-worker laws limit pay cuts at tech firms

About The Author

Rob Sanchez is the author of Job Destruction Newsletter. He is also the Senior Writing Fellow for Californians for Population Stabilization.

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