By , PC Week
November 18, 1998 6:10 AM PT

Four years ago, Linda Kilcrease hit a bitter turning point in her career. One day, with no warning, Kilcrease said, she was summoned via office memo to an off-site meeting with 249 of her colleagues at insurance giant American International Group Inc. Then they were all fired.  

Before leaving the company, however, for the next 60 days, Kilcrease trained her replacement--a foreign IT professional, provided to AIG by a contractor and working in the United States on a temporary work visa called H1-B. Although Kilcrease and other former employees filed complaints against AIG, the company wasn't found liable.

The kind of abuse represented by Kilcrease's well-documented case was supposedly ended in October when Congress passed new compromise legislation governing H1-B visas. The American Competitiveness and Workforce Improvement Act gave large IT employers what they said they desperately need -- relief from what they say is a severe shortage of technical employees in the United States -- by increasing the number of H1-B visas available each year from 65,000 to 115,000 in 1999 and 2000. 

The new law was also supposed to protect IT workers such as Kilcrease and foreign workers by introducing a new safety net of protections. 

Kilcrease and others, however, said the safety net in the new law is fraught with gaping loopholes that put U.S. IT jobs -- particularly those of older workers -- at risk and leave foreign H1-B visa holders vulnerable to exploitation. Officials with the Department of Labor, charged with overseeing the law's safeguards, admit that they lack the resources to provide comprehensive enforcement. As a result, experts said, IT managers thinking of turning over work to contract programming companies that use foreign workers should familiarize themselves with the Workforce Improvement Act and investigate the practices of their contractors.

A lackluster labor law
Under the new law, the major provision intended to protect foreign IT professionals from being forced into working in body shops--high-volume contractors that rely on low- wage programmers--under binding contracts is new whistle-blower protection. It supposedly protects an H1-B worker who alerts the DOL of illegal hiring practices from being blacklisted. However, admit DOL officials, most H1-B holders working toward a green card and to become citizens won't risk jeopardizing their stay in the United States by lodging a complaint.

"Temporary workers have a couple of powerful reasons not to [blow the whistle on their employers]," said John Fraser, acting administrator of the Wage and Hour Division of the DOL. "Their legal right to work in the U.S. depends on their employer. So, if the employer is displeased in any way with their performance or behavior, their right to remain in the U.S. ends."

On the flip side, elements of the new law that are supposed to protect U.S. workers from losing their jobs to H1-B contractors or unethical body shop employers are not as strong as they appear. For instance, the new law protects U.S. workers from unfair displacement by forbidding any company with a work force comprising at least 15 percent nonimmigrant H-1B holders to replace a U.S. worker with an H1-B holder. 

The loophole is in the language: The 15 percent limit applies to entire companies, including human resources, sales, finance, business development and so on. Since most IT organizations do not constitute 15 percent of their companies' work force, it is impossible to hit that threshold and impossible to protect U.S. workers.

"Had the language been changed to, say, 15 percent of the IT work force, it would have been different," Kilcrease said.

Shattered American dream
U.S. workers have a lot to lose from abuse of the H1-B law. When Kilcrease lost her job, for example, she also lost many of her retirement benefits, since she was terminated six months shy of her 10-year anniversary. Fortunately, she was trained in Lotus Development Corp.'s Notes, which was a hot skill to have at the time, and she landed a new job right away.

Other U.S. IT workers feel that they have not been so lucky. Older workers looking for IT jobs, for example, say the availability of foreign workers with H1-B visas has made it easier for employers to engage in age discrimination. Many older workers feel as if they are being quickly passed over for H1-B individuals.

According to one 60-year-old IT professional working as a computer generalist for a temporary-employment agency in Miami, the main reason he cannot land a permanent job is his age. The worker, who requested anonymity, has a master's degree in computer science and more than 25 years of experience at building systems, but when his age is disclosed, the line of questioning shifts.

"As soon as they find out how old I am, the questions stop being about what skills I have, and they start asking me about the skills I don't have," the programmer said.

Another older worker, employed as a contractor at an automobile manufacturer in Detroit, who also requested anonymity, said she has seen multiple violations of the supposed protections in the new H1-B law. One H1-B holder, whom she has been assigned to train, works for a contractor who subcontracted him to another company, which then placed him at the automobile manufacturer. The H1-B worker knows he is being underpaid relative to the competitive salary, yet none of his employers will take responsibility, she said.

And, although the new law says the salary of the H1-B holder is supposed to be posted in the department in which the person is working, so that all workers know a competitive salary is being offered, this has not been done. The law also requires that each time the H1-B holder is transferred to a new job site, the sponsoring company must apply for a new visa for that person. That was not done, she said.

This is common and uncontrollable, even under the new H1-B law, DOL officials admit.

"Are there companies that are able to get away with it? Of course," said the DOL's Fraser.

"And if the question is, Why? The answer is that the law, until this new bill was enacted, didn't make that illegal," he said.

The DOL will never be able to catch many of the offending parties, he admitted.

"It is not due to a lack of concern or commitment to see that the right thing is happening. It is due to a weakness in the law. We've worked very hard in this new bill to make a little progress toward closing some of those loopholes ... but we don't have the power to track all the companies," he said.

The DOL does not perform spot checks on companies that they suspect may be breaking the H1-B law, Fraser said. Rather, they rely upon complaints. In the last fiscal year, through September, there were only 63 complaints filed.

Generally, the DOL finds reasonable cause to further investigate in about two-thirds of the cases, he said.

The companies that the DOL is watching are the large international contracting and consulting firms.

For instance, companies such as Tata Consultancy Services, Mastech Corp. and Syntel Inc. are three of the big outsourcing companies. Syntel was involved in the AIG lawsuit and as a result was fined $40,000 and required to invest $1 million in U.S. training programs. But, due to the loopholes in the law at the time, AIG walked away with no penalty.

Similarly, TCS and Hewlett-Packard Co. in 1995 were slapped with a lawsuit from a disgruntled H-1B worker who left TCS and, the suit claimed, was fined by the company.

HP was not liable, and TCS went to court and won.

Under the new provision, however, requiring H1-B holders to sign a contract obligating themselves to their employer and sponsor may be illegal in some circumstances.

Despite the new law, TCS H1-B employees still face a $30,000 penalty if they leave the company. Company officials claim the contract is a way to protect U.S. workers.

"We require our employees to sign a contract with us that states they will return to India upon completion of the work and that they won't leave TCS and take a job in the U.S.," said Jim Thomas, vice president of marketing at TCS, in Dallas.

However, such binding contracts can bring their own problems. H1-B workers, convinced that they are dependent on a single employer, can be easily taken advantage of, said critics of the practice.

Immigration program the answer?
Many say the answer may be new legislation that, rather than treating imported IT workers as strictly temporary employees, is actually an immigration program that acknowledges that the workers are going to be in the United States for a long time.

That approach, said Paul Kostek, president-elect of IEEE-USA, in Seattle, could make it harder for unscrupulous employers to take advantage of H1-B workers.

"Do we want this group of people who are indentured servants and don't have freedom?" Kostek asked. "We raise the question: Is this the American way?"

Additional reporting by Aileen Crowley