Explained: The new US bill for H-1B reform and how it may affect Indian IT firms

by 5paisa Research Team Last Updated: Dec 12, 2022 - 02:16 am 43.5k Views
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In a move that could have a significant bearing on the hiring and staffing plans of India’s IT companies, the US Republican Party is looking to make the country’s H1B visa programme more stringent in a bid to address gaps in high skilled labour. 

The Republicans have introduced a new piece of legislation which seeks to end a key training programme that benefits high-end IT companies by giving them tax breaks and allowing them to hire workers at lower wages.   

What is the new bill called, and what stage is it at, right now? Who introduced it?

The new bill is called the American Tech Workforce Act of 2021. It has been introduced in the US House of Representatives, which is the lower house of the US Congress. 

The Bill was introduced by Republican Study Committee Chairman Jim Banks as part of a Republican Study Committee Initiative to hold Big Tech accountable.

How can the bill actually become law?

It will have to first be approved by the House, and then the Senate before it can be signed into law.

The Republicans are in the opposition. The only real chance the bill actually has of becoming law is if the ruling Democrats adopt it. This bill then becomes a government legislation, which is passed by both houses and gets presidential approval. 

What has Banks, who introduced the new bill, actually said?

“Big Tech is setting aside some of the most lucrative and valuable career opportunities in America and giving them exclusively to foreign guest workers. They’re cutting out Americans to save a few bucks. It’s domestic outsourcing,” Banks said in a statement.

“This shocking disregard for American workers and their role in our nation’s future is unpatriotic. We must fix Big Tech’s incentives, so they begin putting Americans first,” he added.

What could be the possible wage implications for IT companies, if such a bill were to become law?

The Bill proposes to set a wage floor for H-1B visas at the higher end of the annual wage paid to an American worker for that position, or $110,000. It also seeks to prioritise giving visas to employers who pay higher wages and limiting the ability of big tech firms to contract with third-party workers.

How does it propose to restrict the issuance for new H1B visas?

The bill seeks to limit the validity of visas for H-1B workers sponsored by third-party companies to one year instead of three years, which is the norm, The Economic Times said in a report.

Is any other organisation supporting the new bill?

The American Tech Workforce Act is supported by American Principles Project (APP), Federation for American Immigration Reform (FAIR), and NumbersUSA.

“The bill corrects some glaring flaws in the H-1B program, which has had a severely detrimental effect on the job opportunities and wages of American workers. It also ends OPT, a program that allows Big Tech companies to hire foreign students over American students after they graduate,” said RJ Hauman, Director of Government Relations and Communications, FAIR. “Remember, immigration policymaking should not be solely focused on border security, but also protecting American workers from unfair competition.”

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