H-2B Category Under Attack for Fraud

Congress’ Government Accountability Office (GAO) was asked to determine if there were examples of recruiters and employers engaging in illegal or fraudulent activity with the H-2B program. The GAO conducted an investigation which began in April 2010 and concluded in September with the issuance of a report provided to the House of Representatives Committee on Education and Labor. The report indicated that there were indeed instances of abuse. For example, the GAO cited to several court cases where employers and recruiters operating in 29 states committed fraud and abuse in the H-2B program by paying unfair wages, charging H-2B workers excessive fees, and submitting fraudulent documentation to federal agencies. The GAO also conducted undercover tests and found that while most recruiters did not encourage H-2B visa fraud, some (3 of the 18 contacted) did offer to help violate laws and regulations.

What is the H-2B visa program? The H-2B nonimmigrant program permits U.S. employers to hire temporary foreign workers to perform nonagricultural labor/services to meet short-term seasonal or intermittent needs. As noted in the GAO report, the H-2B program is most commonly used by employers in the following industries: hospitality, construction, landscaping, manufacturing and food processing. Consistent with this industry listing, GAO cited court cases involving H-2B visa fraud or H-2B worker exploitation where the defendants were hotels and hospitality labor brokers, construction companies, and landscaping/forestry companies.

What is the future of the H-2B program? The H-2B program is often the subject of great debate. As the above information shows, concerns of program abuse are real and continuously subject to review by both regulators and Congress. For example, proposed regulations concerning the required wage for H-2B workers are presently under review. However, attorneys who speak to H-2B employers commonly find that these employers are desperate for workers, even in the current economy. These employers often cite to the following reasons for their need: a remote work location; incredibly variable seasonal needs; jobs that are physically demanding, hard and/or difficult to perform; and skill sets that are in short supply. Coincidentally, those needs are ones sometimes cited to when immigration reform proposals supporting a “guest worker” visa category are discussed.

What does the GAO report mean for employers? Arguably, employers in the cited industries that make use of H-2B workers, whether directly or through a contractor, should review their procedures to ensure compliance with the regulations. While the GAO report may result in legislative changes to the H-2B program in the long term, the evidence presented in the report shows that penalties for violations are already a possibility for users (or abusers) of the H-2B program. Furthermore, some industries, such as the hospitality industry, are already at risk for financial loss due to federal wage and hour lawsuits brought by H-2B workers (see the Summer 2010 issue of the Hospitality eAuthority.) While we await the next reform, H-2B employers would be well-advised to carefully review current procedures to ensure compliance with H-2B program rules.