February 9, 2016

Avoiding problems with the H-1B visa program

Posted in Employment Law by Gene Killian |

I remember reading an article years ago about how difficult it was to win a jury trial against the Walt Disney organization. Seems that when jurors see those clean-cut young Disney employees in their crisply-ironed clothes take the stand, they have difficulty believing that representatives of “The Happiest Place on Earth” could possibly have done anything wrong.   Which is not to say that plaintiffs haven’t tried.  A woman who weighed 240 pounds, for example, once sued Disney, claiming that one of the Three Little Pigs had grabbed her breasts and began shouting “Mommy! Mommy!” Problem:  The Three Little Pig characters are unable to move their arms.  Case dismissed.  Another plaintiff, Denise Mooty, sued because Disney tried to prevent her from riding the “Twilight Zone Tower of Terror” 50 times a day, as had been her habit.  She argued that she suffered from abdominal adhesions, and that the ride helped to ease her pain.  (Not sure how that one turned out, and for all I know, maybe it did help to ease the pain.  Also not sure why anyone at Disney cared how much time she spent on the “Twilight Zone Tower of Terror,” as long as she was paying her way.  Me, I’d rather read a book.)

Now Disney faces two class-action suits relating to the H-1B visa program.  The named plaintiffs in the two suits, Leo Perrero and Dena Moore, are former IT employees for Disney.  They contend that Disney and its consulting companies (HCL and Cognizant) colluded to break the law by using temporary H-1B visas to bring in a flood of lower-paid immigrant workers, knowing that Americans would be displaced.  At least 30 other former Disney workers have filed complaints with the federal Equal Employment Opportunity Commission, making similar arguments.

Some brief and basic background:  In years past, employers, especially in high tech, sometimes found it difficult to hire enough skilled US workers to fill all their job openings. In 1990, Congress established the H-1B program, under which companies can hire skilled foreign workers.

If an employer is deemed “H-1B dependent,” however, the employer has to file certain certifications with the Department of Labor.  An employer is considered to be H-1B dependent if:

  1. It has 25 or fewer full-time employees, of which more than seven are H-1B employees.
  2. It has between 26 to 50 full-time employees, of which more than 12 are H-1B employees.
  3. It has more than 50 full-time employees, of which 15% or more H-1B employees.

The required certification basically states that the hiring of an H-1B worker has not and will not affect the job of an American worker “in an equivalent job.” The H-1B dependent employer may not displace a US worker within its own workforce by hiring an H-1B worker in an equivalent job during the period beginning 90 days before the H-1B petition filing date and lasting 90 days after the filing date.

Perrero and Moore contend that Disney and its consultants violated federal racketeering laws by routinely and repeatedly lying on such certifications.

Irrespective of whether the H-1B requirements have been met in this case, the facts alleged by the plaintiffs seem to be a laundry list of what not to do as an employer. According Perrero, for example, in October 2014, he and over 200 other Disney employees working in the IT department were told by Disney management to train hundreds of H-1B visa holders to take over their jobs. The employees were told by management that they were being fired on January 30, 2015. Perrero says that management told the fired employees that if they didn’t stay and train the foreign workers, they would forfeit bonuses and severance pay. Management allegedly told Perrero and the other employees that there would be job openings for them, but apparently very few employees were actually rehired. Some of the terminated employees were apparently told that they were being “blackballed” from working at Disney in any capacity for at least a year.

If these allegations are true, they present a litany of what not to do as a manager, at least if you don’t want your company to end up in litigation.

Firing employees en masse and holding their severance pay hostage to force them to train their replacements?  Bad.  Making misrepresentations to the government about the terminations? Bad.  Conducting mass layoffs in the fourth quarter, just before the holidays? Bad.

Unfortunately for Mr. Perrero, Ms. Moore, and the rest of the fired workers, however, the class action suits appear to have a fatal flaw.   The law exempts from the certification requirements any H-1B worker who earns at least $60,000 per year, or who holds a master’s degree or higher in a field related to the intended area of employment.  The average salary for IT workers is in the $100,000 range; for younger, foreign workers, the average salary is around $62,000.  Based upon the publicly available information, I suspect that Disney may be able to avoid liability by showing the Court that the replacement workers were exempt from the certification requirements because their salaries were too high (or because they had Master’s Degrees.)

(As I write this, it’s an election year, and I should note that immigration is a hot and divisive topic.  Senator Bill Nelson of Florida, a Democrat who’s been openly critical of Disney’s layoffs, has offered a bill to reduce the H-1B quota by 15,000 visas a year to 70,000. Republican presidential candidate Ted Cruz of Texas, a has introduced a bill with Senator Jeff Sessions of Alabama, a Republican hard-liner on immigration, to sharply increase the minimum wage for H-1B workers to $110,000 a year, to discourage outsourcing companies from using foreign workers as a way to lower wages.)

One takeaway for managers, from Disney’s Cinderella: "Just because it's what's done, doesn't mean it's what should be done." Treating employees with respect (even when terminating them) can go a long way towards heading off unwanted and expensive litigation.