IT cos voice concern over proposed US law on hiring

Two US senators have introduced a legislation seeking to prohibit companies that lay off large number of American workers, from subsequently hiring temporary workers (such as tech professionals) from outside the US.

The proposed ‘Employ America Act’, if passed, could severely hit tech companies that had resorted to axing jobs during the economic downturn even as they continued to file for H-1B visas.

The IT industry has expressed concern over the proposed legislation given its ramifications on businesses. But industry watchers also point out that the possibility of the new legislation being passed on a standalone basis may be somewhat low at a time when the US is slated to look at comprehensive immigration reform next year.

When contacted, Ameet Nivsarkar, Vice-President of Nasscom, said, “The proposed legislation will be painful for global companies, if it becomes a law. While it may not get cleared as a standalone legislation, what we need to watch out for is whether it gets tagged as a provision to other must-pass Bills. We are constantly monitoring the situation.”

The proposed Employ America legislation has been introduced by Senator Bernie Sanders and Senator Chuck Grassley – the duo had tagged similar provisions to the economic stimulus package with an aim to prohibit companies receiving bailout from the Troubled Asset Relief Program from replacing laid-off American workers with guest workers from overseas.

The Employ America legislation would require employers hiring temporary workers such as IT professionals to certify that they have not resorted to mass layoffs in the past 12 months and that they do not intend to fire in the future.

Companies that have announced layoffs of over 50 American workers in the past year could be subjected to the prohibition.

The two US lawmakers have claimed that the tech industry, a major employer of H-1B workers, has laid off over 3,45,000 workers since August 2008.

“With the unemployment rate still climbing and millions of people looking for work, we have a responsibility to ensure that companies do not use the temporary guest-worker programme to replace American workers with cheaper labour from overseas,” said Senator Sanders, a member of the Senate Budget Committee.

Earlier this year, Grassley, along with Senator Richard Durbin, introduced a legislation that, among other measures, proposed to prohibit employers from hiring additional H-1B and L-1 guest workers if over 50 per cent of their employees were already in that category.

The 50:50 provision as it was dubbed, raised the hackles of the Indian IT industry, which felt that such a clause would not only impact the outsourcing per se but also hurt competitiveness of the US.

However, the passage of the Durbin-Grassley legislation may be remote given that comprehensive immigration reforms appear to be just around the corner.

Taken from Business Line