Hiring foreign workers proves more time-consuming, costly

By Saul Sugarman

Attorneys say their practices are being hurt by a cumbersome and expensive process.

Despite a recovering U.S. economy, companies remain reluctant to hire foreign workers, leaving immigration law firms hurting for business.

At first, the poor job market was said to be the blame for companies scaling back on visa sponsorships of immigrant employees. Now lawyers say the expensive and often lengthy application process is prompting companies to shy away from foreign labor.

"Getting work visas has definitely become costlier in the last year and a half," said Laura J. Mazel, a partner at Weaver Schlenger Mazel LLP in San Francisco.

Lawyers say the U.S. Center for Immigration Services, the agency responsible for handling visa applications, has increasingly demanded more information on proposed foreign workers. The immigration service is focused on making sure H-1B visas, sometimes called skilled worker visas, it issues are valid. A study the agency conducted in 2008 found serious problems with more than 20 percent of the visas it has issued.

Since then, the application process has taken longer, costs more and has become more unpredictable, according to immigration firms.

"Straightforward cases that should have sailed through the system are now taking several months," Mazel said. "If you’re a startup and money is tight, you may think of alternatives to hiring abroad."

If the visa application is denied, the immigration service does not refund the fee, which in many cases costs a company thousands of dollars. Base application fees for the H-1B have gone up just $5 since 2007, from $320 to $325, according to the immigration service. But a law that took effect in August 2010 tacked on an additional $2,000 for every H-1B visa request filed by a U.S. company with 50 or more employees. That’s on top of a $750 fee required through the 1998 American Competitiveness and Workforce Improvement Act for all companies consisting of one to 25 employees and a $1,500 fee for companies of 26 or more. Additionally, a $500 fraud prevention fee is required for all applications.

"We actually feel the administrative cost [of visa applications] quite significantly," said Eric Whitaker, general counsel for Palo Alto-based auto manufacturer Tesla Motors Inc. "Our immigration expenses are one of our top three legal costs." Whitaker said Tesla isn’t afraid to hire more foreign workers, but the company is looking to bring on in-house staff to handle the ballooning legal expenses surrounding immigration.

In January 2010, the immigration service issued guidance requiring companies to show an employer-employee relationship in order to get a visa application approved. Among several requirements, the guidance states employers must inform the government if they are providing benefits; if there are employee evaluations; what the employee’s pay is; and if the employer has the ability to hire and fire the employee.

"The burden of demands made by the government for these visas is growing," said Angelo A. Paparelli, a partner at Seyfarth Shaw LLP in Los Angeles.

Paparelli said the immigration service is intensifying its demands, which are threefold. The first – and the most burdensome to law firms – is a request for evidence, which means the agency wants clarification or more documentation to complete an application. The second is a notice of intention to deny, which means the visa request will be denied unless the applicant provides reason to prevent the rejection. The third is a notice to revoke, which means the immigration service plans to rescind an issued visa.

"It doesn’t surprise me in the least that some employers are hesitant to go through that ordeal," he said.

Fewer applications from companies has meant less work for their outside counsel. "Our business division has definitely seen a downturn. A lot of our colleagues have gone out of business," said Joseph I. Elias, a senior attorney at Reeves & Associates in Pasadena.

Elias said firms used to be able to float their whole business on H-1B applications.

"Imagine you are a firm that is equipped to file 5,000 new H-1B petitions in a year with attorney and paralegal staff," he said. "But your usual clients drop their demand to 2,500 spread out over the calendar year. It becomes difficult to make ends meet."

In 2008, the immigration service received enough work visa applications to fill its 65,000-person quota within two days of the application period opening in April. The following year, it took until December to reach the cap. In 2010, the number of visa applications didn’t reach its maximum; it took until January this year to r each the cap, nine months after the application period opened. As of this month, there are still more than 20,000 H-1B visas available for the latest application round.

"[The drop-off] has been devastating," said Paparelli. "The typical work that these employment-based lawyers provided and earned a living on just isn’t there for them anymore."

Paparelli said many immigration attorneys have moved into three areas of law in order to meet their billable hours. One of them is defense, specifically complaints filed against the H-1B application process. Another is assisting with I-9 forms, which deal with employment eligibility. The remaining attorneys have moved into EB-5 visas, a program established in 1990 that enables foreigners to receive visas in exchange for making substantial investments in U.S. companies.

Still, most lawyers have weathered the H-1B fallout, he said.

"By now, it seems like practices seem to have stabilized," he said. "They’re not continuing to plummet the way they once were."

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