outplacement ban h1b

Outplacement Ban on H1B Dependent Employers – Immigration Reform

This immigration reform bill is not friendly for IT Consulting companies. There is a clause in the bill called  “outplacement ban” on H1B Dependent employers. This clause will have huge impact,  if changes are not made to the bill.

Comprehensive Immigration reform bill cleared Step 1. Senate judiciary committee passed the bill. Now, the bill will be debated on U.S. Senate.

Read this to understand how a bill becomes a law in USA.

Referring to the above article, current bill S.744 (Border Security, Economic Opportunity, and Immigration Modernization Act) is in the Senate Committee, debated and passed by the Committee. Bill is now reported to the Floor Activity for Debate. As you can see, there is long way to go before immigration can become a law.

In this article, I like to show the impact of the bill on H1B Visa and particularly talk about a section of the bill that will affect IT Consulting companies.

Read Immigration Reform and H1B Visa : Impact Analysis to get an idea about the H1B Provisions and what attorneys are thinking about the bill.

To understand the impact of outplacement ban, you will have to understand the following terms

  • Outplacement Ban
  • H-1B Dependent Employers

Outplacement Ban and H1B

In one single word – outplacement, is referring to consulting companies who does contracts, IT staffing, sub-contracting as service. Majority of IT consulting companies will fall under this category.

This includes companies outside USA and IT consulting companies within USA.

Here’s the actual text about outplacement.

OUTPLACEMENT.—Section 212(n)(1)(F) (8U.S.C. 1182(n)(1)(F)) is amended to read as follows:
‘‘(F)(i) An H-1B-dependent employer may not place, outsource, lease, or otherwise con-tract for the services or placement of an H–1B non-immigrant employee.
‘‘(ii) An employer that is not an H-1B-de-pendent employer and not described in para-graph (3)(A)(i) may not place, outsource, lease, or otherwise contract for the services or placement of an H–1B non-immigrant employee unless the employer pays a fee of $500.

I have Highlighted – H1B Dependent Employer in the above section.

Companies that are considered as H1B dependent, include most consulting companies in India and other countries. With outplacement ban, its tough to provide placement, contracting services. Non H1B dependent employers provide consulting services by paying a fee of $500.

So, who are these H1B Dependent Employer?

(e) H–1B-DEPENDENT EMPLOYER DEFINED.—Section 212(n)(3) (8 U.S.C. 1182(n)(3)) is amended to read as follows:
‘‘(3)(A) For purposes of complying with the requirements related to outplacement of an employee, the term ‘H–1B-dependent employer’ means an employer that—

‘‘(i) is not a nonprofit institution of higher education, a nonprofit research organization, or an employer whose primary line of business is healthcare and who is petitioning for a physician, a nurse, or physical therapist or a substantially equivalent healthcare occupation; and  ‘‘(ii)(I) in the case of an employer that has 25 or fewer full-time equivalent employees who are employed in the United States, employs more than 7  H-1B non-immigrants;

‘‘(II) in the case of an employer that has at least 26 but not more than 50 full-time equivalent employees who are employed in the United States, employs more than 12 H-1B non-immigrant; or ‘‘(III) in the case of an employer that has atleast 51 full-time equivalent employees who are employed in the United States, employs H-1B non-immigrants in a number that is equal to at least 15  percent of the number of such full-time equivalent  employees.

There is one exception to this rule. This exception is for Intended immigrants.

(f) INTENDING IMMIGRANTS DEFINED.—Section 101(a) (8 U.S.C. 1101(a)) is amended by adding at the end the following: ‘‘(53)(A) The term ‘intending immigrant’
means, with respect to the number of aliens employed by an employer, an alien who intends to work and reside permanently in the United States, as evidenced by—
‘‘(i) for a covered employer, an approved application for a labor certification or an application that has been pending for longer than 1 year; or ‘‘(ii) a pending or approved immigrant status petition filed for such alien.
‘‘(B) In this paragraph: ‘‘(i) The term ‘covered employer’ means an employer of an alien that, during the 1-year period ending on the date the employer files an application for the labor certification for such alien, has filed an immigrant status petition for not less than 90 percent of the aliens for whom the employer filed an application for a labor
certification during such period. Labor certification applications that have been pending for longer than 1 year may be treated for this calculation as if the employer filed an immigrant status petition
‘‘(ii) The term ‘labor certification’ means an employment certification under section 212(a)(5)(A).  ‘‘(iii) The term ‘immigrant status petition’
means a petition filed under paragraph (1), (2), or (3) of section 203(b).
‘‘(C) Notwithstanding any other provision of
law, for all  ‘‘(i) calculations under this Act of the number of aliens admitted pursuant to subpara graph (H)(i)(b) or (L) of paragraph (15) an intending immigrant shall be counted as an alien lawfully admitted for permanent residence and shall not be counted as an employee admitted pursuant to such a subparagraph; and

‘‘(ii) determinations of the number of employees or United States workers employed by an employer, all of the employees in any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be counted.’’.

It’s tough to read and understand the actual language of the bill. Let me explain in the way I understood the above section.

If employer is going to file Green Card Application to the H1B employee, they can avoid being counted for H1B Depended Employer.

To make it simple, U.S. doesn’t want companies to send someone on H1B for short period of time. This could be because majority of IT Consulting companies that apply for thousands of H1B, could be using H1B visa to send employees to U.S. have them work for few months to years and move them back to home base.

By adding this intended immigration section, now companies will be forced to process Green Card and have them stay and contribute towards growth of America.

That’s it about H1B and Outplacement Ban section.

Bill is long ways from becoming a law. Companies are lobbying to remove this restrictive section from the Bill. I will publish articles analyzing the interesting sections of the bill and its impact.

Next Steps

Read the following to get more updates on this Immigration Reform Bill

Share this Post, Like this in Facebook. Stay tune for more updates.

If you have any questions about this bill, let me know.


  1. Jerald L. Fowler on June 20, 2013 at 10:04 AM

    The broad bill requires employers filing visa petitions to first offer a job to an “equally qualified” U.S. worker. Hatch’s revised amendment number 12 would impose this requirement only on “H-1B-dependent” companies but clarifies the definition of such companies.

  2. sivanarumugam on June 9, 2013 at 11:51 AM

    any affected by the H4 visa people ,change of visa stattus to H1 .it is useful or not pls tell me .

  3. Haley Gray on May 23, 2013 at 9:40 AM

    While I think that this is a good change, because consulting companies are taking a lot of H1B’s away from people who would otherwise stay permanently, I think that this is only a band-aid on the real problem- the fact that the H1B limits are so incredibly low in the first place. I think if you want to look at true immigration reform, the H1B limits need to be raised, and other measures like this one put in place. There should be separate tracks for people planning to pursue Green Cards, and eventual citizenship vs. those who just intend to come to the USA to work for a few years.
    However, none of that addresses the issue of illegal immigrants in the country. Immigration reform is missing this key issue, and until all aspects of immigration law are tackled in a fair and equitable, and frankly semi-logical way, these sorts of problems are going to only continue to get worse.

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