DOL Refuses Senate Request on SCE Case

There was an uproar after the utility SCE laid off American workers and replaced them with imported ones working under either H-1B or L-1 visas. This was the subject of part of a Senate hearing, and 10 senators wrote an open letter to the Dept. of Labor (and other agencies), asking them to investigate the case.

My blog about the letter had what might now be considered a prophetic title, “Unclear Goal in Senators’ Letter Regarding SCE Case,” as DOL has now refused to conduct an investigation, pointing out, among other things, that SCE’s actions appear to be perfectly legal. I had said the same thing in my blog:

The letter essentially asks whether SCE, and the Indian IT services firms, TCS and Infosys, that provided the workers, dotted all their i’s and crossed all their t’s. The answer is almost certainly Yes — SCE is a huge company with lots of careful lawyers. For instance, the letter asks whether TCS and Infosys are maintaining an employer relationship with the workers sent to SCE, as required by law and regulations. They are almost certainly doing so, assuming the plan, as typical, is to use the onsite foreign workers to serve as liaisons to offshore workers.

Did the senators who authored the letter expect DOL to respond this way, washing its hands of the whole SCE mess? Maybe; there is no naivete in DC, and maybe the intent was to show DOL, and by extension the Obama people, just doesn’t care about H-1B abuses (and that the good senators do care).

Yet I am surprised that DOL simply ignored the request at the end of the Senate letter, which asked DOL and the other agencies to identify any “obstacles in existing law” to preventing abuse such as that in the SCE case. DOL’s lack of a reply on this point is in sharp contrast to DOL’s 1998 House testimony, in which it agreed that there were lots of abuses but the DOL’s hands were tied by the language of the law. In other words, whereas in 1998 the DOL was sympathetic to critics of H-1B, today there is no such feeling. The “obstacle” is now partly DOL itself.

But even those 10 senators, well-intentioned as they may be, are not helping matters either, in their failure to notice the central issue in the SCE case.  As I wrote in my earlier posting, “what really enabled the hiring of H-1Bs to work at SCE was the four-tier system of determining prevailing wage, which makes young foreign workers cheap.” The Senate and the DOL letter have focused on the special H-1B-dependent category in H-1B law, which covers the firms that provided the foreign workers to SCE. Yet the real point is, regardless of whether the rules in that special category are flawed, the foreign workers in the SCE case were still subject to the GENERAL wage requirements for H-1B, and use of young foreign workers for cheap labor is legal under those requirements as well.  In other words: What most needs fixing is GENERAL H-1B wage law.

That law, as I’ve said, makes it legal to hire young foreign workers in lieu of older Americans, as young workers are cheaper. So any legal reform to H-1B that concentrates on the H-1B-dependent class, which I’ve been warning for quite a while is what Congress is headed for, will completely miss the boat.

This includes the proposals to give an unlimited number of visas (temporary and permanent) to newly-graduated foreign students earning STEM graduate degrees at U.S. universities. Even if Congress were to severely clamp down on the H-1B-dependent employers, SCE would have plenty of young foreign workers to hire from.