Dive Brief:
- A New Jersey CEO was arrested earlier this week after an indictment charged him, two information technology companies he partly owns and one of his employees with fraudulently using the H-1B visa program to reduce skilled labor costs by "falsely representing" foreign workers as full-time when they were actually contractors, according to U.S. Immigration and Customer Enforcement (ICE).
- Sowrabh Sharma, the CEO, and Shikha Mohta, the company's head of finance, were both charged with one count of conspiracy to commit visa fraud and to obstruct justice and one count of conspiracy to harbor aliens. Each charge carries potential prison terms and fines up to $250,000 each.
- According to ICE, Sharma's two companies, SCM Data and MMC Systems, offered consultants to clients in need of IT support. But when submitting the H-1B visa paperwork for foreign nationals, student visa holders or recent college graduates, the companies falsely said the foreign workers had full-time positions and annual salaries - required to secure the H-1B visas. Instead, they allegedly paid foreign workers per project as contract workers, a definite no-no.
Dive Insight:
The H-1B visa program, seemingly always in the middle of controversy, is designed to give American employers an advantage when it comes to having enough talent for technology and engineering projects. Indeed, some observers point to it as a potential solution for the current shortage of STEM talent. Of course, when someone allegedly abuses the program, it gives critics - mostly U.S. tech talent who claim the H-1B program keeps salaries down - some evidence for their point of view.
Also, there are media reports that the H-1B program is really designed to favor large employers, leaving smaller employers unable to compete for the limited number of visas issued each year (the number of H-1B visas is capped at 85,000 by federal law). For HR leaders at employers who use H-1B workers, the New Jersey case appears to be a perfect example of how not to take advantage of the program.
