US firms laying off Americans and hiring H-1B workers to face closer scrutiny: What Trump's new order means

US President Donald Trump has directed federal agencies to consider whether employers sponsoring H-1B workers have laid off or plan to lay off American employees when reviewing visa petitions and related applications.

According to a White House fact sheet issued on September 18, the executive order also requires agencies to coordinate with other federal departments to obtain wage, employment and industry data when assessing H-1B applications.

The order directs the Departments of State, Labor and Homeland Security to consider whether an employer has directly or indirectly conducted layoffs in the previous year or plans future job cuts that negatively affect similarly situated US workers. It covers labour condition applications (LCAs), H-1B petitions, visa applications and applications for admission to the United States.

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The measure could lead to closer scrutiny of employers sponsoring H-1B workers and increased enforcement activity. However, the agencies have yet to spell out how they will implement the new requirements.

The White House said the order aims to protect American workers and strengthen oversight of the H-1B programme. It alleged that some employers have used the visa programme to replace US workers with lower-paid foreign labour. The administration also pointed to outsourcing companies, arguing that some use H-1B workers to replace employees at third-party businesses before transferring work overseas.

What the order means for employers

Under the order, the Departments of State, Labor and Homeland Security must coordinate with the Departments of Commerce and Education, as well as the Small Business Administration, to obtain relevant wage, employment, academic, industrial and other economic information.

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The agencies must consider this information when reviewing H-1B-related applications. The precise way in which the data will be used, including whether it will lead to additional scrutiny of offered wages, job duties or job requirements, remains unclear.

The order does not automatically bar companies from sponsoring H-1B workers after conducting layoffs. Instead, it makes recent and planned job cuts a factor that federal agencies must consider when reviewing applications.

The order also directs the Labor Department to begin reviewing data related to previously submitted LCAs within 30 days to determine whether further action against sponsoring employers is warranted.

Existing rules and possible enforcement

Current law already requires certain employers to make attestations related to layoffs. These requirements apply to H-1B-dependent employers and employers found to have willfully violated programme rules.

They must attest that they have not laid off a US worker and replaced them with an H-1B worker in an essentially equivalent job within 90 days before or after filing a petition, or placing an H-1B worker with a secondary employer.

These requirements do not currently apply to all H-1B employers.

The new order directs agencies to consider layoffs when reviewing H-1B-related applications, while the existing statutory layoff-attestation requirements continue to apply to the specific categories of employers covered by law.

The Labor Department's review of previously filed LCAs could also lead to investigations under Project Firewall. The initiative allows the department to launch investigations when it receives credible information about possible violations, even without an external complaint.

The extent of any additional enforcement will depend on how the agencies implement the order.