U.S. Department of Labor
Office of Inspector General

Audit Report


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Report Title:  The Department of Labor's Foreign Labor Certification Programs:  The System is Broken and Needs to be Fixed

Report Number:  06-96-002-03-321

Issue Date:   May 22, 1996

The OIG audited the Department's role in the employment-based, permanent labor certification (PLC) and the temporary H-1B Labor Condition Application (LCA) immigration programs. Under these two programs, ETA has responsibility for certifying certain employers' PLC applications and LCAs before aliens can obtain visas to legally work in the U.S. Our audit objective was to determine whether ETA policies and procedures adequately protected U.S. workers' jobs in accordance with the Immigration Act, as amended.

In our opinion, while ETA is doing all it can within its authority, the PLC and LCA programs do not protect U.S. workers' jobs or wages and, therefore, neither program meets its legislative intent. DOL's role amounts to little more than a paper shuffle for the PLC program and a "rubber stamping" for LCA program applications. As a result, annual expenditures of approximately $50 million for DOL's foreign labor certification programs do little to "add value" to the process of protecting American jobs and wages.

The PLC Program Does Not Meet Its Legislative Intent of Excluding Foreign Workers When Qualified, Willing U.S. Workers Are Available

The PLC program is employment-based and is intended to exclude aliens who seek admission to the U.S., or status as an immigrant, for employment purposes when qualified, willing U.S. workers are available for jobs. However, we found that the program does not currently protect U.S. workers' jobs. Instead, the PLC program allows aliens to immigrate, based on their attachment to a specific job, and then shop their services, in competition with equally or more qualified U.S. workers without regard to prevailing wages.

For the 24,150 aliens for whom PLC applications were certified, we determined:

In addition, we determined that, of the aliens who actually worked for the petitioning employer after adjustment to permanent resident status, 17 percent had left that employer within 6 months after their status was adjusted and a third (includes the 17 percent) had left within 1 year.

As part of the labor certification process, the employer must conduct a test of the labor market to determine that there are no qualified, willing U.S. workers available for employment in a job for which an application has been made. Using two different audit approaches, we determined the PLC labor market test was perfunctory at best.

The LCA Program Is Being Manipulated Beyond Its Intent of Providing Employers the Best and Brightest in the International Labor Market While Protecting the Wage Levels of U.S. Workers

The LCA program is intended to provide U.S. businesses with timely access to the "best and the brightest" in the international labor market to meet urgent, but generally temporary, business needs while protecting U.S. workers' wage levels. We found that the program does not always meet this purpose. Instead, it serves as a probationary try-out employment program for illegal aliens, foreign students, and foreign visitors to determine if they will be sponsored for permanent status.

We determined that:

Some LCA employers use alien labor to reduce payroll costs either by paying less than the prevailing wage to their alien employees or treating these aliens as independent contractors, thereby avoiding related payroll and administrative costs. Other LCA employers are "job shops" whose business is to provide H-1B alien contract labor to other employers.

The only protection the LCA program supposedly provides U.S. workers is that the employer is required to pay the alien the prevailing wage for the specialty occupation. Yet, with the increasing use of LCA workers and employers' failure to either document and/or pay the prevailing wage, the prevailing wage may be eroded over time.

Legislative Reforms Needed

In our opinion, the PLC and the LCA programs are easily manipulated and do not protect American workers' jobs and wages as intended. Therefore, we recommended that the Assistant Secretary for Employment and Training work with the Secretary and the Congress to:

In responding to the draft audit report, ETA stated its long-standing concerns with the program and agreed that these foreign labor programs do not protect U.S. workers' jobs or wages. ETA indicated that: (1) DOL and the Administration have outlined several legislative reforms to address serious deficiencies in both programs and (2) if Congress fails to enact immigration reform to change the current system, ETA intends to make as many administrative and regulatory improvements as can be implemented under current law to strengthen the programs.

Report in PDF[Full Report in PDF]   45 pp.  {213k}

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