August 5, 2020 - Labor/Employment

Executive Order Seeks to Limit the Use of Foreign Workers on Federal Contracts

Federal ProcurementOn August 3, 2020, President Trump signed an Executive Order aimed at limiting the use of foreign workers on federal contracts and subcontracts. The issuance of the Executive Order comes on the heels of the Tennessee Valley Authority, a federally owned utility, announcing plans to outsource 20% of its technology jobs overseas.

The Executive Order has two main components:

  • Executive Agency Review of Contractor Hiring Practices: The Executive Order instructs the heads of executive agencies to assess whether government contractors and subcontractors used temporary foreign labor for contracts performed in the United States or moved the performance of contracts to foreign countries in fiscal years 2018 and 2019. As part of this assessment, the Executive Order requires heads of executive agencies to evaluate any negative impacts on U.S. workers, the economy, or national security caused by federal contractors using temporary foreign labor on their contracts or offshoring work. The heads of the executive agencies must submit a report to the Office of Management and Budget within 120 days of the Executive Order summarizing the results of their review and, “if necessary,” recommending actions to address the use of foreign labor.
  • Protect U.S. Workers: The Executive Order directs the Secretaries of Labor and Homeland Security to take action, “as appropriate and consistent with applicable law,” to protect U.S. workers from any adverse effects on their wages and working conditions caused by U.S. companies employing H-1B visa holders, including ensuring that employers of H-1B visa holders adhere to the requirements of section 212(n)(1) of the Immigration and Nationality Act (8 U.S.C. 1182(n)(1)). It is unclear what specific actions, if any, these agencies may take in response to this Executive Order. Given that contractors must submit certified materials to the U.S. Department of Labor assessing these types of impacts before they receive authorization to hire H-1B visa workers, it is possible that these agencies may increase their investigations of contractors’ certified materials to determine if they are compliant or still remain viable.

While the Executive Order has no immediate impacts on contractors’ use of foreign workers on federal contracts, contractors should keep an eye on this development and review their practices and usage of foreign workers. With the current high unemployment rate due to COVID-19, the rationales contractors may have used to support their engagement of H-1B visa holders may no longer be applicable. In addition, contractors that tend to rely on H-1B visa workers, such as companies in the technology industry, should consider how this Executive Order may impact their ability to staff and perform their federal contracts. The implementation of the order could also affect awards of federal contracts and subcontracts to contractors that rely heavily on foreign workers.

The upcoming election could also impact the outcome of the Executive Order. If President Trump is reelected, the government will likely take further actions to limit the use of foreign labor on federal contracts. If there is a change in administration, however, this Executive Order, along with many of the other executive orders aimed at limiting the use of foreign labor, could be rescinded.