It is a well-known fact that certain US business sectors have more job vacancies than they can fill with domestic talent, forcing companies to cast their recruiting nets farther abroad. But H1B visa abuse by some tech companies has caused the current administration to freeze the H1B, at least through the end of 2020.

The freeze could have serious repercussions for businesses relying on filling critical vacancies with foreign workers. But there are ways to get around the freeze and hire foreign workers, despite the changing laws and regulations.

H1B Visa Requirements

The H1B is a specialty visa granted on a temporary basis to workers with exceptional skills, abilities, or merits. It is not intended for long-term immigrants, although many H1B holders use their status to put down roots in the US and later apply for a green card.

To qualify for the H1B, foreign workers must meet certain requirements:

• The job must demand highly specialized skills and knowledge
• The employer must require job candidates to hold a bachelor’s degree or higher
• The applicant must have the equivalent of a US bachelor’s degree or higher in the specific occupational specialty

Ironically, fashion models also fall under the umbrella of the H1B visa. To meet eligibility requirements, the model must possess “distinguished merit and ability.”

Why the Trump Administration Targeted H1B Visas

It is no secret that President Trump has conservative views on immigration. His campaign slogan, “Make America Great Again,” highlights his America-first philosophy. And after decades of outsourcing by US companies who sent hundreds of thousands of American jobs overseas to exploit low-paid foreign labor, many Americans support Trump’s position.

In particular, a disproportionate number of H-1B visas are granted to tech workers from India who are willing to work for much less than their American counterparts. In 2019, 225,000 H1B applicants competed with US workers for a mere 85,000 jobs.

Silicon Valley tech companies are especially guilty of prioritizing foreign tech workers over domestic employees. And as recently as June of this year, just days before the freeze went into effect, a Facebook employee leaked an internal HR document that exposed FB’s policy of prioritizing H1B workers over US citizens.

On June 22, 2020, the White House released its proclamation suspending H1B visas until the end of the year, citing high unemployment in the US. In an election year, US jobs are always a political talking point, so it is no surprise that the H1B visa news is being used by the Trump campaign to garner political support from disgruntled voters.

Covid-19 and H1B

Massive job losses in the US due to Covid-19 lockdowns give additional impetus to the President’s immigration policies. With American businesses taking a hard hit and Wall Street facing record lows, it seems counterintuitive to open US borders to foreign workers when so many American workers are unemployed.

Moreover, travel restrictions have been put in place to prevent the spread of the virus. Allowing foreign workers to enter the US heightens the threat of Covid-19 to a nation that has already registered widespread infections and suffered thousands of deaths.

How the H1B Freeze Affects US Businesses

The freeze, which also covers H1A visas and J1 short-term visas, is projected to impact as many as 525,000 foreign applicants, including 170,000 permanent resident green card applicants. In addition to highly skilled tech workers, the freeze applies to non-agricultural seasonal labor, nannies and au pairs, and high-level business executives.

Many American businesses are already hiring more US citizens to offset the freeze on H1B visas. Because the halt is temporary, most companies see it as a short-term inconvenience whose impact will be minimal in the long run. Nevertheless, certain businesses will feel the pinch more than others, and some will look for ways to circumvent the new regulations imposed by the Trump administration.

Employment sectors that are most likely to be affected by the H1B visa restrictions include:

• The medical sector, that predicts a potential shortage of nearly 140,000 doctors over the next decade.
• The IT industry that typically relies on foreign employees to fill the qualification gap in skilled US tech jobs.
• Companies with key US employees located abroad, that may experience retaliation from foreign governments.
• Companies that currently employ H1B workers whose families are banned from joining them in the US due to the visa freeze.
• Research ventures, including the US Department of Defense (DOD), that collaborate with foreign scientists and researchers.

Getting Around the H1B Freeze

When it comes to getting a visa, H1B is attractive to educated foreign workers, but even more so to businesses, enabled to hire savvy experts from outside the country.

For businesses, H1B applicants provide a motivated pool of skilled and educated workers. Not to say they become unavailable after the events of 22nd June, 2020, when the Trump administration blocked work visas, five of them altogether. This is the case when a global PEO provider comes into play, letting businesses keep their pace and avoid losing momentum by hiring the same talent overseas.

If hiring globally was an option in the past, it is a business imperative today. One of the most effective solutions for getting around the H1B freeze is to partner with an international employer of record (EOR) like Acumen International. While the visa block shuts down your access to highly skilled talent, an international PEO solution opens a new opportunity window for you in the form of limitless access to a vast variety of global expert talent.

A global PEO solution enables your company to support and employ skilled remote professionals without the limitation of proximity or geography. Retain employees that were denied the H1B visa, whether it is their home country or any other of the 190 countries we support.

We simply draw a tax and law-compliant employment contract that allows your worker of choice to continue operating as usual. We deal with related benefits, payroll, tax, and accounting issues accordingly. Once your employees get the H1B visa again, in the future, we will transfer them off our service and you’ll hire them directly.

Acumen International, Your Global HR Partner

In addition to H1B visa restrictions limiting entry to the USA for foreigners, the ever-evolving and changing laws, regulations and requirements in multiple countries pose enormous challenges for international employers. Acumen International is a global employment service provider in over 190 countries. We manage legal issues, payroll, benefits, taxes, and other HR challenges faced by businesses with a growing global workforce.

Partnering with Acumen ensures your company remains compliant with the multitude of regulations and requirements that affect businesses, so you can confidently continue to facilitate your business and hire the very best talent to meet your needs.

Nothing is more exciting than growing and expanding your business into new markets, especially when you’re ready to go global. Venturing into new frontiers holds infinite prospects for growth and profits. But no matter how eager you are to join the global business community, there remains the challenge of international hiring and compensating your foreign workforce.

Getting Ready to Go Global

Before you hang out your shingle in foreign lands and begin recruiting local talent, you should take adequate time to set yourself up for success. For each new market, you need to identify your target audience, conduct research on local employment regulations and compliance with tax laws, and understand the complexities of payroll processing and employee benefits provision.

If you plan on establishing a company representative to sell company products in a foreign country you should also take into account the red tape of arranging payroll for local citizens or obtaining work permits and visas for expats. In some countries, the application and decision-making processes can take several weeks, but more often – months.

Simply put, the international hiring process cannot be rushed, but more often than not – it has to be. Even though doing it on your own, using your company’s resources can seem like a wiser way to go, it will not save you time, money and headaches down the road. Only when you fully understand the ins and outs of hiring a local citizen in a foreign country should you actually begin the recruitment process. Unless you’re a staffing agency, you probably will lack expertise in local legislation procedures, tax regulations as well as other local employment practices (severance pay, 13th salary, etc.).

The Challenges of Foreign Employee Benefits Provision

An important part of attracting top talent (and retaining too) is offering an enticing benefits package. It is crucial for your local staff and even more so with regard to your global talent. In competitive markets, benefits sweeten the pot, and for a highly skilled prospect, a well-thought-out benefits package can be the deciding factor making them choose your company over your competitors.

Foreign employee benefit provisions fall under one of two categories:
Statutory benefits, also called statutory entitlements, are mandated by local governments. Providing them is not optional when you are hiring a local citizen in a foreign country.

Depending on the country, statutory benefits may include:

• Paid vacation time
• Medical leave
• Maternity and/or paternity leave (partially or fully paid)
• Health insurance
• Severance in case of termination

Statutory benefits can vary widely from one country to the next. If you are expanding into multiple regions, juggling the nuances of local statutes can be a nightmare for human resources. Not only will your HR team need to learn the mandates of each country, but they will have to keep current with changes in local laws. The inequity imposed by statutory benefits can also be a source of contention among home employees, who may feel their foreign counterparts are given unfair advantages. This can create morale issues that poison your corporate culture and undermine productivity.

Voluntary benefits are those you offer in addition to statutory benefits. They are the icing on the cake that can make your offer of employment more attractive to potential candidates. They may also be a key element for employee retention, saving you from the high cost of turnover. You may choose to award voluntary benefits on a case-by-case basis, or offer them to all employees across the board.

Voluntary benefits may include bonuses like:

• Housing
• Discounts on goods and services
• Equipment provision and maintenance
• Education expenses for family members
• Travel expenses
• Retirement plans
• Income tax equalization.

It is important to note that even though these benefits are “voluntary,” if other companies in your niche routinely provide them to foreign employees, it is in your best interest to offer them as well.

Solutions for International Hiring and Payroll Services

Clearly, the process of international hiring is more complicated than hiring employees close to home. Rather than overtaxing their human resources departments, many companies turn to third parties to manage their international employees and operations on their behalf.

Third party companies that serve as intermediaries fall under one of three categories:

• EOR (employer of record): An EOR takes on the legal and regulatory requirements concerning foreign employees, like benefits, taxes and payroll. It can be an enormous help in recruiting, but it does not make company decisions concerning the employee’s work duties; the (f)actual employer does. An EOR company however arranges employee payroll and termination. The global EOR serves as the employee’s registered employer, but has no managerial responsibilities.
• FSaaS (foreign subsidiary as a service): This entity is set up by a larger company whose headquarters are located in another country. A foreign subsidiary is incorporated according to the laws of the country where it is located, and conducts business according to local laws.
• PEO (professional employer organization): A global PEO manages payroll services and benefits provision to your foreign workforce, along with other responsibilities like tax administration and regulatory compliance. A PEO lets you establish your business much faster than if you set up a foreign subsidiary, which can take several months.

Advantages of Using an International PEO/EOR Solution

There are numerous advantages to entrusting your overseas HR management responsibilities to a third party entity:

• Ensure you are legally compliant with the laws of different countries.
• Pay your employees in local currency without worrying about exchange rates.
• Accurately distribute statutory and voluntary benefits to employees in different countries.
• Make sure local taxes are paid accurately and on time.
• Stay up to date with changes in local laws.

Establishing your business in a foreign country can pose many challenges that your HR department is not equipped to handle. By using a third-party entity like Acumen International as your global PEO/EOR, you can get your overseas operations up and running quickly, with minimal stress about local laws and customs.

Acumen International Your Global PEO
If you are ready to expand overseas, Acumen International can help you hire and compensate your foreign workers in over 190 countries. Save money upfront and shave months off your setup time as Acumen helps you navigate the nuances of labor legislation of each country.

Partner with Acumen a global PEO provider for that. Ask Acumen International a question today to get answers.