Government Issues H-1B Guidance for Employers That Receive Funds under Federal Reserve Act Section 13

04/02/2009

The Federal Reserve has issued guidance on application of the Employ American Workers Act (EAWA) to employers that have received funds under Section 13 of the Federal Reserve Act (FRA). EAWA requires FRA Section 13 funding recipients to fulfill additional requirements when seeking to hire a new employee in H-1B status. The Federal Reserve guidance is available at http://www.federalreserve.gov/monetarypolicy/files/eawafaq.pdf.

Under EAWA, an employer that has received funds under FRA Section 13 or under the Troubled Asset Relief Program (TARP) and is seeking to sponsor a new employee for H-1B employment must attest that it took good faith steps to recruit U.S. workers for the position for which the H-1B worker is sought and that no U.S. worker was displaced by the H-1B worker in an essentially equivalent position. Though TARP recipients have been identified by the government, it was less clear which employers had received loans under FRA Section 13.

In its new guidance, the government explains which entities are "recipients" of Section 13 funds for purposes of EAWA, depending upon the type of borrowing arrangement between the entity and the Federal Reserve. The guidance also clarifies that, once a recipient has paid back its Section 13 funds, it will no longer be subject to the H-1B hiring limitations on the basis of that loan.

Employers should review the guidance memorandum in light of their individual dealings with the Federal Reserve.

What happens if the H1B cap is not met within 5 business days?

If the cap is not met during the first five days, then filings will be accepted for additional days, until the cap is met. There will be a lottery, then, of the cases received on the day the cap is met, only. All earlier cases would not be subject to this lottery, and would be eligible for a cap number, if approved.

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