What the Labor Department actually froze

Labor Secretary Keith Soderling suspended eight companies from a program called PERM. PERM is step one for most work-based green cards. It is where a company proves that no qualified American was available for the job. No PERM means no green card. New filings are blocked, and pending ones are frozen.

CNBC reported the suspension on Thursday morning. Microsoft and Adobe were frozen because of what Soderling called multiple active federal investigations. The six outsourcing firms were hit for what officials called abuse of the program. The timing lands right before the midterms.

Soderling described the action as cutting off the head of the snake and protecting American workers. He said the government would put Americans first, not foreigners and especially not foreign fraudsters, and credited President Trump, the vice president, and the task force. Because of ongoing criminal investigations led by the Department of Labor’s Inspector General, Anthony D’Esposito, the department suspended some of the largest IT outsourcing firms in the world from the permanent labor certification program: Cognizant, Infosys, Tata, Wipro, HCL, and Capgemini. Microsoft and Adobe were suspended because of multiple active federal investigations.

The department will not accept any new permanent labor certification applications involving these companies, and it will not process pending ones.

The numbers officials cited

Since 2009, these companies alone have requested almost 3 million foreign workers. They have received over 230,000 H-1B visa approvals and over 100,000 permanent labor certifications. Officials described that as hundreds of thousands of jobs taken from American workers, and as a pattern of companies using immigration programs to replace U.S. workers.

Vance’s message to Microsoft was direct: it is a great American company, but it has to hire great American workers. He accused the company of replacing employees with what he described as foreign indentured servitude, arguing that the immigration system left some workers dependent on their employers. He did not provide evidence directly linking Microsoft’s layoffs with hiring.

The action follows a series of Trump administration efforts to tighten employment-based immigration rules, including a $100,000 payment requirement for new H-1B visas. Progress toward permanent residency can also affect whether certain H-1B workers qualify for extensions beyond the usual limit.

Microsoft’s response

Microsoft answered on its own blog within hours. It said it believes in the strength and talent of the American workforce, and that the vast majority of Microsoft employees in the United States are American. It said it looks forward to providing the administration with additional information.

Of the approximately 6,000 H-1B applications it submitted last year, Microsoft said 80 percent extended or exchanged the status of existing Microsoft employees. These were not new hires. The remaining filings for new employees were for people already legally in the United States who decided to return to the workforce. Microsoft said those workers are only 1 percent of its U.S. workforce and are not new arrivals to the country.

The company also said it only files H-1B petitions for people who meet the visa category’s standards, that it pays employees at the highest compensation levels in the tech sector, and that its wages are among the highest of H-1B filings. It said it succeeds as a global technology leader by strengthening its talent pipeline, hiring American workers, and attracting talent from around the world.

What the statement did not address is the layoff figure Vance pointed to. Microsoft laid off 6,000 people and still continued to extend H-1B workers. The argument from the administration side is that those opportunities should have gone to American workers first. Under the stated rules for PERM and H-1B, the job is supposed to be offered to American employees before it is offered to others.

What happens to the workers

Existing H-1B visas are not canceled. The immediate answer to whether affected employees will be automatically deported is no. The suspension targets the PERM program, not the visas themselves.

An H-1B is generally limited to six years. Workers with an approved I-140 face a different roadblock around that six-year limit once the green card path is frozen. If an H-1B worker is laid off by a suspended company, the worker still has the standard 60-day grace period before having to leave. Already approved certifications stay in effect. There is no blanket H-1B ban, and the announcement does not prohibit these companies from filing H-1B petitions. The formal target is PERM. Given the language used at the White House, those H-1B filings are still likely to face close scrutiny.

The practical result is that the future path to permanent residency is frozen for these specific employees. The executives are not the ones waiting in that line.

The indentured-servitude argument

A person who said he worked at Microsoft for 20 years described the hiring practice as openly discussed, at least in finance. He said H-1B workers cost less, drove down demand for U.S. workers, and suppressed wages. He also said that near the end of his tenure the motivation changed, and that the H-1B program was primarily used by Indian managers to bring in more Indian workers as a way to help fellow Indians at the expense of Americans.

Vance described the permanent visa program as a pipeline of systematic fraud that flooded the country with years of foreign labor, and said jobs taken from American workers should go back to Americans. He accused Microsoft of replacing employees with what he called foreign indentured servants.

Pay level does not erase that dependency. Workers on an H-1B, or waiting on a green card through the employer, can be afraid to leave. Transfer to another company is possible, but the chance of staying with the sponsoring company is very high, and the company knows that. The result is employees who are beholden to the employer’s standards. Even viewed from the workers’ side, the setup does not put them in a fair position.

Freeze first, medal second

The sequence is hard to ignore. The Labor Department froze Microsoft out of the green card program, Vance said no company had abused the system more, and hours later the president gave Satya Nadala the National Medal of Technology and Innovation. The government called the pattern fraud. Microsoft said most of its filings covered people already on its payroll. Whether that makes the practice better or worse is still an open argument. The workers in the middle watched their green card plans hit the wall on the same day the medal was handed over.

The open question is whether Microsoft swapped out Americans for cheaper workers, or whether this is a midterm show with a medal on the side. The filings, the layoffs, the freeze, and the medal all landed in public on the same day.

Conclusion

The suspension does not cancel existing H-1B visas, and it does not automatically deport the workers already here. It stops new and pending PERM filings for Microsoft, Adobe, Cognizant, Infosys, Tata, Wipro, HCL, and Capgemini. For the people already in the green card line, that freeze is the real cost.

Officials framed the move as cutting off the head of the snake after years of requests, H-1B approvals, and permanent labor certifications they said replaced American workers. Microsoft answered that most of its recent filings covered existing employees, that those workers are a small share of its U.S. workforce, and that it pays at the top of the market. It did not answer the point that it laid off 6,000 people while still extending H-1B status.

Vance called the system scandalous and described the workers as foreign indentured servants tied to their employers. A former Microsoft employee said the cost difference was discussed openly and that the later use of the program favored bringing in more Indian workers at the expense of Americans. The White House did not directly link Microsoft’s layoffs to its hiring. The medal still went out the same day the freeze did.

Whether this is a correction of a long-running hiring pattern or a midterm show with a medal beside it is the argument left standing. The filings are blocked. The visas remain. The workers in the middle are the ones whose green card plans stopped.