Except in industries that have high turnover, like technology and fashion. There, H1Bs are abused by companies who don’t want to compete for talent at market rates and instead can lock in foreign workers. It makes more sense to hire the foreign worker specifically because they can prevent them from leaving. Illegal threats and intimidation of H1B workers are more common than you think.
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I'll give you that, but it seems like a much simpler solution would have just been improving the flexibility for an H1B worker to be allowed to work at any employer for the term of their status.
If an employer used an H1B in order to hire a foreign worker and then under pay them, the worker would just get another job that pays market rate, without the work status concern. Without the artificial control over the employee, H1B fraud, in this manner, wouldn't be worth it.
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Stop tying the H1B visa to an employer, and the entire basis of fraud that you have outlined disappears.
The reason it's a disingenuous argument is that the H-1B is not technically transferred: The new employer is actually filing a new H-1B petition, which, yes, is not subject to the lottery. And the employee can start working while the petition is pending.
But here's the thing: Even though the new petition is very likely to approved, it's not automatically approved and there's no guarantee that it will be. Particularly if the new job doesn't use the skills that make the employee special.
It also adds uncertainty to the job hunting process. And, if the current employer finds out that they're looking, they could be fired... which technically makes the ex-employee immediately eligible for deportation... which means there's no counter-offers.
Let me provide some background. If you already know this, my apologies.
The process of getting an H1B is not the employer picking up the phone and ordering "1 H1B for delivery please".
It involves applying at the beginning of April, being entered into a lottery, and you find out if you "won" (and your application is looked at) around the end of March. IIRC it is ~30% that your application is even looked at.
At this point, you're out legal and processing fees (at least a couple thousand), and likely more if USCIS wants more evidence that the position qualifies, or that the individual being sponsored is eligible. As a side note, this is often why job descriptions have degree requirements and such, even if they will hire people without a degree. If a similar job at the same company doesn't "need" a degree, it will be much more difficult to get a work status for, even if the requirement bar is actually quite high.
After this, assuming you actually get your status, you don't "get" it until the beginning of October.
It's now cost your employer 6 months of lead time, a legal process, thousands of dollars, and uncertainty throughout to know if they even _could_ hire someone.
It is not _easy_ to get an H1B.
If you have 2 equally qualified people, who will make the same amount of money (which is what market rates are, see my initial suggestion above), then any reasonable employer is going to go with the candidate that they can hire the next week, rather than going through the H1B process.