Staffing Companies and the H1-B Fraud

Staffing companies are firms that specialize in the recruitment of talent that businesses need on an ongoing basis. There are many areas of expertise that companies either don't need on a full time basis or doesn't find necessary to hire someone full time for. These are either ultra specialized services such as specialized IT consulting projects or other non-core operations such as software testing, HR services, Payroll services, Benefits processing, Group insurance or even Accounting and Information Technology in some cases. Staffing companies have been doing this for decades but in the recent years, this industry has been plagued by some bad scams and some even worse media attention that has tainted the reputation of the industry as a whole.

This started around the last 90s – the threat of a catastrophic event in 2000 – the famous Y2K issue. The concern was justified. Most computer systems used a 2-character date format which meant that after 99 came 00 which could be interpreted as 1900 – resulting in significant errors in date related calculations. As they say, fear drives people to do the craziest things. This event resulted in thousands of people around the world getting hired by staffing companies to employ at businesses to fix this issue.

Though the Y2K bug turned out to be pretty uneventful, the event had caused a profound change – it had established a supply chain so-to-speak of companies all the way from businesses that needed help to the employees that were hired. Often, there were three or more middle-men involved in the process. All these companies needed to continue to operate. The good ones always found good work. But the ones that did not, chose the scam route.

They knew that there was demand for H1-B visas. Dozens of foreign born candidates were lining up for each visa slot. Jobs were still there and they knew they could get them placed in a reasonable position. They used the opportunity to apply for multiple visa slots for the same candidate. For this, they would accept a flat fee from the candidate. If they were hired, they would further take a cut out of their pay – usually a pretty big cut – around 40% - for doing absolutely nothing beyond the initial visa processing. They would take it one step further. If they could not get the candidate hired quickly, they would resort to fabricating resumes, or even not paying them while on bench with the visa. Most of these practices were clearly illegal.

They soon started to be called bodyshoppers and the word spread about the visa abuse. USCIS started cracking down on them in 2007. Many were arrested. 2009 and 2010 visa demand was much more controllable. Things seem to be getting back on track again now. We all certainly hope it stays that way.