How will the new H-1B rules impact German companies?

Zeit Online recently ran an article about announcement by the Trump administration that H-1B visas will be more closely screened than before, and that the focus on protecting US workers will increase. While these changes will (eventually) impact some companies, particularly in the tech area, many German investors will be impacted only indirectly by changes to the H-1B program.

Most small to mid-sized German companies (the so-called Mittelstand) look to two other options for their personnel needs in the USA – the L visa and the E-visa. Neither visa has a separate mechanism to protect US workers because of their limited scope and purpose, and because other limitations (such as specific qualifications or business requirements) limit their use. Neither visa has been subject to the same level of alleged abuse as the H-1B visa (although the L visa has suffered some collateral damage), and thus far neither program has been subject to the same level of animosity from the Trump administration.

The L-visa allows current or recent employees of a German company to be transferred to a US subsidiary or affiliate if they meet certain qualifications. Since the visa is for the transfer of an existing employee, and is to further the exchange of knowledge between related companies, typically only a relatively small number of people can qualify. As a result, there should be little threat to US workers on a larger scale, who wouldn’t have the knowledge necessary for the position anyway since it is specific to the transferring company.

The E-visa allows German companies who trade extensively with the US (E-1) or invest in the United States (E-2) to hire a German national in the US to oversee that trade or investment. The idea is that the investment or trade would not happen without the assistance of someone whom the investor trusts, or someone who has at least the same cultural background as the investor/trader. Since the program is limited to nationals of a specific country with specific qualifications, the overall risk posed by the program to US workers is also limited.

This is not to say that the kerfuffle over H-1B visas doesn’t impact German companies at all. First of all, when H-1B visas become difficult to obtain the strain on other visa categories becomes much greater. The L-1B visa for non-managerial workers in particular has been utilized by companies who can’t obtain enough H-1B visas, often in ways which weren’t really intended uses for the visa. As L-1Bs become more difficult to get, more employers seek to obtain the more preferable L-1A (for managers), which increases scrutiny of that category as well. Not surprisingly, all of the extra scrutiny in the L category makes the E-visa a more attractive option for German companies which, in turn, makes those more difficult to obtain.

Of course, German companies who have already managed to establish a subsidiary in the US (especially in the IT industry) often find that their help wanted ads are answered by foreign nationals, who in turn require a visa (often an H-1B) for employment. As one of my clients once mentioned to me, the German headquarters was not at all happy about having established a US entity at great effort and cost, for the purpose of having an “American” presence, only to turn around and hire Indian nationals and spend money on additional visa applications.

Overall, German companies with a solid business plan and a real need can still obtain the visas they need, although with a little more effort and scrutiny. So far, most (but not all) of those German nationals can still enter the US without too much trouble, although sometimes with more scrutiny and effort there as well. The bigger question for the US is whether the constant barrage of bad news and border control horror stories will make Germans reconsider investing in the US at all.