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What Texas Manufacturers Should Know About Immigration Reform Measures

Posted by Kevin Harris, CPA on Oct 11, 2018 4:58:52 PM

As escalating tariff battles between the U.S. and its trading partners have dominated the headlines in recent months, proposed changes in U.S. immigration policies continue to pose challenges for many businesses, including those in the manufacturing industry.

There are heated arguments for and against the Trump administration’s efforts to reverse the previous administration’s immigration policies. With all politics aside, what should Texas manufacturers understand about impending changes and the need to prepare for a changing workforce?

Overview

Immigrants have long played a significant role in the nation’s manufacturing workforce. Consider the influx of immigrants to Texas between 1990 and 1994 when – according to the U.S. Census Bureau – more than 300,000 legal immigrants settled in Texas. In addition, it is estimated that during that same period, Texas received a net annual increase from illegal immigration of at least 30,000 to 50,000 individuals. That means immigration accounted directly for close to 35 percent of all the growth in that five-year period.

Today, the issue of immigration reform is particularly pronounced in Texas because the state has one of the largest populations of immigrants who are living in the U.S. both legally and illegally. As of 2017, 4.7 million foreign-born individuals comprised 17 percent of the population. Nearly 400,000 immigrant workers in Texas are employed in manufacturing.

DACA Background

The Deferred Action for Childhood Arrival (DACA) program, which was created in 2012 under President Obama, gives immigrants who were children when they were brought to the U.S. by their parents renewable two-year work permits and protection from deportation.

Under DACA, nearly 800,000 people who were brought to the U.S. as children have been able to apply for an employment authorization document (EAD). There are an estimated 120,000 DACA immigrants, known as Dreamers, in Texas. Some studies predict that Texas could lose an estimated $6 billion in GDP with the loss of DACA workers.

In an effort to reverse DACA policy, the Trump administration disallowed new applications. Federal court rulings have blocked Trump’s efforts to end the program. On the state level, Texas Attorney General Ken Paxton (R) filed a lawsuit in May to end DACA, leading a seven-state coalition to end the program. In August, a federal judge in Texas heard arguments, but he did not indicate when he would rule.

Business Implications

Manufacturers with foreign national employees should understand that these efforts will not change the status of the valid EADs of their employees. Owners of manufacturing companies should simply re-verify all I-9 (employment eligibility verification) forms before the DACA-based EAD expires. All employees should understand when their EAD will expire and take action to attain necessary reauthorization documents.

Texan manufacturers should also be aware of President Trump’s executive order to “Buy American, Hire American,” which has had an effect on how H-1B visas are awarded to skilled foreign workers. This visa is designed for workers in specialty occupations which require a minimum of a bachelor’s degree or equivalent in a specific area of knowledge. Given the skilled labor shortage across the U.S. and in Texas, the H-1B visa is important to manufacturers.

The federal government is examining H-1B petitions that propose to pay “Level 1” wages for entry-level employees. For example, the government is asking for additional documentation to prove that the job truly requires a bachelor’s degree. That means employers are increasingly being asked for evidence to support the need, which can delay the processing time and increase costs for the H-1B petition. Affected Texas manufacturers should be prepared for worksite enforcement visits so that disruption to overall operations is minimized.

Looking Ahead

As the legal batter over DACA continues to wind its way through the courts, a resolution to the standoff is unlikely to come anytime soon. That is because several federal courts weighing the program’s future appear to be on conflicting paths. Either Congress will enact legislation or the U.S. Supreme Court will ultimately be able to resolve the issue.

Affected manufacturers should assess their workforce needs and be agile enough to adjust to ongoing changes in immigration policies. In addition to ensuring that all necessary documentation is in order, have a good sense of permit expiration dates and have a plan in place to keep operations running smoothly no matter how Congress or the Court rules.

To learn more about manufacturing issues, please contact Kevin Harris, CPA, at 214-365-2473 or use our contact form below.Learn more about the Manufacturing and Distribution Services Group at Goldin Peiser & Peiser.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.

Topics: Manufacturing