US announces investigation into fraud in H1B temporary employment visas

Just over a month after a US federal judge struck down the Trump administration’s proposed $100,000 fee requirement for H-1B applicants, the government has announced an investigation into potential fraud in this temporary work visa programme.

Also under scrutiny is a labour certification system that serves as the gateway to most employer-sponsored “green cards” that allow permanent residence in the US.

On Wednesday, US Vice President JD Vance said that the US was investigating foreigners involved in fraud related to the H-1B programme.

He said that the Federal Department of Labor had on Wednesday “started dozens of subpoenas and investigations into foreign fraudsters who are trying to take advantage of the H-1B visa programme.”

A subpoena is a written order to attend a court of law to give evidence.

“American jobs ought to go to American workers and not foreign fraudsters,” Vance declared.

In a press release, the US Labour Department said that it has “uncovered widespread schemes in which employers and labor brokers submitted fraudulent applications, exploited foreign workers through coercive wage-kickback arrangements, and undercut American workers by flooding the market with below-wage labor”.

These abuses, it said, “undermine the integrity of …programs designed to address genuine labor shortages – not to line the pockets of bad actors at the expense of American jobs”.

US Department of Labor Inspector General Anthony D'Esposito told Fox Business on Wednesday that this was the Trump government’s “first major investigation” into immigration-related fraud, labour trafficking and the “displacement of American workers”.

He claimed that whistleblowers had raised concerns over “some of the biggest companies, like Cognizant”.

Under the scanner is a labour certification system known as the Program Electronic Review Management or PERM.

Indians, according to the US Department of Homeland Security’s January 2025 data, were among the top five nationalities that made up the country’s nearly 12 million lawful permanent residents.

At least 630,000 Indians have permanent residence rights in the US.

While it is unclear how many of them obtained their status through PERM, a recent study by the Migration Policy Institute found that, as of 2023, at least 37% of green card holders of Indian origin received them through employment-based provisions.

For Indian professionals working in fields such as technology, engineering, medicine and finance, PERM is often the first major hurdle on the path from temporary work visas such as the H-1B to permanent residence.

The occupations accounting for the highest number of accepted PERM certifications include software development, computer systems analysis, data science and industrial engineering, according to a US Department of Labor breakdown last year,

It remains unclear how this investigation will unfold, as the administration has not released further details. But the announcement has already drawn widespread attention, with fears that it could worsen existing backlogs for employment-based green cards and permanent residency.

What is PERM?

Before an American employer can sponsor most foreign workers for permanent residency under the EB-2 or EB-3 categories, it must first obtain labour certification from the US Department of Labor through the PERM programme.

The purpose of the process is to ensure that hiring a foreign worker does not disadvantage workers already in the United States. Employers must demonstrate that they advertised the position, offered at least the prevailing wage and were unable to find a qualified, willing and available American worker for the role.

Only after receiving PERM approval can an employer generally file an immigrant petition with US Citizenship and Immigration Services, allowing the worker to move to the next stage of their green card process.

But the US Department of Labor Inspector General has claimed that the PERM programme, which has remained largely unchanged since 2004, is being abused and is “fuelling crime”.

“Much of the visa and the human trafficking that we see when it comes to this foreign labour is tied to cartels, is tied to transnational gangs, and this is the work that we should be doing, not only to make America safe again, but to make America more affordable again,” D'Esposito told Fox Business.

He did not provide details to support this claim.

According to D'Esposito, the Trump administration’s focus is to ensure that hardworking Americans “are not seeing their jobs taken away by foreigners or people who are gaming the system or financially benefiting from bringing these individuals into America and putting them into jobs that, quite frankly, they are not qualified to do”.

It is unclear how this investigation will affect the PERM system, including current and future applicants.

With an average review period of 403 days, the US Department of Labor’s own data showed that, as of June, there were 16,979 PERM requests pending.

Immigration attorneys now expect this backlog to be impacted. It is in line with worsening backlogs of other employment-based temporary and permanent residency visa applications over the past year as the administration continues its focus on immigration fraud in the US.

Employers are also likely to face more rigorous recruitment requirements, greater documentation obligations and closer scrutiny of labour market testing before they can sponsor foreign workers.

But many of these effects remain currently unclear as the authorities are yet to release details of this federal probe – and if it is going to result in a formal, legislative overhaul of the PERM system.