The White House has barred Microsoft and seven other technology companies from processing new or pending applications under a US programme that allows skilled foreign workers to obtain permanent residency.
US Vice President JD Vance accused the companies of abusing the H-1B visa system and related immigration processes, alleging that they were using foreign workers to displace American employees.
Microsoft, Adobe, Cognizant, Infosys, Tata, Wipro, HCL and Capgemini were named in the government’s action.
“No company in the US has abused this system more than Microsoft,” Vance said on Thursday.
US Secretary of Labor Keith Sonderling said the Department of Labor would not process new or pending Permanent Labor Certification Program (PERM) applications from the affected companies.
He also accused large companies and US universities of becoming “visa mills” that were flooding the country with foreign workers.
Microsoft disputed the allegations, saying the vast majority of its US employees are American.
The company employs more than 200,000 people globally.
Vance pointed to Microsoft’s recent workforce reductions alongside its H-1B visa applications as evidence that the company was replacing American workers with foreign employees.
He said Microsoft had laid off about 6,000 workers while filing 6,800 H-1B applications over the same period.
Microsoft, however, said 80 per cent of the H-1B filings it submitted during the last fiscal year involved employees who were already working for the company rather than new hires.
The company also said foreign workers hired through the H-1B programme receive compensation at the same level as comparable US workers.
“We look forward to providing the Administration with additional information,” a Microsoft spokeswoman said.
Data from Ellis, a company that assists technology firms with immigration processes, puts the median salary of an H-1B worker at Microsoft at about $155,000.
The H-1B programme is designed to allow US companies to employ foreign workers in highly skilled or specialised positions where they may have difficulty finding suitable workers domestically.
The programme is subject to an annual cap of 85,000 visas.
For many foreign workers, the H-1B visa is also an important step towards permanent residency.
The PERM programme allows employers to seek certification from the Department of Labor as part of the process of sponsoring eligible foreign workers for permanent US residency, often leading to a Green Card.
The US Department of Labor certified more than 130,000 PERM applications across 10 business categories during the last fiscal year.
The action against Microsoft comes despite the company’s close engagement with the Trump administration.
Microsoft Chief Executive Satya Nadella is due at the White House on Thursday to receive a technology innovation medal from President Donald Trump.
Nadella has also attended recent White House events, including an artificial intelligence luncheon and a state dinner for Chinese President Xi Jinping.
Despite those engagements, Vance singled out Microsoft during Thursday’s announcement.
“Our message to Microsoft is quite simple: You’re a great American company, you’ve got to hire great American workers,” he said.
Vance argued that foreign workers face particular vulnerability because their immigration status can be tied to their employer.
Under current rules, H-1B workers who lose their jobs generally have a 60-day grace period to find new employment or take other immigration steps. The US government proposed eliminating that discretionary grace period in September.
