Labor Department Opens Major H-1B and PERM Probe

The Labor Department has opened a major fraud investigation tied to H-1B and PERM filings, and the stakes go far beyond paperwork. Officials say the case touches fake labor shortages, wage underpayment, labor trafficking, and hiring practices that can edge qualified Americans out of jobs.

For Patriot Press readers, the core issue is simple: are employers using these programs for real hard-to-fill roles, or are some gaming the rules to cut labor costs? The probe fits into Project Firewall, a broader Trump administration push that began in 2025 and expanded in 2026 to crack down on immigration-related fraud.

Why the Labor Department is going after H-1B and PERM visa abuse

The government says some employers and labor brokers may be using visa programs in ways Congress never intended. H-1B visas let companies hire workers in specialty occupations, usually for three years and up to six with extensions. PERM is the labor certification step used when employers sponsor some workers for permanent residence. In both systems, the rules depend on real jobs, real wages, and honest recruiting.

Under Project Firewall, the Labor Department has focused on prevailing wage compliance, missing public access files, worker misclassification, and hiring practices that favor foreign applicants over U.S. candidates. By 2026, the department had opened roughly 175 to 200 related investigations.

How alleged visa fraud can hurt American workers

When a company posts jobs it never plans to fill with U.S. workers, the harm is direct. Americans lose a fair shot, and pay rates can slide if employers import labor at lower wages than the market would otherwise demand.

Recent enforcement examples show why this matters. The DOJ accused Cloudera in 2025 of steering U.S. applicants away from PERM-linked jobs by using a bad email address. In another high-profile case, research cited HCL for underpaying H-1B subcontractors by about $95 million a year, with pay gaps that reached 47 percent below U.S. peers in similar roles.

Why officials connect visa fraud to trafficking and public safety

Officials also say some schemes reach much darker territory. Anthony D'Esposito, the Labor Department's inspector general, has tied parts of the visa fraud picture to labor trafficking and even broader criminal networks.

That claim matters because some workers are placed in factories, clinics, and doctors' offices through layers of recruiters and middlemen. If a worker's qualifications, job site, or pay don't match the filing, the result isn't a minor technical error. It can put workers at risk and, in sensitive settings, put the public at risk too.

What investigators are looking for in this H-1B fraud probe

This probe looks more aggressive than past compliance sweeps. D'Esposito said investigators have already issued dozens of subpoenas, and the Labor Department is working with DOJ and DHS more closely than before. That means cases can move beyond civil paperwork violations and into fraud, trafficking, or discrimination claims.

Investigators are likely looking for fake job postings, shell companies, wage kickback schemes, and labor condition filings that don't match reality. They are also checking whether employers kept required records and whether workers were placed in jobs different from the ones described on paper.

Red flags that can point to a fake or abusive filing

Some warning signs are easy to spot once you know the pattern:

• Pay that falls below the required prevailing wage or below the wage promised in the filing.

• Job duties that don't match the approved H-1B role.

• Layoffs of U.S. staff followed by new visa hires in similar positions.

• Business addresses that look like mail drops or shared shells.

• Missing public access files or odd subcontracting chains.

Why some cases may involve labor brokers and middlemen

Middlemen can make bad conduct harder to trace. A worker may be recruited by one company, paid by another, and placed at a third job site. That setup can hide wage theft, pressure workers to return part of their pay, or move people into roles that don't match the visa.

North Texas has already drawn attention on this front. A congressional request this year asked the Trump administration to investigate alleged H-1B fraud there involving third-party agents, fake job offers, and wage misstatements.

The biggest industries and states tied to H-1B use

The tech sector sits at the center of this debate because it gets the largest share of H-1B filings. Recent reporting put tech at roughly 60 to 70 percent of new applications. Consulting and professional services also use the program heavily, along with engineering, manufacturing, healthcare, medical research, and higher education.

Geography matters, too. D'Esposito identified California, New York, and Illinois as three of the top states for applicants. Those states have dense employer networks, large outsourcing firms, major hospitals, and research institutions, so both legal use and possible abuse show up at scale.

Why tech companies are under the most scrutiny

Tech keeps drawing heat because the numbers are so large, and because layoffs often collide with continued visa demand. Critics argue that some firms cut domestic staff while still leaning on H-1B pipelines or subcontracting vendors.

The HCL case sharpened that concern. According to research cited in 2026 enforcement reporting, H-1B workers placed through HCL performed work for companies such as Disney, FedEx, and Google while earning far less than comparable U.S. workers.

What the data says about top employers and approvals

Large employers such as Amazon and Microsoft regularly appear near the top of H-1B approval lists. That fact alone doesn't prove misconduct, but it keeps the program in public view because a small group of big employers can shape the market.

When approvals cluster in a few sectors and firms, every allegation carries more weight. That's why each new subpoena lands with such force.

How the Trump administration's crackdown is changing enforcement

This investigation is part of a wider enforcement shift, not a one-off case. Project Firewall, launched in September 2025 and pushed harder in 2026, puts wage compliance and fair hiring at the center of Labor Department oversight. At the same time, the department proposed a new prevailing wage method tied more closely to Bureau of Labor Statistics data, which would make lowball pay harder to defend.

The role of the Labor Department inspector general

D'Esposito has become one of the public faces of this push. His office says it is targeting fraud that hurts U.S. workers and exposes foreign workers to exploitation. The department's willful violator and debarment lists already include firms such as GowraTech, Renotek Group, Seeloz, and Sherwood Academy.

What the Milwaukee announcement adds to the story

The timing also matters. D'Esposito announced the probe ahead of Vice President JD Vance's fraud-focused event in Milwaukee, where the administration tied visa abuse to a broader anti-fraud message.

That framing tells employers the government is treating H-1B and PERM abuse as part of a larger law-enforcement problem. The message is getting harder to miss.

Final thoughts

The sharp edge of this case isn't a stack of forms. It's the claim that some employers used H-1B and PERM filings to depress wages, dodge fair hiring, and hide abusive labor arrangements.

If the allegations hold up, enforcement is entering a much tougher phase. Companies that rely on these programs now face a simple test: match the paperwork to real jobs, real pay, and lawful recruiting.