Microsoft President Brad Smith publicly rejected Vice President JD Vance's fraud allegations against the company on Wednesday, calling the administration's characterization of its hiring practices 'completely off base.' Speaking to Politico in Ireland, Smith said the vast majority of Microsoft's H-1B visa and green card applications were filed for employees already working at the company, not as replacements for laid-off American workers.
The rebuttal is the first on-record, named response from Microsoft leadership since Vance announced on October 8 that the Department of Labor would suspend processing of permanent labor certification, known as PERM, applications for Microsoft, Adobe, and several IT staffing companies. The suspensions remain in effect, with no agency order, published violation, or end date identified in the available record. Immigration attorneys are advising employers not named in the action to continue filing PERM applications rather than pull back preemptively.
What Smith Said and Why It Matters
Smith's comments directly challenge the numbers Vance cited at the October 8 press conference, where the vice president said Microsoft laid off 6,000 American workers while benefiting from 6,300 H-1B visas and almost 3,000 green cards in the same period. Vance argued that math meant Microsoft replaced each laid-off worker with one and a half foreign workers, which he described using the phrase 'indentured servants.'
Smith disputed that framing directly, saying the comparison of 6,000 job losses against 9,000 foreign hires misrepresented what actually happened inside the company. He said most of the visa and green card applications were for people who had already been working at Microsoft, some for many years, and that the volume reflected processing delays rather than new hiring.
The October 8 Suspension That Started the Dispute
The suspensions were announced at a White House press conference led by Vance alongside Labor Secretary Keith Sonderling and Attorney General Todd Blanche, with Labor Department Inspector General Anthony D'Esposito also drawing attention to the issue in subsequent public appearances. The companies named included Microsoft, Adobe, and IT staffing firms Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL Technologies, and Capgemini.
Officials alleged unspecified abuses of visa programs tied to ongoing investigations but did not publish findings, a formal order, or a Federal Register notice identifying the specific conduct at issue. A Department of Justice spokesperson confirmed that investigations into Microsoft and Adobe had opened before the suspensions were announced, but did not share further details.
Understanding the PERM Process
PERM stands for Program Electronic Review Management, the Labor Department process employers use to obtain labor certification before sponsoring a foreign worker for a green card. Before filing, an employer must show that no qualified American applicant wants the job, a step known as the labor market test.
Companies typically file PERM applications on behalf of employees already working for them on H-1B status or another temporary visa. Because PERM filings allow those workers to continuously renew their status while a green card application moves forward, blocking new filings can leave workers unable to extend their H-1B status once their current authorization runs out.
Where the Numbers Diverge
Microsoft has said the vast majority of its U.S. employees are American and that new H-1B hires, not counting extensions, amounted to only 1% of its workforce in the past year. Smith added Wednesday that Microsoft hired 9,200 American workers in its last fiscal year, a figure he said was left out of the administration's narrative.
Regulatory Authority Behind the Suspensions
The Labor Department has broad existing authority under current PERM regulations to suspend an employer from the program upon learning of possible fraud or misrepresentation, pending the outcome of an investigation or court proceeding. Those regulations have not been significantly updated since 2004, and attorneys note that some existing requirements, such as newspaper advertisement rules, can sit awkwardly alongside the kind of recruitment standards the Justice Department has pushed for in separate settlements with companies including Meta, Apple, and OpenAI.
A Separate Rule Overhaul Already Underway
Before the suspensions were announced, the Labor Department had already been preparing a broader overhaul of PERM recruitment standards. That proposed rule is currently under White House review, with no published text or effective date, meaning the regulatory landscape for employers could shift again independent of the current dispute.
Who Is Affected and What Remains Unclear
The eight named companies face an immediate halt to PERM processing, and immigration attorneys say smaller employers who sponsor only a handful of workers may be discouraged from filing at all, even though they were not named in the action. Workers at the suspended companies whose H-1B extensions depend on pending or future PERM filings face uncertainty about maintaining lawful status if the suspension continues without resolution.
No published agency order specifies the alleged violations, the scope of the suspension as applied to already-pending applications, or an end date. It remains unknown whether Microsoft or Adobe will pursue a legal challenge, and the administration has not responded publicly to Smith's rebuttal.
Clinch Law Legal Analysis
Sources
This article provides general information and does not constitute legal advice. Immigration outcomes depend on individual facts and current law.
The PERM suspension announced October 8 against Microsoft, Adobe, and several major IT staffing firms remains in effect with no published end date, no specified violations, and no formal agency guidance on what affected employers or their foreign-national employees should do next. Workers at suspended companies whose green card sponsorship depends on pending or future PERM filings face immediate uncertainty about maintaining H-1B status through extensions tied to labor certification applications. Employers not named in the suspensions are being advised by immigration attorneys to continue filing PERM applications rather than halting sponsorship preemptively, because the administration has not identified the specific conduct it considers problematic beyond general allegations of visa-program abuse. Anyone with a pending PERM case at a suspended company should consult counsel about alternative immigration pathways and status-maintenance options now, before H-1B renewal windows close.
The legal basis for the suspensions has not been detailed in any published agency order or Federal Register notice. The Department of Labor reportedly has broad existing regulatory authority to suspend employers from PERM processing upon learning of possible fraud or misrepresentation, but no formal findings have been released. Microsoft President Brad Smith publicly disputed Vice President Vance's characterization that the company replaced laid-off workers with foreign hires, stating that the vast majority of its visa and green card filings were for existing employees. A DOJ spokesperson confirmed investigations into Microsoft and Adobe predated the suspensions, but shared no details. A proposed DOL rule overhauling PERM recruitment standards is separately under White House review. Until the administration specifies the alleged violations or a court intervenes, the scope and duration of the suspensions remain entirely uncertain.
Questions Clients Are Asking#
Should employers who were not named in the PERM suspension stop filing labor certifications?
Immigration attorneys are advising employers not targeted by the suspensions to continue filing PERM applications. The administration has not identified specific violations underlying the actions against the named companies, so there is no concrete compliance change to react to yet. As one attorney quoted in Bloomberg Law's reporting stated, attorneys do not know how or whether clients need to pivot. Stopping filings preemptively could harm workers whose H-1B status depends on pending PERM cases.
What happens to H-1B workers at suspended companies who were waiting for PERM green card processing?
Workers at suspended companies may face disruptions to their ability to remain in the United States. PERM applications allow H-1B workers to continuously renew their temporary status while awaiting a green card. If those applications are blocked, some workers may be unable to extend their H-1B visas. The verified reporting does not indicate any transition relief or alternative pathway announced by the government for affected workers at this time.
Did Microsoft actually replace laid-off American workers with foreign hires as Vice President Vance claimed?
Microsoft President Brad Smith publicly disputed this characterization, stating that the framing of Microsoft replacing 6,000 laid-off workers with 9,000 foreigners was "completely off base." Smith said the vast majority of visa and green card applications were for people already working at Microsoft, not new hires, and that USCIS backlogs explained the volume of pending applications. Microsoft also stated it hired 9,200 American workers in its last fiscal year. The administration has not published evidence supporting its fraud allegations.
What specific violations led to the PERM suspensions for Microsoft, Adobe, and the IT staffing companies?
The administration has not publicly identified specific violations. Vice President Vance and Labor Secretary Sonderling alleged unspecified abuses of visa programs identified in ongoing investigations. A DOJ spokesperson confirmed investigations into Microsoft and Adobe were opened before the suspensions but provided no details. Immigration attorneys quoted in Bloomberg Law reporting note that without specified violations, employers lack clear guidance on what conduct to change.
Is there a new PERM rule coming that could change the program more broadly?
Bloomberg Law reports that the Department of Labor was preparing to overhaul PERM regulations — which have not been significantly updated since 2004 — even before the suspensions were announced. A proposed rule focusing on recruitment standards for American workers is currently under White House review. No effective date or final rule text is available from the verified record. The timeline and substance of any final rule remain uncertain.