I have a friend that was told to seek another job inside his company, but when he applied, the job req was filled by a lesser qualified individual with a lower wage coming from an H1-B. He sued and eventually won (but it was painful). Bigger companies especially, where innovation is lacking, do this all the time since they believe they can train a monkey to perform "a high tech job".
IMHO, one should avoid those companies, unless you're allergic to "good work", but still... stuff like this is happening all the time.
For $1000, the answer is: Cheap Foreign Labor
"What is our standard hiring practice?"
Correct, choose again...