Lawsuits Aim to Block H-1B Rule Changes and Sharp Wage Increases

On October 8, 2020, the Trump Administration abruptly revamped rules that will dramatically change the H-1B program and sharply increase the required wages for temporary positions and others seeking employment-based green card sponsorship. The changes are aimed at discouraging U.S. employers from hiring and continuing to employ foreign workers.

At a time when employers need predictability and flexibility, the changes sow confusion and vexation, impacting not only new workers but also existing personnel. Whether the new rules go into effect as planned remains to be seen. Federal court litigation may delay or prevent the changes and restore the status quo. Businesses and associations have filed suit, challenging the wage changes and H-1B rule changes as arbitrary and capricious.

When Are the Changes Effective? 

Both rules are "Interim Final Rules" that take effect without the typical notice and comment period.

• Wage Increase by U.S. Department of Labor (DOL): "Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States," (DOL Wage Rule) became effective immediately, without prior notice, on the date of publication, October 8, 2020.
• H-1B Revision by U.S. Citizenship & Immigration Services under the Department of Homeland Security (DHS): "Strengthening the H–1B Nonimmigrant Visa Classification Program," (DHS H-1B Revised Rule) takes effect on December 7, 2020, but will not apply to H 1B petitions filed and pending before that date. 

DOL Wage Rule 

What Are DOL Wage Requirements for Foreign Workers? 

Before filing a petition for a temporary foreign worker in the categories H-1B, H-1B1 (for citizens of Chile and Singapore), or E-3 (for citizens of Australia), the employer must file a Labor Condition Application (LCA) with DOL to certify that the wage offered to the foreign worker meets or exceeds the "prevailing wage" in the area of intended employment.

The U.S. Bureau of Labor Statistics maintains an Online Wage Library which contains the prevailing wage determinations for various occupations in each area of the country. The Online Wage Library contains four levels of wages based on the job duties, education and experience requirements from Level 1, for entry level, to Level 4, for fully qualified or expert personnel. Alternatively, the employer may use a private wage survey with wage data that meets DOL requirements.

The DOL also refers to the same four-level wage data to establish the required wages for the PERM application program for employers seeking to obtain permanent residence and green cards for foreign workers.

How Does the New Rule Increase the Required Wages? 

The DOL Wage Rule substantially increases all four levels of wages. Here is one example of the wage increase for employers in the Seattle area: The Level 1 wage for entry level Software Developers in the Seattle area has been increased from just over $92,000 to nearly $140,000, and the Level 4 wage for experienced Software Developers has been increased from just over $155,000 to nearly $224,000.

What Types of Applications Are Subject to the New DOL Wage Level Rule, and What Is the Impact?

• LCAs filed on October 8 and thereafter for the categories of H-1B, H-1B1 (Chile and Singapore), and E-3 (Australia) are subject to the DOL Wage Rule.
  
  Impact: This includes LCAs for new H-1B petitions, including H-1B cap cases, H-1B transfer or change of employer, and H-1B extensions.
• PERM prevailing wage requests processed after October 8, 2020, will have the increased wages applied.
  
  Impact: Employers should review pending and future prevailing wage requests to assess the impact of the higher required wages that DOL might assign.

What Types of Applications Are Not Subject to the Rule?

• LCAs are valid for up to three years. Wages on approved LCAs will not change.
• The DOL Wage Rule will not impact pending H-1B petitions or those where U.S. Citizenship and Immigration Services (USCIS) issued a request for additional evidence (RFE).
• The DOL Wage Rule does not permit readjudication by a consulate during visa processing.
• For a PERM application underway, if the prevailing wage determination already has been issued, the wage will not change.
• The DOL Wage Rule will not impact an I-140 Immigrant Petition that is based on a PERM prevailing wage determination already issued.

To compare before and after wage levels, check H1BGrader.com – Old vs New Wage Levels for H1B Position in an Area.

DHS H-1B Revised Rule

The DHS H-1B Revised Rule adds substantial burdens and restrictions on employers in several key aspects. The revisions apply not only to new hires and change of employer H-1B petitions, but also to H-1B extensions for current employees.

What Key Criteria Is DHS Changing, and What Are the Impacts?

• Change to the definition of "specialty occupation" to require that the employee's degree must be "directly related" to the occupation: This is a major change which is likely to create more uncertainty about which occupations will qualify for H-1B status.
  
  Impact: If employers accept alternative degrees for a particular position, "each of those qualifying degrees must be directly related to the proffered position." For example, for jobs in data analytics, information technology, machine learning, or artificial intelligence, accepting a Computer Science or Electrical Engineering degree without explaining how each degree is directly related to the job could result in denial under the DHS H-1B Revised Rule.

• Removal of what is "normal," "common," and "usual": Prior to the change, an H-1B petition was approvable for jobs where a bachelor's degree is "normally" required or "common to the industry," or where the knowledge required for the position is "usually associated" with at least a bachelor's degree or equivalent in a specialty field.
  
  The DHS H-1B Revised Rule eliminates the terms "normally," "common," and "usually" from the criteria. Employers will now need to prove that a bachelor's degree in a specific specialty is always the minimum requirement.
  
  Impact: This may create a nearly impossible task and stifle ingenuity for start-ups, small companies, nonprofits, and innovative employers with novel positions and job titles.
• Adding a requirement for evidence of sufficient "actual work available" as of the requested start date: The DHS H-1B Revised Rule requires that an employer must "have a bona fide, non-speculative job offer." Employing an H-1B worker for a job to meet "possible workforce needs arising from potential business expansions or the expectation of potential new customers or contract" would result in denial.
  
  Impact: The level of specificity that USCIS may require is unclear. Economic viability of the employer may be required to prove the job is not speculative.
• Adding factors on whether there is an "employer-employee relationship": USCIS is requiring additional evidence to determine, based on the "totality of the circumstances," whether a valid employment relationship exists between the beneficiary and petitioner:
  
  • (i) Whether the petitioner supervises the beneficiary and, if so, where such supervision takes place;
  • (ii) Where the supervision is not at the petitioner's worksite, how the petitioner maintains such supervision;
  • (iii) Whether the petitioner has the right to control the work of the beneficiary on a day-to-day basis and to assign projects;
  • (iv) Whether the petitioner provides the tools or instrumentalities needed for the beneficiary to perform the duties of employment;
  • (v) Whether the petitioner hires, pays, and has the ability to fire the beneficiary;
  • (vi) Whether the petitioner evaluates the work product of the beneficiary;
  • (vii) Whether the petitioner claims the beneficiary as an employee for tax purposes;
  • (viii) Whether the petitioner provides the beneficiary any type of employee benefits;
  • (ix) Whether the beneficiary uses proprietary information of the petitioner in order to perform the duties of employment;
  • (x) Whether the beneficiary produces an end product that is directly linked to the petitioner's line of business; and
  • (xi) Whether the petitioner has the ability to control the manner and means in which the work product of the beneficiary is accomplished.
  
  Impact: Employers should plan to incorporate the above factors into offer letters involving third-party placements. Employers with employees who work for third-party end clients may find this to be very challenging to satisfy.
• Adding "employer-employee relationship" factors where the H-1B beneficiary possesses an ownership interest in the petitioning organization: In order to assess whether an "owner" is an "employee" that the petitioner has a right to control, USCIS may require evidence such as the following:
  
  • (i) Whether the petitioning entity can hire or fire the beneficiary or set the rules and parameters of the beneficiary's work;
  • (ii) Whether and, if so, to what extent the petitioner supervises the beneficiary's work;
  • (iii) Whether the beneficiary reports to someone higher in the petitioning entity;
  • (iv) Whether and, if so, to what extent the beneficiary is able to influence the petitioning entity;
  • (v) Whether the parties intended that the beneficiary be an employee, as expressed in written agreements or contracts; and
  • (vi) Whether the beneficiary shares in the profits, losses, and liabilities of the organization or entity.
  
  Impact: This section of the new rule will be of particular interest to startups and small businesses where the H-1B beneficiary possesses an ownership interest in the petitioning entity.
• Third-party placement, limiting the validity period for H-1Bs to a maximum of one year: Pursuant to statute, all H-1Bs may be issued up to three years. Under the DHS H-1B Revised Rule, petitions for beneficiaries who will work at third-party worksites will be limited to one year.
  
  Impact: Given lengthy processing times and the frequency of Requests for Additional Evidence (RFEs), employers may need to file extensions every six months.
• Adding inspection and compliance review provisions, including pre-approval inspection, at USCIS discretion: Although the incidence of H-1B site visits has decreased since the coronavirus (COVID-19) pandemic began in March 2020, USCIS appears to have resumed such visas in the past couple of months.
  
  Impact: Inspections may occur at any worksite, including a remote or home office location. Employers of H-1B nonimmigrants should be aware of the possibility of such H-1B site visits and should take all appropriate actions to prepare for such visits, including the development of a site visit protocol.