Summary Of The Trump Administration’s Interim Final Rules (IFR) For The H-1B Program And Prevailing Wages
On Tuesday, October 6, 2020, the U.S. Department Homeland
Security (DHS) and the U.S. Department of Labor (DOL) issued two
Interim Final Rules (IFRs) that introduce significant changes with
respect to the H-1B, H-1B1, E-3 visa programs, and to the wage
levels in connection with these programs and the PERM Labor
Certification program. The DHS rule is entitled,
“Strengthening the H-1B Nonimmigrant Visa Classification
Program,” and introduces specific changes to the H-1B program
that will take effect on December
7th,
2020 – sixty (60) days after the date published. The
DOL rule is entitled, “Strengthening Wage Protections for the
Temporary and Permanent Employment of Certain Aliens in the United
States” and increases the wage levels that are required to be
paid to certain nonimmigrant workers. This DOL rule took
effect on Thursday, October 8, 2020.
The new rules are the latest restrictions the Trump
Administration has imposed on nonimmigrant visa programs. Many of
the specific restrictive changes included in the DHS rule are ones
that the Administration has said that it intended to advance since
late 2017.
If both rules are allowed to stand, the changes to the H-1B,
H-1B1, E-3 visa programs and the PERM certification program will be
profound. Acting USCIS Director Ken Cuccinelli told the press that
he anticipates that the changes would impact a third of cases that
had previously been approved. It is anticipated that these rules
will be challenged in court on both procedural and substantive
grounds.
Here are summaries of the two rules:
DHS Rule
Revises the definition of the term ‘specialty
occupation’
- Claiming that the decades of interpretation of specialtyoccupation is inconsistent with the statute, the rule revises and
significantly narrows the regulatory definition of, and standards
for, what qualifies as a “specialty occupation.”
- Currently an H-1B, H-1B1, E-3 petitioning employer has toestablish that the foreign worker holds “theoretical and
practical application of a body of highly specialized
knowledge” and “attainment of a bachelor’s or higher
degree in the specific specialty.” Under the new definition,
the H-1B, H-1B1, E-3 petitioning employer will have the burden
“of demonstrating that there is a direct relationship between
the required degree in a specific specialty (in other words, the
degree field(s) that would qualify someone for the position) and
the duties of the position.”
- The IFR greatly narrows the degree requirements to support aspecialty occupation determination. Under the new rule:
- The educational degree of the foreign national must be directlyrelated to the proffered H-1B, H-1B1, E-3 position. Employees with
general degrees, without further specializations, will generally
not qualify for the H-1B, H-1B1, E-3 categories.
- The H-1B, H-1B1, and E-3 employer must also prove that theposition requires a directly related specialty degree to perform
the duties.
- The IFR removes the words ‘normally,’ ‘common’and ‘usually’ from the regulatory criteria. Currently, the
H-1B rules state that a degree is a common requirement for the
proposed occupation, but not a universal requirement.
- The IFR indicates that the H-1B, H-1B1, E-3 petitioningemployer will need to establish that the bachelor’s degree in a
specific specialty or its equivalent is a minimum requirement for
entry into the occupation by showing that this is always the
requirement for the occupation as a whole, the occupational
requirement within the relevant industry, the petitioner’s
particularized requirement, or because the position is so
specialized, complex, or unique that it is necessarily required to
perform the duties of the specific position.
- The IFR explicitly states that general engineering degrees willnot satisfy the specialty requirement for technology positions in
the H-1B, H-1B1 or E-3 categories, nor would other general degrees
for other occupations.
- The rule change requires that the petitioning employer provideevidence of a bona fide, non-speculative job offer. In addition,
the new rule requires the petitioning employer provide
corroborative evidence that the foreign national has work at a
third-party location.
Revises the definition of the term ’employer-employee
relationship’
- Revises the definition of the term ’employer-employeerelationship’ which may restrict certain companies from being
able to sponsor foreign nationals for the H-1B, H-1B1, and E-3
categories that were able to sponsor foreign nationals in the
past.
- Compared to the current practice in which a determination of”employer-employee relationship” could be based upon the
H-1B, H-1B1, E-3 petitioning employer establishing an
employer’s right to control the foreign national’s
employment, the new rule states that the USCIS will “assess
and weigh all relevant aspects of the relationship” and that
DHS “does not believe that any one factor should be
decisive.” This means that a petitioning employer may face
added scrutiny and may be required to provide more documentation to
support their H-1B, H-1B1, or E-3 petition filing. USCIS is likely
to scrutinize the employer-employee relationship with respect to
all H-1B petitions, including those petitions in which the foreign
national will work at the sponsoring employer’s facility.
- The new definition will consider the following eleven (11)factors in determining whether a valid employer-employee
relationship exists:
(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.
Revises the definition of the term “United States
Employer”
- Replaces the word “contractor” with the word”company”. The DHS argues that the current regulatory
language suggests that contractors should qualify as U.S.
employers. The new rule will require that contractors must
establish an “employer-employee relationship” with the
H-1B beneficiary. The DHS claims that it is more difficult to
assess the employer-employee relationship between H-1B
beneficiaries and contractors as these often involve assigning the
beneficiary to third-party work locations. This rule change will
have a significant impact on major staffing companies who are
contracted to provide H-1B, H-1B1, and E-3 skilled talent to U.S.
companies.
Changes the validity period for H-1B, H-1B1, E-3 petitions
for employees placed at third-party work sites
- The rule for the first time would distinguish between types ofworksites and impose new restrictions on those involving
third-party worksites. It limits the validity period for
third-party placement petitions to a maximum period of one
year.
- For H-1B dependent employers, the new rule is especiallyonerous given that the USCIS recently issued a revised fee schedule
(currently under a federal court injunction) which requires, in
addition to paying the $4,000 PL 113-114 filing fee for a new H-1B
petition, the employer will now have to pay $4,000 for every
extension petition filing. This means that, should the new USCIS
fee schedule take effect at some point in the future, and the one
year period of employment rule (for placement of an H-1B worker at
a third party work location) remains in place, an H-1B dependent
employer that needs to place an H-1B worker at a third party work
location will have to pay thousands and thousands of dollars more
than in the past ($12,000 as compared to $4,000) in order to
maintain that H-1B employee in the U.S. for just a three-year
period.
- When a foreign national is to be placed at a third-partyworksite, the H-1B, H-1B1, and E-3 employer will be required to
submit evidence such as contracts, work orders, or other similar
evidence to establish that the beneficiary will perform services in
a specialty occupation at the third-party worksite(s).
- The rule increases the oversight and investigatory authority ofthe agencies, so that there may be more scrutiny, site visits, and
possible higher rates of petition denial, especially in cases
involving placement of H-1B workers at third-party work
locations.
- The rule likely will result in a general increase in the numberof H-1B extension petition filings, which will add increased costs
to many U.S. companies, especially those U.S. companies that place
workers at third party work locations.
DOL REGULATORY REVISIONS
Changes prevailing wage requirements
- Increases the Occupation Employment Statistics (OES) wageamounts used by U.S. employers to determine the prevailing wage
level for the H-1B position. Before an H-1B, H-1B1, E-3 petition is
filed with the U.S. Citizenship and Immigration Services (USCIS),
the U.S. sponsoring employer is required to file a Labor Condition
Application (LCA) with the U.S. Department of Labor (DOL) and
indicate the wage level and occupation category for the position.
(Note: These prevailing wage levels also apply to PERM labor
certification program.) The increase in the prevailing wage levels
by the DOL, result in H-1B employers to pay much higher wages to
H-1B, H-1B1, E-3 workers than in the past.
- The changes to four prevailing wage levels are as follows:
- Wage Level I has increased from 17% to 45%;
- Wage Level II has increased from 34% to 62%;
- Wage Level III has increased from 50% to 78%;
- Wage Level IV has increased from 67% to 95%.
- These new wage levels will pose a harsh burden on manyemployers, but could do particular harm to start-up companies and
smaller firms that are in need of skilled talent that are not flush
with cash and are operating in fields where unemployment remains
exceptionally low. Some estimate that the new rule will increase
prevailing wages for certain positions by as much as 40%.1 These new wages levels will also
hinder rural health care providers from hiring physicians from
abroad due to the higher salary levels.
- The new wage level data will be applicable to any LaborCondition Applications (LCAs) that were pending on or filed
on or after October 8, 2020. LCAs already
approved before October 8, 2020 are still valid, and no changes
need to be made unless there is a new LCA that needs to be filed to
document changes in the H-1B employment.
- The new wage level will not only impact new H-1B petitionfilings, but also affect H-1B, H-1B1, and E-3 extension petition
filings. Employers will be forced to file an extension petition
with the new, higher, wage levels with the DOL. The OES has, as of
this writing, not listed wage data for certain occupations, meaning
that employers will have to file petition with the default wage
levels.2
- Many employers will probably consider using private wagesurveys when filing their H-1B, H-1B1, and E-3 petition filings,
than have in the past, since the cost to proceed with a petition
filing using the new OES wage data is not feasible from a cost
perspective.
As indicated above, we anticipate that both the DHS and the DOL
rule changes will be challenged in federal court.
Footnotes
2. http://blog.cyrusmehta.com/2020/10/killing-the-h-1b-visa-also-kills-the-us-economy.html
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