Yesterday, the Trump Administration published in the Federal Register two new Interim Final Rules designed to reduce significantly the number of H-1B workers in the United States. They are
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A rule from the U.S. Department of Labor that changes the methodology for calculating the required prevailing wage levels for H-1B Petitions and for the green card process, which will result in a significant increase in those wage levels.
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A rule from the U.S. Department of Homeland Security that makes significant changes to the H-1B petition program.
DHS officials have predicted that these regulatory changes will result in the denial of at least one third of H-1B petitions.
The prevailing wage rule took effect immediately, but the agency will receive comments for a period of 30 days.
The H-1B rule will take effect 60 days after its publication, on December 7. The DHS has provided a 60-day comment period on the substance of the rule and a 30-day comment period on the collection of new information that is proposed in the rule.
Of significance, the Administration has elected to bypass the normal rulemaking process with both rules. Normally, an agency provides notice to the public of a proposed rule and a period for comment from the public, followed by a period in which the agency reviews and considers the comments received before issuing a final rule. The rushed implementation of these two new rules -- particularly the DOL rule, which took effect immediately -- creates a procedural vulnerability that increases the likelihood of litigation challenging the rules and the possibility of court injunctions. If the rules are challenged in court, the Administration will have to show good cause for bypassing the normal rulemaking process. According to the Administration, the current economic conditions caused by COVID-19 provide good cause.
Key provisions
DOL Rule
Both the H-1B and the PERM (Green Card) programs require that employers pay at least the prevailing wage. Prevailing wages are based on the DOL’s Occupational Employment Statistics data and use a four-tier system. Wage Level I is the lowest possible prevailing wage, typically for entry-level positions. Wage levels increase as the minimum qualifications for the position increase, with Level IV being the highest possible prevailing wage. The new rule significantly raises the percentile of the mean wages used for each of the four levels.
Because this rule became effective immediately, its impact is also immediate. Labor Condition Applications that are filed on or after October 8 must comply with the higher prevailing wages imposed by the new DOL rule. Also, under the green card process, where prevailing wage determinations must be requested from the DOL, the determination must have been received before October 8 for the old prevailing wage methodology to apply.
The following are the old and new wages as approximate percentiles of OES wage distribution:
| Wage Level | Before October 8 | On or after October 8 |
| Level I | 17th percentile | 45th percentile |
| Level II | 34th percentile | 62nd percentile |
| Level III | 50th percentile | 78th percentile |
| Level IV | 67th percentile | 95th percentile |
These significant percentile increases will have a corresponding impact on the prevailing wages for each level. Here are some examples from the Boston metropolitan area:
Economist
| Wage Level | Before October 8 | On or after October 8 |
| Level I | $69,389 | $95,243 |
| Level II | $90,501 | $129,688 |
| Level III | $111,613 | $164,112 |
| Level IV | $132,725 | $198,557 |
Software developer, applications
| Wage Level | Before October 8 | On or after October 8 |
| Level I | $76,523 | $112,757 |
| Level II | $96,242 | $139,797 |
| Level III | $115,939 | $166,837 |
| Level IV | $135,658 | $193,877 |
The wage increases, as evident, are dramatic. The expected impact from the new rule is that some employers will be unable to afford to file H-1B petitions because they will not be able to meet the higher prevailing wage requirements. These situations include petitions to extend the status of existing employees and to amend the status of existing employees to allow for a change in position, as well as H-1B change of employer petitions to hire new employees. For the same reason, employers may be unable to proceed with green card applications.
DHS Rule
As already noted, the DHS rule will be effective on December 7.
This rule has two distinct aspects: One directly affects sponsorship of foreign nationals in H-1B status, and the other focuses on third-party placements of H-1B workers. The latter situation typically involves IT consulting companies that petition for, employ, and then place H-1B workers at client worksites.
Impact on petitioners
The H-1B status is for specialty occupations that require at least a bachelor’s degree or equivalent in a related specialized field of study. The new rule redefines and narrows the definition of specialty occupation, and narrows related specialized fields of study.
The rule will place a heavier burden on employers to prove that 1) a bachelor’s degree or equivalent is required for the occupation in which the H-1B worker will be employed; and 2) the H-1B worker’s education is directly related to the occupation.
Under the new rule, it will no longer be sufficient to demonstrate that a bachelor’s degree or equivalent in a specific specialty is the typical or common requirement for the occupation. Rather, it must be an absolute requirement. That presents significant evidentiary challenges and will thus allow the government to deny large numbers of H-1B petitions. The government heavily relies on the DOL’s Occupational Outlook Handbook as an authoritative source with respect to degree requirements, and numerous occupations in the handbook have a bachelor’s degree as a usual or common, but not an absolute, requirement.
The rule also makes clear that if a position’s minimum qualifications allow for multiple disparate fields of study, the employer will have to establish how each field of study is directly related to the duties of the position. The government is clearly skeptical of these arguments. Generalized degrees, including degrees in “engineering,” will be even more problematic now than they were in the past.
The preamble to the rule provides examples of non-qualifying requirements, such as a Software Developer position requiring a degree in engineering. To qualify, the employer would have to demonstrate how each of the approximately 50 fields of engineering relate to the job duties of Software Developer.
Another example under the new rule is the requirement of a degree in an unspecified quantitative field. To qualify for an H-1B, specific quantitative fields must be identified.
Particular impact on third-party placements of H-1B workers
The next aspect of the rule focuses on consulting companies that petition for, employ, and then provide H-1B workers to end clients. The new rule redefines the employer-employee relationship, making it harder to prove that such a relationship exists between the H-1B worker and the petitioner. In fact, the word “contractor” has been removed from the regulatory definition of a U.S. employer.
The rule also increases the corroborating evidence that the petitioner of these H-1B workers placed at third-party sites must provide regarding the services to be performed in the United States. The services or work offered the H-1B worker must be non-speculative in nature, and uncorroborated statements will not be sufficient. For example, evidence of the work to be performed for the end client could include signed contracts (master services agreements, legally binding agreements, statements of work), work orders, detailed statements from authorized employer officials, technical documentation, milestone tables, marketing analyses, cost-benefit analyses, brochures, and funding documents. Some of these requirements were previously in effect under a government policy memorandum that was enjoined by the courts for violating the rulemaking process.
Additionally, the validity period for petitions for H-1B workers involving third-party placements will be reduced from the current three years to one year. This reduction in time will significantly increase the cost and burden of H-1B workers to these petitioners.
Administrative Site Visit Program
Finally, the U.S. Citizenship and Immigration Services has an administrative site visit program to help monitor compliance and deter fraud in the H-1B program. Generally, a government auditor visits a worksite and conducts interviews with an employer representative and the H-1B worker to ensure compliance. Participation in the site visit is voluntary.
Under the new rule, failure to cooperate with a site visit will be ground for denial or revocation of any H-1B petition for H-1B workers who perform services at the locations that are a subject of the inspection, including any third-party worksites. The penalty for failure to cooperate applies to the end client as well as the petitioner/employer.
Need help?
If you need assistance in complying with these new rules, please contact any member of Constangy’s Immigration Practice Group.
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