On October 8, 2020, the Departments of Homeland Security (DHS) and Labor (DOL) announced sweeping changes to the H-1B program, as well as adjustments to the way that required wages are calculated for the H-1B, E-3 and PERM labor certification processes.
With the stated goal of protecting U.S. workers, the DHS estimates that the changes will cut annual H-1B filings by about one-third. Currently, there are approximately 500,000 H-1B workers in the United States.
Proposed H-1B Regulations
We note that the DHS’ H-1B program changes are proposed rules, set to take effect December 7, 2020. If implemented, the changes would not impact employees currently holding H-1B status; the regulations will apply to filings made on or after December 7 (extensions, amendments, change of employer, H-1B lottery cases). We expect litigation aimed at the proposed rules, which could delay or cancel their implementation.
In general, the proposed H-1B rules address three areas: qualifications for an H-1B beneficiary; qualifications of an H-1B employer; and third-party worksites. We have summarized the changes in each of these categories below:
Qualifications for H-1B Beneficiary
- The foreign national must have a degree in a specific specialty that is always the requirement for the occupation. Previously, the foreign national could have a degree that was “normally,’ “common,” or “usually” required.
- General degrees without specialization, such as business administration, will no longer be considered specific enough for H-1B purposes.
Qualifications for H-1B Employer
- The employer must establish, at the time of filing, that it has sufficient work for the H-1B employee.
- The rules set forth extensive criteria that will be used to confirm the existence of an employer-employee relationship.
- The DHS reserves the right to conduct on-site inspections of sponsoring employers, satellite offices and/or worksites, including interviews of officials and review of compliance records. Refusal to provide pertinent, requested information may result in the revocation of all petitions for H-1B workers at the place of work.
- H-1B petitions for employees working at third-party worksites will be approved for a one year period, rather than the usual three years (but can be renewed).
- A third-party worksite is defined as a location other than the employee’s home or a site that is not owned, leased or operated by the petitioning employer.
New Wage Requirements
Unlike the DHS’ proposed rules, the Department of Labor’s new wage requirements were published on October 8, and took effect immediately – giving only about 36 hours’ notice before implementation. For the H-1B, E-3 and PERM labor certification processes, the employer must agree to pay a minimum required wage, as set by the DOL, in order to prevent wage suppression and the replacement of U.S. workers by less expensive foreign nationals. The wages provided by the Department of Labor are categorized by the county of work location, the occupation, and the skill/education level required for the position, based on semi-annual surveys. For all occupations, there are four levels – Level 1 being for positions requiring the least education/experience, Level 4 being the most.
As of October 8, the DOL has changed the way that the wages are calculated, resulting in significant increases in salary requirements. Prior to October 8, the Level 1 required wage was in 17th percentile of wages normally earned in the proffered position – the new Level 1 required wage is in the 45th percentile of salaries earned. Put another way, the new Level 1 wage is closer to what the Level 3 salary was previously. As an example – the Level 1 wage for a Mechanical Engineer in the Detroit area was $67,850 on October 7. On October 8, the Level 1 wage increased to $92,830.
It is important to note that the salary changes were not a result of new survey results – they were issued after “re-calculation” by the Department of Labor. We expect that these regulations will also be litigated. However, until/unless injunctive relief is issued by the courts, employers need to prepare and plan for higher wage requirements for H-1B, E-3 and green card processes.
Kate M. McCarroll has extensive experience in employment-related immigration law, including inbound/outbound immigration, Department of Labor/ Department of Homeland Security audits and I-9 compliance training. Kate has also handled matters involving asylum proceedings, family-based immigration, and criminal and inadmissibility issues.
Miroslava Orduño Rincón has extensive employment-related experience concerning U.S. non-immigrant and immigrant petitions for large international clients. She also processes outbound visitor and work visas, family-based petitions, and naturalization.
Robert S. Anderson counsels and represents clients in the full spectrum of immigration legal issues as applied to their workforce and staff, including all aspects of the international movement of personnel for local, national, and international companies.
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Practice AreasImmigration Law