Under existing law, in order to protect U.S. workers from losing jobs to foreign employees who might work for a lower wage, H-1B employers are required to pay their H-1B workers the higher of (i) the actual wage paid to similarly qualified workers in the same position, or (ii) the prevailing wage for the occupation in the geographic area of employment. One of the first steps in the H-1B visa petition process (this applies also to the employment certification process for employers sponsoring workers for permanent employment under the EB-2 and EB-3 immigrant visa preference categories) is to determine the prevailing wage for the job being offered to the prospective H-1B worker.
The Department of Labor uses four levels to calculate the prevailing wage for a particular position or occupation: Level I (entry level), II (qualified), III (experienced) and IV (fully competent). Until now, each wage level has been based on the wage percentiles of the Bureau of Labor Statistics database of occupational employment statistics (OES) for the occupation in which the proposed H-1B position lies, with Level I being based on the 17% wage percentile, Level II on the 34% percentile, Level III on the 50% percentile, and with Level IV being based on the 67% wage percentile.
The new rule changes the calculation of the prevailing wage to increase the percentile for each wage level to 45% for Level I, 82% for Level II, 78% for Level III, and 95% for Level IV. The change in computing the prevailing wage will not change an H-1B position from one wage level to another. Instead, it will increase the wage that is attributable to each OES wage level for the position, thereby causing an increase in the lowest wage that the H-1B employer must pay the H-1B worker. H-1B workers are going to become more expensive to employ.
B. Change in Definition of “Specialty Occupation”
The H-1B visa is for those coming to the United States to perform services in a “specialty occupation.” According to the preamble of its interim final rule, DHS is aligning the regulatory definition and standards for a “specialty occupation” with the definition of “specialty occupation” set forth in the Immigration and Nationality Act. The new rule tries to achieve this by making at least three important changes.
(a) There Must be a Direct Relationship Between the Required Degree Field(s) and the Duties of the Position.
The Immigration and Nationality Act defines a “specialty occupation” as “an occupation that requires (A) theoretical and practical application of a body of highly specialized knowledge, and (B) attainment of a bachelor's or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States.” On the other hand, current regulations define a “specialty occupation” more broadly as:
(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.
D. Changes for H-1B Visa Holders Placed at Third-party Worksites.
(a) Increased scrutiny of employer-employee relationship
Historically, H-1B employers, particularly service providers, have found it difficult to show that the placement of an H-1B worker at a customer’s worksite maintains the required employer-employee relationship between the H-1B petitioning employer and the H-1B worker placed at the third party site. The new rule will make this even harder to demonstrate.
From now on, USCIS will use the litany of “non-exhaustive” factors to be considered “in the totality of the circumstances” to scrutinize the purported employer-employee relationship in order to determine whether, the required employer-employee relationship exists between the off-site H-1B worker and the H-1B petitioning employer.
In order to assist it in its determination of the existence of the required employer-employee relationship based on new, more comprehensive qualifying criteria, USCIS will also now be requiring the petitioning H-1B employer to submit corroborating documentation such as “contracts, work orders or other similar corroborating evidence on a case-by-case basis.” In its preamble to the new rule, USCIS adds that this will be so in all cases, regardless of the location of the employee. This is not only to demonstrate the employer-employee relationship, but also to show that the H-1B worker will perform services in a specialty occupation, and continue to do so throughout the period of approved employment.
Finally, and again in order to make it easier for USCIS to monitor the activities of the H-1B employee for continuing compliance with H-1B requirements for third-party worksite placement, USCIS is changing the maximum period of stay granted for an approved H-1B petition for a third-party worksite placement from three years to one.
2. What Does the Future Hold?
Both the DHS H-1B changes and the DOL wage amendments were issued as interim final rules, by-passing the usually required notice and public comment periods. Further, the changes will likely have an enormous impact on the present H-1B visa program, making it more uncertain and more costly, and, overall, more difficult to satisfy the H-1B qualifying criteria.
The changes in the H-1B regulations will affect a large number of H-1B employees and their employers in a host of industries. Many existing H-1B workers will be filling positions that no longer qualify for the H-1B visa. Expiring petitions and periods of stay will not be extended. Although there are 85,000 new H-1B visas granted each year, the number of foreign workers in the United States on H-1B visas at any given time runs at just shy of half a million. The new rules will, no doubt, disrupt employment.
Due to both the administrative process and as the methodology that DHS and DOL have used to make these changes to the H-1B regulations, a legal challenge can be expected. That legal challenge will likely be brought under the Administrative Procedures Act, upon the basis that there is no “good cause” upon which to justify the waiver of the usual notice and public comments periods for these interim final rules. If the challenge is successful, then, both DHS and DOL will have to start the rule publishing process all over again. Of course, whether the process will be corrected and the rules published properly will depend very much on which party is in the White House next year.
The Immigration world is constantly changing. However, rest assured that we at GrayRobinson are responding to all immigration and other issues affecting our clients as they arise. We are here to help; please let us know if you need us.