WHAT’S HAPPENING
On October 6th, 2020, The Department of Homeland Security (DHS) and Department of Labor (DOL) announced that they will publish new regulations that would significantly impact the rules governing the H-1B visa, as well as wage requirements in connection with the H-1B, H-1B1 and E-3 visas and the PERM labor certification process.
Both rules are expected to be published as Interim Final Rules (IFRs) in the Federal Register on Thursday, October 8th. The DHS Rule will take effect 60 days after publication and while stakeholders can comment on the rule during this 60 day period, comments will not be considered before the rule takes effect. The DOL Rule will take effect immediately upon publication and will not have a delayed effective date, though DOL will accept public comments for 30 days. Both rules are likely to be challenged in court, meaning that injunctions could halt their implementation, at least temporarily, pending litigation.
DHS Regulation Impacting H-1B Visas
MAIN FEATURES
Definition of “Specialty Occupation” Revised
Historically specialty occupations were ones that normally required an individual to possess a body of highly specialized knowledge, typically obtained through earning a bachelor’s degree or higher in a specialized field or equivalent, as a minimum for entry into the profession. The new definition requires an even narrower correlation between the degree held and the offered position, stating that “general degrees” such as Business Administration or Liberal Arts are not sufficient to qualify someone for an H-1B role without further specialization. The rule further clarifies that while a range of degrees or multiple bodies of highly specialized knowledge may still be acceptable, each must be directly related to the proffered position.
In addition, the previous definition of “specialty occupation” permitted petitioners to demonstrate that a position qualified as a specialty occupation if it met at least one (1) of four (4) criteria. While the new rule also identifies four (4) similar criteria for demonstrating qualification, it notably adds the requirement that any degree must be in a “directly related specific specialty”. In addition, it no longer permits petitioners to establish that certain degrees that are “common to the industry” and instead requires petitioners demonstrate that such degrees are a “minimum requirement for entry into parallel positions at similar organizations in the employer’s United States industry.”
Third Party Placement Limited & Clarifications to Definition of Employer-Employee Relationship
The new rule adds further clarification to the ways in which a petitioner can demonstrate they have established a valid employer-employee relationship and includes additional restrictions on third party placement, noting that both these aspects of the rule largely mirror policies of two recently-rescinded USCIS Policy Memoranda, effectively reinstating and codifying this previous agency policy guidance.
With respect to the Employer-Employee relationship, the new rule lists 10 factors the agency will consider, noting that the agency will assess all relevant aspects of the relationship and no single factor will be determinative. The factors largely mirror the recently rescinded “Neufeld Memo” and include such considerations as location and nature of supervision, receipt of employee benefits, payroll status, petitioner’s ability to control the manner and means of beneficiary’s work product, etc., which apply to both direct-employment petitions as well as third-party placements.
With respect to third-party placement, the rule further distinguishes a “worksite” from a “third party worksite”, defining the latter as a place “other than the beneficiary’s residence in the United States” that is not owned, leased or operated by the petitioner. Where work will be performed at third-party worksites the new rule effectively reimposes and codifies the requirements from the recently rescinded 2018 Policy Memoranda “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites” including more extensive documentation of itinerary, contracts, and end-client documentation. In addition, the new rule limits the maximum H-1B validity period for petitions involving third-party placement to one (1) year.
Codification of Fraud Detection Site Inspections
Finally, the new rule codifies USCIS’s long-standing practice of conducting H-1B site visits through its Fraud Detection and National Security Directorate (FDNS), giving the agency authority to conduct site visits before, during, and after the H-1B petition validity period, including at third-party worksites.
WHAT APPLICATIONS/PETITIONS WILL THE RULE APPLY TO
The new rule will apply to H-1B petitions filed on or after the rule’s effective date. It will apply to all types of H-1B petitions including new petitions, change of employer petitions, extensions, and petition amendments. The new rule will not apply to petitions that are pending at the time of enactment or those approved prior to the rule taking effect.
OTHER CONSIDERATIONS
While at first glance, the new DHS rule appears to drastically alter the H-1B landscape, upon closer review, many of the changes are merely codifications of existing adjudication trends and Policy Memoranda that the agency only recently rescinded due to Federal Court litigation.
Finally, because the rule is being published as an IFR and will be open to public comment during the 60-day delayed implementation, certain aspects of the rule are subject to change.
DOL Regulation Impacting Wages for H-1B, H-1B1, E-3 Visas and PERM Filings
MAIN FEATURES
The new DOL regulation, which is being issued in tandem with the above DHS H-1B regulation, increases the DOL prevailing wage levels used in connection with Labor Condition Applications (LCAs) for H-1B, E-3, and H-1B1 visas, as well as for Prevailing Wage Determinations issued as part of the PERM Labor Certification process.
Previously, the DOL relied on four (4) wage levels based on data from the Bureau of Labor Statistics (BLS) on the average wages paid to similar workers in the area of intended employment. The wages were set at the 17th, 34th, 50th, and 67th percentiles of wages, commensurate with experience, education, and the level of supervision required for the position in question (ranging from Level I or “entry” level, up to Level IV, “fully competent”). Under the new rule, these will increase as follows:
Level 1 Wages: will increase from the 17th to the 45th percentile
Level 2 Wages: will increase from the 34th to the 62nd percentile
Level 3 Wages: will increase from the 50th to the 78th percentile
Level 4 Wages: will increase from the 67th to the 95th percentile
WHAT APPLICATIONS/PETITIONS WILL THE RULE APPLY TO
Although the regulation will take effect immediately upon publication on October 8th, 2020, LCAs filed prior to this date will be issued under the current wage levels, even if they remain pending beyond October 8th.
LCAs filed on or after October 8, however, will be issued based on the increased wage levels, resulting in higher wage requirements for these cases. The new regulation will not impact wages for any currently approved LCAs or PERM prevailing wage determinations.
All PERM Prevailing Wage Determinations issued on or after October 8 will be issued based on the increased wage levels, regardless of when they were filed.
OTHER CONSIDERATIONS
Significantly, the new regulation still permits employers to use alternative wage sources, not subject to the DOL wage percentiles, instead of DOL prevailing wage data for LCAs and PERM applications.