What’s Happening
On the evening of December 1st, 2020, a United States District Court Judge issued a decision repealing two Interim Final Rules (IFRs) published by the Department of Homeland Security (DHS) and the Department of Labor (DOL) on October 8th, 2020, which created additional hurdles for U.S. companies seeking to employ workers H-1B, E-3, and H-1B1 visas. The DOL rule took effect immediately on October 8th, 2020 and the DHS rule had a 60-day delayed effective date and was scheduled to go into effect next week. The Court order states that both regulations are repealed effective immediately, however, the DOL has not yet issued any guidance as to how individuals seeking to submit Labor Condition Applications (LCAs) and Prevailing Wage Determinations (PWDs) under the old wage levels should proceed.
What This Means
As discussed in our previous post outlining these two IFRs, both DHS and the DOL circumvented the standard 30-60 day notice and comment period that takes place prior to a regulation taking effect, citing the ongoing economic consequences of COVID-19 pandemic and, more specifically, the rates of domestic unemployment resulting from the pandemic. Both agencies argued that such urgent economic circumstances constitute “good cause” for the rules to be published as “Interim Final Rules” and thus, to be enforced without first giving notice to impacted parties and seeking feedback to ensure “due deliberation” occurs before new rules take effect.
The basis used by the Court to repeal both IFRs was that neither DHS nor the DOL demonstrated sufficient good cause for circumventing the normal notice and comment period required before a regulation, impacting thousands of individuals and U.S. companies, goes into effect. More specifically, both the DHS and DOL argued that the dire economic consequences of the COVID-19 pandemic were unforeseen and required immediate, emergency action to protect the interests of and job opportunities for U.S. workers. In rejecting this argument, the Court found that (1) the agencies had been aware of the “skyrocketing” unemployment rates for at least 6 months prior to publishing the IFRs in October 2020; (2) that some semblance of both the DHS and DOL rules had been on the Administration’s regulatory agenda since 2017; and (3) that the unemployment rates relied upon by the agencies were too broad (and included sectors where only 10% of the occupations were similar to H-1B occupations) and that when the Court examined unemployment rates in industries with high rates of H-1B employment, they found that “a large number of job vacancies remain in the areas most affected by the Rules” (e.g., computer occupations).
What You Need to Know
Because the Court relied on the way in which the rules were introduced as the basis for its decision, rather than the substance of the rules themselves, it is possible that the Administration could attempt to quickly re-introduce the rules via the normal notice and comment process, using the minimum notice and comment period required (30 days) in an attempt to finalize the regulations and have them go into effect before the new administration is sworn in on January 20th, 2021. Were this to occur, it’s possible that additional lawsuits could be filed challenging the merits of the rules (rather than the method of implementation) or that the Biden Administration could introduce regulations rescinding these rules should they go into effect before January 20th (nothing that these new rescinding regulations would themselves have to go through the notice and comment period and thus, the impact would not be immediate).
D&S will continue to monitor this developing situation and provide updates as they become available.
UPDATE: On December 3rd, 2020 the DOL announced what actions it would take to implement the District Court order. They include the following:
Pending LCAs - Any LCAs submitted before December 4th that are pending will continue to be processed with no delay
New LCAs - the DOL system will be temporarily suspended while the wage data is updated, and new LCAs will not be able to be submitted until around 8:30AM on December 9th
Pending Prevailing Wage Requests - processing of these requests will be temporarily suspended, and will resume around 8:30AM on December 15th using the old wage data
New Prevailing Wage Requests - can be submitted at any time
Prevailing Wage Determinations already issued with the incorrect wage - a request for review can be made on or before January 4th, 2021. It's expected that there may be some delays in reissuance.