2/8/2021 UPDATE: USCIS published a final rule delaying until December 31, 2021, the effective date of its final rule creating a wage-based selection process for H-1B petitions, which was originally set to become effective March 9, 2021.
1/7/2021 UPDATE: On January 8, 2021 the administration will publish the final version of this rule in the Federal Register and it will take effect 60 days from publication. It is possible that the legality of the rule could be challenged in Federal Court and an injunction could be put in place preventing the rule from taking force while its legality is litigated. Similarly, the rule could also be placed on hold by the incoming Biden administration, delaying or preventing its implementation.
D&S will continue to monitor both the Biden Administration’s actions with respect to this rule as well as any lawsuits filed challenging the rule and will provide updates as they become available.
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[Original Post from November 2020]
RESTRUCTURING THE H-1B LOTTERY TO A WAGE-BASIS
On October 28, 2020 the Trump Administration proposed a significant change to the process of filing cap subject petitions for H-1B nonimmigrant classification. The proposal would replace the current random selection process by which USCIS selects H-1B registrations for filing of H-1B cap-subject petitions with a system that selects registrations based on the highest Occupational Employment Statistics (OES) prevailing wage level that the proffered wage equals or exceeds for the relevant Standard Occupational Classification (SOC) code and area(s) of intended employment. The proposed rule, the full text of which is available here, was published in the Federal Register on November 2, 2020 and comments on the rule must be submitted on or before December 2, 2020.
Please note that this rule will NOT take effect until a Final Rule is published and made effective.
BACKGROUND
In April 2017 the Trump Administration issued its “Buy American Hire American” Executive Order, which advanced a policy of creating “higher wages and employment rates for workers in the United States, and to protect their economic interests”. The Executive Order mandated that the Secretary of Labor and Secretary of Homeland Security “suggest reforms to help ensure that H-1B visas are awarded to the most high-skilled or highest-paid petition beneficiaries”. In line with this measure, DHS Acting Secretary Chad Wolf announced the October 28 proposal rule as intended to “incentivize employers to offer higher wages or petition for positions requiring higher skills and higher-skilled workers instead of using the program to fill relatively lower-paid vacancies”.
The proposed rule comes just a few weeks after the publication of twin Interim Final Rules (IFRs) directing the Department of State (DOS) and Department of Labor (DOL) to significantly increase the four respective OES prevailing wage levels (IV, III, II, I) for H-1B and PERM processes, which we discuss here. Therefore, the IFRs and the proposed rule should be viewed as tripartite measures which are aimed to take effect in time for the 2021 H-1B cap season.
KEY PROVISIONS
The following is a list of some of the key provisions of the proposed rule:
New Selection Process
If registrations during the annual initial registration period exceed the total H-1B numerical allocation, the proposed rule provides that USCIS will rank and select registrants beginning with the highest OES wage level (IV) for the area of intended employment that the actual wage for the offered position met or exceeded. Once all registrants with OES wage level IV are selected, USCIS will rank and select registrants who meet OES wage level (III), and continue in descending order of wage levels. If the H-1B numerical cap is exceeded by the number of registrants within a particular wage level, then USCIS will randomly select registrants from that wage level until the numerical cap is reached.
No changes are made to the H-1B numerical cap, standing at 85,000, with 65,000 available to individuals with a Bachelor’s degree (often referred to as the “Regular Cap” or “Bachelors Cap”), and a further 20,000 available to individuals who possess a U.S. advanced degree (often referred to as the “Masters Cap” or the “Advanced Degree Cap”).
Wage Levels
If no current OES prevailing wage information exists for the position, the proposed rule states that “USCIS will rank and select petitions based on the appropriate wage level that correspond to the requirements of the proffered position”. At this time, DHS “requests comments on, including potential alternatives to, the proposed ranking and selection of registrations based on the OES prevailing wage level...in situations where there is no current OES prevailing wage information.”
If the proffered wage is lower than an OES wage level I, because the proffered wage is based on a prevailing wage from another legitimate source (other than OES) or an independent authoritative source, the proposed rule provides that USCIS will rank the registration as OES level I.
If the H-1B beneficiary is expected to work in multiple locations, the lowest corresponding OES wage level from the relevant geographic areas will be used for the selection process.
Advanced Degree Cap
The above-mentioned DHS and DOL IFRs and proposed rule do not alter the H-1B Advanced Degree Cap. The proposed rule states that the same ranking and selection process will operate if the number of eligible registrants exceeds the Advanced Degree Cap. As with the proposed Regular Cap selection process, if the number of registrants at a certain wage level exceed the total advance degree numeral allocation, then registrants are randomly selected from that wage level group until the Advanced Degree Cap is reached.
Electronic Registration Process
In 2020, USCIS introduced an electronic registration process with the objective of streamlining the H-1B selection process and reduce costs to employers. The proposed rule provides that the electronic registration process will be amended to require a statement of the highest applicable OES wage level that the wage for the position meets or exceeds for the relevant geographic area.
Subsequent Cap Exempt Petitions
The proposed rule provides that USCIS may deny a subsequent new or amended petition filed by a petitioner on behalf of the same beneficiary if it determines that the subsequent petition is an attempt to unfairly decrease the offered wage below the OES wage level submitted for the purpose of H-1B lottery selection in order to increase chances of selection. USCIS will not otherwise deny a petition solely on the basis of provision of a wage that is below the OES wage level used for the H-1B lottery process.
WHAT TO KEEP IN MIND
For almost every annual H-1B selection process over the last decade, USCIS has reported more H-1B petitions than the annual numerical allocation of 85,000. This trend is not anticipated to change for the 2021 (FY 2022) selection process, therefore the new selection process in the proposed rule is highly likely to be triggered.
The proposed rule is expected to significantly impact foreign nationals hired for entry-level positions, in particular international students who are seeking continuity of status and ability to work following the expiry of their post-completion OPT period.
A number of legal challenges to the proposed rule are expended to follow shortly, as it is debatable whether a change to the factors included in the H-1B selection process requires Congressional legislation.