New H-1B Rules Announced: Reality vs Hyperbole
First, to be clear, rule making is normally a long and tedious process at the federal level and these potential changes and possibilities have been the subject of policy discussions for several years. That being said, this particular rule announcement comes without a public comment period and as an interim final rule (IFR) in order to expedite how quickly it can go into effect, which the federal agency explains to be in response to the current market reality strain and the need to protect US Workers and not foreign workers who may be undercutting wages or US workers. Under Federal Regulations, an IFR will go into effect 60 days following publication, which is scheduled for publication in the Federal Register on October 8, 2020, for a potential effective date of December 7, 2020. That being said, it is likely that this IFR will be the subject of a court challenge demanding the normal rule making process to be followed.
Due to some overlap of other programs, these proposed changes will have impacts on H-1B, H-1B1, E-3 (Australian H-1B), and the “PERM” process which seeks to grant green cards to certain eligible employees and executives.
This is not a discussion on policy, but simply a pragmatic overview of what the rule means and how employers and job applicants can adapt. The following is a breakdown and discussion of the changes that have been announced and what it means for current H-1B holders, potential H-1B holders, and companies sponsoring H-1B candidates.
Actual Changes
Redefining or clarifying the meaning of “specialty occupation”
Limiting/removing H-1B approval for work placement companies (in favor of direct hires)
Increasing the Prevailing Wage amounts for job categories (including PERM/green card categories)
Update and expand worksite compliance requirements
Meaning of the Changes
A specialty occupation is defined 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.” In reality, though, this is a fairly broad definition and unfortunately has been manipulated by employers and their legal counsel to the point that the US Citizenship and Immigration Services now wants to further clarify and restrict the scope of this phrase with the new rule change.
For a long time, many job placement agencies and third party entities would apply for many H-1Bs only to subsequently “place” the approved candidates at third party companies and locations. This practice has drawn scrutiny over the years and has even led to some abuse. To address these concerns, the IFR is seeking to clarify the difference between a “worksite” and a “third party worksite”, the result of which is yet to be seen.
Prevailing Wage is a determination made based on statistical analysis of the specific job, the location of the worksite, and the overall wage distribution. The proposed changes will increase the calculated wages that the US Dept of Labor says a company must offer and actually pay those workers on the non-immigrant worker status. This increase will impact not only H-1B, but also H-1B1, E-3 (Australian H-1B), and the “PERM” process which seeks to grant green cards to certain eligible employees and executives.
With any new regulation, the IFR is also proposing increased and and expanded ability of the DHS officer to inspect the worksite, satellite, headquarters or other locations of the sponsoring company, and provide flexibility for how these inspections may be conducted.
Current H-1B Holders (and H-1B1 or E-3)
If you are on an H-1B, E-3, H-1B1 or have already had a prevailing wage certified for purposes of the PERM steps, then this proposed rule change will have little to no effect on you immediately.
Upon renewal or transfer of an H-1B, E-3, or H-1B1, the company and employee will need to follow the rules then in effect, which may require paying a higher wage than previous in order to comply.
Guidance for Employers
Review your recruiting process to ensure that job descriptions and requirements more closely refer to the specific degree fields that satisfy each potential hire.
Review your current H-1B, E-3 or H-1B1 compliance protocols and improve those, in anticipation of the potential for onsite inspections from the Dept of Homeland Security.
Review overall company policies, strategies, and timing related to hiring /sponsoring foreign workers and when or if the company will proceed with the green card stage.
This is a time of change, especially in the world of Immigration. We’re here to help with questions to make sure that both the company and the employee can navigate trying to hit what feels like a moving target!