Two New Rules Further Discourage U.S. Employers Hiring High-Skilled Talent; Court Battles Expected

Two New Rules Further Discourage U.S. Employers Hiring High-Skilled Talent; Court Battles Expected

October 13, 2020

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Two new interim final rules, issued the same day from the Departments of Labor (DOL) and Homeland Security (DHS), would raise prevailing wages for high-skilled foreign workers, revise the definition of a “specialty occupation” for H-1B purposes, and make other changes likely to adversely affect U.S. employers and reduce opportunities for the high-skilled talent they need.

Commenters have noted that the DOL rule inflates the prevailing wage and is expected to have a deleterious effect on foreign workers and employers as a result. In addition to raising foreign workers’ wages, the new requirements are expected to exert upward pressure on the salaries of similarly skilled U.S. workers, which will make it more difficult especially for smaller employers, nonprofits, hospitals, universities and the like to afford the talent they need. These effects are likely to drive some affected employers and foreign workers to seek more immigration-friendly countries in which to do business or be employed. Outflows of high-tech business and workers to Canada, for example, would not be far-fetched.

Lawsuits are reportedly in the works, and the results of the upcoming Presidential election could have a major impact on the rules’ long-term outlook. Below are highlights of the two rules:

DOL Rule on Prevailing Wages

On October 8, 2020, DOL issued an interim final rule effective the same day that amends Employment and Training Administration regulations governing prevailing wages for employment of foreign workers in the United States. The rule includes both certain employment-based immigrant visas (EB-2, EB-3) and nonimmigrant visas (H-1B, H-1B1, and E-3).

DOL focused on the H-1B program in assessing how best to adjust the prevailing wage levels because it accounts for the largest share of foreign workers, by far, covered by DOL’s four-tier wage structure: Levels I (entry level), II (qualified), III (experienced), and IV (fully competent. About 80 percent of all workers admitted or otherwise authorized to work under the programs covered by the wage structure are H-1B workers, DOL noted, and thus they pose the greatest risk of adverse effects on U.S. workers.

DOL said that it would be “inappropriate” to consider the wages of the “least educated and experienced workers in these occupational classifications” when setting the prevailing wage levels, and that this consideration “demonstrates the inconsistency of the existing wage levels with the statutory and regulatory framework.” The interim rule therefore discounts the typical wages of workers at the lower levels and ratchets up the prevailing wage levels by substantial margins.

Interestingly, although DOL acknowledged that some sources have suggested that attracting foreign workers with specific, in-demand skills helps firms innovate and expand, driving growth and overall job creation, which in turn leads to more work opportunities for U.S. workers, the agency said that “such outcomes are not the immediate objectives of the [Immigration and Nationality Act’s] wage protections.” Rather, DOL said it was focused on “ensuring that the H-1B program does not impair the wages and job opportunities of U.S. workers similarly employed.”

DOL has adjusted the existing wage levels, in place for more than 20 years—set at approximately the 17th, 34th, 50th, and 67th percentiles for each of the four levels in the Occupational Employment Statistics distribution—to the 45th, 62nd, 78th, and 95th percentiles, respectively. DOL acknowledged that adjusting the four wage levels significantly higher “may result in some employers modifying their use of the H-1B and PERM programs,” and will also likely result in higher costs for some employers.

According to DOL’s Office of Foreign Labor Certification (OFLC), the interim final rule will apply to:

  • Applications for Prevailing Wage Determination, Form ETA-9141, pending with OFLC’s National Prevailing Wage Center (NPWC) as of the effective date of the regulation;
  • Applications for Prevailing Wage Determination, Form ETA-9141, filed with the NPWC on or after the effective date of the regulation; and
  • Labor Condition Applications for Nonimmigrant Workers (LCA), Form ETA-9035/9035E, filed with OFLC on or after the effective date of the regulation where the Occupational Employment Statistics survey data is the prevailing wage source, and where the employer did not obtain the prevailing wage determination from the NPWC before the effective date of the regulation.

DOL is accepting comments on the rule until November 9, 2020, although in the absence of a court ruling (or a different administration), it’s unlikely that DOL will backtrack on its calculations or conclusions. As noted above, litigation is likely, challenging both DOL’s methodology and the rule’s immediate effect.

DHS Rule on Specialty Occupation Definition for H-1B Purposes, Other Changes

On the same day the DOL rule summarized above was issued—October 8, 2020—DHS issued an interim final rule effective December 7, 2020, that revises the regulatory definition of and standards for a “specialty occupation” for H-1B purposes.

The rule clarifies that there must be a direct relationship between the required degree field(s) and the duties of the position. A position for which a bachelor’s degree in any field is sufficient to qualify for the position, or for which a bachelor’s degree in a wide variety of fields unrelated to the position is sufficient to qualify, will not be considered a specialty occupation under the rule because it will not require the application of a body of highly specialized knowledge. Similarly, a position will not qualify as a specialty occupation if attainment of a general degree, without further specialization, is sufficient to qualify for the position. The petitioner must demonstrate a direct relationship between the required degree in a specific specialty and the duties of the position.

The rule also:

  • Adds definitions for “worksite” and “third-party worksite”;
  • Revises the definition of “United States employer”;
  • Clarifies how U.S. Citizenship and Immigration Services (USCIS) will determine whether there is an “employer-employee relationship” between the petitioner and the beneficiary;
  • Requires corroborating evidence of work in a specialty occupation;
  • Limits the validity period for third-party placement petitions to a maximum of 1 year;
  • Provides a written explanation when the petition is approved with an earlier validity period end date than requested;
  • Amends the general itinerary provision to clarify it does not apply to H–1B petitions; and
  • Codifies USCIS’ H–1B site visit authority, including the potential consequences of refusing a site visit.

The petitioner must establish, at the time of filing, that it has actual work in a specialty occupation available for the beneficiary as of the start date of the validity period. In addition, all H-1B petitions for beneficiaries who will be placed at a third-party worksite must submit evidence that the beneficiary will be employed in a specialty occupation, and that the petitioner will have an employer-employee relationship with the beneficiary. The interim final rule will impose new annual costs of $24,949,861 for petitioners completing and filing H-1B petitions with an additional time burden of 30 minutes, DOL said.

The rule is expected to have the effect of narrowing what qualifies as a specialty occupation. In addition, the rule’s effects could be severe on companies that provide foreign workers under contract to other companies. As with the DOL rule, litigation is likely on the DHS rule.

Comments are due by November 9, 2020 (information collection) and by December 7, 2020 (interim final rule).

Contact your WR attorney for advice in specific situations.

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2020-10-13T13:15:26-08:00 October 13th, 2020|

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