AILA Quicktake #297: New Rule Creates Wage-Based Selection Process for H-1B Visas

On 11/2/20, DHS released a new rule prioritizing the selection of H-1B registrations for employers who pay the highest prevailing wages, despite no congressional mandate to do so. AILA President Jennifer Minear explains the changes proposed by the rule and discusses other recent regulations.

Video Transcript

The government has recently published three rules that will have a significant impact on the H-1B visa program in this country. The first rule is published by the Department of Labor and impacts the way prevailing wages are determined under the H-1B program; the second rule is published by the Department of Homeland Security and will impact how specialty occupation is defined under the federal statute; and the third rule is just published on November 2nd and would replace the current random lottery system that is used to determine whose petitions get processed each year under the fiscal cap. So, instead of a random selection process, which is what we have now, under the new rule the selections will be made according to how much an H-1B worker would be offered in salary. So, those offered the highest salaries with their positions, starting with the level four under the DOL's prevailing wage database and then in descending order levels three, two, and one, will be considered for selection under the lotter process, the registration process.

Department of Homeland Security has estimated that no one being offered a level one wage, or an entry level wage would be chosen under this new registration system for H-1Bs. But all of those offered a level three or a level four wage are estimated they will be chosen. So as a practical matter, what this means is that all entry level workers who are seeking to be employed in H-1B status would have to be paid at levels that are significantly higher than their US counterparts in order to be processed for H-1B status, in order to be selected under this new registration program to even have their petitions adjudicated by the agency. For example, a recent college graduate with no work experience or a physician who has just graduated from residency training would normally be paid an entry level wage, a level one wage, for that occupation but now in order to be competitive in the H-1B registration process they'll have to be paid at a rate that is at least at the 95th percentile or higher for their occupation in order to have a shot at getting registered under the H-1B program. So, the object here is obviously to make it so expensive to employ H-1B workers that employers will simply not be able to file H-1B petitions

This rule is designed to be an end run around the statute and it's part of a coordinated effort of the Trump administration to do through executive agency action what they've not been able to accomplish legislatively, which is to essentially eliminate the H-1B visa program. There's nothing in the law that requires employers to pay H-1B workers more than they pay U.S. workers and there's certainly nothing in the law that allows the agency to prioritize the allocation of H-1B petitions according to how much money the H-1B worker will be earning. This rule must be read in concert, again, with those other two recently published rules that I mentioned earlier. The first is the Department of Labor's prevailing wage rule which took immediate effect upon October 8 when it was published, and that rule resets how prevailing wage levels are calculated for H-1B and the impact of that is to skew wages significantly higher than what the market bears.

So again, going back to this new registration rule, here's how that ties in. The employer now has to pay a level three or level four wage in order to get selected in the H-1B registration process but the Department of Labor's new prevailing wage rule and how they set those levels ensures that a level three and a level four wage is now so artificially high that employers won't be able to pay them. So, even if an employer were willing to pay an entry-level worker three times as much as every other entry-level worker, and pay them at a level three or a level four rate, even that prevailing wage is going to be artificially high under the Department of Labor's new prevailing wage rule.

Now, the other rule that is aimed at gutting the H-1B program redefines specialty occupation in a much more limited and restricted way, and the rule takes particular aim at any H-1B worker who will be employed at a third party location. So for example, in my practice I represent a lot of physicians who are employed by medical practice groups but who have admitted privileges at local hospitals and go there to treat their patients who have been admitted to the hospital. That would be a third-party work site. An architect who needs to work on site at a client's building that they're designing for that client; that would be a third-party work site. A software engineer who works for a consulting company but is placed at a third-party client site to execute that consulting contract; that would be a third-party work site. So, this rule takes particular aim at third-party worksite locations and makes it much harder for them to qualify for H-1B status than for others by challenging the employer employee relationship based on the fact that they're working at a third party site.

AILA has already sued to block the Department of Labor's prevailing wage rule and we're seeking summary judgment in that case. The U.S. chamber of commerce and other plaintiffs have also filed a separate action that opposes both the Department of Labor prevailing wage rule and the Department of Homeland Security specialty occupation rule. The most important thing that AILA members can do at this time is to submit comments on all three of these rules. The deadline for the Department of Labor prevailing wage rule is November 9th, so no time to waste there. The deadline for commenting on the lottery registration rule is December 2nd and the deadline for commenting on the Department of Homeland Security specialty occupation rule is December 7th. We strongly urge all AILA members to take an active part in opposing these rules through their comments. The more the agencies know about the deleterious impact on the regulated community of these rules the more likely we are to be able to overturn them in court.

Cite as AILA Doc. No. 20110542.