Federal Court Sets Aside DOL and DHS Rules Restricting H-1B Category; Appeal Likely

Morgan Lewis
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Morgan Lewis

The US District Court for the Northern District of California on Tuesday set aside two Interim Final Rules (IFRs) that sought to restrict severely eligibility for the H-1B Specialty Occupation nonimmigrant category.

The first of these, the US Department of Labor’s (DOL’s) IFR, Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States, went into effect on October 8 of this year and restructured the Occupational Employment Statistics (OES) prevailing wage system for H-1B, H-1B1, E-3, and PERM labor certification applications to increase the prevailing wage levels for each of the four OES levels by approximately 28%.

The US Department of Homeland Security’s (DHS’s) IFR, Strengthening the H-1B Nonimmigrant Visa Classification Program would have gone into effect on December 7 and would have introduced heightened qualification standards for the H-1B category, including a new definition of a Specialty Occupation, reduced validity periods for H-1B petitions for beneficiaries working at third party sites, and new evidentiary requirements for establishing employer/employee relationships. The DHS estimates that approximately 30% fewer H-1B petitions would be approved under these new standards. We reported on both of these IFRs in our alerts of October 8, and October 9, 2020.

The district court found that the DOL’s and DHS’s issuance of these IFRs without the traditional notice and comment period based upon the coronavirus (COVID-19) pandemic and its effect on the nation’s unemployment rate did not have a legitimate basis and that the agencies’ arguments about a supposed emergency that warranted the immediate issuance of these IFRs were unconvincing and thus set aside both IFRs. The impact of the court’s ruling is that neither rule may now be implemented. The DOL may not impose its restructured OES wage level system on employers seeking to file H-1B, H-1B1, or E-3 petitions and the OES wage level system in place before October 8 will once again be in effect. It is not clear whether or not prevailing wage determinations issued by the DOL between October 8 and yesterday will remain valid. Similarly, the USCIS may not apply the new H-1B qualification standards that would have gone into effect on December 7.

It is possible that both the DOL and the DHS will appeal the district court’s ruling within a short period of time. Indeed, this is likely, given the current administration’s efforts to achieve as much as possible in certain areas, including immigration, during its lame duck period and the fact that the incoming administration is unlikely to support either agency’s IFR. We will continue to monitor this situation and will issue another alert as soon as any development affecting this situation occurs.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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