Long Awaited H-1B Regulations Take Effect On October 7, 2020 - Result Will Limit Eligibility For The Most Highly Sought After And Prized U.S. Work Visa

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Recent developments which are likely to have a dramatic effect on certain foreign workers seeking entrance to the United States occurred earlier this week with the introduction of dual regulatory changes by the U.S. Department of Labor (USDOL) and the U.S. Department of Justice (USDOJ).

On October 6, 2020, the USDOL and the USDOJ issued interim final rules, making significant changes to the H-1B program, and especially entry-level positions and third-party staffing arrangements heavily used by the technology industry. The changes are estimated to affect about one third of all H-1B visa petitions filed by U.S. employers, according to Ken Cuccinelli, Acting Deputy Secretary of Homeland Security. He further indicated that the Administration's changes conform with the "Buy American, Hire American," presidential proclamation issued in 2017.

The H-1B specialty occupation visa, which results in the issuance of 85,000 visas annually to qualified foreign nationals to work in occupations requiring university-level education, will likely be curtailed in usage by U.S. companies seeking to hire entry-level employees. The H-1B visa program, in existence since the early 1970's, is premised upon the supposition that the hiring of foreign workers will not displace U.S. worker wages and that foreign worker employment will not undercut the U.S. labor market. The H-1B visa petitions filed by U.S. employers are further dependent upon underlying labor condition applications which are certified by the USDOL. The USDOL attests to the prevailing wages offered by U.S. employers in their H-1B filings with U.S. Citizenship and Immigration Services (USCIS). Employers hiring H-1B foreign workers for entry-level positions as designated by the USDOL would have to pay in the 45th percentile of their profession's salary, rather than the 17th percentile. Wages for the highest-skilled foreign worker would rise to the 95th percentile from the 67th percentile. This will undoubtedly depress the usage of the H-1B visa by U.S. companies for foreign national sponsorship for professional occupations.

In addition, the rule further proposes to limit the definition of "specialty occupation" and will narrow eligibility for professional qualifications for specific jobs offered by U.S. companies. The wide range of possibilities to qualify for a position in engineering, teaching or artificial intelligence, for instance, will be narrowed. This will apply across the board to all occupations, as contemplated by the regulation. The sole exception for the H-1B visa category and one unaffected by any of the changes in the regulations is the fashion model category. That category and its prevailing wage and other placement rules remain untouched.

Introduced as an interim final rule which takes effect in 60 days, the process allows for limited public comment. There is no doubt that federal court litigation will ensue as many U.S. businesses rely heavily on foreign talent and many H-1B foreign workers do ultimately undergo sponsorship for U.S. permanent residence. The Administration believes that with millions of Americans out of work and as the economy continues its recovery, immediate action is required to safeguard against the risk of low-cost foreign labor challenging U.S. workers right to employment here at home. Additionally, USCIS has imposed routine and unannounced site visits to assure that U.S. employers are complying with the wage requirements and terms of employment. The category has historically been a controversial one, and most recently, one of the many categories affected by Presidential Proclamations earlier in the year which resulted in the barring of entry for nationals of specific countries where the incidence of COVID-19 had risen.

Historically, efforts to impose these types of changes by government agencies have been challenged both in congressional committees and in the federal courts. It remains to be seen if these proposed rules and regulations changes will be upheld ultimately, or whether the H-1B visa category will remain intact.

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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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