New H-1B Rules Face An Uncertain Future

Vinson & Elkins LLP

Vinson & Elkins LLP

One of the parlor games that labor and employment specialists engage in is to try to guess what a new and incoming administration will mean for our area of practice. And no doubt, we will be doing that during the next couple of months. If experience has taught us anything, however, change usually comes gradually. This is particularly true when you have a divided government, which is likely to be the case for us at this point.

But if I were going to make a prediction about one area where we are most likely to see significant changes in the early months of the Biden administration, it will be to undo or prevent the implementation of the current administration’s recent rule changes to the H-1B program. For example, the Department of Homeland Security recently introduced a more restrictive definition of “specialty occupation” that would require a candidate to have a degree in a “directly related specific specialty.” While in the past, a candidate with a master’s degree in electrical engineering might qualify for an H-1B to work as a software engineer, under the new rule, the candidate would have to have a degree that is directly related to the specialty of software engineering.

However, the required minimum wages that employers must pay certain workers — especially at the entry level — is perhaps the most dramatic change that employers are facing. Under the new rules, an entry-level worker must be paid the salary that is at the 17th percentile for all employees in that profession in a particular geographic area; whereas. Now they would have to be paid at the 45th percentile, which is approximately the median wage for all employees, including those with considerable experience. For example, the required minimum salary for entry-level software developers tends to range between $75,000 and $85,000, depending on the geographic location. The new rules would require the starting salary for these individuals to be in the range of $110,000 to $120,000, which is considerably higher than what companies typically pay entry-level software developers. Finally, a new rule has been proposed that would replace the current lottery system with a system that prioritizes the selection of H-1B petitions based on corresponding wage levels, again discouraging employers from hiring recent foreign graduates of U.S. universities.

There are at least two reasons why many believe that these new H-1B rules face an uncertain future and are more likely to be reversed than other employment-related regulations that were enacted during the Trump administration. First, these are all rules that were enacted in the eleventh hour of the administration. Most court challenges — and there have already been a few — will probably not be resolved until the new administration, which could very well choose to concede the arguments made by the litigants. Second, while immigration issues remain contentious, many business leaders were opposed to these rules, and it is far more likely that there will be bipartisan support for overturning many of these changes. The big question is whether the rules will be changed before April 1, 2021, which is when most employers are likely to file their petitions. If not, this may be the first year in a long time where some H-1B visas will go unused.

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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