On November 2, 2020, the Department of Homeland Security issued a Notice of Proposed Rulemaking (NPRM) announcing its plan to drastically change the way USCIS selects the H-1B Cap registrations of U.S. employers. If the Proposed Rule is finalized in its current form and made effective, this would affect the registration selection process for employers and their prospective H-1B employees.
You may recall that for last year’s H-1B Cap Season, the agency implemented an electronic registration step that preceded the actual filing of H-1B petitions. This change streamlined the selection process by enabling prospective H-1B petitioning employers the ability to electronically register in the H-1B cap lottery to sponsor a specific individual in lieu of filing a completely prepared H-1B petition as a means of entering the lottery. Consistent with historical practice, USCIS then conducted a random selection lottery to determine which US employers would be able to sponsor the workers that they needed. With such a great variety of employers registering for the H-1B Cap lottery and advanced degree exemption, random selection provided a fair chance to all.
A tweak designed to increase the selection of employers registering to sponsor those with a US master’s or higher degree reversed the order of registration selection from prior years. USCIS selected registrations first from the 65,000 regular cap, and afterward registrations under the 20,000 advanced degree exemption, tilting the odds slightly more in favor of registrations for those with advanced US degrees.
Recently, the agency issued an Interim Final Rule to change basic definitions that are central to eligibility for H-1B status. And further, the US Department of Labor issued an Interim Final Rule to significantly increase Level I, II and III wage levels by pushing up the scale within the four levels.
Nobody knows whether registrations will exceed the regular cap and advanced degree exception limits such that a lottery will be necessary in March, but if there is a lottery, USCIS is proposing a significant change to the selection process. The agency proposes to select H-1B cap registrations with a strong preference for employers who can pay the highest Occupational Employment Statistics (OES) prevailing wage level for the job category (Standard Occupational Classification or SOC code) in the area of intended employment.
More specifically, DHS proposes to “generally” rank and select employer registrations beginning with those who offer to pay the highest wage (Level IV) for the occupation in the geographic area of employment. In other words, lottery selection would first be made from all registrations indicating a wage offer of Level IV or higher. If the number of such registrations would exceed the regular cap, a random selection process of only Level IV registrations would be conducted (followed by selection of advanced degree exception Level IV registrations). Conversely, if not enough registered employers offer a wage that equals or exceeds the Level IV wage, the process of selection would continue in descending order with those offering Level III wages, then Level II and finally, Level I.
Note that under the NPRM, it is proposed that if an employer uses a wage survey or other independent authoritative wage source rather than the OES wage, regardless of any other case factors, such registrations will be grouped in Level I and have the lowest odds of selection.
The NPRM mentions consideration of an alternative selection process whereby random selection would continue–but with a twist. The registrations would be “weighted according to their OES prevailing wage level, such that, for example, a Level IV position would have four times greater chance of selection than a level I position, a level III position would have three times greater chance for selection than a level I…” and so on.
Overall, the proposed new selection process would benefit employers who are able and willing to pay a Level IV or III wage even though the majority of employers offer a Level II wage (i.e., the NPRM notes that ~54% of registrants offered Level II wages, with ~15% combined offering Levels III and IV wages for a total of ~70% of registrants offering wages above Level I). While the stated goal of the proposed changes is to incentivize employers to pay higher wages to H-1B workers, and this sounds great at first glance, the NPRM also notes potential downsides to employers like lost profits and increased costs in terms of training and replacement of workers, along with potential lost productivity while that takes place.
Of course, in order to implement the Proposed Rule if it becomes effective, it would be necessary for employers to include additional information in their registrations so that the ranking could be conducted. This would require a more in-depth analysis of the case prior to registration.
All combined, more than in the past, it’s important that employers who are interested in sponsoring individuals for H-1B status contact qualified legal counsel as early as possible to allow time for a reasoned legal analysis and for potential considerations such as the use of alternative wage surveys and degree evaluations, among other things.