U.S. Agencies Issue Interim Final Rules with Major H-1B Reforms for Legal Definition of Specialty Occupation Workers and Wage Rates

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The U.S. Department of Homeland Security (DHS) and U.S. Department of Labor (DOL) have released two new interim final rules affecting immigration. Both rules immediately impact skilled foreign workers in the H-1B specialty occupation visa program and employment-based immigrants, and make major reforms to the classification of specialty occupations and wage rates paid. The new DOL rule will be effective immediately upon publication in the Federal Register, scheduled for October 8, 2020. The DHS rule will take effect 60 days after publication. 

The publication of the interim rules is yet another move by the Trump administration this year to create restrictions on the H-1B program, which it believes allows low-cost foreign workers to undermine U.S. worker opportunities. Based on Presidential Proclamation 10052, workers on new H-1B visas issued after June 24, 2020 generally remain barred from entering the United States through the end of 2020, subject to a few exceptions.

Strengthening H-1B Program Interim Final Rule

The new DHS rule will narrow the range of positions that qualify for H-1B “specialty occupation” status. DHS’s H-1B rule makes significant changes throughout the regulations covering all aspects of the H-1B program and legal definitions for qualifying as an H-1B worker, focusing on requiring proof of an “employer-employee relationship,” revising regulatory standards for the legal definition of a specialty occupation, and revising itinerary requirements in agent situations and third-party workplace scenarios:

  • Revision of the regulatory definition of an H-1B specialty occupation;
  • Evidentiary requirements for proof of specialized bona fide non-speculative employment offer;
  • New definitions for what constitutes a “U.S. employer,” “worksite,” and “third-party worksite”;
  • New guidance on whether an “employer-employee relationship” exists between petitioner and the beneficiary;
  • Enhancement of USCIS site visit authority to enforce H-1B compliance, scope of authority, consequences for inspection violations;
  • Validity period limits for H-1B workers employed at third-party worksites; and
  • Revision of itinerary requirements to specify that they will apply to petitions filed by agents who perform the function of an employer.

DOL Prevailing Wage Interim Final Rule

The DOL rule changes the government’s calculation of prevailing wage rates. Prevailing wage rates are used in Labor Condition Applications (LCAs) used to support visa applications, such as H-1B petitions. In an LCA, an employer must guarantee that it will pay the worker a certain minimum wage rate for the particular position. The prevailing wage is calculated based on geographic location, Standard Occupational Classification (SOC) occupational category, and ascending skill level required for the positon (Wage Level 1, 2, 3, or 4, depending on nature of required skills to perform job duties).

In this case, the key takeaway is revision upwards of all Occupation and Employment Statistics’ wage levels (the DOL previously applied its statutory formula to existing wage levels to set Levels I through IV, respectively, at approximately the 17th percentile, the 34th percentile, the 50th percentile, and the 67th percentile):

  • OES Wage Level 1 – 45th Percentile;
  • OES Wage Level 2 – 62nd Percentile;
  • OES Wage Level 3 – 78th Percentile; and
  • OES Wage Level 4 – 95th Percentile.

As of October 8, 2020, employers and their authorized attorneys or agents will be able to access revised OES prevailing wage data for each SOC and area of intended employment (https://www.flcdatacenter.com).

These changes will likely cause significant disruptions for employers’ H-1B, H-1B1, and E-3 visas, and for various employment-based immigrants. In the short term, newly filed LCAs will be impacted, as the requisite wage levels will rise significantly. This carries other considerations as well. Under the new schema, an individual previously eligible for Wage Level 3 at the 50th percentile of local wages for the position would now be limited to filing a new LCA under Wage Level 1 (a category that is heavily scrutinized by USCIS as not requiring sufficiently advanced duties to qualify as an H-1B specialty occupation with complex work duties).

We will monitor developments and potential court action in response to the interim final rules (which bypassed the regulatory review process) and will be advising on steps for individual applications impacted by the new rules in the immediate future.

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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