A federal district court has struck down a legacy Trump administration rule that would have replaced the annual H-1B cap lottery with a scheme to favor high-wage earners.

If implemented, the rule would have adversely impacted employers wishing to sponsor  H-1B petitions for entry level professionals positions with corresponding entry level wages, including petitions for recent foreign student graduates from U.S. universities.   The rule would have also harmed non-profit institutions, including many hospitals, and small businesses unable to compete with larger enterprises offering higher wages.  Inevitably foreign students graduates, including scientists, heath care professionals, IT professionals and others, would be required to depart the U.S. after graduation  with this key immigration option eliminated.

Notably, the Biden administration did not abandon the rule when it took office, but only delayed its implementation to December 31, 2021.  The U.S. Chamber of Commerce led a group of plaintiffs that included universities other organizations challenging the legality of the rule, and this week, the court agreed with plaintiffs that Acting Secretary of the Department of Homeland Security (DHS) Chad Wolf was not lawfully appointed at the time the rule was promulgated, and thus had no authority to issue the rule.  The court did not address whether the Immigration and Nationality Act allows DHS to prioritize the selection of H-1B visas based on wages or another factor, one of the arguments alleged by the plaintiffs.

Looking Ahead

The rule is not inconsistent with the  Biden administration’s stated aim to incentive higher wages for nonimmigrant and high-skilled workers. The administration does have the option of promulgating another rule – this time with a lawfully appointed Secretary of Homeland Security – but even so, such a rule is unlikely to be implemented before the  fiscal year 2023 H-1B cap registration period which commences in March 2022.  A similar rule favoring high wage earners would also face the same substantive legal challenges, particularly that such a proposal is inconsistent with, and flatly contradicted by, the Immigration and Nationality Act.

The case is U.S. Chamber of Commerce v. Department of Homeland Security, Case No. 20-cv-07331 (N.D. Ca., March 19, 2021).

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