On October 8, 2020, both the Department of Labor (DOL) and Department of Homeland Security (DHS) published new regulations that will significantly change the H-1B visa program. Specifically, the DOL Interim Final Rule (DOL IFR) will result in significantly higher prevailing wages required for H-1B, H-1B1, and E-3 nonimmigrant visa sponsorship, as well as permanent residency (green card) sponsorship requiring a PERM Labor Certification. The DHS Interim Final Rule (DHS IFR) narrows the definition of "specialty occupation," among other changes, and will make H-1B sponsorship more difficult. Entry-level professional occupations will be especially impacted by both the DOL IFR and DHS IFR.
The DOL IFR became effective immediately, on October 8, 2020, while the DHS IFR will become effective December 7, 2020. Both rules will almost certainly be met with legal challenges, but in the meantime, employers should be sure to consult with immigration counsel regarding the impact of these rules on their foreign national workers in H-1B, H-1B1, and E-3 non-immigrant statuses and on those employees for whom the employer has initiated the PERM Labor Certification process (the first step in the lawful permanent residency process for many foreign workers).
What is the impact of the DOL regulation?
As background, the DOL's occupational employment statistics (OES) wage data is used to determine the prevailing wage for H-1B, H-1B1, and E-3 non-immigrant workers, who, as a general rule, are required to be paid the higher of the prevailing wage or the actual wage (the rate paid by the employer to other employees in the position with similar experience and qualifications). In addition, the DOL OES data is used to assign a prevailing wage during the PERM Labor Certification phase of the permanent residency process.
The OES wage data contains a four-tiered wage system: level 1 (entry-level), level 2 (qualified), level 3 (experienced), and level 4 (fully competent). The October 8, 2020 DOL IFR significantly changes the way DOL calculates the OES wage data and will result in higher prevailing wages for each OES-based wage level and, in many cases, will exceed competitive wages currently paid by U.S. employers.
The DOL IFR will not impact Labor Condition Applications (LCAs) already certified by DOL, LCAs filed before October 8 or already assigned PERM prevailing wage determinations. However, the DOL IFR's revised wage data will be applied to any new LCA or PERM Labor Certification prevailing wage request, as well as PERM Labor Certification prevailing wage requests currently pending review. For practical purposes, this means an employer may continue to pay an H-1B worker their current salary, as listed on the certified LCA, but could face the requirement to significantly increase that employee's salary the next time they need to file an H-1B extension and obtain a new LCA.
The DOL IFR will not impact an employer's ability to use an alternate wage survey, or other acceptable wage methodology, in lieu of relying on the OES wage data.
What is the impact of the DHS regulation?
In short, the H-1B nonimmigrant visa classification is for foreign national workers in "specialty occupations," meaning occupations that require the theoretical and practical application of highly specialized knowledge, as evident by "normally," "usually," or "commonly" requiring at least a bachelor's degree, or equivalent, in a specialized field relevant to the occupation. The DHS IFR, which will take effect on December 7, 2020, narrows the definition of "specialty occupation" and requires a demonstration that the degree is "always" a requirement for the occupation, rather than "normally," etc. Importantly, in adjudicating H-1B petitions, U.S. Citizenship and Immigration Services (USCIS) will continue to rely on the U.S. Bureau of Labor Statistic's Occupational Outlook Handbook, which rarely indicates a degree in a specific specialty is always required for an occupation, making meeting this new definition of "specialty occupation" a challenge for many occupations.
The DHS IFR also mandates that the validity period of an H-1B petition that requires the worker to perform duties at a third-party worksite will be limited to one-year (rather than the standard three-year validity period), resulting in more frequent renewals and increased uncertainty. The DHS IFR also formally adopts the criteria enumerated in a 2010 USCIS memo for determining whether the requisite "employer-employee relationship" exists for H-1B sponsorship.
Under the DHS IFR, employers should expect increased scrutiny of H-1B petitions, especially in cases where a variety of degree fields are acceptable preparation for the occupation.