On January 8, 2021, the U.S. Department of Homeland Security (DHS) published a final rule that will amend the process by which U.S. Citizenship and Immigration Services (USCIS) selects H-1B cap-subject petitions. The rule will replace the current random H-1B selection process, or "lottery," with a system that allocates H-1Bs by wage level, and therefore prioritizes the granting of new cap-subject H-1Bs to the highest paid candidates. The rule will become effective on March 9, 2021, but when and if the rule will be implemented remains to be seen.
How will the new rule impact the H-1B lottery?
As background, for each fiscal year, there are only 85,000 new (or "cap-subject") H-1Bs available: 65,000 for foreign nationals with a bachelor's degree (or equivalent education) from a U.S. or foreign college or university, and an additional 20,000 for foreign nationals with a graduate degree from a U.S. college or university.
When the demand for new cap-subject H-1Bs exceeds the numerical quota, USCIS conducts a random H-1B selection process or "lottery." All H-1B workers must be paid the required wage rate, as determined by the U.S. Department of Labor (DOL), but the offered wage has never before been a factor in the H-1B selection process.
Under the new DHS final rule, the H-1B selection process will require employers to indicate on their H-1B registration (or H-1B petition, if the registration system is suspended), the highest DOL occupational employment statistics (OES) wage level applicable to the H-1B candidate's offered salary. Under the OES wage system, prevailing wages for a particular occupation are provided at four wage levels: level 1 (entry-level), level 2 (qualified), level 3 (experienced), and level 4 (fully competent).
The final rule's amended selection process will rank and select H-1B registrations (or petitions) on the basis of the highest OES wage level, with priority first being given to registrations (or petitions) offering a Level 4 or higher wage. If the numerical quota has yet to be reached under this amended selection process, USCIS will then proceed to rank and select H-1B registrations (or petitions) in descending order from Level 3 to Level 1. Under the new rule, it is expected that very few, if any, H-1B registrations (or petitions) offering a Level 1 wage will be selected.
When will the new rule go into effect?
The new rule will become effective on March 9, 2021, but it is unclear if the rule will be implemented in time for the fiscal year (FY) 2022 H-1B selection process, which will most likely require H-1B registrations to be submitted no later than March 18, 2021. In addition to updating the H-1B registration system to allow for entry of the necessary wage level data, USCIS will need to conduct the necessary testing of the system, and "engage in public outreach and provide training to the...public on the modified registration system in advance of its implementation."
Importantly, USCIS has the discretion to suspend the H-1B registration system, and revert to the prior system of submitting full and complete H-1B petitions for the H-1B selection process. However, there is no indication at this time that USCIS intends to take this action for the purpose of implementing the new rule.
The new rule will certainly be met with legal challenges. In addition, the incoming Biden administration will have the authority to amend or rescind the new rule, or simply delay its implementation. The incoming Biden administration has already announced their intention to suspend any Trump administration rule enacted prior to inauguration day for at least 60 days, which would make it very difficult, if not impossible, to implement the new rule for this year's H-1B registration.