New H-1B visa rules were published by the Department of Labor (DOL) on October 8, 2020. Foreign professionals working in the US on H-1B visa will likely see an increase in their wages. The new rule, “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States,” might look like a positive at first glance, but the H-1B backlog will likely grow as companies will be less likely to hire the same amount of H-1B employees with these new wage hikes as they did before.
The wages are joined by other changes that will substantially change the H-1B landscape.
Table of Contents
- New H-1B Wage Rules and Levels
- New H-1B Visa Rules Redefine Specialty Occupation
- Third-Party Work Site Restriction
- What If I Have a Pending H-1B Petition?
- What Happens Next?
New H-1B Wage Rules and Levels
Prevailing Wage vs. Actual Wage
When deciding on an H-1B employee’s wage, companies had options of the prevailing wage or the actual wage. The Foreign Labor Certification Data Center sets the prevailing wage based on job descriptions, areas, and minimum hiring requirements. The actual wage is set by the employer based on what the employer pays others with similar experience and qualifications. Before October 8, an employer could choose either for the H-1B visa holder’s salary. The new rule now requires the employer to pick the higher wage out of the two options to be the H-1B visa holder’s salary.
Prevailing Wage Level Increases
That change alone is a difficult pill for employers to swallow, but when you can couple it with the increase in prevailing wage levels, it creates a serious problem for H-1B employers.
There are usually for wage levels with level 1 being for entry-level positions. The wage for each level is a percentage of the wage distribution for the respective occupation. Below are the prior percentages next to the new percentages as of October 8, 2020.
- Level 1 Wage: From 17th percentile to 45th percentile
- Level 2 Wage: From 34th percentile to 62nd percentile
- Level 3 Wage: From 50th percentile to 78th percentile
- Level 4 Wage: From 67th percentile to 95th percentile
This is the first wage level increases in 20 years. While good for future H-1B employees, it’s easy to see that the increases might discourage companies from hiring foreign professionals, especially those that fall under Level 1 or Level 2.
New H-1B Visa Rules Redefine Specialty Occupation
The wage level increases were a surprise, but other H-1B visa restrictions were expected.
The definition and qualifications for specialty occupation will dramatically change starting on December 7, 2020. Petitioners will no longer qualify for special occupation if their degree and job duties do not directly connect. You will need to have further specialization if you have a general degree like mathematics, engineering, or business administration. In addition, bachelor’s degrees are now a minimum requirement for specialty occupations. Furthermore, it is no longer enough to meet just one of the qualifications for the specialty occupation. H-1B petitioners must meet more than one criteria.
If you have or had an H-1b visa under specialty occupation and are looking for another, you should contact an attorney to see whether you still fit the criteria.
Third-Party Work Site Restriction
Another expected restriction is the limit of H-1B visa holders from working at third-party worksites. This will cause a burden on IT companies how have their employees working at their clients’ offices. USCIS will not grant the visa to petitioners who will spend most of their time working at third-party worksites.
What If I Have a Pending H-1B Petition?
The wage level increase is the only rule that became effective immediately. Depending on your specific situation, you may be affected by this rule even if you have a pending petition. We have noted below who is and isn’t affected.
- Petitioners under the following criteria are not affected by the new wage level increases.
- You submitted a proper ETA form 9035/9035E labor condition application (LCA) before October 8, 2020.
- Your LCA was issued, but you have not yet received your H-1B, H-1B1, or E-3 visa.
- Your ETA form 9141 was issued before October 8, 2020, for the PERM Labor Certification.
- Petitioners under the following criteria are affected by the new wage level increases.
- You filed an ETA form 9141but haven’t received a determination.
What Happens Next?
Like many of the rule changes, restrictions, and regulations brought on by the administration, it is expected that these changes will be challenged in federal court. There is a likelihood of a judge blocking some of these rules—at least temporarily, to allow the judicial process to take place. However, if these rule changes end up permanent, then they will likely create a backlog of H-1B visas. The wages increase less incentive for employers, and the new qualifications will make it harder for some to gain the visa.
The DOL recognizes this fact and stated the following in the preamble of the rule.
“The Department acknowledges that the existing wage levels – set at approximately the 17th, 34th, 50th, and 67th percentiles – have been in place for over 20 years, and that many employers likely have longstanding practices of paying their foreign workers at the rates produced by the current levels. Adjusting the levels to the 45th, 62nd, 78th, and 95th percentiles represents a significant change, and may result in some employers modifying their use of the H- 1B and PERM programs. It will also likely result in higher personnel costs for some employers, as detailed below. However, to the extent employers have reliance interests in the existing levels, the Department has determined that setting the wage levels in a manner that is consistent with the text of the INA and that advances the statute’s purpose of protecting U.S. workers outweighs such interests and justifies such increased costs.”
There are two important things you can do now to prepare for these changes.
- Check back here regularly for updates and any new rules. Staying informed is the first step in immigration matters where laws can change from one day to the next.
- Contact your immigration attorney. If you are already a client of one of our experienced H-1B attorneys, make sure to contact them to see if these changes affect you. If you have not filed an H-1B petition and wondering how to handle these changes, schedule a consultation by filling out this contact form.