On Tuesday, October 6, 2020, the U.S. Department Homeland

Security (DHS) and the U.S. Department of Labor (DOL) issued two

Interim Final Rules (IFRs) that introduce significant changes with

respect to the H-1B, H-1B1, E-3 visa programs, and to the wage

levels in connection with these programs and the PERM Labor

Certification program. The DHS rule is entitled,

“Strengthening the H-1B Nonimmigrant Visa Classification

Program,” and introduces specific changes to the H-1B program

that will take effect on December

7th,

2020 – sixty (60) days after the date published. The

DOL rule is entitled, “Strengthening Wage Protections for the

Temporary and Permanent Employment of Certain Aliens in the United

States” and increases the wage levels that are required to be

paid to certain nonimmigrant workers. This DOL rule took

effect on Thursday, October 8, 2020.

The new rules are the latest restrictions the Trump

Administration has imposed on nonimmigrant visa programs. Many of

the specific restrictive changes included in the DHS rule are ones

that the Administration has said that it intended to advance since

late 2017.

If both rules are allowed to stand, the changes to the H-1B,

H-1B1, E-3 visa programs and the PERM certification program will be

profound. Acting USCIS Director Ken Cuccinelli told the press that

he anticipates that the changes would impact a third of cases that

had previously been approved. It is anticipated that these rules

will be challenged in court on both procedural and substantive

grounds.

Here are summaries of the two rules:

DHS Rule

Revises the definition of the term 'specialty

occupation'

  • Claiming that the decades of interpretation of specialty

    occupation is inconsistent with the statute, the rule revises and

    significantly narrows the regulatory definition of, and standards

    for, what qualifies as a “specialty occupation.”

  • Currently an H-1B, H-1B1, E-3 petitioning employer has to

    establish that the foreign worker holds “theoretical and

    practical application of a body of highly specialized

    knowledge” and “attainment of a bachelor's or higher

    degree in the specific specialty.” Under the new definition,

    the H-1B, H-1B1, E-3 petitioning employer will have the burden

    “of demonstrating that there is a direct relationship between

    the required degree in a specific specialty (in other words, the

    degree field(s) that would qualify someone for the position) and

    the duties of the position.”

  • The IFR greatly narrows the degree requirements to support a

    specialty occupation determination. Under the new rule:

  • The educational degree of the foreign national must be directly

    related to the proffered H-1B, H-1B1, E-3 position. Employees with

    general degrees, without further specializations, will generally

    not qualify for the H-1B, H-1B1, E-3 categories.

  • The H-1B, H-1B1, and E-3 employer must also prove that the

    position requires a directly related specialty degree to perform

    the duties.

  • The IFR removes the words 'normally,' 'common'

    and 'usually' from the regulatory criteria. Currently, the

    H-1B rules state that a degree is a common requirement for the

    proposed occupation, but not a universal requirement.

  • The IFR indicates that the H-1B, H-1B1, E-3 petitioning

    employer will need to establish that the bachelor's degree in a

    specific specialty or its equivalent is a minimum requirement for

    entry into the occupation by showing that this is always the

    requirement for the occupation as a whole, the occupational

    requirement within the relevant industry, the petitioner's

    particularized requirement, or because the position is so

    specialized, complex, or unique that it is necessarily required to

    perform the duties of the specific position.

  • The IFR explicitly states that general engineering degrees will

    not satisfy the specialty requirement for technology positions in

    the H-1B, H-1B1 or E-3 categories, nor would other general degrees

    for other occupations.

  • The rule change requires that the petitioning employer provide

    evidence of a bona fide, non-speculative job offer. In addition,

    the new rule requires the petitioning employer provide

    corroborative evidence that the foreign national has work at a

    third-party location.

Revises the definition of the term 'employer-employee

relationship'

  • Revises the definition of the term 'employer-employee

    relationship' which may restrict certain companies from being

    able to sponsor foreign nationals for the H-1B, H-1B1, and E-3

    categories that were able to sponsor foreign nationals in the

    past.

  • Compared to the current practice in which a determination of

    “employer-employee relationship” could be based upon the

    H-1B, H-1B1, E-3 petitioning employer establishing an

    employer's right to control the foreign national's

    employment, the new rule states that the USCIS will “assess

    and weigh all relevant aspects of the relationship” and that

    DHS “does not believe that any one factor should be

    decisive.” This means that a petitioning employer may face

    added scrutiny and may be required to provide more documentation to

    support their H-1B, H-1B1, or E-3 petition filing. USCIS is likely

    to scrutinize the employer-employee relationship with respect to

    all H-1B petitions, including those petitions in which the foreign

    national will work at the sponsoring employer's facility.

  • The new definition will consider the following eleven (11)

    factors in determining whether a valid employer-employee

    relationship exists:

(i) whether the petitioner supervises the beneficiary and, if

so, where such supervision takes place;

(ii) where the supervision is not at the petitioner's

worksite, how the petitioner maintains such supervision;

(iii) whether the petitioner has the right to control the work

of the beneficiary on a day-to-day basis and to assign

projects;

(iv) whether the petitioner provides the tools or

instrumentalities needed for the beneficiary to perform the duties

of employment;

(v) whether the petitioner hires, pays, and has the ability to

fire the beneficiary;

(vi) whether the petitioner evaluates the work-product of the

beneficiary;

(vii) whether the petitioner claims the beneficiary as an

employee for tax purposes;

(viii) whether the petitioner provides the beneficiary any type

of employee benefits;

(ix) whether the beneficiary uses proprietary information of the

petitioner in order to perform the duties of employment;

(x) whether the beneficiary produces an end-product that is

directly linked to the petitioner's line of business; and

(xi) whether the petitioner has the ability to control the

manner and means in which the work product of the beneficiary is

accomplished.

Revises the definition of the term “United States

Employer”

  • Replaces the word “contractor” with the word

    “company”. The DHS argues that the current regulatory

    language suggests that contractors should qualify as U.S.

    employers. The new rule will require that contractors must

    establish an “employer-employee relationship” with the

    H-1B beneficiary. The DHS claims that it is more difficult to

    assess the employer-employee relationship between H-1B

    beneficiaries and contractors as these often involve assigning the

    beneficiary to third-party work locations. This rule change will

    have a significant impact on major staffing companies who are

    contracted to provide H-1B, H-1B1, and E-3 skilled talent to U.S.

    companies.

Changes the validity period for H-1B, H-1B1, E-3 petitions

for employees placed at third-party work sites

  • The rule for the first time would distinguish between types of

    worksites and impose new restrictions on those involving

    third-party worksites. It limits the validity period for

    third-party placement petitions to a maximum period of one

    year.

  • For H-1B dependent employers, the new rule is especially

    onerous given that the USCIS recently issued a revised fee schedule

    (currently under a federal court injunction) which requires, in

    addition to paying the $4,000 PL 113-114 filing fee for a new H-1B

    petition, the employer will now have to pay $4,000 for every

    extension petition filing. This means that, should the new USCIS

    fee schedule take effect at some point in the future, and the one

    year period of employment rule (for placement of an H-1B worker at

    a third party work location) remains in place, an H-1B dependent

    employer that needs to place an H-1B worker at a third party work

    location will have to pay thousands and thousands of dollars more

    than in the past ($12,000 as compared to $4,000) in order to

    maintain that H-1B employee in the U.S. for just a three-year

    period.

  • When a foreign national is to be placed at a third-party

    worksite, the H-1B, H-1B1, and E-3 employer will be required to

    submit evidence such as contracts, work orders, or other similar

    evidence to establish that the beneficiary will perform services in

    a specialty occupation at the third-party worksite(s).

  • The rule increases the oversight and investigatory authority of

    the agencies, so that there may be more scrutiny, site visits, and

    possible higher rates of petition denial, especially in cases

    involving placement of H-1B workers at third-party work

    locations.

  • The rule likely will result in a general increase in the number

    of H-1B extension petition filings, which will add increased costs

    to many U.S. companies, especially those U.S. companies that place

    workers at third party work locations.

DOL REGULATORY REVISIONS

Changes prevailing wage requirements

  • Increases the Occupation Employment Statistics (OES) wage

    amounts used by U.S. employers to determine the prevailing wage

    level for the H-1B position. Before an H-1B, H-1B1, E-3 petition is

    filed with the U.S. Citizenship and Immigration Services (USCIS),

    the U.S. sponsoring employer is required to file a Labor Condition

    Application (LCA) with the U.S. Department of Labor (DOL) and

    indicate the wage level and occupation category for the position.

    (Note: These prevailing wage levels also apply to PERM labor

    certification program.) The increase in the prevailing wage levels

    by the DOL, result in H-1B employers to pay much higher wages to

    H-1B, H-1B1, E-3 workers than in the past.

  • The changes to four prevailing wage levels are as follows:
  • Wage Level I has increased from 17% to 45%;
  • Wage Level II has increased from 34% to 62%;
  • Wage Level III has increased from 50% to 78%;
  • Wage Level IV has increased from 67% to 95%.
  • These new wage levels will pose a harsh burden on many

    employers, but could do particular harm to start-up companies and

    smaller firms that are in need of skilled talent that are not flush

    with cash and are operating in fields where unemployment remains

    exceptionally low. Some estimate that the new rule will increase

    prevailing wages for certain positions by as much as 40%.1 These new wages levels will also

    hinder rural health care providers from hiring physicians from

    abroad due to the higher salary levels.

  • The new wage level data will be applicable to any Labor

    Condition Applications (LCAs) that were pending on or filed

    on or after October 8, 2020. LCAs already

    approved before October 8, 2020 are still valid, and no changes

    need to be made unless there is a new LCA that needs to be filed to

    document changes in the H-1B employment.

  • The new wage level will not only impact new H-1B petition

    filings, but also affect H-1B, H-1B1, and E-3 extension petition

    filings. Employers will be forced to file an extension petition

    with the new, higher, wage levels with the DOL. The OES has, as of

    this writing, not listed wage data for certain occupations, meaning

    that employers will have to file petition with the default wage

    levels.2

  • Many employers will probably consider using private wage

    surveys when filing their H-1B, H-1B1, and E-3 petition filings,

    than have in the past, since the cost to proceed with a petition

    filing using the new OES wage data is not feasible from a cost

    perspective.

As indicated above, we anticipate that both the DHS and the DOL

rule changes will be challenged in federal court.

Footnotes

2. http://blog.cyrusmehta.com/2020/10/killing-the-h-1b-visa-also-kills-the-us-economy.html

The content of this article is intended to provide a

general guide to the subject matter. Specialist advice should be

sought about your specific circumstances.

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