Around 13 US trade organisations, universities and healthcare firms have sued the Trump administration on October 19 in North California for the two new H-1B rules, saying they were illegal and arbitrary. These regulations will have an impact on Indian IT firms, hitting hiring as well as business.
This is the third lawsuit against the government. The first was filed by the ITServe Alliance, an association representing IT firms and seven other companies in New Jersey. The second one, which was pro bono, was filed in Washington DC by the American Immigration Lawyers Association and others.
Two new H-1B rules
On October 6, the Trump administration announced two rules—H-1B wage hikes by the Department of Labor (DOL) and tightening of regulations by the Department of Homeland Security (DHS) to make it harder to qualify for an H-1B visa.
The wage hikes came into effect on October 8 and the DHS regulation will kick in 60 days later and is currently open for commentary. The aim of the wage increase is to make it tough for companies to hire H-1B workers and to encourage local hiring.
An increase in wages in some areas is as high as 47 percent and according to the National Foundation for American Policy (NFAP), the wages for computer-related occupation increased by 45 percent on an average.
These regulations will have a significant impact on large Indian IT firms and are likely to affect their margins despite their localisation strategy. More than 60 percent of the workforce of most of these firms in the US is local.
The lawsuit filed by the US Chamber of Commerce and other players has asked for the two new rules to be set aside, saying they “were unlawfully issued without notice and comment and are arbitrary, capricious, or otherwise not in accordance with law”. Moneycontrol has reviewed the copy of the lawsuit.
The plaintiffs also wanted the court to block the implementation of these rules by the DHS and DOL till the litigation was complete.
Other than the chamber of commerce, other plaintiffs include the National Association of Manufacturers, the Bay Area Council and universities like Cornell University.
DOL, DHS rule unlawful
The American Immigration Lawyers Association (AILA), which filed the second lawsuit along with others, said in a joint statement, “The poorly-drafted, improperly-issued (wage hike) rule did not comply with the procedural rules for rule-making and is substantively arbitrary, incorrect, and irrational.”
“Frankly, the last thing we need during a pandemic and economic turmoil is a rule based on a false and incorrect understanding of the market and American workforce. This will impede our economic recovery, not enhance it,” the statement added.