Explained: How will the new wage-based selection of H-1B petitions work?

The Department of Homeland Security (DHS) will publish the final rule that modifies the H-1B selection process from a lottery system to a wage-based one on January 8.

This is an attempt to protect American workers and prevent the abuse of the H-1B temporary visa programme by employers, said USCIS Deputy Director for Policy Joseph Edlow in a statement. The rule will come into effect on March 9, 2021, 60 days after the rule is published in the Federal Register.

Every year the US government issues 85,000 H-1B visas for skilled immigrant workers. However, the number of registrations far exceeds the quota. For instance, last year saw close to 2.74 lakh registration for H-1B selection.

Hence, a random selection method was followed by the USCIS to choose potential H-1B petitioners for the visa.

The DHS opened the proposed wage-based selection rule for notice and comment period on November 2, 2020 for 30 days and will publish this as the final rule on January 8.

How will the selection process work now?

The registration for the H-1B selection process usually begins in March. The USCIS is yet to announce the date for the H-1B selection process this year.

Once the registration is closed, instead of a lottery, wages will be the criteria used.

In the 184-page final rule document, the DHS said: “USCIS will rank and select from among all registrations properly submitted on the final registration date on the basis of the highest OES wage level…”

Occupational Employment Statistics (OES) wage level refers to the minimum wage an H-1B visa holder must be paid in the given region. The wages may differ from one region to another and changes based on occupation as well.

Look at the OES wages for the four H-1B levels in California for the role of a computer programmer: Wages for Level 1 (entry level) employees is $78,125 per year, followed by $97,261 per year for Level 2 (senior with few years of experience). Executives at level 3 and level 4 are paid $116,397 and $135,533 per year respectively.

If the USCIS ranks the application based on wages, those at the highest wage level, typically senior executives under Level 3 and Level 4 wage bands, will have a better chance of getting selected. Those at the entry level and with a couple of years of experience, Level 1 and Level 2, respectively, have a lesser chance of getting selected.

What if there are more applicants than needed at the wage level?

In that case, the USCIS will choose petitions by random selection. However, random selection will happen at the wage level.

“If USCIS receives and ranks more registrations at a particular wage level than the projected number needed to meet the numerical limitation, USCIS will randomly select from all registrations within that particular wage level a sufficient number of registrations necessary to reach the H-1B advanced degree exemption,” it said in the final rule.

Will this affect the H-1B selection process that starts in March this year?

It is not clear, but immigration attorneys say it is unlikely.

Last year, the registration process started on March 1, 2020. Though the USCIS is yet to announce the date for this year, immigration attorneys pointed out since the registration date is likely to be before the rule comes into effect, the H-1B selection process will not be affected this year.

The rule will come into effect on March 9, 2021.

How will this impact the Indians and Indian IT firms?

This will impact Indians and also IT majors given that Level 1 and Level 2 account for about a larger portion of the H-1B selection pie. Indian IT companies are one of the largest beneficiaries of the H-1B visa.

According to the proposed rule document published by the DHS, for FY20, of the 82,900 regular cap applications (85,000 visas issued per year) selected, 26,140 were in level 1 and 44,530 were in level 2. Level 3 and 4 (senior- level employees) accounted only for about 8,622 and 3,608, respectively.

According to immigration experts, the proposed rule for H-1B selection would harm IT firms, with smaller companies getting hit the most. Not all companies will be willing to pay a high wage for entry-level talent, thus impacting the job prospects of foreign students as well.

On the other hand, this rule is more predictable than the lottery system and will allow services firms to tap into more experienced resources, with large paychecks, and deploy them in the US, Peter Bendor-Samuel, CEO, Everest Group, told Moneycontrol recently.

What are the job prospects for Indian students if this rule is implemented?

The rule could reduce the job prospects for Indian Science, Technology, Engineering and Mathematics (STEM) graduates in the US since not many companies would be willing to pay a premium for entry-level talent. These STEM graduates will typically fall in either Level 1 or Level 2 categories.

The Indians student diaspora, at about 200,000, is one of the largest in the US.

In their comment to the proposed rule, US universities, trade associations and immigration attorneys, pointed out that this rule would make US institutions less attractive and reduce the universities’ ability to recruit foreign students.

If getting a job in the US gets tougher, Xiao Wang, co-founder & CEO, Boundless Immigration, pointed out earlier, it will accelerate the trend over the past three years of declining foreign student enrollments in the US and increase foreign enrollments in other English-speaking countries such as Canada and Australia.

It would impact the US economy as well. International students bring $41 billion to the US economy, and supported over 458,000 jobs during the 2018 through 2019 academic year, according to data released by the US Department of Commerce’s Bureau of Economic Analysis.

What are the prospects of this rule not getting implemented on March 9, 2021?

There are significant chances that the rule might not come into effect on the said date.

1. The Biden administration can delay the effective date for any rules that have not come into effect till the new administration takes charge by 60 days. This provision is given to every President by the Office of Management and Budget over the last few terms.
2. The rule was issued under the charge of acting DHS Secretary Chad Wolf, whose appointment violated the Vacancy Act violations.
3. Litigation is possible as well since the DHS rushed its implementation. Instead of giving 60 days for notice and comment period, the agency gave only 30 days.