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Explainer: These two new rules could make it harder for Indian IT firms to employ H-1B workers in the US

One rule increases the wage levels of highly skilled workers such as H-1B workers and green card applicants. The other makes the criteria to qualify for an H-1B visa difficult for employers. Immigration experts feel the new rules could face legal challenges

October 08, 2020 / 07:29 PM IST

On October 6, the Department of Homeland Security (DHS) and Department of Labor (DOL) announced two interim final rules that changed H-1B regulation, making it tough to hire skilled foreign workers.

One, increasing the wage levels of the highly skilled workforce like H-1B workers and green card applicants. This is effective after publishing in the Federal register. According to reports, it could be effective October 8.

Two, making the criteria to qualify for H-1B difficult for employers. This is effective 60 days after the date of publication in the Federal Register.

A little background

‘Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States’ as proposed by the DOL and ‘Strengthening the H-1B Nonimmigrant Visa Classification Program’ a proposal by the DHS, were submitted to the Office of Management and Budget (OMB) in September at the interim final stage for review.

The OMB had 90 days to review the proposals.

However, both were withdrawn on September 30. Immigration attorneys had pointed out that the idea was to speed up the implementation by forgoing the review period, with the US elections around the corner. Americans will vote to elect their new President on November 3.

What does the wage-level increase rule change? 

The rule increases wages for three highly skilled non-immigrant worker categories — H-1B, H-1B1 (residents from Chile and Singapore) and E-3 (for Australian residents). It will also affect employment-based green-card applicants.

Why is the Department of Labor increasing wages?

According to the IFR document, “A primary purpose of the restrictions on immigration…is to preserve jobs for American workers.”

It added that based on evidence examined by the Department, existing prevailing wage rates used in these foreign labour programmes are causing adverse effects on the wages and job opportunities of US workers. So, the department is adjusting the wage levels to “reduce the dangers posed to… US workers’ wages and job opportunities.”

How much have the wages increased?

By 28 percentile more than the current wages.

The prevailing wages for skilled foreign temporary workers is determined based on experience, geography and the nature of work. This is done using Occupational Employment Statistics by the DOL.

Wages differ for each region based on experience and nature of work. So, the DOL had categorised this into level 1 (entry level), level 2 (experience), level 3 (qualified), and level 4 (fully competent).

As per the new wage rule, for level 1, wages would increase from the current 17th percentile of the average wage for the occupation to the 45th percentile. Similar increases could be seen for others as well.

H1b wages

What is the idea behind the DHS’ Strengthening H-1B visa programme?

The idea of the rule is to make it harder to recruit H-1B visa holders. These restrictions, along with the wage hike for H-1Bs, would have a huge impact on the Indian IT and tech workforce.

So, what are the changes?

One. Joel Yanovich, immigration attorney, Murthy Law firm in the US, explained that the US Citizenship and Immigration Services (USCIS) will limit the ability of an H1B employer to list multiple unrelated fields of study to qualify for a position. This means that the regulation would make it harder to use a very general field of study to qualify for a position.

For instance, the employer cannot say engineering is a qualification to hire for the role of a software engineer. The prospective H-1B visa holder should be a Computer Science or Information Technology graduate to qualify.

This is a problem since a fair share of software engineers employed in IT and tech firms are not necessarily computer science or IT graduates but hold different degrees.

Two. The regulation expands the scope of site visits by the USCIS. In case the USCIS is unable to visit a requested location or obtain the information requested, this may result in the revocation or denial of the H1B petition. “Importantly, the regulation includes the requirement that the USCIS be able to conduct inspections at third-party locations. If the client refuses to cooperate, this could result in the H1B being denied or revoked,” Yanovich explained.

Three, the rule also limits the validity of H-1B visas at third-party worksites to one year. A third-party worksite is a place where the employee will be deployed for work and not a direct client of the employer sponsoring the visa.

How does it affect the employers? 

Employers will have to pay more, and could face more denials. If the new rules come into effect, the rate of denials, already up, will rise further. Reports have pointed out that denials are particularly high for Indian IT services firms, with Infosys having more than 50 percent of its fresh petitions denied since the Trump administration came took over in 2017.

Indians and the tech workforce will be impacted by the increase in wages, given that they account for a significant portion of the H-1B workforce. Indians account for about 1.3 lakh of the 1.8 lakh H-1B visas issued/extended in FY19. They also account for a significant share of the 85,000 H-1B visas issued every year.

So, these restrictions will bite into the margins of IT firms as they will have to pay more to recruit an H-1B resource after October 8. Petitions that were filed before the date will go by the current wage rule.

Are only IT and tech firms affected?

No, smaller firms and medical professionals will be affected as well. Immigration experts pointed out that though the move seems to target only IT and large tech firms, it will also impact smaller firms and healthcare firms that employ H-1Bs.

In a tweet, Greg Siskind, an immigration attorney in the US, said: “They fail to note that a whole lot of H-1Bs are filed by small employers who aren't paying what Apple, Amazon and Salesforce are. Also, this rule affects other professions beyond IT which DOL seems to think is the only profession impacted.”

So, what next? 

For one, the acting DHS Secretary Chad Wolf, who had signed off the new rule, is yet to be appointed officially. The rule can be blocked on the grounds that his appointment is not yet legal.

Also, immigration experts have pointed out that these wage hikes are misguided and lawsuits will be inevitable. In a note, US immigration firm Fragomen said: “The rule is likely to be the subject of federal lawsuits. DOL took the rare step of issuing the regulation with immediate effect, no advance notice or opportunity for public comment, and without an economic impact analysis, all of which make the rule vulnerable to challenge.”
Swathi Moorthy
first published: Oct 7, 2020 02:45 pm