Lawsuit challenging H-1B wage hikes filed in US court

IT firms in the US files a lawsuit challenging the US Department of Labor’s wage hike rule that increased the H-1B wages up to 50 percent on October 16.

The case was filed in the US District Court New Jersey against the US Labor Secretary Eugene Scalia and John Pallasch, Assistant Secretary of Labor. The plaintiffs in the case include ITServe Alliance, an association of IT companies in the US and seven other companies.

This is the first lawsuit challenging the recent wage hikes imposed by the DOL that came into effect on October 8. The rules increased the minimal H-1B hike by 50 percent in some areas.

The rule was implemented without the notice and public comment period and was effective immediately.

Moneycontrol earlier looked at the wage hikes in three regions. Wage hikes were increased by 47 percent for software developers’ role in Texas. In California, salary increase for H-1B workers increased by 40 percent. This increase was across experience levels from entry level to experienced professionals.

This would have a huge impact on IT firms, especially smaller ones, who would find it hard to recruit skilled workforce in the US.

The lawsuit, which Moneycontrol has reviewed, said, the hikes are “contrary to procedures required by law, DOL’s issuance of the IFR for failing to follow the required notice and comment procedures.” The lawsuit further argued that the DOL’s decision did not consider relevant data, facts, and empirical studies, and failed to engage in reasoned decision-making and hence was arbitrary and capricious.

The lawsuit has asked for preliminarily and permanently enjoin DOL from “implementing, applying, or enforcing the IFR or any of the prevailing wage methodologies or prevailing wage rates under the IFR as against Plaintiffs and any member of ITServe Alliance, Inc.”

Only early in 2020, ITServe Alliance won a case against the US Citizenship and Immigration Services that made the Department of Homeland Security rescind two memos that had resulted in increasing denial rates for H-1B.