Second lawsuit challenging new H-1B rules to be filed in US court today

Opposition to the Donald Trump administration’s new H-1B rules is mounting with a second lawsuit challenging them set to be filed in the Washington DC Court on October 19.

Greg Siskind, an immigration lawyer based in Memphis, Tennessee, who is filing the lawsuit, told Moneycontrol in an email, that the lawsuit would include 10 universities, physician and dentist groups, an IT industry association, a community health clinic, a nursing home chain and a logistics/warehousing company.

The first lawsuit was filed on October 16 in the District Court of New Jersey by the ITServe Alliance, which represents US IT firms, and joined by seven other firms. Apart from these, there is one more in the offing from the US Chamber of Commerce and others, and it will be filed in North California, said Siskind.

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 come into effect 60 days later. It 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.

These regulations will have a significant impact on large Indian IT firms and are likely to have an impact on their margins despite their localisation strategy. Currently most of these firms have over 60 percent of their workforce in the US as locals.

Indians are one of the large beneficiaries of H-1B visas. In FY19, they accounted for about 70 percent of the 1.8 lakh H-1B visas that were issued or extended.

Mounting lawsuits

Explaining the grounds for his lawsuit, Siskind, said: “The case is focussed on the illegal manner in which the rule was rolled out (focussing on the Administrative Procedure Act requirements) ... the faulty math and economic assumptions in the rule...”

For one, the DOL’s wage hike rule was implemented without the usual notice and public commentary period, making it vulnerable to lawsuits.

Secondly, the DOL and DHS have pointed out the increasing unemployment in the US as one of the reasons for implementing the rules. However, experts said the reasoning is flawed.

The unemployment rate in computer-related occupations, where the majority of the H-1B workers has been employed, has been the lowest, at 3.5 percent, in September 2020. Stuart Anderson, Executive Director, National Foundation for American Policy (NFAP), pointed out that job vacancies have increased by 4.7 percent to 655,386 in September compared to 625,702 in April-May.

Also, these wages well exceed the market wages if they want to employ an H-1B visa holder. On average, NFAP research pointed out employers will have to pay software developers 45 percent more.

NFAP research further points out that by increasing the wages, the “DOL has exceeded its authority by making employers pay salaries that bear little resemblance to market wages or even the wages under the system the Department of Labor operated before publishing its new wage rule.”

Experts have also pointed out that the agencies implemented the rule without an economic impact analysis of these new rules, making them vulnerable to lawsuits.