Summary of 2020 H-1B Rule Changes and Current Status Updates

February 24, 2021 § Leave a comment

Close to the end of its term, the former Trump Administration had attempted to enforce a series of H-1B rules that had the potential to drastically impact H-1B employers and employees.  On October 6, 2020 the Department of Labor (DOL) and the Department of Homeland Security (DHS) announced two interim final rules which would, among other restrictions, significantly raise minimum wage requirements and limit eligibility for prospective H-1B employers and employees. Both rules have since then been challenged in court, and on December 1, 2020 a federal judge in California blocked both interim final rules, ruling that the Trump administration did not have “good cause” to issue them without a notice and comment period.  On January 14, 2021, DOL republished its modified final rule on the prevailing wage increase, with the rule set to take effect on March 15, 2021 (although there is now a pending proposal by DOL for the rule to be delayed until May 14, 2021).  The rule contains a phased implementation plan in which wage level adjustments would not begin until July 1, 2021.  A third H-1B rule, announced in November 2020 that was supposed to go into effect in March 2021, was designed to replace the H-1B lottery system with a wage-based selection system under which H-1B candidates with higher salaries would receive selection priority.  This rule has now been delayed until December 31, 2021. 

Background and Current Status

  • Department of Labor Prevailing Wage Rule (“Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States”).  The rule had gone into effect in October 2020 but was initially struck down in December 2020.  DOL republished a modified rule in January 2021, set to go into effect in March 2021, pending a further proposal by DOL to delay its effective date for 60 days in compliance with the Biden Administration’s request to further review the rule.  The rule will over time dramatically raise the minimum required wages for all visa categories that require labor certifications, including H-1B nonimmigrant specialty occupation visas and EB-2 and EB-3 permanent employment-based visas.  The new wage rates are set to be implemented gradually over the period between July 2021 and June 2022, with the full prevailing wage levels becoming fully effective starting on July 1, 2022.  The new rates will reflect a significant increase from the current rates, up to a 90% increase. 
  • Department of Homeland Security’s H-1B Rule (“Strengthening the H-1B Nonimmigrant Visa Classification Program”).  The rule was set to go into effect on December 7, 2020 but was struck down on December 1, 2020.  The rule had sought to be more restrictive with H-1B employers and employees. H-1B candidates would need to possess an educational background that is more specific to the H-1B position such that, for instance, a candidate for an accounting position would not qualify if his/her degree was in a more general subject such as mathematics.  The rule also sought to limit the amount of H-1B time for an employee placed at a third-party job site, from three years down to one.  In conjunction with this rule, DOL had previously published bulletins, later withdrawn, that would have required both an H-1B employer (e.g. a staffing company) placing an H-1B worker with a secondary employer, as well as the secondary employer, to both file Labor Condition Applications (LCAs) with DOL as well as file H-1B petitions with the United States Citizenship and Immigration Services (“USCIS”). All H-1B petitioners must file LCAs; therefore, some H-1B workers could have multiple, simultaneous LCAs and petitions.  Under current rules applicable to H-1B applications involving a job placement at a third-party worksite, the primary employer would serve as the H-1B worker’s employer for payroll and tax purposes, while the secondary employer would manage the worker’s day-to-day work. However, secondary employers have so far not been required to file LCAs or H-1B petitions.
  • USCIS H-1B Lottery Rule (“Modification of Registration Requirement for Petitioners Seeking To File Cap-Subject H-1B Petitions”). This third rule would have eliminated the H-1B visa lottery and prioritized H-1B petitions in which H-1B workers would receive higher wages.  USCIS would then select H-1B petitions based on salary-level, starting with the highest and working down.  Originally published on January 8, 2021 and set to be effective on March 9, 2021, this rule has now been delayed to allow for notice and comment and is set to take effect on December 31, 2021.  The H-1B lottery system will remain in place this year.  On February 2, 2021, USCIS announced that the initial registration period for the Fiscal Year 2022 H-1B cap will open at noon (ET) on March 9, 2021, and will run through noon (ET) on March 25, 2021. During this time, petitioners and representatives can fill out petitioner and beneficiary information and submit their registration.

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