Proposed change to H-1B visa program would make it harder for U.S. employers to hire recent grads

A proposed rule change to the H-1B visa program would limit U.S. employers’ ability to hire recent foreign graduates of U.S. advanced degree programs and other entry-level workers from abroad.

The modification would impact the process by which U.S. Citizenship and Immigration Services (USCIS) selects the registrations of U.S. employers looking to file H-1B visa petitions. H-1B visas are capped at 85,000 per year, and the new rule would give preference to those positions at the highest wage levels. As annual requests for H-1B visas often exceed 200,000, the new system would prevent employers from filling entry-level and slightly higher roles requiring highly educated, specialized workers. 

The proposed change, which is currently in a 60-day comment period, is among several recent assaults on employment-based immigration programs. The Department of Labor pushed through its Interim Final Rule (IFR) last month without the typical comment period that precedes most rules. The IFR, which significantly raised the minimum compensation that employers must pay foreign national workers in the H-1B, E-3 and PERM programs, is being challenged in court. 

The H-1B visa program helps employers find specialized talent

The H-1B visa program was set up to help employers find workers with highly specialized skills to temporarily fill positions that they struggle to fill domestically. Limitations were put in place to protect U.S. workers, including capping the H-1B program at 85,000 spots per year and prohibiting employers from hiring foreign nationals for lower wages than comparable U.S. workers would earn. The majority of H-1B petitions come from employers in the health care, technology, education, and research and development sectors.

Currently, 20,000 of the 85,000 spots are reserved for foreign graduates of U.S. advanced degree programs (master’s and higher), a policy that is intended to entice the best and the brightest to study at U.S. higher education institutions while allowing U.S. companies to benefit from the knowledge they gain.

Rather than giving preference to graduates of U.S. higher education programs, however, the proposed change calls for the ranking and selection of registrations to be based on wage levels. Positions with the highest compensation would receive preference, while other positions that involve salaries that are comparatively low against the Department of Labor wage levels – including those that are typically filled by recent graduates – would be shut out. As the H-1B program’s intent is to help employers secure highly educated workers with specific skill sets – and not simply high wage earners – this modification would be counter to the purpose of the program.  

How registrations would be impacted

Employers participating in the program must pay foreign national workers the higher of the prevailing wage or the actual wage that they pay their workers with similar experience and qualifications. Prevailing wages for a given occupation are calculated for employees at Level 1 (entry-level) through Level 4 (fully competent) and vary by geographic area. 

Only about 15 percent of the current selected H-1B petitions (FY 2019-FY 2020) are for positions at the two highest wage levels. For the advanced degree exemption, this percentage is even lower, at about 10 percent, with Level 2 wages accounting for about 53 percent of the accepted petitions and wages at or below Level 1 accounting for about 37 percent.  

But the current proposal would result in no Level 1 wage registrations and only 75 percent of Level 2 wage registrations being selected to file petitions, according to USCIS. For the advanced degree exemption, no Level 1 registrations and only 20 percent of Level 2 registrations would be selected. 

“A prospective petitioner, however, could choose to increase the proffered wage so that it corresponds to the higher wage level,” according to USCIS, which acknowledges that this would not be feasible for all employers. “Another possible effect is that employers would not fill vacant positions that would have been filled by H-1B workers,” the agency said.

IFR already hiked wage levels significantly

The proposed change coincides with the IFR, which significantly increased the minimum compensation for foreign national workers at all wage levels. Prior to the IFR, foreign national workers at Level 1 had to be paid at least at the 17th percentile of what U.S. workers earn for similar work; Level 2, at the 34th percentile; Level 3, at the 50th percentile; and Level 4, at the 67th percentile. The IFR upped the requirements to the 45th, 62nd, 78th and 95th percentiles for the respective levels. This substantial hike of wage levels that had been in place for more than two decades has priced the H-1B program out of many employers’ reach.

Further, the IFR effectually mandates a minimum salary of $208,000 ($100 an hour) for workers in a wide range of occupations, localities, and levels of expertise. This is because the Department of Labor (DOL) does not have enough data under the new system to calculate prevailing wages for many occupations and geographic areas. The required salary defaults to $208,000 in these situations, which occur in more than 18,000 combinations of occupations and geographic markets, regardless of experience level, according to the National Foundation for American Policy. 

Modification would limit the use of alternative wage surveys

When not enough survey data is available, or when an employer disputes the DOL data for a particular occupation in its geographic area, the employer is permitted to present a statistically supported private wage survey as an alternative to the DOL’s data. The alternative wage survey must be conducted by an independent source, which can include other government agencies and private organizations.

However, the proposed change to the cap selection process would effectively stymie the use of alternative wage surveys. Although the survey may be more reflective of wages for a particular position or geographic area, it would likely be on the lower side of the DOL’s wage levels, as there would not be a need to use an alternative wage survey if the employee would be paid at a rate commensurate with Level 3 or 4 of USDOL’s occupational wage data. If the proposed rule change passes, the use of an alternative wage survey would decrease the employer’s chance of securing a registration spot, thus rendering the use of such surveys ineffective. 

Written comments on the proposed rule are due Dec. 2, 2020.

Founded in 1930, Barst Mukamal & Kleiner is one of the oldest immigration law firms in the United States. The firm’s immigration and business lawyers provide comprehensive immigration and business law services. Clients should contact their BMK attorney with any questions regarding the H-1B program. For general inquiries or to set up a consultation, please visit https://bmkllp.com/contact-us/

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