On October 6, 2020, the U.S. Department of Homeland Security (“DHS”) announced the Interim Final Rule entitled “Strengthening the H-1B Nonimmigrant Visa Classification Program,” and the U.S. Department of Labor (“DOL”) announced the Interim Final Rule “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States,” which together bring sweeping changes for U.S. employers hiring foreign talent.
DHS IFR “Strengthening the H-1B Nonimmigrant Visa Classification Program”
The DHS Interim Final Rule (“IFR”) purports to “strengthen the H-1B nonimmigrant visa program to protect U.S. workers, and restore integrity to the H-1B program and better guarantee that H-1B petitions are approved only for qualified beneficiaries and petitioners.” The DHS IFR was published in the Federal Register on October 8, 2020 and will become effective 60 days after publication. The new rule includes the following changes:
- Amending the Definition and Criteria for a “Specialty Occupation.” The new rule will require H-1B employers to demonstrate a direct relationship between the required degree in a specific field and the duties of the H-1B position. Furthermore, the new rule will also define “specialty occupation” more narrowly, which will require the H-1B employer to demonstrate that a position is H-1B classifiable by demonstrating that a bachelor’s or higher degree in the specific field is “always the requirement for the occupation as a whole, the occupational requirement within the relevant industry, the petitioner’s particularized requirement, or because the position is so specialized, complex, or unique that it is necessarily required to perform the duties of the specific position.” It will no longer be sufficient to show that a degree is normally, commonly or usually required.
- Defining “Worksite” and “Third-Party Worksite.” The new rule will define “Worksite” and “Third-Party Worksite” to align with the current DOL definitions, which will allow further limitations to be placed on “Third-Party Worksites.”
- Clarifying the Definition of “United States Employer.” The new rule will confirm that an “employer-employee relationship” is required to qualify as an H-1B employer and that all relevant aspects of the relationship will be assessed to ensure compliance with the H-1B program.
- Corroborating Evidence of Work in a Specialty Occupation. The new rule will require H-1B employers to submit specific types of corroborating evidence for third-party placement petitions. The corroborating evidence will include contracts, work orders or other similar evidence to establish that the H-1B worker will perform services in a specialty occupation at the third-party worksite(s).
- Maximum Validity Period for Third-Party Placements. The new rule will limit the validity period for third-party placement H-1B petitions to a maximum of one year.
- Written Explanation for Certain H-1B Approvals. The new rule will require the adjudicator to provide an explanation when an H-1B petition is approved with a validity period that is shorter than the period requested by the H-1B employer.
- Revising the Itinerary Requirement for H-1B Petitions. The new rule will eliminate the itinerary requirement for H-1B petitions listing multiple worksites.
- Expanding Site Visits. The new rule will enhance the DHS’s enforcement measures by setting forth the scope of on-site inspections and the consequences of noncompliance with these inspections.
DOL IFR “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States”
The DOL IFR purports to “improve the accuracy of prevailing wages paid to foreign workers by bringing them in line with the wages paid to similarly employed U.S. workers.” The DOL IFR was published in the Federal Register on October 8, 2020 and became effective immediately upon publication.
As background, the DOL uses Occupational Employment Statistics (“OES”) data from the Bureau of Labor Statistics to determine the prevailing wage applicable to positions identified in H-1B petitions and PERM Labor Certifications. The OES data is based on occupation and geographic location, and each resulting prevailing wage is divided into four wage levels, with Wage Level I corresponding to entry-level positions and Wage Level IV corresponding to senior-level positions within the occupation.
The new rule will change the method used to calculate the prevailing wage for each wage level, which will result in higher prevailing wages for all occupations in all geographic locations. For example, Wage Level I will now reflect the wage paid to the 45th percentile of workers in a given occupation, rather than the 17th percentile. Below is a breakdown of each wage level:
| Level I Wage: | 45th percentile (from 17th percentile) |
| Level II Wage: | 62nd percentile (from 34th percentile) |
| Level III Wage: | 78th percentile (from 50th percentile) |
| Level IV Wage: | 95th percentile (from 67th percentile) |
Practical Takeaways
If implemented, the DHS IFR will place significant constraints on the H-1B program. Many positions that were previously H-1B classifiable may now be unable to meet the new definition of “specialty occupation,” and employers will have a much higher burden to meet when preparing H-1B petitions, especially in the context of third-party placements.
Additionally, the DOL IFR will significantly increase the required wage that must be paid to H-1B workers, which will make it much more challenging for many U.S. employers to hire foreign talent. It is possible that employer/host institutions will have to turn to J-1 classification for medical residents and fellows if the H-1B wage requirements exceed a reasonable level. J-1 status does not require a prevailing wage determination, so host institutions may pay a market-based stipend level that is not influenced by the DOL’s prevailing wage levels.
These changes are intended to target the information technology industry, but there will be some impact on other sectors, including health care. Within the health care industry, physicians, medical residents, physical therapists, nurse practitioners, medical technologists and other H-1B classifiable workers will first be impacted by a significant increase in the wage levels used for H-1Bs. Additionally, these changes will impact physician groups and other entities that place their health care workers on site at locations that are not owned or controlled by the physician group or other entity.
It should be noted that both new rules will likely be the subject of litigation, particularly the DOL IFR, which bypassed the regulatory review process and became effective immediately upon publication, without any input from stakeholders. We will monitor developments and potential litigation in response to the interim final rules and will be advising on steps for H-1B petitions that may be impacted on a case-by-case basis.
For more information, please contact:
- Michael Kim at (317) 977-1418 or mkim@wp.hallrender.com;
- Lindsay Ramsey at (317) 429-3637 or lramsey@wp.hallrender.com;
- Charlotte Fillenwarth at (317) 977-1476 or cfillenwarth@wp.hallrender.com;
- Grace Shelton at (317) 429-3620 or gshelton@wp.hallrender.com; or
- Your regular Hall Render attorney.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
