Dramatic Changes Made to H-1B Visa Program

Last week, the Trump administration finalized and published a new rule which essentially dismantles the existing H-1B visa lottery, and replaces it with a new system which will allocate H-1B visas to the highest bidder. The rule is scheduled to go into effect on March 8, 2021, unless it is frozen by the Biden administration or overturned in court. Under the new system, H-1B visas will be issued to applicants offered the highest salaries relative to others in their field in the area of intended employment. Assuming there are more applications for H-1B visas than there are available visas (which has been the case for the past 10+ years), the selection process will rank H-1Bs beginning with the highest wage levels and descending from there. Under the four-level prevailing wage system now in place, the likelihood is that only applicants within the top two wage levels will be chosen.

It is clear that the new system will have a direct and negative impact on many US employers and qualified workers, perhaps most significantly on recent college graduates. It will effectively eliminate the H-1B program for these applicants, which will likely discourage international students from attending college in the US. Without realistic prospects for post-graduate employment, international students will no longer see the US as a destination for their innovative skills and talents, and instead will look to countries with better employment opportunities.

The new rule does not appear to apply to cap-exempt H-1B employers, which include universities, nonprofit entities related to or affiliated with institutions of higher education, nonprofit research organizations and government research organizations.

It is unclear whether the Biden administration will allow this rule to take effect in March, institute a 60-day freeze (which would delay the rule beyond this year’s H-1B registration period in March) or take other action. It is likely that the new rule will face court challenges.

In other H-1B news, the Department of Labor announced on January 12, 2021 that it is reissuing a final rule raising the four prevailing wage salary levels. After its initial attempt to increase prevailing wage rates was shut down by three federal judges, the DOL put forth a new rule that will still raise prevailing wage rates substantially higher than those under the current system, but less than they would have been under the DOL’s first attempt. The new rule will take effect in July 2021 and will be phased in over the next three years. As with the H-1B lottery rule, it is unclear how the Biden administration will view this rule. Litigation is also expected.

If you are considering sponsoring H-1B workers this year, we recommend that you contact our office to discuss the registration process and how the new rules may impact your hiring needs.