Forthcoming Regulations Would Fundamentally Impact the H-1B Visa Program and Prevailing Wage Levels
Dated September 28, 2020
By AILA’s Business Immigration Response Team (BIRT)1
On September 3, 2020, U.S. Citizenship and Immigration Services (USCIS) submitted an Interim Final Rule to the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB) entitled, “Strengthening the H-1B Nonimmigrant Visa Classification Program.”2 The proposed regulation has been on the administration’s regulatory agenda for some time. It is anticipated that the administration will publish the regulation as an Interim Final Rule (IFR), rather than as a Notice of Proposed Rulemaking (NPRM), which would mean that the regulation would take effect without the agency first evaluating and responding to public comments, possibly upon publication. The distinction between an IFR and an NPRM is discussed in more detail below.
Soon after publication of the USCIS IFR, on September 16, 2020, the U.S. Department of Labor (DOL) submitted an Interim Final Rule to OIRA entitled, “Restructuring of H-1B/H-1B1/E-3 and PERM Wage Levels.”3 It is anticipated that the administration plans to publish this regulation as an Interim Final Rule and that it could become effective immediately upon publication. The USCIS and DOL Interim Final Rules are expected to combine to substantially modify prevailing wage requirements so as to limit the availability of the H-1B visa program to the most highly paid professionals, regardless of actual wage data for the labor market.
To prepare AILA members for these forthcoming regulatory changes, we offer highlights of several expected provisions of these regulations, a summary of key differences between an interim final rule and the notice of proposed rulemaking process, and a preview of potential legal challenges this regulation may face.
While the specific language of the forthcoming regulations will not be available until they are published in the Federal Register, based on the regulatory agenda and other clues, they are expected to include the following:
- Revision of the definition of an H-1B specialty occupation to “increase focus on obtaining the best and brightest foreign nationals.”4
- Changes to the definitions of H-1B employment and the employer-employee relationship, with a focus on restricting offsite placement of H-1B workers. In May 2020, USCIS entered into a settlement agreement to resolve legal issues raised in the ITServe Alliance litigation.5 The settlement agreement resulted in the issuance of the “Rescission of Policy Memorandum” by USCIS.6 This memorandum rescinded the 2018 memorandum “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites” (PM-602-0157) and the 2010 policy memorandum, “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements” (AFM Chapter 31.3(g)(16)), HQ 70/6.2.8 (AD 10-24).” It is expected that, as part of its in response to the settlement agreement and the rescissions of these memoranda, the Interim Final Rule will revise the regulatory definition of “United States Employer” and the interpretation of “employer-employee relationship” so as to exclude or limit the availability of the H-1B visa program where there is third-party placement of H-1B workers.
- Possible requirement that H-1B employers and their end clients jointly obtain LCAs where H-1B workers will work at client sites. The regulation may include a revision to the Labor Condition Application (LCA) requirement so that, when the H-1B worker is assigned to a third-party work site, the end-client would need to join in or be a signatory to the LCA. A joint LCA requirement may create de facto joint employer liability for LCA obligations on wages and working conditions.
- Additional H-1B wage requirements “to ensure employers pay appropriate wages to H-1B visa holders”7 as well as a restructuring of the H-1B, H-1B1, E-3 and PERM prevailing wage levels.8
Interim Final Rule versus Notice of Proposed Rulemaking
- Notice of Proposed Rulemaking: Traditionally, a new regulation is required to go through the notice of proposed rulemaking process, which includes the publishing of a proposed rule, or notice, followed by a comment period of at least thirty to sixty days.9 After the comment period is closed and comments are reviewed, an agency is then able to publish a Final Rule with an effective date no less than thirty days after publication.10
- Interim Final Rule: In contrast, an Interim Final Rule is a rule published as a final rule that becomes effective without the agency first evaluating and responding to public comments.11 Note that most regulations that are Interim Final Rules allow for the collection of public comments that the agency can consider at a later date, yet the rule goes into effect exactly as published on an interim basis before the agency considers and responds to comments. An agency can issue an Interim Final Rule when advance notice and comment otherwise would be required when it has good cause to do so. This generally means that it is "impracticable, unnecessary, or contrary to the public interest" to go through the normal process.12
Submission of a rule to the OMB is typically the final step before issuance of a regulation. OMB has up to ninety days to review the regulation, but the review of these regulations is expected to be put on a fast track given their importance to the Trump administration. Once OMB clears the regulations, they will be published in the Federal Register.
The timing of this regulation is crucial as, with the election coming in November and the possibility of a change of administration coming in January, the clock is ticking on this administration’s ability to promulgate new regulations to implement its restrictionist agenda.
Litigation Challenging the Regulations
While the anticipated rules could include several provisions that could upend the practices of many business immigration lawyers, litigation challenging the regulations is anticipated. A few grounds for a legal challenge could include:
- Several of the expected changes appear to be inconsistent with existing statutes on specialty occupation.
- If issued as an Interim Final Rule, the agency will also need to show the basis for its determination that there exists “good cause” to skip the normal notice and comment process.
AILA’s Administrative Litigation Taskforce is actively monitoring these regulations and evaluating potential litigation strategies. AILA members and the public are encouraged to submit comments during the applicable comment period.
Reforming (read: restricting) the H-1B visa program is a priority for Senior Policy Advisory Stephen Miller. However, it may be that the year-end push of this Interim Final Rule is just “red meat for the base” since issuing this regulation as an Interim Final Rule presents many risks and makes a successful legal challenge more likely. If a federal court issues an injunction following a legal challenge, it is unlikely that there would be enough time to republish a regulation and consider public comments - unless there is a second term of the Trump Presidency.
AILA is actively monitoring these regulations and will update members as soon as more information becomes available.
1 Special thanks to BIRT members Vic Goel and Roujin Mozaffarimehr for their contributions to this practice alert.
2 See “Strengthening the H-1B Nonimmigrant Visa Classification Program,” Pending EO 12866 Regulatory Review, https://www.reginfo.gov/public/do/eoDetails?rrid=131073.
3 See “Restructuring of H-1B/H-1B1/E-3 and PERM Wage Levels,” Pending EO 12866 Regulatory Review, https://www.reginfo.gov/public/do/eoDetails?rrid=131147.
4 See “Strengthening the H-1B Nonimmigrant Visa Classification Program”, RIN 1615-AC13, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202004&RIN=1615-AC13.
5 See “Settlement Agreement”, https://www.aila.org/File/Related/18122613a.pdf; see also “USCIS Settles Lawsuit Challenging H-1B Employee-Employer Relationships and Itinerary Guidance, https://www.aila.org/infonet/itserve-alliance-v-uscis-10-11-18.
6 See “Rescission of Policy Memoranda,” (PM-602-0114), June 17, 2020, https://www.uscis.gov/sites/default/files/document/memos/PM-602-0114_ITServeMemo.pdf.
7 See “Strengthening the H-1B Nonimmigrant Visa Classification Program”, RIN 1615-AC13, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202004&RIN=1615-AC13.
8 See “Restructuring of H-1B/H-1B1/E-3 and PERM Wage Levels,” Pending EO 12866 Regulatory Review, https://www.reginfo.gov/public/do/eoDetails?rrid=131147.
9 See “A Guide to the Rulemaking Process”, https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf.
12 See 5 U.S.C. §553(b)(B).