Trump’s New H1B Visa and PERM Green Card Rules Attack Wage levels and Specialty Occupation - October 6, 2020
On October 6, 2020 the Trump administration decided to pass two immigration rules directly aimed at the H1B and PERM Green Card processes. It is critical for companies and individuals to understand these rule changes and what to expect as it is aimed at the very core of H1B specialty occupation as well as H1B and PERM Green Card wage requirements that impact the immigration status of professional workers. These rules, although likely vulnerable to court challenges, will certainly have an impact on predictability for U.S. companies engaging in workforce planning and looking to onboard and retain top talent. This is yet another legally questionable move by the Trump administration which harms U.S. companies, especially tech companies, who in large part are supporting the U.S. economy.
There are two rules at play here that impact H1B and PERM Green Card matters among others. In summary, effective immediately there are changes to the method by which prevailing (minimum) wage level are to be calculated for use in H1B, H1B1, E3 and PERM Green Cards. This will increase the wage levels U.S. companies have to satisfy. Secondly, taking effect in 60 days the definition of Specialty Occupation and how a professional position and visa holder can satisfy this definition is altered to make satisfaction much more challenging and gives USCIS even more discretion.
Ken Cuccinelli, a DHS official, said on a news conference call Tuesday that he expects about one-third of H-1B visa applications would be rejected under the new set of rules.
Trump Rule Change #1: Impacted H1B, H1B1, E3 and PERM Wage Levels (Effective Immediately)
The Trump administration has pushed immediately effective amendments to Employment and Training Administration wage regulations, directly impacting H-1B and PERM Green Card wage considerations.
The rule summary provides in part that:
“The primary purpose of these changes is to update the computation of prevailing wage levels under the existing four-tier wage structure to better reflect the actual wages earned by U.S. workers similarly employed to foreign workers.”
The main thrust of this rule change is to increase Wage Levels that need to be paid by U.S. companies in order to satisfy H1B, H1B1, and E3 prevailing wage requirements as well as PERM Green Card. DOL has provided that the new wage levels will be used starting on October 13, 2020 with access to the new wage levels coming out on October 8, 2020.
There are 4 wage levels in these cases each with its own definition, used to classify the level of a position for wage purposes for each role sponsored by a company. These are as follows:
Level I (entry) wage rates are assigned to job offers for beginning level employees who have only a basic understanding of the occupation. These employees perform routine tasks that require limited, if any, exercise of judgment. Statements that the job offer is for a research fellow, a worker in training, or an internship are indicators that a Level I wage should be considered.
Level II (qualified) wage rates are assigned to job offers for qualified employees who have attained, either through education or experience, a good understanding of the occupation. They perform moderately complex tasks that require limited judgment.
Level III (experienced) wage rates are assigned to job offers for experienced employees who have a sound understanding of the occupation and have attained, either through education or experience, special skills or knowledge. They perform tasks that require exercising judgment and may coordinate the activities of other staff. Words such as ‘lead’ (lead analyst), ‘senior’ (senior programmer), ‘head’ (head nurse), ‘chief’ (crew chief), are indicators that a Level III wage should be considered.
Level IV (fully competent) wage rates are assigned to job offers for competent employees who have sufficient experience in the occupation to plan and conduct work requiring judgment and the independent evaluation, selection, modification, and application of standard procedures and techniques. Such employees use advanced skills and diversified knowledge to solve unusual and complex problems. They generally have management and/or supervisory responsibilities.
The new rule is changing the way wages for H1B, E3, H1B1, and PERM cases are to be calculated, increasing all of these:
(1) Rule Changes to H1B Wage level 1
This first wage level—currently calculated as the mean of the bottom third of the OES wage distribution—will now be calculated as the mean of the fifth decile of the wage distribution for the most specific occupation and geographic area available. Roughly speaking, this means that the first wage level will be adjusted from the 17th percentile to the 45th percentile of the relevant OES wage distribution.
(2) Rule Changes to H1B Wage level 4
Currently calculated as the mean of the upper two thirds of the OES wage distribution—will now be calculated as the mean of the upper decile of the distribution for the most specific occupation and geographic area available. This means the fourth wage level will increase approximately from the 67th percentile to the 95th percentile of the relevant OES wage distribution.
(3) Rule Changes to H1B Wage level 2 and level 3
There are similar changes in computations here which yields second and third wage levels at approximately the 62nd and 78th percentiles, respectively, as compared to the current computation, which places Level II at approximately the 34th percentile and Level III at approximately the 50th percentile.
Summary of Trump Wage Rule Changes Impacting H1B, PERM, E3, and H1B1
This will significantly increase wages that companies have to pay to those in H1B, H1B, and E3 status while also offering higher wages for Green Cards under the PERM process. We will provide more details in the days to come.
Trump Rule Change #2: Impacted H1B Specialty Occupation Definitions (Effective in 60 Days)
It appears that this rule will take effect in 60 days. The good news is that this provides time to challenge the validity of the rule in federal court and hopefully obtain an injunction. That said, we all need to prepare for what is to come if court challenges are not successful.
What we can ascertain as of now is that the changes are aimed primarily at attacking the very core of the H1B visa rules, which have been relied on by companies across the U.S. to bridge the talent gap in specialized professional occupations.
The USCIS website provided that the new rule will:
Narrow the definition of “specialty occupation” as Congress intended by closing the overbroad definition that allowed companies to game the system;
Require companies to make “real” offers to “real employees,” by closing loopholes and preventing the displacement of the American worker; and,
Enhance DHS’s ability to enforce compliance through worksite inspections and monitor compliance before, during, and after an H1-B petition is approved.
These H1B rule changes, target the very heart of decades-long H1B regulations. It changes the very definition of H1B ‘specialty occupation’, attaches new requirements to H1B wage levels, and adds additional requirements to H1B cases involving third-party placement of H-1B professionals at third party client sites.
This rule will impact the types of jobs that will qualify for H1B transfers and extensions immediately. It could also potentially (unless litigation proceeds swiftly) impact which roles will qualify for new H1B cap cases for those applying for their first H1B visa early next year in the next lottery cycle.
Language of the new Trump H1B Specialty Occupation Rule
The initial rule, that was posted and then pulled as part of the initial rule-making attempt, provided that:
“The Department of Homeland Security (DHS) will propose to revise the definition of specialty occupation to increase focus on obtaining the best and the brightest foreign nationals via the H-1B program, and revise the definition of employment and employer-employee relationship to better protect U.S. workers and wages. In addition, DHS will propose additional requirements designed to ensure employers pay appropriate wages to H-1B visa holders.”
This is in fact what the new rule attacks:
• (1) H1B Definition of Specialty Occupation
• (2) H1B Definition of Employer-Employee Relationship
Let’s take a look at each in turn. Note that this is our initial analysis based on limited information thus far. We will add to this as tings become more clear.
(1) H1B Specialty Occupation DefinitionS: Impact of New Trump Rule
The new version of the definition tries to narrow the scope of which positions qualify as specialty occupations in various ways outlined below.
The prior, long-standing, definition of Specialty Occupation was written as follows in accordance with 8 C.F.R. § 214.2(h)(4)(ii) and 20 CFR § 655.715:
Specialty Occupation means an occupation which (a) requires theoretical and practical application of a body of highly specialized knowledge in fields of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts, and (b) which requires the attainment of a bachelor's degree or higher in a specific specialty, or its equivalent, as a minimum for entry into the occupation in the United States.
In accordance with 8 CFR 214.2(h)(4)(iii)(A), to qualify as a specialty occupation currently, the position must meet one of the following criteria: (1) A baccalaureate or higher degree or its equivalent is normally the minimum requirement for entry into the particular position; (2) The degree requirement is common to the industry in parallel positions among similar organizations or, in the alternative, an employer may show that its particular position is so complex or unique that it can be performed only by an individual with a degree; (3) The employer normally requires a degree or its equivalent for the position; or (4) The nature of the specific duties are so specialized and complex that knowledge required to perform the duties is usually associated with the attainment of a baccalaureate or higher degree.
Note that many of these changes, although not reflected in the rules until now, have in fact been what we have had to do in reality to overcome the large numbers of Requests for Evidence issued by the USCIS over the last 3 years of the Trump administration.
H1B Specialty Occupation Definition Change #1: No General Degree Requirements
In the language of the rule itself these are relevant sections of concern:
“First, this rule amends the definition of a “specialty occupation” at 8 CFR 214.2(h)(4)(ii) to clarify that there must be a direct relationship between the required degree field(s) and the duties of the position. Consistent with existing USCIS policy and practice, a position for which a bachelor’s degree in any field is sufficient to qualify for the position, or for which a bachelor’s degree in a wide variety of fields unrelated to the position is sufficient to qualify, would not be considered a specialty occupation as it would not require the application of a body of highly specialized knowledge.”
Further, the rule goes on to say that:
“A position would not qualify as a specialty occupation if attainment of a general degree, without further specialization, is sufficient to qualify for the position.”
The impact of this change is clearly to allow USCIS officers to even further press on a topic they have pushed on for years now under the Trump administration, asking for a detailed overview of how specific degree courses associated with the required degree, and the duties of the H1B position are connected. We already do this in practice but this amendment is likely to give Officers even more leeway and desire to push denials based on this nexus issue.
H1B Specialty Occupation Definition Change #2: No Disparate Fields of Study Allowed
It is also important to note that the new rules frown upon having various disparate fields of study that could satisfy minimum position requirements. The amendment provides:
In cases where the petitioner lists degrees in multiple disparate fields of study as the minimum entry requirement for a position, the petitioner would have to establish how each field of study is in a specific specialty providing “a body of highly specialized knowledge” directly related to the duties and responsibilities of the particular position to meet the requirements of sections 214(i)(1)(A) and (B) of the INA, 8 U.S.C. 1184(i)(1)(A) and (B), the regulatory definition, and one of the four criteria at new 8 CFR 214.2(h)(4)(iii)(A).
Therefore, the new Trump rules (depending on how long they last before being challenged and overturned in court) will place extra emphasis on how minimum requirements are set by companies filing H1B applications. For example, merely asking for a general engineering degree for a software developer position will be advisable. The USCIS will want a more specific field of study and will want to see how the courses taken have prepared the person for the role and why these are necessary.
H1B Specialty Occupation Definition Change #3: Elimination of Normal/Common Degree LanGuage
The rule also eliminates the terms “normally,” “common,” and “usually” arguing that we must show that the degree fields set as minimum requirements in an H-1B role are in fact the minimum requirements provided by the Department of Labor for entry into the occupation. This can be done by showing that the degree is (1) always the requirement for the occupation as a whole (this draws on DOL data), (2) it is the norm for the occupation within the relevant industry, (3) it is the norm for the petitioner’s particularized business, or it is needed in this specific case because the position is so specialized, complex, or unique that it is necessarily required to perform the duties of the specific position
H1B Specialty Occupation Definition Change #4: Added Burden of Proof beyond established definition
One of the most concerning changes alters the language of the regulation in a way that seems to add a second level of burden on the H1B Petitioner Company.
Under established rules it has only been necessary to satisfy one of the four prongs provided for evidencing that the H1B role is a “speciality occupation.” The language change now provides that “meeting one of the regulatory criteria is a necessary part of – but not necessarily sufficient for – demonstrating that a position qualifies as a specialty occupation.”
This makes it clear that satisfying one of the four prongs of the specialty occupation is no longer sufficient, as USCIS appears to still have the right to deny the application. What the rules do not do then is clarify how many prongs must be satisfied. This is very concerning and seems to provide USCIS officers unfettered discretion in denying cases.
Summary of H1B Specialty Occupation Impact in Practice
These changes will continue the trend of making efficient onboarding a challenge for U.S. companies and raises some questions that are yet to be answered:
What happens to those currently in a H1B role that is now deemed not to be a specialty occupation? We hope that these issues will not impact already approved H1B employees although this is yet to be seen.
How are companies supposed to overcome the STEM talent gap in the U.S. if certain roles will not be supported by the H-1B?
(2) H1B Employer-Employee Relationship Definition: Impact of New Trump Rule
In accordance with 8 CFR 214.2(h)(4)(ii) and 20 CFR § 655.715 the rules currently provide that:
United States employer means a person, firm, corporation, contractor, or other association, or organization in the United States which:
(1) Engages a person on H-1B to work within the United States;
(2) Has an employer-employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee; and
(3) Has an Internal Revenue Service Tax identification number.
The new rule change makes the following changes to the existing definition of employer-employee:
1 Year Maximum for Third Party Worksites: Under current regulations at 8 CFR 214.2(h)(9)(iii), the maximum validity period an H-1B petition may be approved is “up to three years.” This interim final rule however will limit the maximum validity period to 1 year for workers placed at third-party worksites. This provision will result in more extension petitions from petitioners with beneficiaries who work at third-party worksites.
Contractor: The new rule is replacing the word “contractor” in the definition above with “company”. DHS further clarifies that while a contractor is certainly not excluded from qualifying as a “United States employer” for purposes of an H-1B petition, the contractor, like any petitioner, may be a person, firm, company, corporation, or other association or organization, and the contractor (whatever the form) still may qualify as a U.S. employer of the H-1B beneficiary if the contractor demonstrates the requisite employer-employee relationship with the beneficiary.
H-1B engagement work: The rule goes on to say that the phrase, “[engage] a person to work within the United States” has limited practical value. The new rule, in 8 CFR 214.2(h)(4)(ii) proposes to revise that an employer must “[engage] the beneficiary to work within the United States, and ha[ve] a bona fide, non-speculative job offer for the beneficiary”. Here DHS’s reasoning is to make it clear that a petitioner must have non-speculative employment for the beneficiary at the time of filing and must establish that a bona fide job offer exists and that actual work will be available as of the requested start date. PLEASE NOTE: DHS is not by this rule requiring employers to establish non-speculative and specific assignments for each and every day of the proposed period of employment. The petitioner must demonstrate, at the time of filing, availability of actual work as of the requested start date.
Discretion: Importantly the rule changes give the USCIS more discretion in interpreting whether an employer-employee situation exists. Instead of a simple rule the revised “employer-employee” definition lists non-exhaustive factors to be considered in the totality of the circumstances including:
(i) whether the petitioner supervises the beneficiary and, if so, where such supervision takes place;
(ii) where the supervision is not at the petitioner’s worksite, how the petitioner maintains such supervision;
(iii) whether the petitioner has the right to control the work of the beneficiary on a day-to-day basis and to assign projects;
(iv) whether the petitioner provides the tools or instrumentalities needed for the beneficiary to perform the duties of employment;
(v) whether the petitioner hires, pays, and has the ability to fire the beneficiary;
(vi) whether the petitioner evaluates the work-product of the beneficiary;
(vii) whether the petitioner claims the beneficiary as an employee for tax purposes;
(viii) whether the petitioner provides the beneficiary any type of employee benefits;
(ix) whether the beneficiary uses proprietary information of the petitioner in order to perform the duties of employment;
(x) whether the beneficiary produces an end-product that is directly linked to the petitioner’s line of business; and
(xi) whether the petitioner has the ability to control the manner and means in which the work product of the beneficiary is accomplished.
H1B and PERM Tips Under the Trump Rule Changes
We will continue to update this list but for now it is recommended to:
Consider New Wage Levels: Understand new wage levels once they are released on October 8, 2020. This will impact new H1B, H1B1, and E3 Labor condition applications and PERM prevailing wage determinations.
Run Internal Wage Reports: Run reports to see all wages paid to all H-1B employees. Highlight which employees are impacted by these new wage levels and be ready to have to adjust and file amendments if in fact the wages fall below the new DOL prevailing wage standards. We are still unsure whether this rule will impact those already in status with valid I-94 periods of stay and if it will be required to change wages and file amendments.
Expect Processing Delays: Expect case processing to slow down due to more RFEs caused by these new changes.
Ensure Employees Maintain Status: Make sure that you understand how to maintain valid status in the U.S. as an H1B holder, particularly due to the wage issues and also whether a role is, in fact, a specialty occupation role.
Consider Alternative Visa Options: Ensure that as a company and an individual you know about various visa options that might be applicable in case there comes the time that other visa options might become necessary.
Third-Party Placement Documents: Employers should continue to gather and provide documents like employment agreement, offer letter, specific assignment / project details, copies of contracts, SoWs (if applicable) and such corroborating documentation to show pay, supervisions, hire and control components of the employer-employee relationship.
Stepping Back: Looking at Trump’s Immigration History and Priorities
The H1B has been a favorite target of the Trump Administration and in various legislative agendas, and statements, the Administration has clearly had the H1B on its roadmap. Some of the H1B topics that the Trump has listed as priorities have included precisely what we are seeing now:
Changing the definition of ‘Specialty Occupation’ which would change the way an H1B position and an individual’s background would be assessed for qualification;
Changing the wage requirements associated with H1B applications, something which already exists but which the Trump administration has apparently wanted to target and possibly only allow the highest wage levels to qualify;
Revising the definition of employer and employee-employer relationships aimed at making it more difficult for consulting companies (another area where the Trump administration suffered a recent Federal Court defeat) and possibly entrepreneurs to qualify.
As we detailed in our blog post “Trump Immigration”: What to Expect Before the Election,” the Trump administration has focused on promoting a constant feeling of confusion and unpredictability for U.S. companies and immigrants alike. This has only accelerated as we move towards the November, 2020 presidential election with the latest move aimed at H-1B standards that have been around for decades.
On July 10, 2020, President Trump indicated, in a confusing statement, that he planned to unveil various immigration measures over the next 4 weeks. Trump used the words ‘executive order’ and ‘immigration bill’ interchangeably. Actual changes to immigration laws require following set processes under the Administrative Procedures Act, allowing for public comment and notice periods among other set processes. Executive Orders on the other hand circumvent such required procedures but are supposed to be used in limited situations that qualify under the President’s powers.
In one of the most confusing statements President Trump provided:
"We're working out the legal complexities right now, but I'm going to be signing a very major immigration bill as an executive order, which the Supreme Court now, because of the DACA decision, has given me the power to do that," Trump said.
Both statements, signing an immigration bill as an executive order, as well as the power provided by the Supreme Court from DACA, are very unclear.
President Trump also mentioned, referring only in part to DACA that “[i]t's going to be a very big bill, a very good bill, and merit-based bill and it will include DACA..."
Whitehouse spokesman Judd Deere stated that:
"As the president announced today, he is working on an executive order to establish a merit-based immigration system to further protect U.S. workers. Furthermore, the president has long said he is willing to work with Congress on a negotiated legislative solution to DACA, one that could include citizenship, along with strong border security and permanent merit-based reforms. This does not include amnesty."
Additionally, as we expected and as we wrote about on blog, statements made by the President on June 22, 2020 discussing a "merit-based" immigration program, appears to now have resulted in the current attempt to alter the H1B professional worker category through the “Strengthening the H-1B Nonimmigrant Visa Classification Program” rule change.
H1B By the Numbers Under Trump
H1B by number till Q2 2020: the H-1B approval rate was 85.2% for Q1 and Q2 of 2020 but remains well below FY 2015’s overall H-1B approval rate of 95.7%. The H-1B RFE rate was 35.8% in the second quarter of FY 2020, up tremendously from figures prior to Trump’s administration. The rate of approvals after RFE remains well below FY 2015’s rate of 83.2%.
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