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New DHS Rule to Allocate H-1B Visas to Highest Paying Jobs, Effective March 9, 2021

7 Jan

On January 8, 2021, the U.S. Department of Homeland Security (DHS) is scheduled to publish in the Federal Register a final rule prioritizing allocation of H-1B visas according to the wage level of the offered position.  The stated goal of the regulation is to fulfill President Trump’s order for DHS to take action to ensure that H-1B visas are allocated to “the best and brightest workers.”  DHS allowed only a 30-day comment window before finalizing the rule for publication in the Federal Register.

An H-1B visa is a temporary work visa for foreign nationals to work in a specialty occupation that requires the theoretical and practical application of a body of highly specialized knowledge and requires a bachelor’s degree or higher in the specific specialty, or its equivalent. The H-1B employer must treat H-1B workers similarly to U.S. workers, including as to payment of wages. The annual H-1B quota is perennially oversubscribed. Accordingly, by long-standing regulation and practice, USCIS has applied a lottery to award H-1B visa numbers to petitions filed with USCIS.  Last year USCIS implemented a pre-registration process and applied the lottery to all registrations. The new rule sets aside this lottery system.

The new rule ranks and selects petitions based on wage levels rather than using the current random lottery system. Petitions offering a Level IV wage (highest level) for the offered position would be ranked highest for allocation of H-1B work visas. Those positions with Level III wages would be ranked next, followed by those with Level II and lastly Level I wages (entry-level positions). Prioritizing highest wage-earning positions could lead to situations where large companies that are able to dip into a deeper budget are able to effectively “outbid” smaller and medium-sized companies in the H-1B lottery. 

The new rule will apply only to the allocation of H-1B visa numbers under the annual quota and will not affect H-1B extension or change of employer petitions. It also will not impact those petitions that are not subject to the annual H-1B quota.  

The proposed new rule does not combine or alter the order of the “Regular H-1B Cap” and “Master’s Cap” selections. Rather, registrations within each category would be ranked and selected based on prioritization of wage level relative to other positions within their occupational classification within each category. Level IV in all occupational classifications within the Regular Cap would be prioritized and selected first, and then Levels III, II and I, in descending order until the full Regular Cap is exhausted. Remaining petitions qualifying under the Master’s Cap (advanced degree from accredited U.S. institution of higher education) would then be ranked among the Master’s Cap registrations and prioritized for selection of Level IV first, and then Levels III, II and I in descending order of priority within the Master’s Cap.  

During the H-1B registration process, employers will be required to specify the occupational classification, the area of intended employment, and the highest wage level that the offered wage meets or exceeds for that geographic area. If petition registrations are selected, petitioners will not be permitted to offer a wage that is lower than the wage level specified in the registration. A similar type of requirement was anticipated in the registration process for Fiscal Year 2021, for which registrations were accepted beginning March 1, 2020, but U.S. Citizenship and Immigration Services (USCIS) did not implement the requirement at that time. USCIS is now preparing to implement the requirement for 2021, which means that much of the work associated with an H-1B, including the strategy development and the occupational classification and prevailing wage research, must occur before registration can be submitted in March 2021. 

The new regulation is set to go into effect 60 days after publication in the Federal Register. This means the regulation is anticipated to apply to the selection of registrations for the upcoming H-1B cap season. It is possible that the new regulation could be rescinded or delayed in terms of implementation. It is also possible that the regulation will be challenged in federal court and could be enjoined prior to the upcoming H-1B cap season. 

Foster will continue to monitor regulatory action that impacts the allocation of H-1B visas and will make additional updates available as appropriate via future bulletins and on our firm’s website at www.fosterglobal.com.