On Oct. 8th, the Trump administration announced two new rules that stifle U.S. companies’ ability to hire qualified H-1B visa holders. The Interim Final Rules were issued without any notice period or right to comment and lawsuits have already been filed.
The irony of the Interim Final Rule is that Trump, who promised to bring jobs back to America, has ensured many will leave with these sweeping rules.
Increased Prevailing Wage
Now in effect, the Department of Labor (DOL) raised the prevailing wage for entry-level H-1B applicants from the 17th percentile to the 45th percentile of their profession’s salary. For higher-skilled workers, the prevailing wage was increased from the 67th percentile to the 95th percentile of the profession’s salary.
Essentially, the prevailing entry-level wage jumped from a level 1 to almost level 3 in the previous wage determination. The DOL rule strengthening wage protections for the temporary and permanent employment of certain aliens in the United States is a direct punch to U.S. companies’ bottom line.
The rule implements the following prevailing wages.
- OES Wage Level 1 – 45th Percentile
- OES Wage Level 2 – 62nd Percentile
- OES Wage Level 3 – 78th Percentile
- OES Wage Level 4 – 95th Percentile
While this administration has refused to increase the minimum wage for Americans it has made a massive increase to the wages for foreign nationals on H-1B visas.
The purpose of increasing the prevailing wage is not to assist Americans in getting a job, but to frustrate H-1B visa holders and the American companies that need to hire them. This is evident as the prevailing wage is spiked so high that it makes it impossible, in many professions and in most places, to obtain an entry-level job at these wages.
Revised Definition of Specialty Occupation & Limited H-1B Validity
The U.S. Department of Homeland Security (DHS) and Department of Labor have changed the definition of a specialty occupation and what qualifies as an employee-employer relationship. These changes are set to take effect in 60 days.
Moreover, the DHS and DOL limited the validity of an H-1B visa to one year (instead of three) for any tech worker placed at a third-party worksite.
Amended Definition of Specialty Occupation
First, DHS amended 8 CFR 214.2(h)(4)(iii)(A)(1) by replacing the word ‘position’ with ‘occupation’ to ensure employees strictly conform to their occupational codes.
Second, in the amended definition of ‘specialty occupation,’ DHS has removed the adjectives ‘normally,’ ‘most’, and ‘typically’ used to qualify a job as a specialty occupation.
In the past, courts ruled that for a job to qualify as a specialty occupation, 51% of those in the position must have a bachelor’s degree.
By removing the words ‘normally,’ ‘most’ and ‘typically,’ DHS has narrowed the definition of specialty occupation to include only those jobs that require 100% of people to have a bachelor’s degree.
The DOL uses the Occupational Outlook Handbook to determine which degrees are required for which job. The DHS memo doesn’t state that the software developer is no longer a specialty occupation, but the DOL does.
H-1B visa holders working as software developers account for 40% of the jobs in the tech field. In other words, the tech industry would be devastated if it lost 40% of workers.
The eliminating language of the new rule also affects a large portion of other H-1B jobs. For instance, a general engineering degree requirement for a position as a computer engineer would not satisfy the specific occupation requirement. The revised definition would require a specific type of engineer to have a specific degree and show how the job is related.
What’s more is that numerous jobs aren’t even included in the OOH – like software architect (one of the most sophisticated roles) or quality assurance tester (a typical role).
The issue with the singular degree requirement is that often the coursework of a related degree provides the specialized knowledge needed to perform job duties. For instance, to fill a computer programmer position, an applicant does not necessarily require a computer science degree to carry out tasks. Instead, a person with a mathematics or information technology degree can adequately fulfill such job responsibilities.
Redefining specialty occupation to include specialization beyond a degree will arbitrarily complicate the process and drain employer resources.
Furthermore, the revised definition focuses too narrowly on the degree title without regard to the individual’s specialized body of knowledge, completely ignoring what U.S. employers seek in a competitive labor market.
Conclusion
The consequences of creating more restrictive rules on American companies trying to dig out of the pandemic is a chilling of the American tech economy.
- International students will be disinclined to come and study in STEM fields.
- Billions of dollars will be lost from international students, followed by a deficit for higher education institutions.
- U.S. employers will opt to open offices overseas, causing Americans in managerial positions to lose their jobs as there is no one to oversee.
- Instead of fulfilling the promise to bring back manufacturing jobs, the Trump administration will have removed tech sector jobs that have been driving the American economy for the past decade.
- American companies will be forced to move more jobs offshore.
In March 2020, USCIS lost a series of lawsuits, including ITServe Alliance, Inc. v. Cissna, and was forced to stop using arbitrary and capricious methods to deny H-1B visas for consulting firms that placed H-1B workers at third-party sites. The Interim Final Rule is the hammer to obliterate the holding of the ITServe case.
Since the Revision of Specialty Occupation doesn’t do into effect for 60 days, the question remains whether this is just a political stunt to get American voters to vote for Trump.
More importantly, will it hold up in court? This process is an expedited version of the typical process that requires notice and comment period similar to the now enjoined Trump proclamation that denied entry to H-1B visa holders and other types of valid work visas.
If you need to understand more the impact on your U.S.-based business, please get in touch with us for a no-charge conversation, and we’ll see how we can help.