October Surprise: Major Changes for Employers who Sponsor Foreign Workers
During the first week of October and just days into the new fiscal year, the Trump Administration announced two significant changes for employers who wish to sponsor foreign workers. The first of these announcements affects changes to the prevailing wage that employers must pay foreign workers, while the second imposes changes to the H-1B process for employers who wish to sponsor foreign professionals.
Changes to Department of Labor Wage Library
The Department of Labor (DOL) introduced changes to its regulations governing prevailing wages for both the Labor Condition Application (LCA)—used to support certain temporary petitions for professionals, such as H-1B and E-3—and the permanent Labor Certification process. The interim final rule changes the way the DOL calculates the wage levels under the Department’s four-tiered wage system, stating that the change is needed to reflect the actual wages earned by U.S. workers who are similarly employed to foreign-born workers. The rationale provided by the DOL is that the new wage system—which replaces the wages that went into effect just three months ago—will ensure that the employment of foreign-born workers does not adversely affect the wages of U.S. workers. Here are several factors to note concerning the new wage system:
- The average increase in prevailing wages is between 70-75%. For example, the prevailing wage for entry-level software developers in the Minneapolis/St. Paul area jumps from $71,698 to $94,515.
- The new wage system applies only to prevailing wage determinations that rely on the Department’s wage source library.
- Employers may still rely on other wage sources to compute the prevailing wage (such as employer-provided surveys or collective bargaining agreements), though the DOL may reject alternative wage data that does not meet eligibility criteria.
- The new wages went into effect on October 8, 2020, without much advance notice. Beginning October 13, 2020, any pending prevailing wage request applications will be issued with the new wage data as computed in the Department’s interim rule.
Changes to H-1B Process
The other set of changes announced pertains to the H-1B process. The Department of Homeland Security (DHS) issued an interim rule called “Strengthening the H-1B Nonimmigrant Visa Classification Program.” The changes were published in the Federal Register on October 8, 2020, and go into effect on December 7, 2020. This rule imposes three notable changes to the H-1B program:
Changes to the Definition of “Specialty Occupation”
To qualify for H-1B status, the position in which the foreign professional will work must qualify as a “specialty occupation.” That will not change under the new rule. However, the DHS rule proposes drastic changes to the definition that will most certainly disqualify some, if not most, positions from H-1B classification. To understand these changes, it is important to look at the current definition of “specialty occupation.”
The Current Definition of “Specialty Occupation”
The current regulatory definition of a specialty occupation is as follows:
“an occupation which 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 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.”
Further, to qualify as a specialty occupation, the position must meet one of the following criteria:
- A bachelor’s degree or higher is normally the minimum requirement for entry into the position;
- The degree requirement is common to the industry;
- The employer normally requires a degree for the position; or
- The nature of the duties is so complex that the knowledge required to perform the duties is usually associated with attaining a bachelor’s degree or higher.
The New Definition of “Specialty Occupation”
The new rule adds the following changes to the current definition of “specialty occupation”:
The attainment of a U.S. bachelor’s degree or higher in a directly related specific specialty, or its equivalent, as a minimum for entry into the occupation in the United States. The required specialized studies must be directly related to the position. A position is not a specialty occupation if attainment of a general degree, such as business administration or liberal arts, without further specialization, is sufficient to qualify for the position. While a position may allow a range of degrees or apply multiple bodies of highly specialized knowledge, each of those qualifying degree fields must be directly related to the proffered position.
What this means is that if the position requires a degree in disparate fields of study (e.g., an applications developer position that requires at least a bachelor’s degree in Computer Science or Electrical Engineering), the employer must show how each field of study provides a body of highly specialized knowledge that is directly related to the duties of the position. It also means that if a position allows for a range of degrees—even if those degrees are not disparate—the petitioner must show how each qualifying field is directly related to the proffered position.
“Normally,” “Common,” and “Usually”
The new rule also eliminates the terms “normally,” “common,” and “usually” from the regulatory criteria that sets forth the specialty occupation standard. This means that employers will have to establish that its degree requirement is always the requirement for the occupation as a whole (or always required within the industry or the employer’s business) or that the position’s duties are so complex that the degree is required to perform those duties.
Third Party Worksites
Another change proposed in the new rule amends the definition of worksite as “the physical location where the work is actually performed,” and the term third-party worksite as a “worksite, other than the beneficiary’s residence in the United States, that is not owned or leased, and not operated, by the petitioner.” This impacts employers who place workers at client sites since the new rule also sets a 1-year maximum validity period for all H-1B petitions that involve beneficiaries who will work at a third-party worksite.
For an H-1B petition to be approved, the petitioner must show that it has an employer-employee relationship with the beneficiary. The regulatory language implementing this requirement states that a United States employer, by definition, must have an “employer-employee relationship with respect to employees[…]as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employer.”
Previous Factors Used to Determine Employer-Employee Relationship
In January 2010, Donald Neufeld, the Associate Director of USCIS Service Center Operations, issued policy guidance that set forth the following factors that USCIS personnel should consider when determining if an employer-employee relationship exists between the petitioner and the beneficiary:
- Does the petitioner supervise the beneficiary and is such supervision off-site or on-site?
- If the supervision is off-site, how does the petitioner maintain such supervision, i.e., weekly calls, reporting back to the main office routinely, or site visits by the petitioner?
- Does the petitioner have the right to control the beneficiary’s work on a day-to-day basis if such control is required?
- Does the petitioner provide the tools or instrumentalities needed for the beneficiary to perform the duties of employment?
- Does the petitioner hire, pay, and have the ability to fire the beneficiary?
- Does the petitioner evaluate the work-product of the beneficiary, i.e., progress/performance reviews?
- Does the petitioner claim the beneficiary for tax purposes?
- Does the petitioner provide the beneficiary with any type of employee benefits?
- Does the beneficiary use proprietary information of the petitioner in order to perform the duties of employment?
- Does the beneficiary produce an end-product that is directly linked to the petitioner’s line of business?
- Does the petitioner have the ability to control the manner and means in which the beneficiary’s work product is accomplished?
Current Factors Used to Consider Employer-Employee Relationship
In June 2020, USCIS rescinded the policy guidance detailed above, as set forth in the January 2010 Neufeld memo. The rescission memo directs USCIS officers to consider whether the petitioner has met at least one of the “hire, pay, fire, supervise, or otherwise control the work of” factors with respect to the beneficiary, as stated in the regulatory definition.
New Factors Used to Consider Employer-Employee Relationship
The new rule includes a non-exhaustive list of factors to be considered in determining if an employer-employee relationship exists between the petitioner and the beneficiary. The factors should be considered in the totality of the circumstances. The new rule restores the factors listed above set forth in the January 2010 Neufeld Memo, with one noteworthy difference. The Neufeld Memo considered whether or not a petitioner had the right to control the beneficiary, which was clearly distinguished from actual control of the beneficiary. Under the new rule—in addition to considering whether the petitioner has the right to control the beneficiary—USCIS will also consider whether the petitioner has actual control of the beneficiary, and may even require the petitioner to show that it can actually take control if needed.
For beneficiary placed at third-party worksites, the new rule requires the petitioner to submit evidence of contracts, work orders, or other evidence to show that the petitioner has an employer-employee relationship with the beneficiary.
Immigration attorneys expect lawsuits challenging the interim final rules listed above, challenging both the rules as well as their swift implementation. Consequently, the H-1B and permanent residence landscapes are expected to be in flux, at least for the remainder of 2020. The immigration team at Nilan Johnson Lewis will track these changes and provide updates as they become available. In the meantime, be sure to sign up for immigration updates here.