The Departments of Labor (DOL) and Homeland Security (DHS) issued final rules making substantive changes to foreign worker programs, notably prevailing wage methodology and the definition of the employer-employee relationship for H-1B workers. Below are selected highlights of the two rules and related guidance.
DOL final rule. On January 14, 2021, DOL published a final rule changing the prevailing wage methodology for several immigrant and nonimmigrant foreign worker programs. The final rule is effective March 15, 2021, but filers will not be required to use the revised prevailing wage methodology until July 1, 2021.
Among other things, the final rule changes the calculation of prevailing wages for jobs requiring certain employment-based immigrant visas or for jobs in the PERM, H-1B, H-1B1, and E-3 visa programs for which employers seek labor certification. The related interim final rule, issued in October 2020, was scuttled by court decisions. DOL said it made changes to the interim rule in response to comments. For example, the agency adjusted the Level I and Level IV wages downward to the 35th percentile and 90th percentile, respectively, and is changing how it uses data in the H-1B and PERM programs “that will further reduce the incidence of inappropriately inflated wages identified by commenters.” DOL also is adopting a “phase-in approach” to give employers and workers time to adapt.
DHS final rule. On January 15, 2021, DHS released a final rule on its website that it has sent for publication in the Federal Register. The rule amends its regulations, for petitions filed on or after the effective date of the regulation, to clarify how U.S. Citizenship and Immigration Services (USCIS) will determine whether there is an “employer-employee relationship” between an H-1B petitioner and a beneficiary for the purposes of qualifying as a “United States employer.” DHS said it is not finalizing other provisions of the related interim final rule published in the Federal Register on October 8, 2020, and that it “plans to pursue future rulemaking for those provisions,” which were vacated by the U.S. District Court for the Northern District of California on December 1, 2020.
The final rule adopts a “common-law test” for determining which entities have an employment relationship with an H-1B worker. Under the common law, DHS explained, “multiple entities can have an employment relationship with a worker simultaneously.” Under a third-party placement arrangement, therefore, it is possible that the third-party entity would also be considered an employer of the H-1B worker and would be required to file a petition for the H-1B worker. DHS said that because adoption of the rule “may require adjustments to business practices on the part of employers, including third-party common-law employers,” the agency determined that it is appropriate for the rule to take effect 180 days from publication.
Related guidance. DOL’s Office of Foreign Labor Certification (OFLC) revised its interpretation of regulations concerning which employers of H-1B workers must file a Labor Condition Application (LCA). Under the interpretation announced on January 15, 2021, all common-law employers of H-1B workers, including any secondary employers meeting the common-law test, must file an LCA.
The OFLC bulletin explained that H-1B employment frequently involves primary employers, such as staffing agencies, that petition to hire H-1B workers, as well as secondary employers, such as staffing agencies’ clients, where the H-1B workers are assigned to work. Secondary employers must now comply with the statutory and regulatory requirements of the H-1B program if they are common-law employers of the H-1B worker, OFLC said.
Also, on January 15, 2021, DOL released a bulletin providing guidance to Wage and Hour Division field staff regarding H-1B program obligations for common-law employers “in light of interpretive changes being made” by DHS and DOL.
Litigation is expected.
- DOL final rule
- DHS final rule (not yet published in the Federal Register)
- “DHS and DOL Team Up on H-1B Visas Against IT Services Companies,” Forbes
- “Labor Department Raises Mandatory Wages for H-1B Workers,” India West
- “U.S. Agency Issues Final Wage Rules for H-1Bs and Green Card Holders, Higher Wages to Apply in a Phased Manner,” Times of India
- “DOL H-1B Visa Wage Rule: Donald Trump’s Bad Parting Gift to Immigrants,” Forbes
- “Trump Administration Moves Ahead With H-1B Pay Rule Over Silicon Valley’s Objections.”
- “OFLC Announces Revised Interpretation and Issues New Guidance Clarifying Requirements Under the H-1B Program,” OFLC, Jan. 15, 2021
- “H-1B Program Obligations for Common-Law Employers,” DOL Field Assistance Bulletin, Jan. 15, 2021