Proposed Changes to the H-1B Program under the Senate's Immigration Reform Bill

Proposed Changes to the H-1B Program under the Senate's Immigration Reform Bill

The Senate Judiciary Committee is currently reviewing a comprehensive immigration reform bill drafted by a group of bipartisan Senators, known as the “Gang of Eight” that seeks to implement provisions balancing changes sought by Republicans and Democrats. Titled "the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013," the new bill seeks to make sweeping changes across all aspects of U.S. immigration law, including providing a pathway to citizenship for illegal immigrants, as well structural and procedural changes for employment-based immigration and the H-1B program. A copy of the reform bill is attached for your reference. We are also attaching a copy of a section-by-section summary released by the American Immigration Lawyers Association/American Immigration Council (AILA/AIC).

Please note that as the Senate reform bill goes through consideration before the Senate Judiciary Committee and the Senate Floor, the reform bill is likely to undergo changes as potential mark-ups and amendments are introduced. In addition, the House of Representatives has its own “Gang of Eight” that is responsible for drafting its own version of the immigration reform bill. The House has yet to introduce its bill, which may have different or more lenient provisions that the Senate bill. However, if the Senate and House pass different versions of the reform bill, a conference of both Chambers of Congress will be required, upon which both versions will have to be merged. The House also has the option of passing the Senate version of the bill.

As such, if the Senate’s version of the reform bill passes in its current form, it would mean an increase in the number of available H-1B visas per fiscal year, but also heightened restrictions for IT consulting/staffing firms and added conditions for all H-1B employers. Below is a summary of proposed changes regarding the H-1B program, as well as possible solutions and alternatives for those hardest hit by the reforms: IT consulting/staffing firms.

The number of available H-1B visas available per fiscal year would increase from 85,000 to 110,000 for the first fiscal year, all the way up to 180,000 for subsequent years. In addition, the advanced degree exemption would increase from 20,000 to 25,000.

Spouses of H-1B employees would have employment authorization in the United States, if the spouse is a national of a foreign country that allows for reciprocal employment.

H-1B workers would have a 60-day grace period of legal status following termination of employment with its H-1B employer. Moreover, the H-1B Beneficiary would be granted lawful status under H-1B as soon as a new petition to extend, change, or adjust their status is filed during the grace period.

The Prevailing Wage structure would be changed from four levels to only three.

· The first level would be a mean of the lowest 2/3 of wages surveyed, but not less than 80% of the means of all wages surveyed.

· The second level would be a mean of the wages surveyed.

· The third level would be a mean of the highest 2/3 of wages surveyed

If the employer is H-1B dependent, it must pay the H-1B worker at least the level 2 wage.

There would be a new requirement for the Labor Condition Application (LCA) in which employers must post an advertisement for the position on the Department of Labor’s website for at least 30 calendar days before the LCA will be certified. Although the new bill would allow employers to file an H-1B petition without the certified LCA, the H-1B petition will not be adjudicated until the LCA is certified. In addition, H-1B employers generally cannot displace a U.S. worker for the 90 days before and after the filing of the LCA. For H-1B dependent employers, this period is 180 days before and after the filing of the LCA.

In addition, the employer must offer the advertised position to any equally qualified U.S. worker who applies for the job first, and make a good faith effort to recruit U.S. workers for the advertised position.

Employers other than non-profit and research organizations, that employ 50 or more employees in the U.S. may not have more than:

· 75% of total number of employees in H-1B or L-1B status in 2015

· 65% of total number of employees in H-1B or L-1B status in 2016

· 50% of total number of employees in H-1B or L-1B status in 2017

Between 2015 and 2024, H-1B dependent employers who employ 50 or more employees in the U.S. and have 30-50% in H-1B or L-1B status will have to pay an additional $5,000 fee. For H-1B dependent employers who employ 50 or more employees in the US and have 50-75% in H-1B or L-1B status, this fee will be $10,000 for 2015 to 2017.

The Department of Labor’s authority in monitoring wages and compliance with DOL rules would increase. DOL would be able to initiate an investigation without the current requirements for reasonable cause to initiate or certification of reasonable cause. The Secretary of Labor will no longer need to first know the identity of the tipster before initiating an investigation, and would be able to investigate any LCA compliance issue. The timeframe in which DOL is required to certify an LCA would increase from 7 days to 14 days.

In addition, all employers with more than 100 employees in the U.S. or who have more than 15% of its employees as H-1B non-immigrants will have to undergo an annual compliance audit.

Moreover, USCIS and the DOL will have authority to share information provided by any H-1B employers as part of the H-1B adjudication process.

One final provision, if not the most relevant for IT consulting/staffing firms, is a proposed restriction prohibiting all H-1B dependent employers from outsourcing an H-1B employee. For non-H-1B dependent employers, an H-1B employee may be outsourced only upon paying an additional $500 fee.

H-1B dependent employers are defined as any employer who:

· Is not a nonprofit institution of higher education, a nonprofit research organization, a healthcare company, or a government entity;

· Employs 25 or fewer full-time employees (FTE) in the U.S. and more than 7 are H-1B;

· Employs 26 to 50 FTE in the U.S. and more than 12 are H-1B; or

· Employs 51 or more FTE in the U.S. and more than 15% are H-1B.

This section of the bill also provides “Intending Immigrant” language (AILA/AIC summary, page 61; Section 4211 of Reform Bill) in which an H-1B beneficiary whose employer has begun the green card process for him or her will not be counted towards the numbers above as an H-1B employee. Although the language of the bill may change, the current bill defines an “Intending Immigrant” as an alien who intends to work and reside permanently in the United States who has a) an approved labor certification application or an application that has been pending for more than one (1) year, or b) a pending or approved immigrant petition. The first option above (a) only applies to “covered employers,” who are employers that have filed immigrant petitions for not less than 90% for whom it has filed a labor certification application during the previous year (under this provision, labor certification applications pending for more than one year may be treated as if the employer filed an immigrant petition) (AILA/AIC summary, page 61; Section 4211 of Reform Bill). This provision provides a possibility for H-1B employers with a large number of H-1B employees to continue outsourcing H-1B workers in the IT services industry.

The proposed increase in requirements and conditions for H-1B employers may potentially do more harm than good for the U.S. economy and the job market. The new provisions potentially hinder American competitiveness in the global market, as well as encourage U.S. companies to hire skilled foreign workers abroad in countries like India and China, rather than in the United States. Moreover, many of the provisions, including changes to the H-1B wage rules, the 180-day non-displacement requirement, the H-1B ban for employers with more than 50% of their employees in H-1B status, and the H-1B fee increases, potentially violate international trade treaties such as the General Agreement on Trade in Services (GATS).

In addition, the language provided in the reform bill with regard to the DOL’s expanded authority in relation to recruitment and non-displacement terms are overly broad and inherently subjective. For instance, the new bill requires H-1B employers to offer a job to any equally qualified U.S. worker who applies before hiring the H-1B worker. This grants the DOL investigator, and not the employer itself, the authority to determine who is “equally qualified.” Moreover, if the equally qualified U.S. worker is not the best person for the job, an employer may be required to justify its hiring decision to the DOL. Such conditions may encourage U.S. companies to outsource its resources and jobs abroad rather than expose itself to the legal risks associated with hiring an H-1B worker.

This heightened restriction against outsourcing H-1B employees for non-H-1B dependent employers, and outright ban for H-1B dependent employers, makes it very costly, if not impossible, for IT consulting/staffing firms to continue doing business. As such, we provide one possible solution to IT consulting/staffing firms to continue to provide IT services.

H-1B and L-1B employers can begin the green card process for its H-1B and L-1B employees so that they are considered “Intending Immigrants” and are not counted towards the H-1B/L-1B numbers of the company. As mentioned above, the current bill defines an “Intending Immigrant” as an alien who intends to work and reside permanently in the United States who has a) an approved labor certification application or an application that has been pending for more than one (1) year for covered employers, or b) a pending or approved immigrant petition (AILA/AIC summary, page 61; Section 4211 of Reform Bill). Filing the Labor Certification is the first step towards reducing your H-1B/L-1B numbers without having to fire or suspend hiring H-1B workers.

Currently, the timeframe for the labor certification process is two (2) to four (4) months to prepare and file the labor certification, and three (3) to six (6) months for the adjudication process. This timeframe does not take into account delays in the preparation process or the possibility of an audit. As such, we recommend beginning the Labor Certification process for your H-1B/L-1B employees as soon as possible.

Download attachments:

  • AILA_AIC Section-by-Section Summary
  • BILLS-744 Border Security, Economic Opportunity, and Immigration Modernization Act