New DOL & DHS Rules Make Game Changing Revisions to PERM and H-1B Wages and Minimum Qualifications

On October 6, 2020, the U.S. Department of Labor (DOL) and U.S. Department of Homeland Security (DHS) released the text of game changing revisions to PERM and H-1B regulations.

The DOL has announced that an Interim Final Rule, making sweeping changes to H-1B and PERM wage requirements, will be published October 8, 2020 and will be effective immediately upon publication.   On the same day, DHS announced the publication of new regulations tightening requirements for H-1B degree requirements and employer / employee relationships. These new regulations are intended to protect U.S. workers by narrowing the pool of qualifying H-1B petitions to high wage / high skill positions.

Undoubtedly, both rules will be the subject of federal lawsuits. Because the DOL wage regulation will be an interim final rule, no advance notice or opportunity for public comment has been provided before implementation.  This opens the door for swift litigation with a request for a preliminary injunction to block DOL from enforcing the rule while challenges are litigated in court.

DOL Resets the Bars for H-1B and PERM Wages

 The new DOL wage regulation will significantly lift wages for H-1B, E-3, and H-1B1* nonimmigrant cases and the PERM labor certification program (first step in “green card” application process).

The primary source for determining the required rate of pay for H-1B and PERM application is the Occupational Employment Statistics (OES) data from the Bureau of Labor Statistics (BLS). The OES prevailing wage is subdivided into four wage levels.  The wage levels are intended to provide a ladder of wages reflecting skill levels from entry level to experienced level.  U.S. employers are required to use a complicated formula to determine which skill level is appropriate for the H-1B or PERM position.  The resulting wage tier sets the minimum wage that must be paid.

Under the new rule, OES prevailing wage minimums will increase dramatically for foreign workers at all four levels of skill and experience. When the new regulation takes effect on October 8, 2020, the entry-level Skill Level 1 will increase to just under what is currently the minimum wage for Skill Level 3.

Annual Salaries With Prevailing Wage Levels Under New DOL H-1B Rule

Source: National Foundation for American Policy, Department of Labor.

The DOL issued a set of Frequently Asked Questions that include implementation details:

• Labor Condition Applications (LCAs) filed on or after October 8 will be subject to the new wage levels. LCAs filed and pending before October 8 will not be affected.

• PERM prevailing wage determinations (PWDs) issued on or after October 8 will be subject to the new wage levels. Determinations issued before October 8 will not be affected. PWD requests pending on October 8 will be subject to the new wage levels.

DHS Tightens Requirements for H-1B Specialty Occupation Petitions

The DHS regulations, which will take effect 60 days from publication, implement requirements that have been previously enforced as part of the H-1B application process through copious Requests for Evidence and petition denials.  These denials have been challenged successfully in court due to their lack of a regulatory basis.

The new regulations revise the definition of “specialty occupation” to mandate that the occupation require a minimum of a bachelor’s degree in a directly related specific specialty.  The required studies must now “be directly related to the position.”  A position may require a range of degrees but they all must be directly related to the position.

The rule also codifies a current DHS practice of limiting the validity period of the H-1B for applications for employees at third-party worksites.  The new rule limits petition validity for employment at third-party worksites to a one-year period, instead of the full three-year period.

The new rule also permits immigration inspections of any location where the H-1B beneficiary will be employed, including the petitioning employer’s headquarters, satellite locations or the location where the beneficiary works, including third-party worksites.

The department is also codifying the definition of the “employer-employee” relationship currently implemented through Requests for Evidence and resulting petition denials.  The regulations provide a laundry list of documentation familiar to attorneys practicing business immigration.  The document list is based on a common law definition traditionally used to determine if the employer actually supervises and controls the employee.  DHS is seeking to crack down on placement of H-1B workers at third-party contractors to try to eliminate situations where U.S. workers are replaced by H-1B contractors working for lower wages.  Significantly, DHS removed “contractor” from the definition of “United States Employer.”

What Does This All Mean?

Although the revisions to the basic minimum requirements for H-1B petitions will be burdensome and require mountains of documents for a successful outcome, the new wage requirements will raise minimum wage levels to a height that will effectively eliminate the ability of a small or new business to afford to hire an H-1B worker.  These new minimum wage requirements will be a game changer for the H-1B playing field.  Only the best funded employers with deep pockets will be able to successfully petition for H-1B employees.  Unless the wage requirements are overturned through litigation, President Trump and his administration will have achieved victory in their war on H-1B workers.

* For purposes of this blog post, H-1B, E-3, and H-1B1 are referred to as “H-1B.”  All revisions relating to H-1B petitions apply to E-3 and H-1B1 applications as well.