Comprehensive Immigration Reform and H-1B Visas

May 8th, 2013

In April 2013, the Senate’s “Gang of Eight” introduced immigration form legislation entitled “Border Security, Economic Opportunity and Immigration Modernization Act.”  As part of this comprehensive immigration reform package, it contains important changes to the H-1B specialty occupation nonimmigrant visa status.  While it does provide additional benefits, it also creates a multitude of highly disadvantageous provisions that will only discourage the filing of H-1B petitions, punish US employers and hurt our economy.

As for the benefits, it will do the following:

  • Create a floor of H-1B visa numbers of 110,000 and a ceiling of 180,000 (H-1B cap);
  • Increase the number of H-1B visas exempt from the H-1B cap for graduates of US master’s degree programs or higher from 20,000 to 25,000;
  • Allow work authorization for spouses of H-1Bs if the spouse is a national of a country that allows reciprocal employment in similar circumstances;
  • Provide a 60-day grace priod for H-1Bs if terminated, during which time they could apply to change or extend their nonimmigrant status in the US;
  • Allow for visa revalidation within the US (not have to consular process abroad for a new visa); and
  • Limit the comparable employers to be used for prevailing wage determinations for permanent labor certifications (PERM) to like entities for instutions of higher education, related or affiliated nonprofit entities, nonprofit research organization and government research organizations, and keeps the 4-level prevailing wage systems for these entitites).

However, the legislation imposes the following harsh restrictions and requirements on the H-1B program:

  • Not allow for more than 180,000 H-1B visa numbers even if there was a demand for more;
  • Not allow the total cap to increase by more than 10,000 in any given year;
  • Restrict the master’s or higher degree exemption from the H-1B cap to those with degrees in STEM (science, technology, engineering or math);
  • Impose an additional fee of $1,250 per H-1B petition for employers with up to 25 employees and $2,500 for those with more than 25 employees (nonprofit research and education institutions would be exempt);
  • Require H-1B dependent employers with 50 or more employees to pay an extra $5,000 in fees if 30 to 50 percent of its employees are H-1B or L-1B specialized k nowledge, and from 2015 to 2017 to pay an extra $10,000 if 50 to 70 percent are H-1B or L-1B specialized knowledge (nonprofit institutions of higher education and nonprofit research organizations are exempt);
  • Require H-1B dependent employers to pay a minimum of a Level 2 prevailing wage;
  • Change the system of prevailing wage determinations from 4 levels to 3 levels;
  • Institute a recruitment requirement for all H-1Bs comprised of posting the position on a Department of Labor website for 30 days before filing a labor condition application (LCA);
  • Require the employer to offer the job to any US worker applicant who is equally or better qualified than the H-1B;
  • Add a nondisplacement provision for non-H-1B dependent employers, requiring that employers attest that for 90 days preceding the filing of the LCA that it has not and will not displace US workers (does not apply if the non-dependent employer has not reduced its US worker staff in the same job zone in the past year);
  • For H-1B dependent employers, require the look-back rule for non-displacement to be 180 days;
  • Bar outplacement, leasing or subcontracting of H-1Bs by H-1B dependent employers;
  • Require non-H-1B dependent employers to pay $500 per outsourced worker;
  • Define an H-1B dependent employer as one (1) employing more than 7 H-1Bs if it has 25 or fewer full-time equivalent employees (FTEs); (2) employing more than 12 H-1Bs if it has 26-50 FTEs; (3) employing 15 percent of H-1Bs if it has 51 or more FTEs;
  • Exempt nonprofit institutions of higher education, nonprofit research organization and employers primarily engaged in healthcare who are petitioning on behalf of a physician, nurse, physical therapist or substantially equivalent healthcare worker from being H-1B dependent;
  • Exempt intending immigrants from the calculation for H-1B dependency and defines an intending immigrant as one for whom the employer has filed a labor certification and further requires that the employer has filed immigrant visa petitions for 90 percent of those for whom a labor certification has been filed (ironically, in another section of the legislation it waives the labor certification requirement for those with a STEM degree, which means that most H-1B workers will not be able to be counted as intending immigrants);
  • Bar employers with more than 50 employees in the US from having more than 75 percent of its employees in H-1B or L-1 status in 2015; 65 percent in 2016 and 50 percent later (date unclear in the the legislation);
  • Increase the allowable processing time for an LCA from 7 to 14 days (but allow the filing of an H-1B petition before receiving a certified LCA); and
  • Increase fines for failure to abide by H-1B rules and regulations.

Practically speaking, the “sticks” in this legislation almost cancel the benefits afforded by it.  The filing fees are already exorbitant ($2,325 for employers with more than 25 employees and $1,575 for those with fewer) and the increase in fees will only further discourage the future hiring of H-1B workers.  The legislation also unfairly exacts a disproportionate penalty on employers that need workers in shortage areas, such as technology, science, engineering and math.  We should be encouraging the employment of such workers to help grow our economy and make the US more globally competitive.  The prohibition on subcontracting my H-1B dependent companies will only drive the employment abroad, draining profits from the US.  The requirement that all employers advertise for 30 days before filing an LCA will hinder the speedy hiring of H-1B workers that employers require to effectively run their businesses.

Hopefully, the final version of this legislation will be more rational, wise and fair, especially if it is going to make the US more competitive and allow for the creation of employment.  However, the House version will most likely be only more hostile towards the H-1B program.  The H-1B cap should be eliminated and recruitment should only be required for those areas where it is determined that there is a high supply of US workers.  The H-1B cap is protecting no one and only hindering US businesses from growing.  Maybe the likes of these new pro-immigration lobbying groups by technology companies and social media companies will make a difference.