H-1B visa: Rule to boost mandatory wages delayed and under review

H-1B visa: Rule to boost mandatory wages delayed and under review

The administration of President Joe Biden this week gave notice that it plans to delay a controversial rule to raise mandatory minimum pay for foreign workers on the H-1B visa.

The rule is a carry-over from the administration of former President Donald Trump, which proposed revisions to proposed mandatory salaries after losing a court battle to organizations including the Bay Area Council over an initial version. If ultimately imposed, workers on the H-1B at the lowest wage level would have to receive at least the 35th percentile of the prevailing wage for their job type and location, compared to the 45th percentile in the initial version. Workers at the highest wage level would have to receive the 90th percentile, compared to the 95th percentile.

The notice, to be officially published Friday, said the new rule would become effective May 14 rather than March 15. A July 1 start date for phased-in implementation of the wage requirements has not been changed, but the Department of Labor said in the notification that it was reviewing the rule and that both the effective date and implementation date could be further delayed because of the rule’s complexity and the department’s goal of providing “clarity and sufficient time for employers to comply with the regulations.”

The H-1B, intended for jobs requiring specialized skills, became a target for the Trump administration, which dramatically increased denials, mostly for outsourcing and staffing companies. Major Silicon Valley technology companies, which employ H-1B workers directly and via staffing firms, rely heavily on the visa and push to increase the annual 85,000 cap on new visas, claiming that they need more of them to secure the world’s top talent. Critics point to abuses and allege that the visa is used by outsourcers and staffing companies, as well as by tech giants, to replace U.S. workers with cheaper foreign labor, drive down wages and facilitate outsourcing.

The initial version of the wage rule was shot down by a federal judge in Oakland in December. The Bay Area Council — which represents major companies including Apple, Google and Facebook — had argued that by significantly increasing required minimum pay, the regulation would have gutted the H-1B program and proved disastrous for the economy and post-pandemic recovery. The judge in U.S. District Court in Oakland ruled that the government had not shown good cause for imposing the rule without notice or opportunities for public comment.

The Trump administration in January proposed the new rule, with the Labor Department saying it was intended to protect American workers from cheaper foreign labor. Ron Hira, a Howard University professor who studies the H-1B, said at the time that even the reduced increases in required pay in the new version of the rule would still allow employers hiring foreign H-1B workers to obtain roughly a 20% discount over median wages, with the amount depending on job type and geographic location.

 

 

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