The Trump administration has proposed a new rule that would end the H-1B visa lottery, used when U.S. Citizenship and Immigration Services (USCIS) receives more petitions than allowed under the annual limit. In its place, USCIS would grant petitions based on the registrations received starting with the highest salary level and working down. The proposed regulation to eliminate the lottery may violate the statute, say attorneys, and also raises questions as to its impact on international students, information technology professionals, physicians and others with less experience who could be shut out of obtaining H-1B petitions.
What Would the Rule Do? The rule would eliminate the H-1B lottery used to grant 65,000 petitions under the annual limit and 20,000 petitions for individuals with an advanced degree from a U.S. university. In its place, USCIS would receive registrations before the start of a fiscal year (in the past, it has been prior to April 1) and, if there are more received than the H-1B limit allows, it would award the petitions from highest to lowest salary.
“If USCIS has received more petitions than necessary to meet the numerical limitation for the H-1B regular cap, USCIS will rank and select the petitions received on the basis of the highest Occupational Employment Statistics (OES) wage level that the proffered wage equals or exceeds for the relevant Standard Occupational Classification (SOC) code in the area of intended employment, beginning with OES wage level IV and proceeding in descending order with OES wage levels III, II, and I,” according to the regulatory language describing the process for the 65,000-cap.
The same process will be used if there are more than 20,000 registrations for the H-1B advanced degree exemption limitation. “Unselected registrations will remain on reserve for the applicable fiscal year,” according to the rule. Note that USCIS typically selects more than 85,000 petitions to take into account denials. USCIS may deny or revoke a petition if it is “part of the petitioner’s attempt to unfairly decrease the proffered wage to an amount that would be equivalent to a lower wage level, after listing a higher wage level on the registration to increase the odds of selection.”
Obtaining (and specifying) a wage for an individual was not part of the H-1B registration system in 2020, which means this new rule would complicate the process.
The same method for selecting petitions will be used if an employer uses a private wage survey instead of the Department of Labor’s Occupational Employment Statistics system: “USCIS will rank the petition in the same manner even if, instead of obtaining an OES prevailing wage, a petitioner elects to obtain a prevailing wage using another legitimate source (other than OES) or an independent authoritative source. If USCIS receives and ranks more petitions at a particular wage level than the projected number needed to meet the numerical limitation, USCIS will randomly select from among all eligible petitions within that particular wage level a sufficient number of petitions needed to reach the numerical limitation.”
Who Might Be Excluded Under the New Rule: The Department of Homeland Security (DHS) predicts that under the new regulation, no individuals paid Level 1 wages would be selected for H-1B petitions. Based on the data presented in the rule, DHS asserts that about 25% of individuals who would receive Level 2 wages also would not be chosen for an H-1B petition. Everyone at Level 3 and Level 4 would be selected. DHS states that fewer individuals at Level 2 may be chosen if more employers pay H-1B visa holders at Level 3 and Level 4 wages to improve the chances for obtaining an H-1B.
In practice, the proposed regulation may be bad news for employers looking to hire international students in H-1B status, which is typically the only way to employ an international student long-term in the United States. If employers must pay individuals with no work experience the same as employees with several years of experience, international students may become too expensive to hire. The salary discrepancies could raise serious issues within a workplace.
If working after graduation becomes more unlikely, the rule could affect whether international students choose to study in the United States. The recent Department of Labor (DOL) H-1B wage rule also is aimed at pricing international students and others out of the U.S. labor market, while a DHS rule to limit the time allowed to stay in the U.S. appears designed to deter foreign students from coming to U.S. universities.
The proposed rule is also aimed at another group disfavored by the Trump administration – employers that supply business services to U.S. companies, particularly information technology (IT) services. Like the DOL wage rule, the goal is to prevent such companies from obtaining H-1B petitions or to make it too expensive for them to employ H-1B visa holders.
The proposed rule equates salary alone with value. As Mark Regets, an economist and senior fellow at the National Foundation for American Policy, notes, the four wage levels from the Department of Labor only tell us who is more highly paid within an occupation. It tells us nothing about the value to society between occupations. Is a pediatrician or cancer researcher in his or her first year of work less valuable to America than a financial analyst with 7 years of experience? It appears unlikely a first-year pediatrician or cancer researcher, or a nurse, would obtain an H-1B petition under the proposed rule.
The Proposed Rule May Not Be Legal: Is it legal for USCIS to award H-1B petitions based on highest to lowest salary via regulation? It likely is not legal. “The law requires the agency issue visas in the order received,” said Jonathan Wasden of Wasden Banias, which has filed several successful lawsuits against USCIS. “It doesn’t say anything about salary. This seems to be a pretty clear overreach.” (In the section of the law related to H-1B visas it states, “Aliens . . . shall be issued visas . . . in the order in which petitions are filed for such visas or status.”)
Support for Wasden’s position comes from an unlikely source: The Trump administration. In its final rule (January 31, 2019) on the H-1B registration process, DHS stated: “DHS is reversing the cap selection order to prioritize beneficiaries with a master’s or higher degree from a U.S. institution of higher education in accordance with congressional intent, as the numerically limited exemption from the cap for these beneficiaries was created by Congress and appears in the INA [Immigration and Nationality Act]. DHS believes, however, that prioritization of selection on other factors, such as salary, would require statutory changes.” (Emphasis added.)
“USCIS recognized that the use of factors such as salary would require a statutory change and their effort to do it here as a regulatory matter is ultra vires (beyond one’s legal authority),” said Ira Kurzban, author of Kurzban’s Immigration Law Sourcebook, in an interview.
In the new proposed rule, the Trump administration attempts to gloss over its earlier statement that it “would require statutory changes” to prioritize H-1B selection based on salary. “DHS acknowledges that the preamble to the H-1B Registration Final Rule states that prioritization of registration selection on factors other than degree level, such as salary, would require statutory changes,” states the proposed rule. “However, DHS did not provide further analysis regarding that conclusion. Upon further review and consideration of the issue initially raised in comments to the H-1B Registration Proposed Rule, DHS concludes that the statute is silent as to how USCIS must select H-1B petitions, or registrations, to be filed toward the numerical allocations in years of excess demand. DHS, therefore, is relying on its general statutory authority to implement the statute and proposes to revise the regulations to design a selection system that realistically, effectively, efficiently, and more faithfully administers the cap selection process.” (Emphasis added.)
“I would still argue that the change is ultra vires because the statute doesn’t contemplate other factors, and they cannot use the statute’s silence as an invitation to seize on any criteria they want to determine distribution of visas,” said Kurzban. “For example, if the statute is silent on height, weight or political affiliation it would not give them the right to use those criteria because it doesn’t further the underlying purpose of the statute. The statute is designed to provide an avenue for employers to hire a person in a specialty occupation. It is not rational to give preference in the selection to people who are paid more because it is not necessarily tied to the specialty occupation designation.”
The proposed regulation carries a 30-day comment period. The presidential election could determine its fate. If the Trump administration or a possible Biden administration moves forward with the rule to award H-1B petitions based on salary, whether the rule goes into effect may be decided in court.