DHS Has the Tools to Implement H-1B Reforms to Protect Both U.S. and Foreign Workers Today

The Biden administration withdrew an important reform to H-1B regulations

By Elizabeth Jacobs on August 5, 2022

At the end of 2021, the Biden administration withdrew an important reform to H-1B regulations that could have protected U.S. workers from unfair labor competition and foreign workers on H-1B visas from certain kinds of labor exploitation. The rule, titled Modification of Registration Requirement for Petitioners Seeking to File Cap-Subject H-1B Petitions, required that U.S. Citizenship and Immigration Services (USCIS) select higher-paid and higher-skilled foreign workers for H-1B cap-subject visas, thus ensuring U.S. businesses have access to the best pool of foreign workers. This reform would have also discouraged wage suppression and reduced unfair competition to U.S. workers. Currently, USCIS issues H-1B cap-subject visas on a purely random basis using a lottery system.

The rule, however, never had a chance to reform the program. It was finalized by the Trump administration in January 2021 and scheduled to go into effect on March 9, 2021. On February 8, 2021, however, the Department of Homeland Security (DHS) issued a final rule delaying the effective date to December 31, 2021. At the same time, DHS solicited additional comments from the public to inform their review of the regulation in light of the new administration’s priorities. Finally, on December 22, 2021, DHS withdrew the rule entirely. 

DHS justified its withdrawal entirely on a September 15, 2021 ruling from the U.S. District Court for the Northern District of California. The court vacated the regulation after concluding that former Secretary of Homeland Security Chad Wolfe was not lawfully appointed to his position, and therefore, had no authority to issue the regulation. Three months later, DHS published a notice to withdraw the rule merely stating that DHS intended to “comply with the court’s decision.” 

Notably, DHS did not respond to any of the comments it solicited from the public following the rule’s delay. And while DHS may be within its authority to withdraw the regulation following the court decision, the legal issues underlying the decision are no longer at play. Secretary of Homeland Security Alejandro Mayorkas was confirmed by the Senate and has the authority to ratify the regulation. Indeed, Mayorkas has ratified other Trump-era regulations that have been challenged on the same basis. DHS could have also implemented the rule with changes, if it determined, after reviewing comments it received from the public in 2021, that tweaks were needed.

Prioritizing foreign workers certified at higher wage levels, however, would go a long way to ensuring U.S. businesses access to the most valuable workers while simultaneously discouraging wage suppression and unfair employment competition. The 2021 regulation would have incentivized employers to offer higher wages, or to petition for positions requiring higher skills and higher-skilled aliens that are commensurate with higher wage levels, to increase the likelihood of selection for an eventual petition. 

Wage level is a reasonable proxy for skill level. Even where some employers choose to offer a higher wage for a certain worker beyond the required prevailing wage relative to the worker’s relative skill level, the higher wage is still a reasonable reflection of the value the employer places on that particular worker. If not for skill level per se, then for other sought-after qualities that worker could bring to the business.

Similarly, the reform would have discouraged abuse of the H-1B program to fill lower-paid, lower-skilled positions, which has allowed businesses to undercut U.S. workers and underpay H-1B beneficiaries with the current selection system. Although federal law requires employers to pay foreign workers the prevailing wage for their positions, current Department of Labor (DOL) policies allow employers to offer wages at just the 17th percentile of equivalent domestic wages if the employer claims that the worker is entry level (or “Level 1” of DOL’s four level system). Current law also restricts DOL’s ability to challenge an employer’s claim about the foreign worker’s experience level or skills, which has resulted in substantial abuse and misuse of the H-1B and other employment-based visa programs.

The 2021 rule did not alter any numerical limit or change the prevailing wage levels associated with a given position for DOL purposes. The rule also did not affect the order of selection as between the regular cap and the advanced degree exemption or otherwise effect substantive H-1B eligibility requirements. The selection process created by the 2021 rule, however, would have removed all incentives for employers to petition H-1B workers at lower-than-market rate or lower-than-deserved wage levels. 

It is important to note that under this system, a wage level is not the specific dollar amount the worker is paid, but rather the percentile of the worker’s proffered wage compared to domestic workers in that specific profession and region. Accordingly, workers in lower-paying occupations are not put at a disadvantage in the selection process to professionals in higher-paid regions or fields of work.

Prioritizing selections on the basis of wage levels proffered is a reasonable interpretation of the statute that furthers Congress’ primary purposes in creating the H-1B program. Congress created the program to allow U.S. employers to fill actual labor shortages in positions requiring highly skilled or highly educated workers without undermining the interests of the domestic labor force. Today’s H-1B program fails to deliver on these promises.