12/03/2020

Federal Court Reverses Trump Administration's H-1B Wage Hike

As a positive development for H-1B employers, on December 1, 2020, the U.S. District Court for the Northern District of California issued a final ruling in Chamber of Commerce, et al., v. DHS, et al. set aside the Interim Final Rules (IFRs) by the Department of Homeland Security (DHS) and Department of Labor (DOL), finding the federal agencies “failed to show there was good cause to dispense with the rational and thoughtful discourse that is provided by the Administrative Procedures Act (APA)’s notice and comment requirements”.

The federal court effectively reversed two significant Interim Final Regulations, which were detailed in our October 8, 2020 Immigration Alert. First, the DOL Interim Final Rule which took effect on October 8th increased the minimum prevailing wages for H-1B, E-3, H-1B1 and PERM workers by 30-60%. The DHS Interim Final Rule was set to go into effect on December 7th, and would have 1) imposed stricter requirements positions to qualify as specialty occupation and foreign nationals to obtain H-1B, E-3, H-1B1 status, and 2) scrutinized the placement of H-1B workers at third-party worksites through a shorter one-year H-1B visa period. According to the court ruling, “about one-third of H-1B applications would be rejected under the new set of rules”. Universities and business groups in technology and manufacturing objected to these IFRs as the rules priced-out many lower wage positions from H-1B visa qualification and increased the H-1B visa adjudication denial rate.

How does this impact employers and their foreign national workers?

The U.S. District Court ruling yesterday invalidated both IFRs, which greatly benefits employers seeking to secure and retain foreign national talent and highlights the importance of foreign talent to the U.S. economy, and is immediately effective nationwide. Accordingly, all pending I-129 petitions for H-1B, E-3 and H-1B1 nonimmigrant status and petitions to be filed should no longer be adjudicated under the increased restrictions imposed by the DHS Interim Final Rule. Similarly, the prevailing wage issues imposed by the DOL Interim Final Rule should no longer impact the such I-129 petitions or PERM applications that will be filed. However, this will not change the prevailing wages used for petitions and applications that have already been submitted under the IFR requirements, and the salary wages stated in the LCA and ETA 9089 will still be required, unless new applications/petitions are submitted based on employer’s business decisions or additional guidance is provided by the DOL and DHS.

Currently, both agencies have not released information or guidelines based on the new court ruling. As such, it is undetermined as to when DOL will reinstate the old prevailing wages. While it is possible that DHS and DOL under the Trump Administration will appeal the decision or request a stay of the ruling to continue implementation of the IFRs, it is unlikely that the courts will reverse the U.S. District Court’s ruling as the IFRs were implemented in violation of Administrative Law procedures. Additionally, as the court ruling is based on the fact that the agencies did not adhere to the APA rules, the agencies may still proceed with trying to implement the requirements in the IFRs by completing the necessary steps for the public comment and review period.

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