New Proposed H1b Visa Rules And Their Impact On OPT Students

On January 14th a new final rule has been signed by DHS that redefines the employer-employee relationship. As per the rule, even the clients of third-party companies where H-1B works will be deputed have to file (LCA) Labor Condition Application & H-1B applications. It will result in a higher administrative cost & burden for the clients.

Previously only the consulting or staffing companies (primary employers) were responsible for filing legal requirements & obligations for placing H-1B workers in their client’s organizations. However, with the new rule’s implementation, the legal obligations of filing LCA have extended to its clients (secondary employer).

This rule will severely affect America’s IT industry that heavily relies on the Indian IT professionals as not many clients would want to file H-1B applications as that will point fingers at them for displacing American workers.

Since both the employer and the client will have to file LCA, some H-1B workers will have multiple petitions & LCAs. Thus, any OPT student who wants to file H-1B must not rely on the staffing companies as this new amendment will make it difficult for their H-1B visas. Due to the filing of 2 LCAs, it will be difficult for H-1B workers to get their ISA & extension approved.

Now the ideal thing is to find direct employment with clients so that one employer will file your H-1B application & LCA.

This rule will ensure that only exceptionally talented & technically qualified candidates will get employed & receive an H-1B visa. It confines the entry of regular low-paid tech employees to prevent the displacement of American employees by low-paid foreign labor. If you want to get exceptional in technology, reach out to SynergisticIT and let us help you stand out from the crowd and get your foot in the door to work at great tech clients.

DHS Update– On January 7, 2021, DHS and USCIS has published the Final Rule to amend the H-1B visa selection process. It replaces the random selection of candidates carried under the lottery process with a salary-based selection system. Earlier registrants of H-1B visas were selected regardless of their merits. However, with the new rule in effect, the applicants will be shortlisted based on their proposed salaries. So, workers with relatively higher wages are likely to have good chances of getting H-1B visa than their lower-paid peers.

According to DHS, the wage-based selection process will compel H-1B employers to offer higher salaries or file petition for positions requiring higher skills to increase the likelihood of selection under the H-1B visa cap. It will boost the number of competent professionals in the country.

On the other side, immigration experts are of a different view. They say that it will become impossible for the entry-level workers to obtain an H-1B visa if the new rule gets implemented. Also, the workers at level 2 wages may have to face a chain of challenges to get selected. While this rule will be the biggest boon for the highest-paid workers who are earning level 4 salaries.

The new rule will make foreign hiring more difficult & will majorly impact Indian aspirants as Indians constitutes the largest part of OPT programs. DHS refute the charges & says that any change in the H-1B selection process will not affect OPT students. Instead, it will increase the employment opportunities at higher wage levels & prompt the selection of most qualified students for H-1B visa status.

H-1B visa is a temporary nonimmigrant work visa that allows U.S. companies to hire skilled foreign workers to fill specialty occupations. As per DOL “The H-1B visa program applies to the US employers to hire nonimmigrants as workers in specialty occupations or as fashion models of distinguished abilities & merits. A specialty occupation refers to the application of highly specialized knowledge & the attainment of at least a bachelor’s degree or its equivalent. The H-1B provisions intend to help companies who otherwise cannot find the needed skills & abilities from the U.S. workers by authorizing temporary employment of qualified individuals who otherwise are not authorized to work in the US. “

Today, around 500,000 foreign workers are working in the U.S. in H-1B status. However, many employers have misused the H-1B program to drive thousands of foreign workers at low wages in comparison to U.S. workers for the same occupation. Thus, it has become indispensable to reform the default prevailing wage methodology and OPT employer requirements.  DOL has laid new rules to address the faulty prevailing wage system in the H-1B visa program and other foreign worker programs.

On 8th October 2020, the U.S. Department of Labor (DOL) has issued the interim final rule to safeguard the wages and jobs for American workers. The rule predominantly affects H-1B visa holders, OPT students, green card citizens, L2 EAD visa holders, and U.S. citizens.

The interim final rule will refine the accuracy of prevailing wages paid to the foreign workers by aligning them with the wages paid to U.S. workers for similar occupations. Hence, if an employer wants to employ a foreign worker on H-1B Visa, then the employer must attest that during the period of authorized employment, he will pay the actual wage paid to other employees with the same qualification & experience or the higher of the prevailing wage. It will ensure to protect U.S. workers from unfair competition prompt by the arrival of foreign workers of lower wages. So, employers cannot use foreign workers in place of U.S. workers just because of cheap labor.

Further, the administration has proposed that the companies must pay a minimum annual wage of $150,000 to $250,000 or more to the foreign-born engineers and scientists in H1-B status, which will taper the eligibility for H1-B visa approval. Since no company will prefer to pay such high salary packages to an unskilled employee, so they need to be technically competent for getting H1-B visa.

Major Changes in the H-1B Visa Program under Interim Final Rule

  1. Duration of the H-1B Visa Program- The duration of theH-1B visa has decreased to 1 year from 3 years, which is applicable for the foreign workers who are working for a third-party company on contract only.
  2. Rise in wage requirement– When you file for an H-1B visa, there are certain wage levels set by the Department of Homeland Security & Department of Labor, as per which you need to make a particular amount of money under a certain level and for a specific occupation. The minimum wage or salary for H-1B workers is defined by the concept of ‘wage levels’ that differs on some factors such as experience, education, and location.
  • The reason for setting minimum wages for H-1B workers is to ensure that foreign workers in H-1B are getting salaries on par with the US citizens and the U.S. employers are not exploiting them as cheap labor.
  • DOL has introduced the four-tier wage levels system under the H1B Visa Reform Act of 2004. It is commonly known as the prevailing wage levels. Have a look at the definitions of 4 H-1B wage levels:
  • H-1B Wage Level 1 (Entry)- The first wage level is for the entry-level H-1B workers with basic knowledge and understanding of the job.
  • H-1B Wage Level 2 (Qualified)- The second wage level is for qualified H1-B workers with education & the ability to perform moderate tasks with limited judgment.
  • H-1B Wage Level 3 (Experienced)- The third wage level is for those H1-B workers who have years of experience in their field of study. Workers under this level are required to manage people and exercise judgment.
  • H-1B Wage Level 4 (Fully Competent)-The fourth and last wage level indicates experts and professional H-1B workers who can perform complex jobs, manage different things & exercise judgment in their work.   

The interim final rule has made some major changes in the four-tier wage levels distribution as shown below:

OES wage level for Software EngineersPrevailing Percentile of Wage DistributionPrevailing Annual SalaryNew Percentile of the wage distributionAnnual Salary as per New Percentile
Wage Level 1 (Entry)17th$74,53245th$94,833
Wage Level 2 (Qualified)34th$93,64062nd$129,604
Wage Level 3 (Experienced)50th$112,56978th$151,444
Wage Level 4 (Fully Competent)67th$131,56995th$173,264

Under the Interim Final Rule, the lowest possible wage that a company can pay to an H-1B worker has increased from the 17th percentile of a profession’s income distribution to the 45th percentile. Moreover, the uppermost wage limit has increased from the 67th percentile to the 95th percentile.

For instance, if an entry-level Software Developer in California gets an average salary of $75,000 per annum, with the new rule, the salary will be significantly higher like $120,000 or more.

The prevailing wage distribution allowed companies to hire foreign workers on H1-B visa as a low-cost alternative to the US workers. However, with the increase in the wage distribution, the companies will now have to pay higher salaries to H1-B workers, so they cannot use foreign labor as a cheap alternative to the US workers. This hike in salaries will drastically impact thousands of small and medium scale businesses.

3. Definition of Specialty Occupation– For an H1-B visa, you need to have highly specialized skills and education. Now, if you are working on an H-1B visa, your employer will have to prove to the government that how is your education or degree related to the job you are doing. So, you may have to face more rejection if your job is not related to your bachelor’s or master’s degree.

4. Employer and Employee Relationship- The authority will supervise your relationship with your employer during, after, or before your H1-B gets approved.It is proposed to check thatthe company which is sponsoring your H1-B visa is a real company and you have a real relationship with your employer. Under the new rule several things that were overlooked earlier, will now be analyzed closely such as: 

  • Does your employer supervise you daily, do you have a weekly or daily meeting?
  • Can your employer do the daily assignment, how they control you, what product you work on, and how you are attached to the company?
  • If the company provides a laptop or do you use your own?
  • Does your employer provide insurance or health benefits?
  • If you are working remotely, how you are connected with your employer?

The changes are made in the OPT employer requirements to curb the number of fraudulent activities.  Recently, the federal law enforcement agencies arrested 15 foreign students on the charges of falsely staying in the United States. The culprits claimed to be employed by the companies that do not exist. According to ICE officials, the arrests were made under Operational OPTical Illusion which is a law enforcement targeting foreign students who fraudulently used their OPT program to stay in the States. Thus, to mitigate such fraudulent activities and protect national security, ICE officials are ensuring that all visitors, students, & schools are complying with the US immigration laws.

Premium Processing Fees to be increased for H-1B Visas

With the tightening of the H-1B visa selection process, you must be thinking of upgrading your application to premium processing, but that may cost you heavily. Lately, USCIS has announced that from 19th October it will increase the premium processing fees for H-1B visa. There will be a hike in H-1B and L-1 visas fees from $1,440 to $2,500.

The sudden surge in the visa application fee is expected to impact IT firms that have thousands of foreign employees on H-1B and L-1 visas. Such companies will now have to pay an additional $4,000 to $4,500 for each visa extension.

Impact of the new interim rule on OPT Students

Many firms and small-scale organizations that are currently using the H-1B system might not be able to take part in the new H-1B program that imposes inflation of the wages. It will have an adverse effect on the foreign workers with little field experience as they often work in small companies who cannot provide them level-3 to level-4 wages. Also, the large companies will avoid hiring them due to their lack of knowledge, skills, & experience. Mostly, the H-1B visa holders are recent graduates with limited or no work experience. Thus, the students on H-1B status need to develop in-demand skills and prove their specialized knowledge to the companies to secure good positions.

Survival of the Fittest

It is the need of the hour for foreign workers to get upskilled if they want to stay in the United States. Once you become qualified, companies will employ you even at higher wages, and your visa will also be filed easily.

H-1B workers should work for the clients directly instead of relying on a third-party or a consultancy company to get a 3 years visa. Since the Interim Final Rule has introduced changes in the validity period granted to the H-1B petitioners who place foreign workers at third-party companies. Under the new rule, the employers can no longer request for 3 years validity period for H-1B petitions in which the foreign workers will be placed at a third-party worksite. Instead, the rule imposes 1-year maximum validity for any off-site H-1B petition.

Besides, working directly for the client can benefit you more in terms of financial stability. For example, if you get H-1B visa sponsorship from staffing or consulting companies, then you will be placed in one of their client’s companies on contract.  The client company will provide the wages for your services to the staffing or consulting company that has placed you. Thereon, your consulting company will give you the wages after deducting their share.

  • Most consulting companies work in the multiple layer model:
  • So, there is a Client then a Tier 1 vendor then the Consulting Company-1, Consulting Company-2, and then the Candidate.
  • Let’s say if the client company pays the tier 1 vendor 100$, then the tier 1 vendor will take out its share around $30 and give $70 to the first consulting company after that the first consulting company might keep like 15 & give $55 to the second consulting company and at the end candidate will only get $40.

The above example is illustrated below:

Average Annual Salary 2080*$40= 83200
  • This would not be enough for a consultant to file H1B visa as the candidate would not be able to make enough money to satisfy LCA wages.
  • On the other hand, if you work for the client directly, you will get a fair share of your salary without any unnecessary deductions and the client would be able to easily pay LCA wages & file your H1B.

As per most attorneys most RFE’s and denials of H-1B take place when lower level of LCA have been used for filing H-1B. So, your best bet for getting H-1B approved for 3 years is to work for a direct client rather than a staffing company

In case you are working through a consulting company, ensure that your H-1B sponsor employer has filed the mandatory document of LCA with the US Department of Labor before they file the H-1B petition with USCIS. Filing of LCA means your employer will abide by the labor rules wherein he has to pay prevailing wages, provide the same working conditions as given to the US workers, share a copy of LCA notice with you, etc.

Conclusion

The proposed rule will certainly be a turning point for all the foreign workers, U.S. employers, as well as the natives of America. The initiative to mandate U.S. employers to pay higher wages to the H-1B professionals is an attempt to restrict the entry of foreign labor in the U.S. market and to ensure that only highly qualified professionals can use the H1b visa.

Any technology job seeker who is trying to get an H1b Visa in the near future needs to understand that he needs to have experience and technical skills superior than most other candidates in the job market looking for similar jobs. To differentiate themselves from other jobseekers’ candidates should upgrade their tech skills by either self-study or by taking admission with skill enhancement training programs to gain additional skills in the latest technologies. If a candidate has a skillset which is vastly superior to other job seekers then organizations would want to hire such a candidate and offer high wages and file H1b visa for a Highly skilled candidate.

We at Synergisticit provide a robust technology upskill program for the tech enthusiasts to procure the required skills to cope with the ever-changing demands of the IT domain. Our program includes Java training, AWS Certification, Big Data training,  and MERN Stack training in California. Let us help you achieve your career goals. Synergisticit – The Best Programmers in the Bay area…Period!

Update- The District Court of California has struck down the attempt of DOL & USCIS to change the H-1B visa program, but still we’re not sure if USCIS may counter sue. In October, DOL & USCIS has published some legally questionable interim rules that could have a radical impact on the H-1B visa program, making it more difficult for the U.S. employers to sponsor foreign workers. The new interim rules changed the methods of calculating the prevailing wages for H-1B workers. Soon after publication, the rule came into effect on 8th October. However, due to the recent District Court decision, the DOL may require to revert the prevailing wages in the original form to what they were before the publication of new rules in the near future.

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