Multiple lawsuits have been filed against the Department of Labor in response to new rules tightening the applicant pool and available opportunities of the H-1B visa program. Among those filing lawsuits are universities, advocacy groups, and firms, particularly in the technology industry.
H-1B visas are widely obtained by foreign graduates of universities in the United States to be employed here after graduation. In early October, the Trump administration narrowed the eligibility requirements to obtain a H-1B skilled worker visa and increased the wages employers would have to pay H-1B visa holders. A public comment period was not provided at the time, which is required by federal law before imposing a new rule; instead, the former change was published by the Homeland Security Department with an effective date of December 7, 2020 and the latter change went into effect immediately when it was announced on October 8, 2020.
According to the Trump administration, these changes are intended to “restore integrity” to the H-1B visa program and protect American workers. U.S. Secretary of Labor Eugene Scalia more specifically reasoned that the changes will “strengthen our foreign worker programs and secure American workers’ opportunities for stable, good-paying jobs.”
What Do the New Rules Entail?
The first rule narrows the “specialty occupations” that would be eligible for H-1B visas. Part of the rule requires applicants to earn a highly specialized degree that closely matches the position they are seeking. For example, an international student with a general engineering degree would not be eligible for a position as a software developer.
The second rule significantly increases the wages that employers have to pay H-1B visa holders. The Department of Labor calculates that employers will face $198.29 billion in costs over a 10-year period as a result of this rule. The plaintiffs’ motion for preliminary injunction in the lawsuit pending in the United States District Court for the Northern District of California provided a concrete example of how this rule would affect employers. The University of Utah seeks to renew an existing H-1B employee who is currently paid approximately $80,000, which is significantly higher than the required wage of $62,760 under the old rule. Under the new rule, however, the university would be required to pay the employee $208,000, an increase of 231 percent from the old required wage.
The Legal Challenges
The action entitled Chamber of Commerce of the United States of America v. United States Department of Homeland Security pending in the United States District Court for the Northern District of California illustrates the legal challenges against the new H-1B visa rules:
The Department of Labor failed to follow the notice and comment rulemaking procedures required under the Administrative Procedure Act for federal rulemaking. The Trump administration claims to have bypassed these procedures due to elevated unemployment related to the COVID-19 pandemic, but the lawsuit alleges that this rationale is “mere pretext.”
The Department of Labor is setting a master’s degree as the benchmark for the qualifying entry level into an H-1B position by raising the prevailing wage levels for H-1B workers. This violates the Immigration and Nationality Act, which states that a bachelor’s degree is the minimum credential.
The Department of Labor will severely harm workers and the H-1B program at large by requiring wage increases ranging from 35 percent to over 200 percent.
The Department of Labor made these changes without considering “readily available, relevant data and empirical studies,” instead relying on “outdated, incorrect, or limited empirical data.” Furthermore, the lawsuit contends that these new rules and their reasoning conflict with basic economic theory.
Broader Impacts of the New Rules
The lawsuit pending in the United States District Court for the Northern District of California claims that these new rules will disrupt at least 30 percent of employment relationships, causing “hospitals, universities, and employers of all shapes to lose their enormous investments in this skilled-workforce.” For recent graduates, the new wage rule will likely price the hiring of recent graduates with H-1B visas out of reach for employers. Given the sudden changes in the wages to be paid, many businesses anticipate lay-offs and off-shoring of projects to locations outside the United States.
If the plaintiffs in each of the lawsuits successfully argue their case, the H-1B visa program will revert back to the status quo. If not, it is likely that the population of international employees in the U.S. will be diminished, potentially harming employers and the domestic economy.
Natalia Núñez is from Yonkers, New York pursuing a Public Policy major, Markets & Management Studies certificate, and Psychology minor.