 |
|
 |
 |
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
December 2004 Newsletter I am writing this Newsletter to focus on the immigration implications of the recently passed H-1B Visa Reform Act. The Congress in its recent lame duck session passed a new enactment known as the H-1B Visa Reform Act, which appears as part of the omnibus appropriations provisions required to fund the operations of the federal government. President Bush signed this mammoth appropriations bill on December 8, 2004. As noted below, some of the H-1B provisions become immediately operative whereas others go into effect 90 days after enactment, on March 8, 2005. The H-1B Visa Reform Act creates certain modifications to the H-1B Temporary Worker provisions, which is a commonly utilized temporary, nonimmigrant visa classification covering the employment of foreign professionals in the United States. It is not possible to give a unitary judgment as to whether this new Act liberalizes or constricts the H-1B Temporary Worker classification; rather, there are elements of both. To a limited extent, the Act ameliorates the H-1B quota constraints, although its more palpable consequence is to raise substantially the H-1B filing fees. This Act reflects a congressional attempt to balance the various competing considerations affecting business immigration in this post-9/11 period as we seek to balance security and job protection objectives against the clear reality that our nation’s economic, technological, social, and commercial betterment are tightly tied to continuing relocations of foreign professionals to the United States. As a reflection of this assertion, foreign nationals are disproportionately represented in such diverse occupations running from nursing home attendants to PhD scientists, and form an essential component in the workforce to fund our public entitlement programs. The Act to a limited extent seeks to synthesize these competing considerations. We strongly expect the Congress in its next term to examine a wide range of immigration-related issues, including the President’s Comprehensive Immigration Reform/Guest Workers proposals. So, in addition to having an immediate impact on H-1B visa practice, the H-1B Visa Reform Act can perhaps be viewed as a precursor to the complex issues and delicate balancing act that will typify immigration legislation in the next term of the Congress. Basic Provision The basic provisions of the H-1B Visa Reform Act can be summarized as follows:
Now, let’s take a closer look at these four salient features of the H-1B Visa Reform Act. I. Increase in H-1B Numbers. Effective October 1, 2003, the previously generous annual allotment of H-1B visa numbers was reduced dramatically to 65,000. This figure is clearly inadequate to serve the needs of the U.S. business community, as evidenced by the fact that this year’s quota cap was reached the very first day of the federal fiscal year. If indeed H-1B aliens bring skills and talents required to maintain the competitiveness of U.S. businesses in this era of extraordinary globalized competition, it becomes critically important either to enlarge the categories of cap-exempt H-1B cases or, in the alternative, to increase the quota itself. This Act represents the first legislative initiative in four years to even marginally raise the H-1B quota cap. The Congress has now added 20,000 additional numbers for foreign nationals who have earned a Masters Degree or higher from a U.S. institution of higher education. The statutory language specifically requires that the advanced degree be earned from a U.S. institution, meaning that foreign equivalencies will not be recognized. As such, this is a rather limited enlargement, but at least it represents an initial congressional initiative to relax the tight numerical constrictions to the H-1B classification. This expanded numerical allotment for advanced degree holders will go into effect on March 8, 2005. At least initially, all advanced degree H-1B cases will be filed to the Vermont Regional Service Center. Although Citizenship and Immigration Services (CIS) has indicated that it will not presently accept H-1B Petitions filed under this new program, we expect that it will start accepting filings prior to the March implementation date. Given that the number of applicants will undoubtedly exceed this 20,000 limit, we strongly recommend that qualifying cases be promptly filed once the program opens. As discussed in previous Newsletters, it should again be noted that not all H-1B Petitions are subject to the quota cap. In our own legal practice, the principal claimants on H-1B cap-exempt status are: 1) J-1 physicians holding waivers; 2) university and university-affiliated employers; and 3) H-1B extension cases, although there are also isolated other instances of cases not subject to the cap (such as nonprofit and governmental research organizations and primary or secondary educational institutions). My only point is that to some extent, it remains possible to file H-1B Petitions despite the depletion of the quota numbers either by claming an exemption from the quota itself or by qualifying an H-1B case under this new, somewhat expanded numerical allotment. II. Increased Filing Fees.The most immediate effect coming out of the H-1B Visa Reform Act will be substantially greater filing fees for H-1B Petitions. Although not so stated in the Statute, the Regulations have clearly stated that these fees (excluding Premium Processing) must be paid by the employer and that they cannot be assigned to the foreign national. Here is the revised cost for filing an H-1B Petition: Existing $185 Processing Fee. This filing fee is required of all H-1B Petitions, regardless of the type of petitioner or whether or not filing a new petition or an extension. Worker Training Fee. This is a dedicated fee earmarked for creating vocational and professional training programs to enhance the competitive skills of the U.S. workforce. Such a fee was previously instituted in 1998, but then lapsed on October 1, 2003. This new enactment creates the following H-1B trust fund for worker training purposes:
Fraud Detection and Prevention Fee. This is a straight $500 additional fee that applies to all H-1B petitioners, including university and nonprofit research entities. It needs to be paid when the employer files its initial H-1B Petition for the foreign national whether for an entirely new employment position or when switching to a new H-1B employer. Its purpose is to create a funding source for eliminating fraud and immigration abuses. Fees collected from this specific fund will be allocated in the following manner: 1/3 to the Department of State for visa fraud programs; 1/3 to the Department of Homeland Security for internal enforcement; and 1/3 to the Department of Labor for enhanced H-1B/LCA investigations. This $500 fee will go into effect at the 90-day mark on March 8, 2005. Premium Processing Program. The “normal” processing time for H-1B Petitions at the various Regional Service Centers runs from 2-5 months. Under the Premium Processing Program, U.S. Citizenship and Immigration Services (CIS) is obligated to adjudicate an H-1B Petition within 15 days upon the payment of an additional $1,000 Premium Processing Fee. As a functional matter, nearly all new H-1B Petitions are filed under the Premium Processing Program, and even some extensions utilize this Program when the H-1B foreign national needs to obtain a prompt approval of the petition generally for overseas travel purposes. III. H-1B Investigations and Greater Employer Defenses A key concern in immigration policy (including H-1B number availability) is that foreign nationals will work for cut-wages, thereby depressing the salary structure for U.S. workers. Therefore, through the Labor Condition Application (LCA) process, an H-1B employer needs to attest that it will employ a foreign national under acceptable wage and working conditions. In particular, the employer needs to pay the foreign national the higher of the prevailing wage (i.e., the wages paid in the local area for similar occupations) or the actual wage (i.e., the employer’s own internal salary structure for the position). These wage calculations are so complex that even well-meaning employers can become liable for substantial fines and back-payment awards. The H-1B Visa Reform Act seems to signal a renewed commitment by the Department of Labor to conduct investigations for H-1B/LCA noncompliance. In particular, the Act contains two (2) provisions that seem to facilitate such investigations: 1) more liberal bases for launching an investigation; and 2) greater funding resources from the Fraud Prevention Fund, as outlined above. But quite appropriately, the Act then goes on to recognize the inherent complexity of the H-1B/wage provisions and that many (if not nearly all) U.S. employers seek to comply with the law. Therefore, the Act balances out an expected increase in Labor Department investigations with broadened employer defenses against allegations of noncompliance, including:
IV. Prevailing Wage Calculations In many H-1B instances, an employer will choose to rely upon federal government wage surveys. In the Labor Certification arena that relates to the permanent resident process, an employer is almost invariably forced to utilize government wage statistics to justify its salary offer to the alien beneficiary. Yet, these government surveys have been exceedingly imprecise since they do not account fully for gradations in the experience, educational level, and level of authority exercised by the holder of the position. The H-1B Visa Reform Act eliminates the previous flexibility in the prevailing wage calculation under which an employer needed to offer the position at a figure within 5% of the government’s prevailing wage figure (using Occupational Employment Statistics which is a two-tiered system). Instead, the employer’s salary needs to be set at 100% of the stipulated prevailing wage for the position in the local reporting area. But the Act then mandates that any salary schedule must include a four-tier (rather than the current two-tier) calculation methodology commensurate with experience, education, and the level of supervision. Should the government salary survey include only two tiers, the Act then goes on to stipulate how to calculate the intermediate two levels. As employers and other practitioners are all too well aware, one of the frustrations in employment-based immigration has been in dealing with an anachronistic, imprecise, and oftentimes inflated government wage survey data that bears little resemblance to the real-world labor market. The Act continues to require the employer to hire foreign nationals under competitive wages. However, we are encouraged by this utilization of a four-tier wage scale which should better account for the gradations based on education, experience, and authority appearing in most organizations. The full impact of the H-1B Visa Reform Act will not fully become evident until the two major implementing federal agencies – the Department of Homeland Security and the Department of Labor – issue their Regulations. However, the Act has been passed and its provisions either are presently or this coming March will become operational. So, what are the current trends and expectations? First, the substantial increase in the filing fees will undoubtedly discourage new H-1B sponsorship in cap-subject positions to foreign nationals who marginally contribute to the employer’s business. But employers will unquestionably still need to sponsor high performing/high contributing foreign nationals despite the onerous filing fees involved. It remains to be seen if these exorbitantly high fees in combination with the tight quota restraints can be tolerated by U.S. businesses, or whether these provisions will compromise the competitive position of U.S. business concerns. If the latter situation ensues, there will likely be major pressure brought on the Congress to revise its current H-1B provisions. Second, while numerically limited, at least the new 20,000 allotment for advanced degree holders constitutes the first congressional effort since October 2000 to take remedial action to soften the H-B visa squeeze. At some point, the Congress may well make a full examination of the role of the H-1B provisions in serving U.S. national interests, and were such an examination to take place, we believe that the logic would be irrefutable for an increase in the H-1B numbers. Perhaps this Act represents the first step in this process. Third, this Act makes a major advancement in giving employers and H-1B aliens a greater sense of security that inadvertent mistakes will not lead to major punishment. Quite likely, we will see greater Department of Labor investigations/enforcement actions, and this may be necessary to establish the integrity of the process. But we are encouraged that the Act stipulates some logical grounds so as to shield employers from major fines and punishment for inadvertent violations or wage miscalculations, although we are greatly concerned that the implementing Regulations of the Department of Labor will create narrow and rigid enforcement policies. Fourth and finally, the government wage surveys have too long set unrealistic, inflated figures that simply do not account for differences in levels of education and experience. In fact, all too often they are totally at odds with the business world. The Act seems to require more realistic wage figures through factoring in more precisely the particular education, experience, and scope of duties required by the job. The Department of Labor still will have considerable input into defining the criteria of the four tiers, but at least the Congress seems to repudiate the bipolar system that has thus far existed. As always, please feel free to contact me with any questions or comments you may have on information appearing above or, more broadly, immigration issues of concern to you. Cordially,
ROBERT D. ARONSON
|
Aronson & Associates, P.A. |