Breaking Down the New DOL and DHS H-1B Rules

While the U.S. presidential election has come to an end, we continue to monitor changes in the Trump administration’s handling of ongoing agency immigration reforms through the end of 2020 and into early 2021 that may impact employers’ ability to sponsor foreign workers on visas. Of particular note is the U.S. Department of Homeland Security’s (DHS) newest agency rule, Strengthening the H-1B Program,1 which is planned go into effect on December 7, 2020, and will amend 8 CFR 214.2(h), the regulatory section that contains all H-1B program criteria and definitions.

If implemented, this interim final rule (IFR) will make sweeping changes to the regulations covering all aspects of the H-1B program, setting forth new and more restrictive legal definitions and criteria for qualifying as an H-1B worker, demonstrating status as an “employee,” and working in a “specialty occupation.” The new rule also creates new requirements while limiting work petition validity for staffing agencies and third-party worksite employers. These changes, if implemented, will complicate employers’ use of the H-1B category and prompt additional scrutiny of potential third-party worksite placement. We review some of the immediate changes that may impact employers based on the new H-1B rules, specifically the re-definition of the employer-employee relationship and what qualifies as a “U.S. employer.”

How have the basic definitions changed?

  • U.S. Employer: A U.S. employer is now defined as an entity that has an “employer-employee relationship” with an “employee.” To demonstrate status as a “U.S. employer,” an employer must “[engage] the beneficiary to work within the United States, and ha[ve] a bona fide, non-speculative job offer for the beneficiary.” The new rule also requires that a petitioner establish an “employer-employee relationship.” The rule strikes the word “contractor” from the definition of who can qualify for an employer-employee relationship, which means that employers of contractors may face major challenges in trying to establish an employer-employee relationship. See new 8 CFR 214.2(h)(4)(ii).
    • Per 8 U.S.C. § 1101(a)(15)(H)(i)(b), only “intending employer[s]” may apply for H-1B nonimmigrant visas. For comparison, the U.S. Department of Labor’s elemental rule, long followed by the United States Citizenship and Immigration Services (USCIS) (since 1991) and adopted into the H-1B regulations, defines an employer as (1) a “person, firm, corporation, contractor, or other association or organization in the United States which suffers or permits a person to work in the United States” that (2) “may hire pay, fire, supervise or otherwise control the work of any such employee” and (3) which “has an IRS tax identification number.”
    • As another comparison, in the I-9 context, 8 CFR 274a.1(f)-(g) defines an employer as a (1) person or entity, including an agent or anyone acting directly or indirectly in the interest thereof (2) who engages the services or labor of an employee to be performed in the U.S. for wages or other remuneration. An “employee” does not mean an “independent contractor” or those “engaged in casual domestic employment.”
  • Employer-employee relationship: USCIS has reverted to interpreting the term “employer-employee relationship” to be the “conventional master-servant relationship as understood by common-law agency doctrine.” This is at odds with a very recent court order handed down in ITServe Alliance v. L. Francis Cissna, which required that USCIS abide by a more expansive definition that the agency has followed since 1991 (in which an employer need only demonstrate ability to hire, pay, fire, or “otherwise control” an employee). The new “employer-employee” definition sets forth a list of non-exhaustive factors to be considered in the totality of the circumstances in cases (where the H-1B beneficiary does not possess an ownership interest in the petitioning organization or entity). It also refers to the beneficiary’s worksite as a relevant factor in determining whether such relationship exists. See new 8 CFR 214.2(h)(4)(ii).
  • Third-party worksite: A third-party worksite is defined as “worksite, other than the beneficiary’s residence in the U.S., that is not owned or leased, and not operated, by the petitioner.” A worksite will “not include any location that is not considered a “worksite” for labor condition application (LCA) purposes. This definition is already applied in the LCA context with the DOL and does not present significant changes. It appears DHS is codifying the definition of these terms in order to implement stricter scrutiny of third-party placements for H-1B candidates. See new 8 CFR 214.2(h)(4)(ii).
  • Availability of work: Based on the new interim final rule, a petitioner must demonstrate that it maintains non-speculative employment for the beneficiary at the time of filing, along with proving that a bona fide job offer exists and that actual work will be available as of the requested start date. See new 8 CFR 214.2(h)(4)(ii).
  • Specific specialty: Likewise, the IFR further narrows the “specialty occupation” definition by defining specialty occupation to mean an occupation that requires the attainment of a bachelor’s degree in a “directly related specific specialty.” This represents a shift in the previous regulation, which had not expressly required a “directly related” specialized bachelor’s degree. The IFR goes on to instruct that where an employer will accept more than one degree to qualify for a position, “the petitioner would have to establish how each field of study is in a specific specialty providing ‘a body of highly specialized knowledge’ directly related to the duties and responsibilities of the particular position to meet the requirements . . . ” Functionally, this does not present major changes from the current adjudication standard but the narrowed regulatory guidance could prompt additional Requests for Evidence or result in a stricter adjudication on the merits. 

Agency Petitions and Limitations on Third-Party Worksite Placement

The new DHS rule is primarily targeted at safeguarding U.S. labor protections, with a dedicated focus on eliminating untoward labor practices by third-party staffing agencies. These are companies that apply for H-1B worker visas but ultimately place these workers at the worksites of other employers as part of their business model. Such a setup allows a staffing agency to handle personnel issues and onboarding and is attractive to client businesses that seek to avoid the costs of filing and maintaining their own visa petitions, along with employer-related obligations.  

The staffing agency model has long been a target for H-1B compliance, but particularly during the Trump administration, which has pointed to the agency model’s potential for wage violations or documented violations of protections for U.S. workers. The crackdown on third-party staffing agencies is also the result of the administration’s continued scrutiny of the provisions of the H-1B visa worker program, with increasing focus on the “employer-employee relationship.” For overall context, per the National Foundation for American Policy’s 2020 Policy Brief (May 2020), denial rates for new H-1B petitions for initial employment rose from 6% in FY 2015 to 30% in the first quarter of FY 2020 (similar to the initial denial rates of 32% in Q1 2019 and 35% for Q2 2019).2 

In its interim final rule, DHS reiterates labor protection concerns, alleging that agencies impermissibly pay many of their H-1B workers below the local median wage for jobs they fill nationwide or commit other violations related to lack of site enforcement or H-1B visa program abuse.3 DHS notes that an end-client business using the H-1B worker could theoretically avoid complying with labor protection requirements contained in the LCA filed by the petitioner (which would be the staffing agency) with the U.S. Department of Labor.

DHS states that the new rule seeks to combat a situation in which the staffing agency model may incentivize U.S. companies to “avoid hiring more U.S. workers or, even worse, lay off their own, higher-paid U.S. workers who previously performed those services adequately and replace them with lower-paid H-1B workers of lesser qualifications employed by a staffing company.”

History of Employer-Employee Relationship

The new interim final rule amends the existing regulations to narrow the definition of an employer-employee relationship, mandating a common-law factorial test to determine whether an individual is an “employee.” This is in sharp contrast to the regulatory definition that has been in effect since 1991, when the U.S. Department of Labor engaged in formal rulemaking to define the nature of the “employer” that can apply for an LCA in order to obtain an H-1B visa.4 As mentioned above, the DOL final rule (adopted into the H-1B regulations) has defined an “employer” as the following:

  1. A person, firm, corporation, contractor, or other association or organization in the United States which suffers or permits a person to work within the United States;
  2. Which has an employer-employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise or otherwise control the work of any such employee; and
  3. Which has an Internal Revenue Service tax identification number.

The Immigration and Naturalization Service (INS, predecessor to USCIS) adopted this relatively expansive definition of “employer” used by the DOL5 in 1991 and has never made any changes to the definition, either to the underlying statute governing the H-1B program or the regulation. (Per 8 U.S.C. § 1101(a)(15)(H)(i)(b), only “intending employer[s]” may apply for H-1B nonimmigrant visas.) The Immigration and Naturalization Act (INA) does not expressly define the term of “employer,” however, in the I-9 context, 8 CFR 274a.1(f)-(g) defines an employer as a (1) person or entity, including an agent or anyone acting directly or indirectly in the interest thereof (2) who engages the services or labor of an employee to be performed in the U.S. for wages or other remuneration. An “employee” does not mean an “independent contractor” or those “engaged in casual domestic employment.”

Per the current DOL rule in force, an officer must consider an H-1B petitioner and an H-1B beneficiary to have an employer-employee relationship if they meet only one of the “hire, pay, fire, supervise, or otherwise control the work of” factors under the second element of 8 CFR 214.2(h)(4)(ii). This definition does not require an overall factor-based evaluation to determine whether an employer “controls” the employment based on specific aspects of employment.

Evolving Agency Interpretation and ITServe Alliance v. L. Francis Cissna

Despite the existing definition, in 2018, USCIS began denying many H-1B petitions when a prospective employee would actually be providing services at a client site based on the theory that such an individual would not qualify as a “U.S. employee.”6 USCIS had also begun evaluating the employment relationship under a common-law-based test based on a list of factors relating to an employer’s “control” of an employee, often determining that a given H-1B applicant would not have a sufficient relationship as an “employee” of the petitioner. Obtaining a favorable grant of H-1B status also required exhaustive proof of future specialized work availability with the employer.

In response, IT consulting agencies filed 33 separate lawsuits challenging the authority of USCIS to deny petitions based on what they argued were “improper interpretations and applications of the employer-employee relationship, non-speculative work assignment, and itinerary requirements.”7 Earlier this year, in ITServe Alliance v. L. Francis Cissna, U.S. District Court for the District of Columbia partially granted a motion for summary judgment in favor of the plaintiffs after consolidating all 33 cases, resting mainly on the fact that “[n]either the underlying statute nor the regulation has been amended in relevant part since 1991,” nor had USCIS “made [any] changes to the definition” in its 1991 final rule adopting the DOL definition.8

The court ruled that USCIS had “improperly avoided the rulemaking process and, therefore, could not read any single criterion in § 214.2(h)(4)(ii) as mandatory to demonstrate an employer-employee relationship but must consider each sufficient to establish the relationship, including, but not limited to, “otherwise showing control.”9 As a result, the consolidated cases were subsequently settled, and USCIS ordered to rescind policy memoranda “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements (Reference AFM Chapter 31.3(g)(16)), HQ 70/6.2.8 (AD 10-24),” issued January 8, 2010 and “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites, PM-602-0157,” issued February 22, 2018. These were memoranda that had instructed officers to follow a restrictive understanding of what constituted an “employer-employee” relationship, scrutinizing work performed at a third-party location and using a factor-based common law test to evaluate the existence of a qualifying employer-employee relationship for H-1B purposes.

In the ensuing ITServe settlement, USCIS agreed not to interpret the definition of a “United States employer” as to require an analysis of employer-employee relationship under common law. Instead, USCIS was to use the definition of an “employer” set forth in the INS’s 1991 regulation, 8 C.F.R. § 214.2(h)(4)(ii)—the regulation that had been drafted by the DOL and then incorporated by INS as its own. USCIS was also barred from requiring employers to provide proof of non-speculative work assignments for entire duration of visa period.

New Requirements for Employers

In light of the rule’s policy history, it is clear that the new Strengthening the H-1B Program DHS rule stems in significant part from the U.S. district court’s rebuke of USCIS’s prior policy interpretation. In that case, the court had clearly highlighted the agency’s arbitrarily narrow interpretation of existing statutory law and regulations, prompting USCIS’s rulemaking to actually amend the text of the INS 1991 regulation in order to seek its stated policy objectives in scrutinizing the employer-employee relationship.

What Changed?

The new interim final rule generally institutes the guidance in the memoranda that USCIS was forced to rescind earlier this year, altering the regulatory definition of an employer-employee relationship. In addition, DHS has instituted a new provision that a one-year maximum validity period will apply whenever an applicant will be working at a third-party worksite.10

This provision will require affected petitioners to re-file with continuous extension petitions more frequently, thereby incurring more filing costs. The new site visit provisions in the interim final rule clarify that inspections may also include any third-party worksites, as applicable (opening up third-party worksite employers to enforcement liability that would not typically be envisioned in the staffing contractor context).11

As a result of the one-year validity period for workers at third-party worksites, affected petitioners could incur significantly higher filing costs with each extension petition, namely, the 9-11 Response and Biometric Entry-Exit Fee (Pub. L. 114-113 Fee) of $4,000. This fee is required for “H-1B dependent” employers—i.e., employers with more than 50 employees and more than 50% of their workforce in H-1B or L-1 status.

Most employers will not need to worry about such an extensive range of fees—the annual extension fee of USD $4,000 is only required for H-1B dependent employers with more than 50 employees and more than 50% of their workforce in H-1B or L status that also seek to employ workers at third-party worksites (that they do not own or control), such as staffing agencies.12 This presents significantly higher costs in staffing agency scenarios. However, the one-year limitation on petition validity could affect many traditional employers of foreign workers that seek to place clients at third-party worksites (in routine non-staffing contexts, such as medicine, healthcare, or defense industries) where the petitioner does not own, lease, or operate/control the third-party premises.

In evaluating existence of an employer-employee relationship, USCIS is reverting to its “clarifying policy guidance regarding the employer-employee regulation and factors based on the common law that USCIS officers should consider when adjudicating H-1B petitions” (from previously rescinded memorandum “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements (Reference AFM Chapter 31.3(g)(16)), HQ 70/6.2.8 (AD 10-24),” issued January 8, 2010). The rule provides for a factor-based “employer-employee relationship” test based on the common-law agency doctrine enunciated in Nationwide Mutual Insurance Co. v. Darden,13 which assesses the following factors:

  1. Does the petitioner supervise the beneficiary and is such supervision off-site or on-site?
  2. If the supervision is off-site, how does the petitioner maintain such supervision, i.e., weekly calls, reporting back to main office routinely, or site visits by the petitioner?
  3. Does the petitioner have the right to control the work of the beneficiary on a day-to-day basis if such control is required?
  4. Does the petitioner provide the tools or instrumentalities needed for the beneficiary to perform the duties of employment?
  5. Does the petitioner hire, pay, and have the ability to fire the beneficiary?
  6. Does the petitioner evaluate the work-product of the beneficiary, i.e. progress/performance reviews?
  7. Does the petitioner claim the beneficiary for tax purposes?
  8. Does the petitioner provide the beneficiary any type of employee benefits?
  9. Does the beneficiary use proprietary information of the petitioner in order to perform the duties of employment?
  10. Does the beneficiary produce an end-product that is directly linked to the petitioner's line of business?
  11. Does the petitioner have the ability to control the manner and means in which the work product of the beneficiary is accomplished?

The list will be familiar to those aware of the rescinded “Neufeld memo,” a USCIS memorandum dated January 8, 2010,14 which dictated that the petitioner must be able to establish that it has the right to control over when, where, and how the beneficiary performs the job.

In its new IFR, DHS also reiterates that the Court in Darden emphasized that there was “no shorthand formula or magic phrase that can be applied to find the answer, . . . all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.” In the IFR, DHS states that it “does not believe that any one factor should be decisive,” and that “USCIS will assess and weigh all relevant aspects of the relationship.” These are non-exhaustive factors to be considered in the totality of the circumstances in cases where the H-1B beneficiary does not possess an ownership interest in the petitioning organization or entity.”

Perhaps pertinent to note, while not explicitly detailed in the IFR, the Neufeld memo did provide for several examples of what constitutes an employer-employee relationship, and what does not, which may be relevant for reference when determining how the new rule may apply.

According to the now rescinded Neufeld memo, a valid employer-employee relationship would exist in the following scenarios:15

  1. Traditional Employment (exercise of actual control scenario)
  2. Temporary/Occasional Off-Site Employment (right to control scenario)
  3. Long-Term/Permanent Off-Site Employment (right to control specified and actual control is exercised)
  4. Long-Term Placement at a Third-Party Worksite (right to control specified and actual control is exercised)

A valid employer-employee relationship would NOT exist in the following scenarios:16

  1. Self-Employed Beneficiaries (no separation between individual and employing entity; no independent control exercised and no right to control exists)
  2. Independent Contractors (petitioner has no right to control; no exercise of control)
  3. Third-Party Placement/“Job Shop” (petition has no right to control; no exercise of control)

Changes to Evaluation of Specialty Occupation Merits?

Employers will also face an increased burden regarding proof of specialty occupation work. Per new 8 CFR 214.2(h)(4)(ii) (redefining “U.S. employer”), when filing an H-1B petition, an employer must have “non-speculative employment for the beneficiary at the time of filing and must be able to establish that a bona fide job offer exists and that actual work will be available as of the requested start date.” If the petitioner does not have any work available, then it cannot reasonably engage the beneficiary “to work within the United States” in order to qualify as a “United States employer” at the time of filing. We expect additional Requests for Evidence of this nature, which had been commonplace prior to the ITServe Alliance v. L. Francis Cissna settlement.

Also, in adjudicating specialty occupation petitions on the merits, DHS is eliminating the terms “normally,” “common,” and “usually” from the regulatory criteria at 8 CFR 214.2(h)(4)(iii)(A), which states that a bachelor's degree be “normally” required, or “common to the industry,” or that the knowledge required for the position is “usually associated” with at least a bachelor's degree or equivalent. This change means that “a petitioner will have to establish that the bachelor's degree in a specific specialty or its equivalent is a minimum requirement for entry into the occupation in the United States by showing that this is always the requirement for the occupation as a whole, the occupational requirement within the relevant industry, the petitioner's particularized requirement, or because the position is so specialized, complex, or unique that it is necessarily required to perform the duties of the specific position.”17 (emphasis added).

While this change should theoretically have no effect on the H-1B visa program because it was amended to directly mirror the statutory provisions at section 214(i)(1) of the INA, 8 U.S.C. 1184(i)(1) (which have never contained language such as “normally” or “usually”), the revision may cause more Requests for Evidence to be issued or potentially alter the adjudication standard, as officers may interpret the provision as allowing for heightened review. 

As one point of good news for employers, in response to the ITServe court case, DHS has determined it will revise the itinerary requirement at 8 CFR 214.2(h)(2)(i)(B) (for service or training in more than one location) to specify that this particular provision will no longer apply to H-1B petitions, which means that submitting a formal itinerary of supervisors, activities, physical addresses of locations, and specified dates of service will no longer be necessary when employing an individual at more than one location.18

Third-Party Worksites Under Petitioner Control

Many employers have questioned whether they can continue to place employees under their direct supervision at third-party work locations. As one common example, in healthcare contexts, physicians or other healthcare professionals may need to regularly perform services at the petitioner’s primary hospital/facilities, in addition to remote locations at local clinics, partnerships, non-profit organizations, or urgent care centers in the local metropolitan area, some of which are under the control of the petitioner (and some of which may be totally unrelated).

The interim final rule is relatively unambiguous in this case. The key takeaway is that a third-party worksite will be defined as a “worksite, other than the beneficiary’s residence in the U.S., that is not owned or leased, and not operated, by the petitioner.” Thus, if the rule goes into effect, an employer will need to prove that it owns, leases, or operates the third-party worksite or will face the limited one-year petition validity under new 8 CFR 214.2(h)(9)(iii)(A)(1).

To make the determination of whether a beneficiary will be working or placed at a third-party worksite, USCIS will rely on “information contained in the H-1B petition and any accompanying LCA, which must identify each worksite where the beneficiary will work and the name of any third-party entity (secondary entity) at each worksite.” In addition, a petitioner will still need to prove under the new common law test/factor-based analysis that the H-1B applicant remains otherwise under its control based on the enumerated list of new criteria for status as a “U.S. employer” and the “employer-employee relationship.”

When Is It Necessary to Submit Evidence of Available Work?

When a beneficiary will be placed at one or more third-party worksites, DHS will require the petitioner to submit evidence such as contracts, work orders, or other similar evidence (such as a detailed letter from an authorized official at the third-party worksite) to “establish that the beneficiary will perform services in a specialty occupation at the third-party worksite(s), and that the petitioner will have an employer-employee relationship with the beneficiary.”19

However, DHS does clarify that not all third-party placements would necessarily require such extensive “availability of work” evidence when serving at a remote location. DHS gives the example that, “where the beneficiary is placed at a third-party’s worksite, but performs work as part of a team of the petitioner’s employees, including an on-site supervisor employed by the petitioner and who manages the work of the petitioner’s employees, the requirements of the position as established by the petitioner may be determinative.” USCIS will make the determination as to whether the requirements of the petitioner or third-party entity are controlling on a “case-by-case basis,” taking into consideration the totality of the relevant circumstances.

Thus, the provisions provide some flexibility for employers in need of service at multiple locations (in line with traditional amendment requirements requiring a new LCA for long-term work outside of the “area of intended employment”—or metropolitan statistical area). We advise contacting counsel when planning to move an H-1B worker to a secondary site with no relation to the employer as that may trigger the limited one-year validity period, if the rule goes into effect.

DOL Prevailing Wage Interim Final Rule

In tandem with the new DHS rule, Strengthening the H-1B Program, the DOL has also issued its own new interim final rule, Strengthening Wage Protections for Temporary and Permanent Employment of Certain Aliens in the United States, which became effective upon publication on October 8, 2020.20 This rule revises the computation of wage levels under the Department’s four-tiered wage structure based on the Bureau of Labor Statistics’ OES wage survey “to ensure that wages paid to immigrant and nonimmigrant workers are commensurate with the wages of U.S. workers with comparable levels of education, experience, and levels of supervision in the occupation and area of employment.”

For background, a position’s prevailing wage rate (the minimum required wage that an employer must pay as a means of protecting U.S. worker opportunities) is calculated based on geographic location, Standard Occupational Classification (SOC) occupational category, and ascending skill level required for the positon (Wage Level I, II, III, or IV, depending on nature of required skills to perform job duties). The new DOL rule revises upwards the calculation of prevailing wage rates used to support visa applications by 28% at every wage level of the OES wage distribution (which in turn is a function of skills, experience, and education required for the position), as indicated below, resulting in significantly higher required wage rates for employers at all levels:

Wage Level

Previous Wage Standard

New Wage Standard

Level 1 (Entry-Level)

17th Percentile

45th Percentile

Level II (Qualified)

34th Percentile

62nd Percentile

Level III (Experienced)

50th Percentile

78th Percentile

Level IV (Fully Competent)

67th Percentile

95th Percentile

The revised prevailing wage rates will result in substantially higher prevailing (minimum) wage rates for newly filed LCA and PERM applications, which support the H-1B, EB-2, and EB-3 nonimmigrant and immigrant visas classifications. As demonstrated by DHS’s new rule, the H-1B visa program continues to undergo regulatory reform aimed at enhancing the barriers to approval, and we caution that given the increase, employers may want to carefully weigh the implications of selecting a Level I wage rate, which has been historically scrutinized for failing to correspond to a sufficiently high level of work to warrant “specialty occupation” status.

How Can Employers Manage Revised Wage Levels?

In many cases, using an independent authoritative wage survey may be an option for employers. 20 CFR §656.40(g) permits an employer to use an “independent authoritative source,” such as an alternative wage survey, to determine the applicable prevailing wage in both the Form ETA-9035 (Labor Condition Application) and Form ETA-9141 (Application for Prevailing Wage Determination) contexts.

Certain requirements and restrictions apply. For example, the wage survey must be specific to the area of intended employment, align with the job description, be the most current edition of the survey and have been published within 24 months of the date of submission, and represent the arithmetic mean, or the average of the wages of employers similarly employed in the area of intended employment (or median, if no mean is provided).21 Additionally, the employer must include sufficient information about the survey methodology.22

We will be monitoring for needed use of independent alternative surveys to combat issues related to the revised wage levels, particularly in the case of extension petitions where maintaining an employee’s current OES wage level may not be feasible for an employer given the rising prevailing wage rates in the BLS’s OES wage distribution.

Ongoing Litigation Possibilities

The new rules are the subject of multiple lawsuits—three plaintiff groups have filed motions for preliminary injunctions asking the courts to halt implementation while litigation continues. Prominent cases include Chamber of Commerce v. DHS, Case No. 4:20-CV-7331 (N.D. Cal. Oct. 19, 2020), which challenges both the DOL and DHS interim final rules, alleging that the agencies violated the Administrative Procedure Act in failing to follow notice-and-comment rulemaking before making the rules final.23 Purdue v. Scalia, Case No. 1:20-CV-03006 (D.D.C. Oct. 19, 2020) and ITServe Alliance Inc. v. Scalia, Case No. 3:20-14604 (D.N.J. Oct. 16, 2020) similarly challenge the DOL final rule.

We continue to monitor these cases for developments or a possible preliminary injunction as the December 7, 2020 effective date nears, as well as potential changes in policy resulting from the upcoming presidential administration change.

Outlook for Future H-1B Visas

Employers should maintain awareness of prospective regulatory changes, particularly in regard to the brand-new wage levels (which substantially raise prevailing wage rates at all levels for H-1B, EB-2, and EB-3 visa categories), and increased scrutiny of and validity limitations for petitions involving third-party worksite placement.

We will be advising on steps for individual applications impacted by the new rules in the immediate future. 

See Footnotes

1 DHS, Strengthening the H-1B Nonimmigrant Visa Classification Program, 85 Fed. Reg. 63918-63965 (Oct. 8, 2020).

2 H-1B Denial Rates And Numerical Limits As Indicators Of Current Restrictions, National Foundation for American Policy Brief, May 2020,

3 In its interim final rule, DHS cites to instances of staffing agency violations, such as a settlement agreement with a provider of IT staffing and consulting services resolving a claim that one of the provider's offices “discriminated against U.S. workers because of their citizenship status when it posted a job advertisement specifying a preference for non-U.S. citizens who held temporary work visas,” and a U.S. Government Accountability Office report in which “Wage and Hour investigators reported that a large number of the complaints they receive about H-1B employers were related to the activities of staffing companies.”

4 Proposed Rule, Labor Condition Applications and Requirements for Employers Using Aliens on H-1B Visas in Specialty Occupations, 56 Fed. Reg. 37175-01, 37182 (Aug. 5, 1991).

5 See INS Final Rule, Temporary Alien Workers Seeking Classification Under the Immigration and Nationality Act, 56 Fed. Reg. 61111, 61121 (Dec. 2, 1991); see also 8 C.F.R. § 214.2(h)(4)(ii).

6 “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites, PM-602-0157,” issued February 22, 2018.

7 See ITServe Alliance v. L. Francis Cissna, No. 1:18-cv-02350-RMC (D.D.C., Mar. 3, 2020) (available at

8 Id.

9 Id.

10 See new 8 CFR 214.2(h)(9)(iii)(A)(1).

11 See new 8 CFR 214.2(h)(4)(i)(B)(7).

12 See idsee also Consolidated Appropriations Act, 2016, Public Law 114-113, December 18, 2015, 129 Stat 2242.

13 503 U.S. 318 (1992).

14 USCIS, “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements. Additions to Officer’s Field Manual (AFM) Chapter 31.3(g)(15) (AFM Update AD 10-24).” Donald Neufeld, Associate Director, Service Center Operations, Jan. 8, 2010.

15 Id.

16 Id.

17 Strengthening the H-1B Nonimmigrant Visa Classification Program, supra note 1.

18 See new 8 CFR 214.2(h)(2)(i)(B).

19 See new 8 CFR 214.2(h)(4)(iv)(C).

21 20 CFR 656.40(b)(3).

22 20 CFR 656.40(g)(2).

23 Chamber of Commerce v. U.S. Department of Homeland Security, available at

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.