Late yesterday evening, 17 organizations, which consist of group of Universities, non-profits, and businesses filed a lawsuit against US Dept of Labor regarding the recent rule on increase in the H1B, PERM Wage Levels & changes. This is the second lawsuit, the first one was filed by ITServe. In this article, we will review the lawsuit summary and key argument points in the lawsuit.
Update : This lawsuit by 17 Organisations does not have a decision yet. But, other lawsuit filed by US Chamber of Commerce had a decision on December 1st. For more info check – Court Cancels H1B Wage Levels, 1 Year H1B Approvals rules.
If you are not familiar with the changes with the H1B, PERM wage levels issue, read New H1B, PERM prevailing wage levels, huge impact.
Background – Why Lawsuit filed ?
The H1B Labor Condition Application (LCA) and PERM Wage Levels have gone up by 40% or more across all the occupations. The wage levels change rule was published by US Dept of Labor(DOL) without any feedback from public. It was directly published as Interim Final Rule. The impact is huge for everyone, so many are going to court to stop this rule. We cover the background extensively with data points, how it impacts 400K or more H1B holders in the first lawsuit summary. For more background info, read those details at ITServe Alliance Lawsuit Summary on H1B Wage Levels Increase
Lawsuit Details filed by 17 Organizations – Who, Where, What
Below are the details of the second Lawsuit that was filed in the H1B Wage Levels increase by DOL
- Case Name, Title : It is tracked under case name “PURDUE UNIVERSITY et al v. SCALIA et all” with case number “1:20-cv-03006-EGS”.
- Case Location : The lawsuit is filed in US District Court in the Washington, DC
- Case Filed by : The lawsuit is filed by 17 Different Organizations. Below are the list of them
- Universities : University of Michigan, Indiana University, Purdue University, Study Mississippi, Scripps College, University of Denver, Bard College, Arizona State University, Northern Arizona University, Chapman University
- Non-profits & Businesses : Information Technology Industry Council, Hodges Bonded Warehouse Inc., United Methodist Homes and Services, Marana Health Center, Dentists for America, International Institute of New England, Physicians for American Healthcare Access
- Lawsuit Represented by : It is a pro bono lawsuit represented by AILA ( American Immigration Lawyers Association) and law firms of Charles Kuck and Greg Siskind
The lawsuit document is about 63 pages and it goes into a lot of details. For easy understanding of everyone we will review key argument points.
Impact/Harm of the New H1B Wage Levels for 17 Organizations
The lawsuit goes into details of the impact for each of the organization.
- Impact to Universities: The universities say that with the wage levels increase, they will not be able to hire international faculty, post-doctoral scholars. It will impact their research, enrollment and ability to provide quality learning. They give statistics of the number of students, staff and research. For instance, University of Michigan files 400 H1B petitions every year and have more than 750 H1B employees. Many of the occupations does not have a data and they are assigned default prevailing wage of $208,000 USD per year.
- Impact to Nonprofit Organizations: All of the non-profits and businesses state the impact to the bigger community due to wage increases for H1B. Below are couple of instances, but there are lot of similar ones listed in lawsuit.
- ‘Dentists of America’ claim that international dentist are the ones who work in many rural and underserved areas, with the singular wage of $208,000 they cannot really work.
- ‘United Methodist Homes and Service’ claims that they operate several rehabilitation and senior care facilities and the wage increases will not help them hire any foreign nurses. They heavily rely on nurses from Philippines and 25% increase in the wage does not help them to provide many of these health care services.
The lawsuit goes into basics of the H1B program, LCA, PERM, H1B1, E3 and the previous INA regulations related to four levels of prevailing wages and then gets in the argument points. Let’s dive into the details now.
Key Argument Points in H1B Wage Levels Lawsuit
Below are the various key argument points that are raised in the Lawsuit.
Irregular Rule-Making to change Wage levels
US Dept of Labor(DOL) did not follow the proper Notice and Comments period for rulemaking. They were supposed to follow the 9 Steps for Federal Rulemaking, but did not do that. The new rule did not follow the procedural requirement as per Administrative Procedure Act (APA). They argue that comments are critical for a rule like this to get feedback and they cannot skip without proper good cause. The good cause exception can only be used in limited situations as per congress and it does not apply to current situation. DOL explanation for skipping the Notice and comments is not justifiable.
OMB Unexplained Waiver of Review
Office of Management and Budget (OMB) did not give explanation on why they waived the review of the DOL’s wage levels increase rule. As per Executive Order 12866, they are supposed to review anything that has impact to economy of $100 million or more. They are supposed to give details on the review and recommendations. Though, the waiver is discretionary of OMB, such waiver has never been used by DOL. Also, the waiver is only applicable to “exigency, safety or other compelling cause and senior polity official must explain the reasons properly related to harm”. In this current case, they did not give any of these explanation. Also, factually, there is no such need.
DOL’s Unsupported and Illogical statements of Good Cause
DOL claims in the rule stating the “overall unemployment due to COVID-19 and the impact of wages of Americans due to the same” as the reason for skipping notice and comments is not logical. It does not meet the requirements of the “good cause exception” for waiving the notice and comments period.
Incorrect Wage Levels Calculations
DOL used a flawed approach to doing the calculations. If we look at current Level 4 wages set at 95th percentile, they are taken as mean(average) of 10th Decile ( 90 to 100). The problem is there are many outliers in the range, who are highly paid and that skews the average wage.
For instance, if let’s say general average wage is about 70K for an job title. Now, let’s say few people are highly paid in that particular job title and make $500K or more, they will artificially skew the average wage of Level 4. The reason is, all these high wage outliers are in the 10th decile (90% to 100 % range in distribution) of the distribution. Using the average of the 10th decile for Level 4 wages will lead to wrong calculation. As Level 4 is going to be wrongly calculated, it also skews and impacts Level 2 and Level 3 wages. So, the overall wage levels computation is flawed.
Speciality Occupation – Level 1 uses Master’s Degree
As per statute, speciality occupation only needs bachelor’s degree. As per new rule by DOL, they have used Master’s degree as benchmark to come up with Level 1 Wage.
Irrational Wages of at least $100 per hour, $208K per year
The H1B prevailing wage OES data that is available at FLCDataCenter is missing for over 15,000 positions. All these positions are set to a default of $100 per hour, which equals to $208,000 per year. The high wage rates for no data available situations are not discussed in the rule and it is not rational.
For instance, newly graduated attorney with no experience in the Washington DC Metro area has to be paid $208K as there is no wage and it is defaulted. It has doubled from $100K. You can check, Comparison of Lawyers Wages before and after Wage Changes. Similar to this, there are thousands of instances and they are not practical. See below screenshot.
Private Surveys , Audits
As there is no data for Wages in many positions, which is at least 15,000 roles, employers will be forced to use costly private surveys and justify their wages, in case there is an audit. As these private surveys wages will be much different from the OES data, as recommended by DOL, there are high chances of audits and it is extra burden for employers.
You may watch the below YouTube video on this lawsuit.
Wage Issues for Health care workers – COVID, Public Harm
Many foreign medical graduates work on J1 for longer duration and serve rural and underserved areas under CONGRAD30 program. Many of them change status to H1B after few years. The wage increase to have minimum of $208K, due to no data is going to have a huge impact of many serving these rural and underserved areas during COVID situation. Same is the situation for any new foreign student who graduates from medical school. These changes are going to have huge impact on the health care system that is struggling to help community during COVID.
Many medical professionals in health care industry like nurses, physical therapists, occupational therapists, dentists and other provide care, therapy service for rapidly aging population in nursing homes, assisted living facilities and hospitals. With the wage changes, many of these professionals will not be able to support the public and it will have a lot of harm to the entire public.
Issues with H1B Extensions, Moving of Jobs
The lawsuit also talks about the issues with H1B extensions as they need to comply with new LCA wages of the rule and how the wages have gone up by over 40%. Also, it talks about the hardships of H1B holders as their families will be forced to leave US. The H1B program is meant to help the US economy by creating jobs for Americans. If US employers cannot hire anyone for some of these positions, these jobs will be moved to overseas and it will ultimately reduce opportunities for Americans.
Those are some of the key argument points raised by the plaintiffs in the case. Now, let’s look at the decision requested.
Decision requested to Court in Lawsuit
The lawsuit says that US Dept of Labor did not follow proper process and did all the changes without proper logic. Many of the aspects of the new rule are unlawful, it does not meet the good cause exception to skip the comment process. The wage level computations are wrong, they did not factor in any proper data and many of the positions have default wages, that are not practical.
- The court should stop US Dept of Labor from implementing the new calculations for Wage levels
- The Court should immediately re-issue all the prevailing wage determinations that were done after the rule went into effect.
- Give relief, injunctions and orders of justice for all the people impacted and represented in the lawsuit. See below screenshot.
This lawsuit tackles a lot of different aspects that were not in the first lawsuit. The fact that 15,000 positions do not have wage data and need to paid $208K for Level 1 is a big point that they raised. Also, the public health situation due to the high wages for health care workers is another big one that is very compelling. Overall, this lawsuit articulates the bigger challenges and impact to the US Research, Jobs and Public Health due to the irrational changes in H1B, PERM wage levels. It is going to be difficult for DOL to justify and counter many of these arguments raised in the lawsuit.
What do you think of this second lawsuit? Your thoughts? You can check out the actual copy of the lawsuit document at AILA Website