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Court Cancels H1B Rules – Wage Levels Change, 1 Year Approval

US District Court in Northern District of California issued an order today (Dec 1st, 2020) that set aside two recent H1B regulations that were issued by US Dept of Labor (DOL) and US Department of Homeland Security (DHS). In this article we will review the background, summary of the judgment, arguments points reviewed by court, what was the court ruling and the next steps.

Background of Lawsuit on H1B Program, Wage Levels Changes.

Earlier in October of this year, DHS published new H1B regulation that changed the below aspects of H1B program:

  • Definition of specialty occupation
  • Changed the employer-employee relationship requirements
  • Evidence of specialty occupation work like MSA, WO, SOW, etc.
  • 1 Year H1B approvals for third party placements
  • New site visits standards, revoke H1B if refused to cooperate.

The DHS rule was set to be effective from December 7th, 2020. You can read more on these changes at DHS New H1B Rules – Definition Change, 1 Year Approval, Site Visits.

Also, in October, US Dept of Labor (DOL) published a regulation that changed the prevailing wage levels of H1B and PERM.  Below is the change.

Prevailing Wage LevelH1B LCA, PERM Wage levels  Before  New H1B LCA, PERM Wage levels  with Regulation  
Wage Level I17th percentile45th percentile
Wage Level II34th  percentile62nd  percentile
Wage Level III50th  percentile78th  percentile
Wage Level IV67th  percentile95th percentile
Wage Levels Changes to H1B, PERM

You can read more on the above at New H1B, PERM Wage Levels Rule by DOL

There were three lawsuits filed by various agencies across the nation. Below are the details

We are waiting on decisions on the first two. The judgment today is on the lawsuit filed US Chamber of Commerce.

The US Chamber of Commerce focused on below aspects in their arguments, court briefs and asked for judgement.

  • DHS & DOL did not follow proper process to issue these rules. It is a violation as per Administrative Procedure Act (APA)
  • The new H1B rules on Wage levels change & H1B program changes are not supported by statue and designed to substantially restrict H1B program.

Now that you have a background, let’s dive into the details.

Summary of the Judgment, Arguments and Court’s Decision Points

The court did not rule judgment in all the issues raised in the lawsuit by plaintiffs (US Chamber of Commerce). The court only focused on one major issue in both the H1B regulations that they did not follow the proper notice and comment period.  The court reviewed the arguments provided by DHS and DOL on the reason to skip the notice and comment period and rule judgment based on that only.

Let’s look at arguments by DHS, DOL and Court’s Decision

DHS’s argument points, Court’s Response & Decision  

DHS’s claimed the below points on the reason to skip notice and comment period.

  • COVID has skyrocketed the general unemployment rate in US and is about 10.2% as of August 7, 2020.
  • The delay in responding to the COVID-19 economic emergency can cause unemployment crisis and would like to have H1B workers not creating disadvantage for US workers.
  • The new H1B rules like change in definition, 1 year approval, other changes will make the program more effective and efficient.

Court’s response in counter of DHS claims are listed below :

  • DHS did not show proper reason to skip the notice and comment period based on “good clause” exception.  
  • The “good cause” clause is only used when there is an emergency and there is real harm to life, property or public safety.
  • DHS cannot use that “good clause” exception for their own delays. They did not do anything for 6 months and suddenly they cannot use excuses for their delays to skip the process.
  • DHS had the regulation item to change the H1B program for a long time since 2017, but they did not take any action all these years.  
  • DHS is generalizing the unemployment rate in all occupations is not fair comparison as the unemployment in H1B visa related areas is lower than the general.  This argument cannot be used as it is too broad. There are proofs submitted by plaintiffs that state the unemployment is low in the H1B holders working areas and it is decreasing even further.
  • In the past, the good cause exception was used in situations like “air travel safety or mine workers safety”, where there was lifesaving importance.  DHS claim to use this in H1B program changes is not acceptable.

DOL’s argument points, Court’s Response & Decision  

US Dept of Labor (DOL) argues and claims the below points for their reason to skip notice and commet period.

  • The widespread unemployment from COVID-19 threatens wages and job prospects of US workers.
  • Advance notice and comment would create and opportunity for US workers to proactively apply for LCAs before the new wage levels goes into effects and get them for few years. Thus will skip notice and comment period.
  • If not changed, this will create an opportunity for employers to hire and train foreign workers at wages below their counterpart US workers.
  • Existing wage levels are artificially low for H1B workers.

You may also watch the below video on the same.

YouTube video

Court’s response in counter of DOL claims are listed in below points :

  • DOL did not use the “good cause” exception properly as there is no reason for them to skip the notice and comment period.
  • DOL issued other regulations during COVID-19 time, that are not a priority. If the wage levels increase was a priority, they should have focused on that, instead they just delayed. So, they are not entitled to use that clause of urgency.  
  • Even though COVID-19 is not in DOL’s control, they had the control to prioritize what to work on and follow process. They cannot excuse their delays and use the “good cause” exception.  They are not entitled and have forfeited their right to use the same.
  • DOL and DHS made changes to polices which employers relied for years and made decision on their planning and budgeting. Now, changing this without giving an option for the business to give feedback is not logical and not viable from business perspective. So, notice and comment period is mandatory to get inputs from all stakeholders.
  • DOL’s quote of few cases that involved environment issues and others cannot be used as they are different situations.
  • There is no proof that tells that employers would take advantage of the notice and comment period duration to apply more LCAs or PERMs to hire lower wage workers. They say based on historical filing patterns, but DOL does not provide any evidence for the same.

Court Judgment on both DOL & DHS New H1B Rule

The court made a judgment that tells that DHS and DOL did not show proper reason to use the “good cause” exception to skip the notice and comment period and issue these H1B related regulations.  Court is issuing an order to set aside(cancel) both the rules related to H1B issued by DHS and DOL. Below is the exact judgment for your review.

Court Judgement on H1B Wage Levels Case
Court Judgement on H1B Wage Levels Case

Next steps ? Confirmation by DOL and DHS?

We have just received the court order that instructs to cancel both the rules. We do not have any update from DHS or DOL yet. We need to wait for their response.  There are few possibilities as listed below

  • DHS and DOL accept the court decision and issue press release stating that they are cancelling both the wage levels change regulation and changes to H1B program regulation.
  • DOL and DHS may appeal the decision.
  • DOL and DHS may go back and start the standard process of Notice and Comment Period to pass these regulations in proper process…

We need to wait and see what happens.

It is unclear on how DOL will handle the Prevailing Wage Determinations that happened in the last couple of months, as it takes up to 5 months. We need to wait for their guidance.

Again, the court did not really review all the aspects of the changes, they only reviewed one key issue on “why notice and comment period was skipped” and gave judgment based on that.

Conclusion

As of now, the court judgment is clear that the two regulations are not valid as they did not follow proper process.  We need to wait for DHS and DOL response to this decision on how they will handle the decision and what guidance they will give. Also, we need to wait for other courts decisions as well on how they turn out to be. We will be able to have more clarity on this only after DHS and DOL give their guidance.

What do you think of the judgment? What are your thoughts?

You can read the copy of judgment below highlighted with key points and text.

Official Court Order on the Wage Levels & H1B Program Changes.

   

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10 Comments

  1. I am not sure how this will affect my current VISA transfer. I am planning to change my job and new employer is in process of filing my H1b transfer. Mostly today they are planning to send case documents to USCIS , my LCA is approved last week. Do you think this changes affect anything in my transfer process, Will there be any issue in this case?

    Reply
    • I am also going to apply LCA to renew my H1B. Did you get your LCA approved under new or old wage rate as published on Foreign Labor Certification Data Center? Thank you in advance for your kind information!

      Reply
  2. @Kumar

    Whats the process when there are numerous lawsuit on the same rule? Can other judges overrule the judgement by the California court, or they will not proceed with the case anymore?

    Reply
  3. If they decide to go ahead with the standard notice and comments process, what’s happens to the current prevailing wage rates that took effect in October? Do they stay or do they revert to how they were before October?

    Reply
  4. Thank you for the post.
    I wonder what the standard process of Notice and Comment Period is like. If DOL decides to go back and start the standard process, how long will it take for the regulation become effective again?

    Reply

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