DHS announced a new H1B rule today that will change the way H1B registration lottery is conducted. DHS plans to change the H1B lottery selection based on the prevailing wage that employer plans to offer for that position. DHS is seeking public comments as part of the regulatory process. This rule is not final yet, but in the process.
Trump administration has come up with many new H1B rules in recent times. The current rule to comes on top of the recent H1B Prevailing Wage Levels Increases rule by DOL and H1B Definition Change, 1 year approvals Rule by USCIS. In this article, we will review the background on why change in lottery selection, what is changing and how the new proposed process of wage levels would work for new lottery, impact to companies.
Update : On January 7th, 2021 , DHS Published a final rule of this proposed rule. Read DHS Final Rule – H1B Lottery to be based on Wage Levels
Background – Why Change in H1B Lottery Process ?
DHS states the primary reasons for change in the H1B Lottery process as listed below:
- To protect US workers as per Buy American, Hire American Executive Order
- President proclamation to suspend entry of H1B, L1 to protect US Jobs. Also, to ensure that H1B workers do not create any disadvantage for of US workers
- As per current H1B cap stats, majority of the H1B cap subject petitions are for Level 1 and Level 2 wage levels. This contradicts the statute for H1B program that says to fill labor shortage in US with high skilled workers.
- Based on the data from USCIS, about 85% of Regular Cap petitions are in Wage Level 1 and Wage Level 2. For Masters Cap petitions, it is even high with 90% of them in Wage Level 1 and Wage Level 2. See below distribution as listed in the regulation text.
- As H1B program is aimed at attracting high skilled workers, basing the selection based on Salary would attract better skilled workers. In general, higher salary or wage level means the person in that job role is better skilled than lower wage level candidates.
- Also, they say that selection of H1B petitions based on lottery does not provide the option to attract best skilled workers to US.
- As per DHS, Congress left the authority to their discretion for situations like lottery.
Now that we know the background, let’s dive in and review the changes.
H1B Lottery to be based on Wage Levels – General info
This new H1B rule for changing H1B lottery process by DHS will be published to seek public comments first. It is published in federal register under the process step called “Notice of proposed rulemaking (NPRM)”. As part of the regulatory process, the new rule has to go through 9 Steps of Federal Rulemaking . So, some of the things in the rule may change after the public comments are reviewed. DHS is obligated to review all comments by public and give feedback, accommodate the changes as requested by public, wherever possible.
The new regulation document is exactly 100 pages, we will review the key aspects of the regulation as sections below for easy understanding.
If you are not aware of SOC Code, H1B Wage Levels, let’s look at basics.
Basics : H1B LCA – Wage Levels, SOC Code
In general, every H1B petition filed with USCIS requires a Labor Condition Application (LCA) certified by US Dept of Labor. The LCA has two key things related to position : 1. Standard Occupation Classification (SOC) code, which is nothing but the job title classification and 2. Prevailing Wage Level for the sponsored H1B position. It will be usually Level I, Level II, Level III or Level IV. The wage levels determine the base salary to be paid to the H1B employee. The wage levels vary by Location.
If you are new to the Wage Levels concept and LCA, you should read What are H1B Wage Levels, How to Find ? and What is H1B LCA, what does it have ?. These articles have all the details you need to know on wage levels and LCA.
H1B Lottery Selection as per LCA Wage Levels for Position
DHS believes that wage level is a good indication of the skill level and their data supports it. So, as per the new regulation, all H1B registrations that are submitted will be ranked and ordered as per the Wage levels. The wage level for H1B position will be indicated by employer during registration process. Basically, DHS would sort all the H1B registrations by highest OES wage level to lowest wage level and then pick the ones with highest wage level first when they do lottery.
Essentially, they will sort the H1B registrations in descending order from Wage Level IV, followed by Level III, Level II and Level I. They will pick the H1B registrations of Level IV, followed by Level III, then Level II and lastly Level I to meet the H1B quota cap of 85,000.
How many estimated H1B Registrations would be picked?
As you know, USCIS always selects more H1B registrations than 85,000 cap to account for denials, revoke, withdrawals. As per the stats in the rule text, for FY 2019 & FY 2020 years, they selected 110,376 and 109,283 petitions respectively to fill H1B total cap of 85,000. So, now with new rule as well, it does not change much and USCIS would pick approximately 110K (83K Regular, 27K Masters) registrations based on the previous two years statistics.
Now, there is an exception for using the above wage levels bases selection for lottery. Let’s look at that below.
Less H1B Registrations than H1B Cap of 85K
The H1B Registration period for FY 2021 was open for 20 days from March 1st through March 20th. During the registration period, if there are less H1B registrations or Less H1B petitions filings(when registration process is suspended for any year), then USCIS will not use the above wage level lottery process.
The reason is there is no need for lottery in such context. They will accept all the H1B petitions that are filed in a year. History tells that this situation may never happen due to extreme demand. USCIS had H1B lottery for the last consecutive 8 years since FY 2014. Last year for H1B Visa 2021 Season had about 275K registrations. You can check H1B Cap Reach History, Counts FY 2004 to FY 2021
What happens, when there are more registrations or petitions having the same wage level. Let’s look at that.
Many H1B Registrations on Same H1B Wage Level
If there are more H1B registrations on the same wage level, then DHS will conduct random selection or lottery for selecting the registrations in that wage level. This will only be applied to the wage level that has more registrations.
Example: Let’s say in the first run, DHS have selected Level IV and Level III to meet about 60K slots out of 85K cap. Now, they are left with 25K slots open to meet the cap. Now, imagine they have about 100K registrations with Level II wage in the pool, then DHS would run lottery to pick the 25K slots from the 100K Level II wage registrations. They will ignore the Level I registrations as they are not required to be considered as pe the change.
Multiple Locations in H1B LCA – Multiple Wage Levels
In the LCA, an employer can specify multiple locations of work for the H1B worker. In such cases, there will be multiple prevailing wage levels by location. In such cases, DHS would use the lowest corresponding wage level from the list of locations, wage levels during the lottery selection.
H1B Amendments and Extensions after Lottery
DHS also says that, after the H1B lottery is done based on the Wage Levels, the employer cannot amend the petition for the same beneficiary to a lower wage level. If they do so, they will be revoked. This is avoid employers to game the system by putting higher wage levels during lottery and then change them to lower wage levels.
Now, let’s look at the H1B lottery order that was changed couple years ago.
You may watch the below YouTube Video that covert this topic.
No Change in order of the H1B Lottery for Regular vs Masters
DHS is not changing the order of H1B lottery. It will be used as it exists today. The current lottery order is to select registrations to meet Regular Quota cap(65K) first, then select for the master’s quota(20K) cap. It works as illustrated in below flowchart image.
H1B Registrations System with Wage Levels based Lottery
As you all know, employers who plan to sponsor H1B should submit their entries in an Online H1B Registration Tool System. Now, with the new Wage Levels based lottery selection, employers need to also enter the SOC Code, Area of employment and Wage Level of the H1B position that they plan to sponsor.
DHS say that H1B LCA approval is not needed for registration, but it has to be done in good faith under oath indicating the expected H1B Wage Level and SOC Code for the position. See below screenshot from the actual regulation document.
What if No OES Wage Rates for SOC Code, Location?
In cases, where there is no OES Wage rates for an SOC code and location, then they suggest to follow the DOL recommendation and guidance. DHS is also seeking suggestions to handle this situation. Also, when such wage rates are not there, employer may use something similar
Impact of the new Wage Levels based H1B Lottery
DHS has done forecasting to assess the impact with the new wage levels-based lottery based on FY 2021 H1B registrations data. As per their analysis, the entire Wage Level 1 & below will be eliminated and only 75% of Wage Level 2 would be selected from regular cap registrations and only 20% of the Master’s Cap registrations would be selected under the new change.
The impact would be about approximately 66,000 (Level I – 46K + Level II – 20K) for regular cap registrations and 97,000 (Level I – 45K + Level 2 – 52K) for Masters cap registrations. If we sum up the total, it will impact 163,000 H1B Registrations. See below table from the regulation.
Check H1B Wage Levels by Distribution by Company
Now that we know the impact, it is important for you to understand the LCA wage Levels distribution for your or new company that you plan to join. This will help you assess and plan ahead when you are Finding a H1B Sponsor for next fiscal year. H1BGrader.com has built up a feature that lets you find wage levels distribution by year for a company.
You can check: Find H1B Wage Levels Distribution by Company
Below are few examples by Company Type, sample screenshot.
- H1B Wage Levels Distribution for: Microsoft, Google, Facebook , LinkedIn, Uber, AWS.
- H1B Wage Levels Distribution for : Cognizant, Infosys, TCS , Accenture, HCL , Capgemini
Next Steps on H1B Wage Levels Lottery Rule
DHS has put in the draft version in the Federal Register. It is set to be published on November 2, 2020 ( see below screenshot). Here is the draft unpublished version. DHS will open the public comment period for 30 days from November 2, 2020. Also, they will give 60 days to get comments relevant to the information collection.
Will there be lawsuit on this new rule ?
Well, the rule is not final and not effective. DHS is seeking public comments. So, until the rule is final, there will not be any lawsuit. If there is any DHS violation, they will be addressed or indicated in Public comments. If USCIS corrects them in final rule, there may not be lawsuit. Also, they are following proper regulatory process with public comments first. So, there is no lawsuit potential at the moment. Once the final rule comes out, we do not know what can happen…
What do you think of the new Wage Levels based H1B Lottery? Your thoughts?