H1B Lottery based on Wage Levels Rule Information

H1B Lottery to be based on Wage Levels, Impacts 163K H1B filings

In H1B Visa by KumarUpdated : 24 Comments

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.

If you are new to the H1B process, first read What is H1B Registration Process, Lottery and What is H1B Lottery, Current process, History

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.
H1B Wage Levels Distribution for Selected in Lottery
H1B Wage Levels Distribution for Selected in Lottery FY 2019, 2020

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.  

You can Search for H1B Prevailing Wage Levels for last 5 years by SOC Code

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 Visa Registration Process Lottery Order and Process Diagram Flow
H1B Lottery order

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.

Wage Level to be Listed on H1B Registration from Rule Text
Wage Level to be Listed on H1B Registration from Rule Text

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.

Impacted H1B Registrations with New Wage Levels Lottery
Impacted H1B Registrations with New Wage Levels Lottery

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 Facebook vs Infosys
H1B Wage Levels Distribution for Facebook vs Infosys

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.  

Rule Set to be published on Nov 2-2020
Rule Set to be published on Nov 2-2020

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?

Reference : USCIS press Release , Official Regulation Document

   

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Comments ( 24 )

  1. Praveen

    Any final answer for the prevailing wage rule is expected from court this month?
    For renewal of H1B you need to renew the LCA and will the new rule (IFR)is applicable .

    Thank you
    Praveen

    1. administrator
      Kumar

      Praveen,
      No decision yet. Yes, you would usually need new LCA for the H1B extension. Yes, the new wage rules are applicable. But you may speak to your attorney and see, if they can use other wage surveys.

  2. Eager

    Which Wage levels would be considered while categorizing application? Is it recently updated one (with higher wages) or the older one (lower wages)?

    1. h1baspirant

      The new wage levels have been challenged in the court. Whether new/old wage levels will be used is dependent on court’s decision.

  3. Martja

    Hi Kumar,

    I was granted a National Interest Exemption (H1B) today but my work doesn’t start until January 10th.

    My Embassy did not say anything about having 30 days to enter. When should I get in?? (i know there’s a 10 day rule but doesn’t this apply to the date of your i-797? The date on my i-797 is October 1st)

    Please help!!

  4. Ram

    Hi Kumar,

    I got my H1B approved this year and need to get it stamped. However my spouse and kid’s petition for dependent visa is still pending. They are on F2 dependent visa.

    Can i change my employer while my spouse and kid petition is pending?

    Regards
    Ram

  5. Waqas Malik

    Hi Kumar,
    Will this impact the selected candidates in 2021 lottery this year? As my petition has been approved but stamping not done yet.

      1. Question20

        If Passed, what is the target date to effective?

        Is it likely to be effective in March/April 2021 lottery for next batch of H1B 2022?

  6. ST

    Hi Kumar,

    I have a question related to the elimination of lottery for next year based on new Wage rule. How will USCIS categorize the H1B registration as Level IV and Level III for the same OES /SOC code considering the fact that the prevailing wages are location specific. For ex: for the same OES code for the Non-Metropolitan cities somebody who is at Level-III would be at Level-II in the Metropolitan Cities. How would USCIS take that into consideration or will it just go by the Wage Categorization as mentioned in the H1B registration form during the initial submission?

    Thank you very much for your time as always!

    1. administrator
      Kumar

      ST,
      The employer has to declare during registration, where and what level the LCA will be filed ahead of time. This will be used for the lottery for wage levels. As per current text, they will go by wage level selected by employer during submission of registration.

  7. Realist

    This is a right thing and people with a simple 1.5 yr Masters in Comp Sci or IT can be discouraged, from displacing experienced and older workers, by joining consulting companies. But people with deep PhD level experience in future areas such as Nanotechnology, Material Science, Bioinformatics will find it difficult to be hired by Startup companies, which will never be able to pay such high salaries.

    Actually there is a real tech talent shortage in hardware engineering and industrial research areas in the U.S. But the IT field and outsourcing companies have placed such a dominating effect on H1B system that many people with PhD’s in science and Engineering were denied offer letters for the fear of not being selected especially by startup’s companies. This is slowing down the innovation in Science and Technology areas. This new rule might loosen up some visa’s for such situations but still it has to be addressed by having a separate non-IT H1B quota especially for startups in Engineering/Science and Technology areas .

    1. Freddy

      its unfortunate that it has come to this. I think its time to first stop the outsourcing companies blatantly hiring cheap labor from India and replace the American working. Phds , research , architecture have to take a back seat now. We have been listening to this for so long now. No research scholars from India have developed COVID vaccine so far with the current open H1b system. Again DHS attempt to curb the abuse of H1b system is commendable !!!!

  8. Ahire

    when the applications are received for H1b they are for developers or architect positions but it seems the H1B’s are taking up jobs of BA’s and QA’s they are supposed to be hired only specialised qualified jobs which no Americans are available, they are depriving Americans of the local jobs. It is illegal for them to be hired by the IT companies for the positions, Homeland Security should look into this

  9. freddy

    This rule is long over due. Applicants who are offered 167K and 82 K are treated same in the lottery picking up process. DHS is laser focused on cutting down the Outsourcing and third party H1B hiring process.

    1. Justcommenting

      Yep, salary grade should be considered in picking applicants.

      More experienced and experts should get priority. Lottery is just defeating the purpose of hiring the “real” skilled and experts.

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