Having instituted a new on-line registration process for Cap H-1B petitions last year, on November 2, 2020, the Department of Homeland Security (DHS) issued a notice of proposed rulemaking to replace the random selection process with a process that prioritizes H-1B petitions with the highest wage levels.

DHS sees wage levels as a proxy for skill level and is proposing this change to align with the Trump Administration’s desire to provide H-1B visas only to the “best and the brightest.” DHS plans to make this change through rulemaking even though the agency notes in the rule itself that it was previously of the opinion that basing selection prioritization on factors other than degree level, such as salary, would require legislation.

Under the  proposed rule, Modification of Registration Requirement for Petitioners Seeking To File Cap-Subject H-1B Petitions (the Modification Rule), the U.S. Citizenship and Immigration Services will prioritize the selection of cases based on the highest wage levels for the SOC Codes in the area(s) of intended employment – starting with Level IV and moving downward. Cases that use private wage surveys rather than Occupational Employment Statistics (OES) wages would be classified as Level I or below.

Wage level has not previously been a factor in the lottery selection process, including last year’s registration process where no information about the proffered position was required. The only substantive question was about whether the beneficiary held a U.S. Master’s degree or higher. If the proposed rule goes into effect, information including the wage level, the SOC code, and the area(s) of intended employment will be needed.

The Modification Rule is the third in a trio of recently announced rules that are dramatically changing the H-1B process. The first, issued by the Department of Labor, raised prevailing wages, essentially eliminating all entry-level wages for H and E-3 visas. This rule is already in effect. The second, set to go into effect in December, changes the definitions of “specialty occupation” and the “employer-employee relationship.” DHS has predicted that with these changes, one-third of H-1B petitions will be denied. Both these rules were promulgated as interim final rules and have already been challenged in court.

There will be a 31-day substantive comment period until December 2, 2020. DHS is promoting the idea that elimination of the random selection process will make it possible for petitioners to potentially improve their chances of selection by agreeing to pay higher wages to H-1B workers. However, because prioritizing by wage level will effectively preclude most entry and lower experience positions, many companies will find they are no longer able to realistically rely on H-1B employees.  It is expected that the Modification Rule, like the others in the trio, will become the subject of litigation.

Jackson Lewis attorneys will continue to follow the progress of this rule and provide updates as they become available.

Earlier today, USCIS announced it is implementing the registration process in the next H-1B lottery. H-1B employers have been awaiting confirmation of and details regarding the new registration process for H-1B cap-subject petitions.

Every “cap season,” employers prepare and file petitions subject to the annual H-1B cap in early April. Beneficiaries of petitions selected in the H-1B lottery can, upon approval of those petitions, commence employment for the sponsoring employers as of the following October 1. For the fiscal year 2021 cap, employers will undergo a new process that USCIS says “will dramatically streamline processing by reducing paperwork and data exchange, and will provide an overall cost savings to petitioning employers.”

DHS formally created the H-1B registration requirement in the final rule published on January 31, 2019, which took effect on April 1, 2019. Per the final rule published November 8, 2019, employers filing cap-subject petitions for the fiscal year 2021 cap will be required to first electronically register and pay the associated $10 H-1B registration fee. That final rule is effective December 9, 2019.

Among the announced requirements, features and steps of the H-1B cap registration process are:

  • Employers must complete a registration process requiring only basic information about the company and each beneficiary.
  • USCIS will open an initial registration period from March 1, 2020 through March 20, 2020.
  • The H-1B lottery, if needed, will then be run on the electronic registrations received.
  • Employers whose registrations are selected will be eligible to file H-1B cap-subject petitions within the prescribed timeframe.
  • USCIS will post step-by-step instructions informing registrants how to complete the online registration process along with key dates and timelines as the initial registration period nears.
  • USCIS will conduct public engagements and other outreach activities to ensure registrants’ and interested parties’ familiarity with the new registration system.
  • USCIS may determine it is necessary to continue accepting registrations, or open an additional registration period, if it does not receive enough registrations and subsequent petitions projected to reach the numerical allocations.
  • DHS will publish a notice in the Federal Register in the coming weeks to formally announce implementation of the H-1B registration system and provide additional details on the process.

We will provide further updates as USCIS announces additional details and instructions leading up to the initial registration period. We also encourage employers to consider their hiring needs and potential candidates, and gather the basic information necessary for initial registration as early as possible. As there may be “growing pains” associated with USCIS’s first-time use of this new process, it is not too early to start preparing.