These two US rules on H-1B visa can hit Indian IT companies hard

The immigration authorities in the US finalised two rules in the week gone by that can damage Indian IT firms and also Indians. The department of labor’s wage hike rule and stringent regulations that will make it tough to qualify for H-1B visa were finalised as the Trump administration winds down.

The final wage hike rule kicks in 60 days and the H-1B visa regulations 180 days after the date of publication. These were first announced on October 6, 2020 but were blocked by courts. Final rules are promulgated after people have had a chance to comment on them.

What are these final rules?

Wage hikes for H-1B workers

The department of labor (DOL) reissued its interim final rule on wage hikes it first implemented on October 8, 2020. It was struck down by three federal courts on grounds that the agency couldn't have implemented the rule without inviting comments and a notice period. The rule has increased the wages for H-1B workers by as high as 50 percent in certain regions.

The revised final rule announced on January 12, 2021 make some changes. Not only will it come into effect after 60 days, it also says that the hike will be implemented in a phased manner spread over several months.

The agency has also reduced the scale of the hike. For instance, the wage hikes range between 35 percentiles and 90 percentile compared to 45 percentile and 90 percent for the four H-1B wage levels.

Nevertheless, these hikes are still high. Stuart Anderson, Executive Director, National Foundation for American Policy, said in his report that the new DOL wage rule would require employers to pay 28 percent more for computer programmers, making it difficult for companies to employ foreign workers.

If a computer programmer is paid $70,000 per year, the new rule will push the package up by $19,600.

What does it mean for H-1B aspirants and employers?

Immigration law firm Fragomen in a note said the rule would not come into effect till July 1, 2021 since the implementation was phased.

These could be subjected to lawsuits, considering that the wage hike rule was earlier blocked by the courts. “Moreover, the Biden administration could place the wage rule – along with other regulations finalised during the last days of the Trump Administration – on hold in order to review its contents and determine whether it should take effect,” the note said.

Strengthening H-1B visa programme

After the wage hike rule, the department of homeland security implemented a final rule on the employer-employee relationship. The rule, announced on January 14, 2021, will be effective 180 days after the date of publication in the Federal Register.

Under the rule, the employers of the third-party H-1B workers will now have to initiate H-1B for the workers.

Most IT firms initiate H-1B visa for its employees to work for its clients in the US. So far, clients did not have to take part in the H-1B application process. The new rule changes that.

“…by broadening the employer-employee definition, (it) is now requiring the entities who use the services of the H-1B worker to also file H-1B petitions if they meet the broader definition of employer,” Cyrus Mehta, an immigration attorney in the US,  wrote in his blog.

The impact 

The visa rule has the potential to hit the Indian IT industry, which services top US firms. Mehta said the rule was aimed at destroying the Indian IT industry by forcing its clients to file H-1Bs as secondary employers.

“It will also hurt corporate America, which relies on this IT industry to keep humming away, creating jobs, and thus remaining competitive in the global economy. The change will also do significant harm to other sectors as well that involve third-party placements, including nursing, consulting, audit, engineering services among many others,” he added.

But there is hope. The Biden administration takes charge on January 20, 2021 and could stall the implementation of the rule.

“The rule is likely to be politically unpalatable, even to Democrats who disfavor the H-1B visa program, given how overbroad and radical it is, as well as the deleterious impact it would have on the American economy and US companies who use H-1B workers," Mehta said.