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Two Updates to the H-1B Guest Worker Program Companies Need to Know

By October 23, 2020September 29th, 2022No Comments
graphic of visa passport pen and glasses

The United States Department of Labor (DOL) and the Department of Homeland Security (DHS) recently released two new rules restricting H-1B work visas. The Trump Administration imposed these stricter standards to encourage U.S. companies to hire American workers rather than foreign job-seekers at lower wages.

These new regulations create significant hurdles for U.S.-based employers sponsoring H-1B visas. This article discusses details about the laws and how American companies can compliantly hire workers from other countries.

What Employers Need to Know About the DOL Update

The DOL update significantly raises the minimum wage for workers sponsored for the PERM (Program Electronic Review Management) labor certification, or H-1B, H-1B1, and E-3 nonimmigrant visa classifications.

The new rule raises the required wage, known as the prevailing wage, percentile for every level of sponsored workers. The DOL categorizes workers into one of four levels, one being entry-level workers and four being highly-skilled workers.

The DOL calculates required prevailing wages through Occupational Employment Statistics (OES) data from the Bureau of Labor Statistics (BLS). Prevailing wages are the average salary workers receive in the same occupation, at the same level, and in the same geographic area where the sponsored employee will work.

The percentile increase to the different levels is as follows:

Skill Level Current Percentile Updated Percentile
Level 1 (Entry Level)17%45%
Level 2 (Qualified)34%62%
Level 3 (Experienced)50%78%
Level 4 (Fully Competent)67%95%

This update does not affect current H-1B visa holders, but the government can deny sponsored workers seeking visa extensions if their employers do not raise their salaries to meet the new minimums.

DHS Update Redefines “Specialty Occupations”

The DHS rule restricts the definition of “specialty occupations” for candidates to qualify for an H-1B visa. Traditionally, workers must have a bachelor’s degree or equivalent to earn an H-1B specialty occupation visa. The new regulation tightens the definition of a specialty occupation and explicitly states that workers are not eligible for an H-1B specialty occupation visa if their degree is not specialized for their field. For example, a software engineer would not receive an H-1B visa if they had a bachelor’s degree in economics.

The new regulation also limits agreements where a business sponsors an H-1B visa employee who works primarily at a second company. In these arrangements, H-1B sponsors must prove (through contracts, work orders, or other supporting documentation) that they have an employer-employee relationship with the H-1B recipient. H-1B visas will be valid for only one year in such cases, rather than the current three-year term.

Like the new DOL rule, this rule impacts new H-1B visa applications and current visa holders seeking an extension.

Hire Foreign Workers Quickly and Compliantly

The DOL’s rule took effect on October 8, 2020, while the DHS will enforce its rule in two months. These new regulations are two of the most extensive changes to the H-1B program in decades, and the DHS said the changes impact over one-third of all H-1B petitioners.

These new rules leave many U.S. companies wondering how they can hire foreign workers compliantly. As the new H-1B updates increase salaries and limit qualifying roles for H-1B workers, resourceful companies turn to a global hiring solution like International PEO (Professional Employer Organization) to compliantly and cost-efficiently source top international talent.

With International PEO, Velocity Global hires your overseas employees and becomes their legal Employer of Record. Although International PEO does not allow your workers to legally move to the U.S., it enables companies to hire foreign workers and manage payroll, benefits, and compliance with ease.

Contact our experts today if you have questions about how the immigration update impacts your hiring plans or to learn how International PEO can streamline your global hiring strategy.