By Payroll and Entitlements Editorial Staff
On October 6, 2020, the Department of Labor and Department of Homeland Security jointly announced an interim final rule (IFR) that would reform the prevailing wage calculation used by DOL in its foreign worker programs.
In a briefing, DOL and DHS officials explained that the existing prevailing wage rate methodology led to abuses by employers and resulted in employers bringing in low-paid foreign workers, causing U.S. workers’ wages to stagnant or the complete exclusion of U.S workers from the work force. Under the new rule, the prevailing wage rate paid to H1-B workers would mirror the wages paid to U.S. workers. Further, employers would have to attest that will pay nonimmigrant workers, during the period of authorized employment, the higher of the prevailing wage or the actual wage paid to other employees with similar experience and qualifications.
H1-B system improvements. In addition, DOL and DHS believe that the IFR will significantly improve the H1-B system by:
- Getting rid of "body shops" and "shadow employers," companies that recruit individuals on H1-B visas in order to contract them out to U.S. companies. The new rule would require companies to make "real offers to real employees."
- Narrowing the definition of specialty occupations. The new rule would require the agency to closely adhere to the statutory definition of "specialty occupation." Agency officials argued that the term had been interpreted too broadly in the past. For example, under the IFR, an H1-B applicant would have to possess a bachelor’s degree that is specifically tailored to the area in which he or she will be employed. A general bachelor’s degree would not be acceptable.
Pandemic excuses notice and comment. Agency officials argued that economic shocks to the labor market due to the COVID-19 pandemic required the agencies to take swift action to reform the H1-B system, thus it declined to undergo notice and comment rulemaking and instead opted for the IFR process.
"We have entered an era in which economic security is an integral part of homeland security. Put simply, economic security is homeland security. In response, we must do everything we can within the bounds of the law to make sure the American worker is put first," said Acting Secretary of DHS Chad Wolf in a press release. "The Department of Homeland Security is honored to take this important step toward putting Americans first and to continue to implement President Trump’s agenda to keep our economy secure."
Impact. Acting Deputy Secretary of Homeland Security Ken Cuccinelli anticipates that the IFR will affect approximately one-third of H1-B petitions.
The IFR is scheduled to be published in the Federal Register on October 8; it is effective upon publication.
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