"L-1 Visa and H-1b Visa Reform Act": A Mixed Bag

The FY 2005 Omnibus Appropriations Bill signed into law on December 8, 2004, adopted a mixed bag of changes for US corporate employers hiring H-1b temporary professionals and L-1 intracorporate transferees. All things considered, the high point of the new law - 20,000 new H-1b visas available to foreign degree holders from US graduate schools- came at a steep price that, on balance, may not have been much of a bargain.

In light of substantial lobbying pressure from unions and professional organizations, among others, the "L-1 Visa and H-1b Visa Reform Act" appears intended to make H-1b hiring a somewhat less attractive and more expensive option for employers. Among other things, the legislation:

• Reinstates and increases the "retraining fee" which sunset in 2003;
• Imposes a new $500 "antifraud fee" payable with petitions for new hires;
• Reinstates the "H-1b dependent" attestation and recruitment requirements for companies employing proportionately high numbers of H-1b workers.;
• Empowers the Labor Department to conduct investigations of Labor Condition Application violations based on tips brought by anonymous sources.
  

The bill also bars the outsourcing of intracompany transferees to third party employers where "the effect is essentially an arrangement to provide labor for hire." It also requires intracompany transferees in all instances to have been employed for one year abroad with an entity affiliated with the US employer. Under current law, some larger employers are subject to a six month requirement.

USCIS has confirmed that it is now collecting the retraining fee with the filing of H petitions and that it will begin to collect the $500 antifraud fee commencing March 8, 2005. USCIS has so far not provided guidance with respect to processing of petitions for the 20,000 newly available H-1b visas which will become available on March 8. In the absence of agency guidance and in the expectation of high demand, it would be prudent to file petitions now in order to preserve a place in the processing line.

Please let me know if you have any questions.

Regards,

Chuck Tievsky

Key Provisions of the Legislation:

ADDITIONAL H-1B VISAS

• Exempts 20,000 H-1b visas per year from the current 65,000 visa cap, to be allocated to persons who have earned a masters degree or higher from a United States institution of higher education. To the extent that 20,000 advanced degree petitions are filed in a year, the law effectively increases the cap to 85,000 new visas per year;
  
• The new visas will become available 90 days after enactment, and will be available in FY2005 and beyond. Petitions seeking to employ newly cap exempt workers will presumably be accepted by CIS upon enactment of the legislation (accompanied by the new fees) with a start date no earlier than 90 days after the date the President signs it into law.
  
  

FEE INCREASES

• Reinstitutes and increases the H-1b retraining fee applicable to petitions for initial employment, initial extensions of employment, or a change in employers.
  
• Invokes a new Fraud Prevention fee of $500 applicable to H-1b and L-1 intracompany transfer petitions for initial hiring and employer changes.
  
• The following tables demonstrate the new fee structure as the statute appears to require:

Increase in Government Fees in Typical Cases, Upon Enactment (US$)

 

 

Cumulative Government Fees in Typical Cases, Upon Enactment (US$)

* Premium processing is typically not required for extensions and changes of employer in these cases, but may be advisable depending on the particular facts.

 

** Excludes consular processing fees where employee is obtaining an H-1b visa stamp abroad.

 

*** Within same group of companies.

REINSTATEMENT OF “H-1B DEPENDENT EMPLOYER” ATTESTATION

• Reinstates requirement that “H-1b dependent employers” attest in LCA filings that the employer did not and will not displace a US worker 90 days before or 90 days after filing of the LCA

• H-1b dependent employers defined as
  • Employers with 25 employees, where more than 7 are in H-1b status
  • Employers with 26 to 50 employees, where more than 12 are in H-1b status
  • Employers with 51 ore more employees, where 15% or more are in H-1b status

ANTIFRAUD AND INVESTIGATIVE EFFORTS

• Establishes antifraud coordination efforts among State, Homeland Security, and Labor Departments to be funded by antifraud fees
  
• Secretary of Labor empowered to investigate H1b employers on good cause, based on specific credible evidence;
  
• Establishes whistle blower procedures for persons seeking to identify employer misconduct with respect to employment of nonimmigrant
  
  • DOL will commence a formal administrative hearing with respect to the employer if, as a result of information provided to it, DOL finds that an employer has:
    • “committed a willful failure” to meet a condition attested to in a Labor Condition Applications (LCAs) (e.g., payment of the prevailing wage to foreign workers);
    • “engaged in a pattern or practice of failures” to meet LCA conditions, or
    • “committed a “substantial failure” to meet an LCA involving multiple employees.
  • Affirmative finding of violation by Labor department can, under existing law, result in fines, liability for back wages, and a bar to filing LCAs in the future.
  • Establishes a good faith compliance defense with respect to technical noncompliance, unless pattern or practice demonstrated
  • Labor’s investigative authority imposed retroactively to October 1, 2003 .

CHANGES PREVAILING WAGE DETERMINATIONS AND OBLIGATIONS

• Compels employers to pay 100% of the prevailing wage to H-1b holders, up from 95% presently required under current DOL rules.
  
• Compels DOL to adopt a more realistic wage survey using four tiers rather than two.
  • Could have the beneficial effect of permitting a wider range of proposed H-1b wages to qualify as local prevailing wages for an H-1b position
  • Requires DOL survey results to take greater consideration of experience levels
• Effect of statutory formula on survey wage for Computer Software Engineer, Applications, in the Washington, D.C. Metropolitan Area:

• Current Survey Results
• Level I (Entry Level): $43784

• Level II: $82098
  

• New Four Level Survey Required by Statutes
  • Level I:$43784
  • Level II:$56555
  • Level III:$69327
  • Level IV:$82098
• Rules for determining experience ranges for these levels will have to be established by DOL.
• Implementation could create significant confusion, but employers may continue to use

 

CHANGES TO L-1 (INTRACOMPANY TRANSFER) VISAS

• Bars issuance of L-1 visas to “specialized knowledge” workers where the petitioner intends to outsource the worker to an unaffiliated company which control the employees’ day-to-day activities or where the placement “is essentially an arrangement to provide labor for hire".
  
  • Eliminates six months minimum employment threshold for blanket L-1 grants, establishing parity with one year employment requirement applicable to individual filings
    
  • DHS Inspector General to report to Congress within six months with respect to L-1 visa fraud; State, DHS, and Justice to establish a task force to report to Congress on implementation of Inspector General’s report

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