On October 8, 2020, the Department of Homeland Security (DHS) published an interim final rule (IFR), which proposes significant changes to the longstanding regulations governing the H-1B visa program.

The proposed rule is slated to go into effect on December 7, 2020 and it includes the following changes for the H1B program:  

A restrictive interpretation of the definition and adjudicatory standard for “Specialty Occupation.” Under the current rules, a “Specialty Occupation” is defined as “an occupation that requires (a) theoretical and practical application of a body of highly specialized knowledge and (b) attainment of a bachelor’s or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States.”  The proposed rule narrowly interprets this definition to mean those occupations that require a specific degree to perform the job.

Under the current rule, a US employer/ H1B petitioner has to establish that a bachelor’s degree is “normally,” “commonly,” or “usually” required.  Under the new rule, an employer will have to establish that a bachelor’s degree in a specific specialty or its equivalent is the minimum requirement for entry into the occupation in the United States. Thus, an H1B petitioner employer would have to show that the required degree is always:

  • The requirement for the occupation.
  • The occupational requirement within the relevant industry.
  • The petitioner’s particularized requirement; or
  • The position is so specialized, complex, or unique that it is necessarily required to perform the specific job’s duties.

The proposed regulation is likely to cause significant problems for employers seeking to hire H1B workers. There are many common H1B occupations that require education in a combination of fields or for which a specific degree does not exist.

For example, a Data Analyst position is not linked to any one degree in particular but several different bachelor’s degrees can provide training for a job in data analytics. The industry does not have a specific standard as the job often depends on the US employer’s business. One can become a Data Analyst by studying computer science, statistics, or applied mathematics.

Even though it is clear that a Data Analyst is a specialty occupation under the current H1B rules, under the new rule, USCIS could deny such an H1B petition because the beneficiary does not have a degree in Data Analytics, specifically, or USCIS could not find a direct relationship between the required degree field(s) and the duties of the position.

Restrictions on “third-party” worksites.  The proposed regulation limits the H1B approval validity period for third-party placement petitions to a maximum of one year. Currently, such petitions are not treated differently and are eligible for the standard three-year validity period. Though the objective may be to prevent outsourcing of IT workers, one of the unintended consequences would be complications for H1B physicians employed at hospitals.

In many states, hospitals are not allowed to directly employ physicians even though the physicians’ services are essential for the hospital operations.  The standard hiring practice is for the hospital to contract with a medical practice for physicians to provide hospital care. It will be difficult for the physician employers to seek an H1B extension every year. This could potentially further limit the availability of physician services in underserved, rural areas of the US.

Restrictive Interpretation of Employer-Employee Relationship.  The proposed rule defines the term “employer-employee relationship” to be the “conventional master-servant relationship as understood by common-law agency doctrine.” Though it includes a non-exhaustive list of factors to be considered in the totality of the circumstance’s analysis, it takes into account if the employer has “the right to control” the employee’s work as one of the enumerated factors, and USCIS will also look at whether the employer exercises that right to control.

This again presents issues for H-1B professionals such as physicians working at hospitals whose work is not actually controlled by the employers, or management consultants working at a client site. Though a US petitioner can provide appropriate and readily available documents as per the industry standards, such as contracts, work orders, or other similar evidence, it will be burdensome and at times impossible for the H-1B emplyers to prove that all tasks and job duties of the H-1B employee at the client site are controlled by the employer. 

The proposed rule includes several additional changes as follows:

  1. Requires that USCIS provide a written explanation when it approves a petition for an earlier validity period end date than requested.
  2. Amends the general itinerary provision to clarify that the H-1B petition does not have to provide an itinerary for multiple work locations.
  3. Codifies USCIS’s authority to conduct site visits and describes the scope of inspections. It specifies that a failure or refusal of the petitioner or a third-party to cooperate with a site visit may be grounds for denial or revocation of any H-1B petition for H-1B workers performing services at the location or locations subject to inspection, including any third-party worksites.

Two lawsuits seeking to enjoin the proposed rule are pending in Federal District Courts for New Jersey and Northern California. Decisions are expected before December 7, 2020.

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ETA (January 20, 2021):

Today, January 20th, the Biden Administration placed a temporary, 60-day regulatory freeze on certain rulemaking, including the rule listed below. As such, the implementation of this rule is suspended.

ETA (December 1, 2020):

As expected, USCIS and DHS final rules we discussed below were challenged in federal court. On December 1, 2020, the U.S. District Court for the Northern District of California granted the plaintiffs’ motion for partial summary judgement, and set aside the Department of Homeland Security interim final rule (as well as a related final rule from DOL). The Judge’s order blocks the rules from being enforced or implemented. Read the court’s order and judgement, which found that the agencies did not have just cause to promulgate the rules without proper notice to the public and comments from the public. The case is Chamber of Commerce et al. v. DHS et al., Case No. 4:20-CV-7331 (N.D. Ca., October 19, 2020)

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