Federal District Court Vacates Rules on H-1Bs, Prevailing Wages

Earlier this month, a Federal District Court struck down two proposed Trump Administration rules that would have redefined the landscape for H-1B visas. The proposed rules were:

• A Department of Homeland Security (DHS) rule substantially narrowing the types of occupations eligible for H-1B status by:
  • Redefining the definition of “specialty occupation”
  • Limiting the ability to place workers at third-party worksites, and
  • Formalizing procedures for conducting site visits for H-1B employers
• A Department of Labor (DOL) rule reformulating how the prevailing wage levels were defined, with the net impact being a substantial increase in the minimum wage levels that must be paid to H-1B workers

The timing of both the DHS and DOL rules was sudden – the DHS rule was scheduled to go into effect on December 7, and the Department of Labor’s rule took effect immediately when announced on October 8. While the normal procedure for a rule change involves providing notice and the opportunity for public comment, these procedures can be expedited in certain circumstances. In this case, the Trump Administration cited high unemployment caused by the COVID-19 pandemic to justify making these changes without following normal procedures.

In his opinion, U.S. District Judge Jeffrey White of the Federal District Court in the Northern District of California stated that the unemployment caused by the pandemic was not a sufficient justification. He noted that the DHS had been discussing changes to the definition of specialty occupation for at least three years and had stated an intention to change the definition as early as 2017.

In addition, the unemployment rates for occupations that use H-1B visas did not show dramatic increases in unemployment that would justify emergency treatment. On balance, he determined the government did not show an adequate justification to excuse following the normal rules, and as such, the rules were deemed to be illegally enacted.

Following the ruling, the DHS announced that it would comply, and it agreed that the new rules would not go into effect on December 7.  The DOL also announced its intention to comply, and it is in the process of updating its systems to ensure that the wage levels previously used would be back in place by December 9. In addition, they announced that any prevailing wage determination issued between October 8 and December 2 under the higher wage rates would be reconsidered upon request by the employer.

What it means for clients:

• This ruling provides a return to the status quo that existed before October 7
• The ruling prevents the Trump Administration from further restricting immigration in the closing weeks of President Trump’s term
• It provides stability for employers and H-1B visa holders facing uncertainty in renewals

If you have any questions about H-1B visas, prevailing wages or how this ruling may affect you directly, please do not hesitate to Brad Hendrick at bhendrick@celaw.com or 303-443-8010.