Trump Administration Publishes Pair of “Midnight Rules" on H-1B Visas

January 15, 2021

Just days before President-elect Biden is inaugurated, the Trump administration has finalized two rules that would place severe limitations on companies looking to hire junior employees on H-1B visas. 

Rule on wages:  Last October, the Trump administration published an interim final rule (IFR) significantly raising wage requirements for H-1B workers.  Federal courts struck down the rule on the grounds that it was introduced improperly under the Administrative Procedures Act.  However, the rulings did not touch on the content of the regulation.

  • The revamped regulation increases mandated pay for H-1B workers at slightly lower rates than the IFR introduced last October.  The new regulation will particularly increase pay requirements for H-1B workers who are level 1 (entry-level talent) and level 4 (“fully competent” talent) in the government’s four-tier H-1B wage structure that determines prevailing wages for H-1B workers. 

  • The Labor Department will phase in the new wage requirements over the next 18 months for many H-1B positions and 3.5 years for H-1B workers on track to become lawful permanent residents. 

Rule on selection process:  The final rule creates a wage-based H-1B visa allocation process, a departure from the randomized selection process now used. 

  • Junior H-1B workers at risk:  The Department predicts no level 1 workers would be chosen under the new rule.  Further, a significant percentage of those at level 2 would not be chosen.

  • The rule applies only to H-1B quota cases, and not to H-1B amendments, extensions, or transfers.

Rules to be frozen:  The Biden administration will issue a regulatory freeze on January 20, creating an opportunity for reconsideration of the rules.  The wage rule and selection rule would otherwise become effective on June 30th and March 9th, respectively. 

Outlook:  Both regulations will be challenged in court.  Meanwhile, the Biden administration has promised to establish “a wage-based allocation process and establish enforcement mechanisms to ensure [high-skilled visas] are aligned with the labor market and not used to undermine wages."  It remains to be seen how long the Biden administration chooses to delay the rules, and whether they will submit another rule in its place.