Donald Trump speaks in Kenosha, Wisconsin, on April 18, 2017, prior to signing the Buy American and ... [+]
The year 2020 is unlikely to be an improvement over 2019 for companies that hire foreign-born scientists and engineers on H-1B visas. Companies should expect 2020 to bring more restrictions.
An H-1B is generally the only practical way for an international student or a high-skilled foreign national educated abroad to work long-term in the United States. Under Trump administration policies, denial rates for H-1B petitions for initial employment (primarily new employees) quadrupled, “rising from 6% in FY 2015 to 24% through the third quarter of FY 2019,” according to a National Foundation for American Policy analysis. “The 12% denial rate for continuing employment [mostly for existing employees] is also historically high – 4 times higher than the denial rate of only 3% for H-1B petitions for continuing employment as recently as FY 2015.”
In a stable policy environment that adheres to the law and regulations, H-1B denial rates should be extremely low, since, given the time and expense, companies and attorneys only submit applications for individuals they believe meet the legal requirements.
Three developments in 2020 may affect H-1B visas. First, U.S. Citizenship and Immigration Services (USCIS) has announced it will implement an electronic registration for “petitioners seeking to file H-1B cap-subject petitions.” A $10 fee will be charged for each registration. “You may submit as many beneficiaries as you would like for one registrant (employer/agent) in one registration,” according to information on the USCIS H-1B registration tool released online. Employers would list each professional and he or she would be entered into the “lottery” held in April each year for 65,000 H-1B petitions and the 20,000-exemption from the annual limit for foreign nationals with advanced degrees from U.S. universities. “USCIS will open an initial registration period from March 1 through March 20, 2020,” according to an agency press release.
“The new H-1B registration system will likely dramatically increase initial applications,” said Dagmar Butte, a partner at Parker, Butte & Lane, in an interview. She thinks smaller employers potentially could be “squeezed out” under the new system. “In addition, since the government has not been entirely clear about the post-selection process and timing, it is likely that a scramble to complete and file petitions will ensue that will create significant time pressure on employers and their attorneys.”
This assumes the system is implemented in 2020. “Our worst nightmare is that the announced electronic registration system for the lottery either doesn’t work as intended or is stopped at the 11th hour and leaves hundreds of thousands of potential applications unprepared,” said Butte. “Most attorneys recommend that employers have at least a skeletal application ready to go in case USCIS decides to scrap the registration at the last minute.” There is also a potential for problems at the Department of Labor, which could experience an influx of labor condition applications (another part of the H-1B process) after the lottery selections are made.
A second development in 2020 is the potential impact of a new H-1B regulation. USCIS plans to publish a rule that would “revise the definition of specialty occupation . . . and revise the definition of employment and employer-employee relationship.” Employers should anticipate a far-reaching rule.
“Undoubtedly they will push the boundaries and aim for long-term, structural changes to the H-1B visa category,” said Lynden Melmed, a partner at Berry Appleman & Leiden and former Chief Counsel for USCIS, in an interview. Melmed thinks if the agency goes too far with the regulation it risks a court injunction.
As discussed here, USCIS may place into regulation the theory behind a March 31, 2017, internal document now used in adjudications that excludes computer programmers from qualifying as a specialty occupation. What would that mean? That means adjudicators could deny a position qualifies as a specialty occupation “where the [DOL] Occupational Outlook Handbook does not specify that the minimum requirement for a particular position is normally a bachelor’s or higher degree in a specific specialty,” according to the USCIS internal document. This could introduce even more uncertainty into the adjudications process.
The second part of the regulation – revising the definition of employment and employer-employee” – could also present problems for many companies and their customers. Information technology (IT) services companies and other businesses that place employees at customer locations have already experienced much higher H-1B denial rates than other companies. USCIS will likely attempt to “lock in” its current practices through a regulation.
To understand what that part of a regulation would include, one can look at the 2019 lawsuit against USCIS that contends the agency violated the Administrative Procedure Act by denying many H-1B petitions on the grounds a valid employer-employee relationship does not exist.
In ITServe Alliance v. Cissna, the plaintiff argued that a February 2018 USCIS memo on “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites” contradicts its own regulations (8 C.F.R. Sec. 214.2(h)(4)(ii)). The plaintiff asserted USCIS has ignored that a “contractor” can be an employer. The agency did this by stating a contractor must have actual control of the H-1B professional while he or she performs work.
In the lawsuit, the plaintiff’s attorneys argued the February 2018 USCIS memo took the definition of an employer from the Department of Labor (DOL) but ignored the key word “or.” Here’s what the DOL regulation states: “Has an employer-employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee…” (Emphasis added.)
What does that mean? It means that USCIS believes a contractor is not an “employer” if it does not have actual and exclusive “control” over the day-to-day activities of the contractor’s employees at a third-party site – even if the contractor can “hire, pay, fire” the employee. That is why USCIS has denied many H-1B petitions based on its contention a bona fide employer-employee relationship does not exist in many contracting relationships.
“USCIS looks at a number of factors to determine whether a valid [employer-employee] relationship exists, including whether the petitioner controls when, where, and how the beneficiary performs the job,” according to the February 2018 USCIS memo.
A third, ongoing development for H-1B visas is litigation. Arguments in the ITServe Alliance v. Cissna lawsuit were heard in the U.S. District Court for the District of Columbia in May 2019. However, the judge has issued no rulings since that court hearing. That case addresses a host of issues employers consider at the heart of USCIS policies.
One recent litigation development is that Wasden Banias LLC, the law firm involved in the ITServe Alliance case, filed a similar lawsuit in Dallas – involving denials of 30 H-1B petitions – and the government opted to reopen and approve the petitions (or send Requests for Evidence) rather than have the issues in the case heard in court. The case involved two main issues: the employer-employee relationship and the Non-Speculative Work Rule memo, which relates to USCIS demanding companies provide a list of all work assignments an H-1B visa holder will have up to three years in the future. (For more on the Non-Speculative Work Rule memo see here.)
Expect more companies and attorneys to use litigation in 2020. “Our clients that sued in 2018 with H-1B denial rates of 50% filed the same petitions in 2019 and had 99% to 100% approved,” Jonathan Wasden, a partner at Wasden Banias LLC, told me in an interview. “Those companies that engaged the agency through litigation were treated with kid gloves compared to other companies.”
Companies filed at least 62 lawsuits against USCIS related to H-1B visas in 2019, and 29 such lawsuits in 2018, based on a National Foundation for American Policy analysis of the database of H-1B lawsuits developed by Sinduja Rangarajan in impressive research for Mother Jones/Reveal. In comparison to the 93 H-1B lawsuits filed in 2018 and 2019, fewer than 10 such lawsuits appear in the database for the years 2015 and 2016.
Wasden believes both the number of H-1B-related lawsuits filed, as well as the number of denied petitions challenged in court, is likely much higher. First, many suits combine challenges to multiple denied visa petitions for different workers. He says his firm often includes 10, 20, 30 (or in one case more than 60) denied petitions in a single suit. Second, unlike other types of litigation in the federal system, the courts do not release documents or details about immigration-related cases, which makes it difficult to determine how many cases are filed on a particular issue.
The year 2020 will likely bring more denials and restrictive policies for employers that hire foreign-born scientists and engineers on H-1B visas – and more lawsuits against Trump administration policies.
