President Bush is expected to sign the Fiscal 2005 Omnibus Appropriations Bill (H.R. 4818) into law in the first week of December.
This bill contains highly significant provisions affecting H1?B and L-1 visas. This Client Alert summarizes those changes.
20,000 More H-1B Visas for Advanced Degree Graduates of U.S. Universities
Up to 20,000 foreign nationals with masters or higher level degrees from U.S. universities will be exempt from the H-1B cap each year. It appears that visas will be available to the first 20,000 such foreign nationals who apply on or after the effective date of the new law.
By way of background, the number of new H-1B nonimmigrants for the year (65,000) was reached on the first day of this fiscal year, October 1, 2004. With the cap reached, employers (other than cap-exempt institutions) cannot file H-1B petitions for employees who have not previously held H-1B status until April 1, 2005, with a start date of October 1, 2005. While not technically increasing the cap, the new law allows companies to obtain H-1B status for U.S. educated advanced degree holders as early as March 2005. It is expected that demand for these additional 20,000 H-1B visas will be extremely high. As a result, we strongly suggest that companies wishing to hire eligible foreign nationals be prepared to file H-1B petitions on or about the first day that the numbers become available. We will advise you officially of that date when it is confirmed. Please note that this new law is especially important to F-1 and J-1 nonimmigrants working for employers based on authorized practical training (OPT) that will expire in the spring or summer of 2005.
New Government Fees for H-1Bs
Employers may recall that they were required to pay a $1,000 “U.S. Worker Training Fee” with H?1B filings prior to October 1, 2003. The new law reinstates the U.S. worker training fee at higher or lower level depending upon the size of the employer. The training fee is $1,500 for employers with more than 25 employees, and $750 for employers with 25 or fewer employees. In addition, the law introduces a new $500 fraud prevention and detection fee.
This fee is required to be paid by an employer for each initial petition filed on behalf of a foreign national to grant him or her H-1B or L-1 nonimmigrant status. This fee does not apply to extensions with the same employer, but does apply to H or L petitions authorizing a change of employers as well as to any alien applying abroad for a Blanket L-1 visa. Only the principal alien is subject to the fee.
Changes to the L Visa Category
In addition to mandating a study of the vulnerabilities and potential abuses in the L-1 visa program and establishing an L Visa Interagency Task Force to implement the recommendations resulting from this study, the new law makes two important changes. First, it increases from six months to one year the period of continuous employment abroad that is required for an employee to qualify for an L-1 visa under a Blanket L petition. Thus, beneficiaries of both individual and Blanket L petitions must now meet the same one year requirement. Second, it prohibits an alien coming to work in a specialized knowledge capacity from qualifying as L-1B nonimmigrant if the alien’s work will be controlled and supervised principally by an unaffiliated third party employer or if the placement of the alien at the unaffiliated employer is “essentially an arrangement to provide labor for hire for the unaffiliated employer, rather than a placement in connection with a provision of a product or service for which specialized knowledge specific to the petitioning employer is necessary.” The good news is that many other far more restrictive provisions affecting the L nonimmigrant category that had been under consideration were not included in the new law.
Changes in H-1B Prevailing Wages
Apparently dissatisfied with the Department of Labor’s rigid OES two level wage survey, Congress has mandated that DOL must provide at least four levels of wages commensurate with experience, education, and level of supervision. To the extent that DOL does not do so, employers may convert the two tier DOL survey into a four level survey through a mathematical formula specified in the legislation. In addition, employers may continue to use private surveys. Importantly, the new law provides a defense to an employer who is charged with not paying the prevailing wage if the employer can establish that the manner in which the prevailing wage was calculated was consistent with “recognized industry standards and practices.” This may open up the availability of private surveys regularly used by employers that do not technically meet the relevant provisions in the DOL regulations. The expanded flexibility granted employers in determining prevailing wages is offset by a provision mandating that the employer pay 100% of the prevailing wage determined by the survey used, rather than 95%, as permitted in the past.
Reinstatement of Non-displacement Attestation by Employers on Labor Condition Application (LCA)
The provisions requiring “H-1B dependent” employers (those with 10% or more of their workforce on H-1B visas) to make attestations regarding the recruitment and non-displacement of U.S. workers on the LCA are reinstated and made permanent. This requirement had sunset on October 1, 2003. This requirement also applies to employers found to have committed a willful failure or misrepresentation in the proceeding 5 years.
Expanded Investigative Authority of DOL Relating to H-1B Visas
The new law expands the investigative authority of DOL if DOL has “reasonable cause to believe” that the employer is not in compliance with any of the H-1B requirements. At the same time, however, the law provides a new defense to those who made a “good faith attempt” to comply with the requirements even though they did not meet all requirements due to a “technical or procedural failure.”