Encouraging Agency Action to Protect American Workers

While unemployment in the United States remains high, the United States Citizenship and Immigration Services (USCIS) and the Department of Labor (DOL) have taken the novel step of actually moving to protect American jobs for American workers. It is novel because a review of past agency actions in prior Administrations will offer scant evidence that American workers and their interests were ever a consideration in policy making.

USCIS has introduced an “interim final rule” (in the world of regulation these are rules that are final when published and thus bypass the usual notice and comment process due to some urgency identified by the agency, in this case, COVID-19) to strengthen the H-1B program. Under this program, U.S. employers can petition for a visa for a foreign worker to fill an American job in a “specialty occupation.” If approved, USCIS grants the foreign worker a three-year visa (extendable to six years) to fill that job.

Broadly speaking, the foundation of the new rule is defining the term “specialty occupation” with more rigor to ensure an H-1B employer actually is seeking the best and brightest and increasing scrutiny on staffing agencies which are some of the largest users of the H-1B program.

This may not sound groundbreaking, but the long-standing practice in this program has not been concerned with ensuring, for example, that the academic degree of the employee has a direct relation to the skills required for the position for which he or she is being hired. The new regulation actually requires that the degree and the position are directly connected. In addition, the rule makes clear that if a job only requires a general degree with no specialization, then it is not a specialty occupation sufficient to qualify for H-1B. Again, this sounds like a tautology, but the idea that a specialty occupation requires specialized knowledge will now be codified.

Perhaps even more important, the new USCIS rule turns a skeptical eye towards staffing agencies. Put briefly, staffing agencies are companies that contract workers out to third parties that need employees. They can serve a valuable purpose for employers in need of employees quickly. In the context of H-1B, however, this presents many problems.

First, H-1B employers are required to provide a bona fide job offer, not the prospect of being shipped out to another employer.

Second, the entire vetting process by both the Department of Labor and USCIS is designed to focus on the petitioner (in this case the staffing agency), but the actual employer that could abuse the H-1B employee or use them to replace Americans will be the third party employer contracting with the staffing agency. This can allow unscrupulous employers to bypass scrutiny and use cheaper foreign labor at the expense of hiring Americans that could easily do the work if provided the opportunity. In the most notorious cases, unscrupulous employers actually use the staffing agency to replace their existing American employees with cheaper foreign labor, often requiring the Americans to train their foreign replacements.

Third, the H-1B visa program is numerically capped by law, and there are far more petitions than available visas annually. That means staffing agencies that have no bona fide job offer available are gobbling up numerically limited slots from employers that actually do have an immediate and direct job offer. This hurts the employers as well as American workers being ignored by the third party employers using the staffing agencies.

Despite these problems, USCIS does not go so far as to remove eligibility of staffing agencies and third-party placement in this regulation. But they do move to provide more scrutiny since these situations present so many issues.

First, USCIS will limit the validity of the petitions for workers in third-party placement to a maximum of one year, rather than the typical three years. This will increase the ability to continuously vet these employers to ensure they are complying with the laws and regulations governing the program.

Additionally, the rule makes clear that USCIS can make site visits to ensure compliance at third party worksites. This is crucial clarity for fraud investigations where the third party employer is not in a direct relationship with USCIS through a petition. The regulation makes clear that refusal by a third party employer to cooperate with the government can result in the denial or revocation of a petition, providing teeth to the requests of fraud investigators.

Meanwhile, DOL is moving to update their prevailing wage rates to ensure that foreign workers and American workers are on an even playing field with respect to wages. Employers of H-1B workers are required to pay those workers the prevailing wage for the particular job in the particular geographic region. How the prevailing wage is determined is critical to preventing wage stagnation. American workers are often at a disadvantage in applying for jobs when the foreign workforce can be hired at a substantially cheaper rate. The law requires that DOL certify that hiring of a foreign worker will not adversely affect the wages and working conditions of Americans similarly employed. In support of this requirement, the DOL requires a prevailing wage determination (PWD) from employers for a job opportunity.

There are multiple ways to make a PWD. The wage may be connected with a collective bargaining agreement, or through the Davis-Bacon Act. Employers can provide their own wage survey that fits DOL standards. In the absence of those options, the government can determine the prevailing wage for a job using their own statistics from the Bureau of Labor Statistics. The history of the government’s calculation of the prevailing wage is long. For our purposes today it is important to know that there are four prevailing wage tiers used by DOL. The nature of the job (entry level, qualified, experienced, fully competent are the titles for the respective tiers)determines which prevailing wage tier is used.

This new rule acknowledges that the current four tiers are artificially low and thus allow adverse impacts on similarly situated American workers. The current Level I (entry level) minimum is set at the 17th percentile of the median wage for that occupation. The new rule will set that at the 45th percentile. The Level II minimum will be increased from the 34th percentile to the 62nd. The Level III minimum will be increased from the 50th percentile to the 78th. The Level IV percentile is currently 67 and will now be bumped to the 97th percentile. Going forward under these new wage levels, American workers will not be priced out before they even apply for jobs.

The H-1B program is the predominant worker program affected by these tiers. Arguably, no H-1B employee should even be allowed in entry level—Level I—positions since the jobs are supposed to be positions where the employer cannot find an American and it is clear that our colleges and universities are churning out a sufficient number of entry level workers across industries. But if we are going to use a Level I wage it should at least reflect a significant wage for a specialty occupation requiring specialized knowledge. How many American workers in speciality occupations with specialized skill sets are making 17 percent of the prevailing wage? How many would have to accept that wage and are thus adversely affected by current wage levels, counter to current law?

Taken together, these regulations are great steps forward for the American workforce and represent a tangible example of how the immigration system in the country has let down its citizens in the past and can correct it going forward. There is still much to do, however. USCIS should prioritize H-1B visas based on the wages being offered by employers, so those offering the highest wages—presumably reflecting the employer’s actual need for labor—would be approved for H-1B workers first. This would incentivize employers relying on foreign labor to pay higher wages or risk not getting the workers they say they need. Alternatively, and hopefully, they would instead choose to hire Americans at a similar wage.

USCIS should also look critically at the staffing agencies’ eligibility for H-1B workers. The requirement of a bona fide job offer clearly does not include contracting your H-1B with another employer. The third party employer can petition if they want, but using a third party only invites bad actors to launder their misdeeds through a staffing agency. The limited number of visas and clear incentives for abuse are reason enough to bar staffing agency participation. However, it is also inefficient for the agency to expend their limited resources to further police this at-risk group when the law already suggests they are ineligible. While it is proper to subject them to more scrutiny provided the present reality, it would be far more prudent to simply bar their participation and avoid the potential problems altogether.

Jared Culver is a Legal Analyst for NumbersUSA