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The talk in congress is getting heated on the immigration debate. I would like to bring your attention to several items in the bill

The bill for Comprehensive Immigration Reform is an overall positive bill and the Senators and all involved must be applauded for their efforts. Having said that, there are some provisions in the bill that really need a little tweaking. Let’s take the provision that will allow spouses of H-1B visa holders (H-4 visa holders) work authorization.

At Section 4102 of the Bill, it is stated regarding spouses of H-1B visa holders- “authorize the alien spouse to engage in employment in the United States only if such spouse is a national of a foreign country that permits reciprocal employment; and provide such a spouse with an ‘employment authorized’ endorsement or other appropriate work permit, if appropriate.”

It will be hard to find many countries that allow the spouse of a US citizen worker in that country work permission automatically. So, the vast majority of H-4 visa holders will be excluded from getting work permission.

Many employment-based visas already allow spouses work permission. For example, L-1 and E-2 visas, I recommend that the caveat that the foreign country must permit reciprocal employment is deleted.

It has been applauded by immigration advocates for bringing much needed changes to the broken immigration system.

Unfortunately, the H-1B visa, and accompanying L-1 visa proposals in the The Senate Immigration Bill, S. 744, entitled the Border Security, Economic Opportunity, and Immigration Modernization Act (BSEOIMA) are not to be applauded. The main concern on everyone’s mind is how the bill would deal with the shortage of H-1B visa numbers. For FY14, which commences on October 1, the H-1B cap was reached on April 5, 2013. S. 744 increases the H-1B cap undoubtedly, but this increase is accompanied by changes to the H-1B and L visa programs, which may make it more difficult to obtain H-1B and L visas quickly.

BSEOIMA increases the H-1B ceiling to 110,000, which could go all the way up to 180,000.  However, any increase or decrease in H-1B visa numbers cannot be more than 10,000 visas from the previous year. The market based adjustments from year to year will be based on the number of H-1B visa petitions in excess of the cap and the average number of unemployed persons in “management, professional and related occupations” when compared to the previous year. Moreover, BSEOIMA will also increase the Master’s cap from 20,000 to 25,000, but this new cap will only be applicable to those who have graduated from universities with advanced degrees in STEM (Science, Technology, Engineering and Math) fields. This would be a significant improvement from what we have today, which is a paltry 65,000 H-1B visas plus 20,000 for advanced degree holders, which under current law is not restricted to only STEM degree holders.

Unfortunately, in exchange for an increase in H-1B visas to 110,000, with further adjustments based on a market based adjustment formula, BSEOIMA imposes significant restrictions to accessing the H-1B visa for all employers, as well as L-1 visas for some employers, which will adversely affect corporate immigration practice.

Unlike the 4 level wage system we have today, BSEOIMA will replace it with 3 wage levels.

The new Level 1 wage shall be the mean of the lowest two thirds of wages surveyed but can’t be less than 80% of the mean of the wages surveyed. This is clearly wage inflation with a vengeance. Dependent employers will only be able to pay new Level 2 wages, which is the mean of all wages. The third level shall be the mean of the highest two thirds of wages surveyed.

All employers will have to now attest that they have recruited for the position before filing an H-1B petition via an internet posting for 30 days, including advising where applicants can apply for the job. Dependent employers will have to undergo additional recruitment steps. The employer must offer a job (not just decline to hire the H-1B beneficiary) to any US worker who applies and who is “equally or better qualified.”  One can imagine how this will be interpreted by the DOL when an employer takes the top graduate of Wharton in a Bachelor’s program and turns down a U.S. applicant with an MBA from the University of Podunk. There is more. The period within which an H-1B complaint can be brought against the H-1B employer is lengthened from 12 to 24 months, even when DOL itself complains or when the source remains anonymous.

BSEOIMA seems to abhor the notion of “outplacement” of H-1B workers and L-1 workers, even while assigning workers to third party client sites is part of the business model of certain industries such as IT consulting. Dependent employers may not “place, outsource, lease, or otherwise contract for services or placement of an H-1B nonimmigrant employee.” A non-dependent employer must pay $500 if “outplacing” an H-1B worker.

BSEOIMA seeks to ultimately bar a category of so called “super dependent” H-1B or L-1 employers by FY 2017 from filing new H or L petitions if more than 50% of their workforce are in H-1B or L status and hire 50 or more employees.

For the first time, there will be a restriction on L employment too as a result. There is a sliding scale for this over the next few years: (1) if the employer employs 50 or more employees, and there is no distinction between full or part-time, the number of H-1B and L-1B, but not L-1A, employees together cannot exceed 75 % of the total number of employees for FY 2015; (2) 65 %of total number of employees for FY 2016 and (3) 50% of total number of employees after FY 2016 which starts on October 1, 2017. This does not apply to universities or non-profit research centers.

The filing fees for the H-1B and L go way up in a clear effort to discourage such visa sponsorship.  For FY 2014-FY 2024, the H-1B and L filing fee will be $5000 for an employer that employs 50+ employees in the USA if more than 30% but less than 50% of such employees are in H or L status.

From FY 2014-FY 2017, the filing fee goes up to $10,000 per H-1B or L petition if the employer employs 50+ employees, again no distinction between full or part time, if more than 50% but less than 75% of such employees are in H1B or L status.

BSEOIMA goes beyond the L-1 Visa Reform Act of 2004 which allowed outplacement of L-1B workers so long as the L1 beneficiary remained under the direction and control of the petitioner. Here, even if this was the case, such a seconding of the employee would be limited to an affiliate, subsidiary or parent of the L1 petitioner.

For a new office L, the L beneficiary could not have been the beneficiary of 2 or more L petitions in the immediately 2 preceding years.

For the first time, BSEOIMA introduces an explicit provision for L investigations that can be based on anonymous sources. In addition, DOL shall conduct annual L compliance audits for each employer with more than 100 employees if more than 15% are in L status.

Non-compliance with new L restrictions can lead to fines up to $2000 per violation and a 1 year debarment + an obligation to make the employee whole through payment of lost wages and benefits. A willful misrepresentation of a material fact on an L petition can result in $10,000 fine and 2 year debarment

While these provisions against dependent employers are awful for most employers, BSEOIMA introduces the concept of “intending immigrant” which does provide some relief.  If an employer has an H-1B or L employee who is an “intending immigrant,” that worker is not counted in the employer’s dependency or “super dependency” calculation.  With respect to not counting an alien from the dependent calculation who is the subject of the labor certification, the employer has to qualify first as a “covered employer” who is an employer of an alien, which during the one year period that the employer filed a labor certification application for such alien, has filed I-140 petitions for not less than 90% of the total labor certifications filed during that one year period. However, labor certification applications pending for longer than 1 year may be treated for the calculation as if the employer filed an I-140 petition.

The purpose of this “covered employer” definition is to probably ensure that employers do not file labor certifications without pursuing permanent residency on behalf of their employees. In reality, most employers who take the trouble to file labor certifications will go ahead and file the I-140 petition within the 180 day expiration period.

With respect to not counting an alien who is the beneficiary of a pending or approved I-140 petition from the dependency calculation, the employer does not have to establish that it is a “covered employer.” A pending or approved I-140 petition on behalf of a foreign national will remove that person from the employer’s dependency calculation.

Unfortunately, the H-1B provisions, in an otherwise good Senate immigration bill, reflect a complete lack of understanding of the role of globalization and free trade in services during the second decade of the 21st century, which can benefit the US, India and the world.

BSEOIMA seems to give more emphasis on green card sponsorship rather than prolonging the temporary visa status of foreign national workers. To some extent, this is a good thing. By allowing foreign nationals to obtain green cards, it gives them mobility and to not be bound to one employer for many years. There is also a good provision that allows an H-1B who has been terminated to be accorded a grace period of 60 days, and an application to extend, change or adjust status during that period shall be deemed to have been lawful H-1B status while that application was pending.

The bill is now undergoing it’s first markup in the senate and could change significantly.

I just want to re-iterate that this is NOT the law, but a proposal that could change significantly or go away entirely. It is however, a sign of what is to come and something all readers should pay attention to. I expect that we will see significant action this year.

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May 2013