By Xiaojie Meng, Alex Kim, Alexander Ng

On July 23, 2021, the Biden administration filed a cross-motion for summary judgment in Chamber of Commerce v. DHS, a lawsuit in the Northern District of California brought by the U.S. Chamber of Commerce, Bay Area Council, National Retail Federation, and others against the Department of Homeland Security’s (DHS) proposed rule, “Modification of Registration Requirement for Petitioners Seeking to File Cap-Subject H-1B Petitions.” The rule, which DHS published on January 8, 2021, purports to amend the regulations governing the process by which U.S. Citizenship and Immigration Services (USCIS) selects H-1B registrations for the filing of H-1B cap-subject petitions. The chamber’s lawsuit challenges the proposed rule as an unlawful attempt to supplant the text of the INA via regulation, arguing that the rule “purports to replace the INA’s express instruction that noncitizens ‘shall be issued [H-1B] visas… in the order in which petitions are filed for such visas’… with a process that prioritizes noncitizens who earn higher wages.” The administration’s cross-motion is scheduled to be heard by Judge Jeffrey S. White on September 10, 2021.

The legal challenge to the rule is occurring amid widespread discontent among industries about the policymaking behind the rule, which businesses argue puts new graduates at a disadvantage by favoring higher wage levels. Besides this, a major flaw related to the issue of wages that is largely overlooked and distorted in the public debate is the illogical way the rule equates higher wages with higher wage levels in the immigration law context. Wage level determination is a complicated procedure governed by strict rules and metrics promulgated by the U.S. Department of Labor involving many technicalities. The attorneys at Meng Law Group explain how DHS’s rule, as well as related sections of the Biden administration’s proposed U.S. Citizenship Act immigration bill, confuse the issue of wage level determination in basic ways that counteract their stated purpose of favoring workers with higher levels of skill and end up favoring lower skilled jobs instead.

I. Regulatory History

On November 2, 2020, USCIS published a proposed rule entitled “Modification of Registration Requirement for Petitioners Seeking to File Cap-Subject H-1B Petitions” that would dramatically change how H-1B petitions are selected for the annual “lottery.” The proposed rule would replace the current random selection process with a new wage-based selection process which would prioritize the selection of H-1B registrations based on employers who pay the highest wages. DHS published the final rule on January 8, 2021, and the rule was set to go into effect 60 days after publication on March 9, 2021.

On January 20, 2021, new White House Chief of Staff for the Biden administration Ron Klain issued a memorandum directing agencies to consider postponing the effective dates of regulations that have been published, but not yet taken effect, for 60 days from the date of the memorandum. On February 8, 2021, USCIS published a final rule delaying the effective date of the rule creating the wage-based selection process for H-1B petitions to December 31, 2021. It also accepted comments regarding the delay of the effective date until March 10, 2021.

On February 18, 2021, the U.S. Citizenship Act of 2021 was introduced in the House of Representatives. Section 3407 of the proposed legislation is entitled “Wage-based consideration of temporary workers” and amends the INA to state that for H-1B purposes, “the Secretary of Homeland Security, in consultation with the Secretary of Labor, may issue regulations to establish procedures for prioritizing such visas based on the wages offered by employers.” This language in the proposed legislation seems to pave the way for implementing the new rule.

II. The Proposed Selection Process Incorrectly Assumes that Higher Wage Levels Correspond to Higher-Skilled Jobs

In the final rule, DHS proposes to rank and select H-1B petitions “on the basis of the highest OES wage level that the proffered wage were to equal or exceed for the relevant SOC code and in the area of intended employment, beginning with OES wage IV and proceeding in descending order with OES wage levels III, II, and I.” In support of the proposal, DHS stated that it believes that “salary generally is a reasonable proxy for skill level” and that “[b]y engaging in a wage-level-based prioritization of registrations, DHS is better ensuring that new H-1B visas will go to the highest skilled or highest paid beneficiaries.” In other words, DHS is presuming that higher wage levels correspond to higher-skilled positions. However, this presumption overlooks the critical fact that entry level positions (OES wage level I) for the most complex, highly skilled occupations typically have higher baseline education and skill requirements than the higher wage level positions (OES wage levels II, III, or IV) of lower-skilled occupations. Because the baseline requirements of entry level positions for the most complex, highly skilled occupations start at a much higher level than other occupations, OES wage levels are a poor proxy for ranking the relative level of education and skills required by positions across occupations of different types.

III. Higher Baseline Requirements for Comparatively Complex Occupations Make Selection Based on Wage Levels Counterproductive

The problems associated with ranking and selecting H-1B petitions based on OES wage levels are compounded by the fact that increasing the wage level for more complex, highly skilled positions is more difficult than for comparatively less skilled occupations that have lower entry level requirements.

The wage level for a position is determined by comparing the actual requirements of the position with the baseline entry-level requirements of the position. In general, the position’s wage level is increased if additional requirements, including education level, years of experience, or unusual skills, are imposed on top of the baseline requirements.

Thus, the baseline requirements have a huge impact on the wage level. For example, a position in an occupation in which the baseline education requirement is only a bachelor’s degree can easily be elevated to a level II wage if the employer requires a master’s degree instead. In contrast, an occupation in which the baseline education requirement is a Ph.D. would need to require additional years of experience or unique skills to be elevated to a level II wage. Therefore, a position in a complex occupation that requires a Ph.D. may be classified at a level I wage, whereas another position in a less complex occupation that only requires a master’s degree would be classified at a level II wage.

In this way, lower-skilled occupations can more easily reach higher wage levels than more complex occupations. If a wage-based selection process based on OES wage levels were put in place, it would lead to the undesirable result that candidates for the most complex positions with high baseline requirements most needed by the U.S. are disfavored simply because the position is classified at level I wage, despite the fact that it requires a more advanced degree and offers higher pay at the entry level.

IV. Examples of Comparatively Complex Occupations with Higher Baseline Requirements and Lower Wage Levels

To illustrate this point, we provide examples of highly skilled occupations that have higher entry level requirements and higher corresponding wages that are nevertheless classified at a level I wage.

According to O*NET, the computer and information research scientists occupation is a job zone 5 occupation which typically requires a Ph.D. and 4 to 10 years of experience, while the electrical engineers occupation is a job zone 4 occupation which typically requires a four year bachelor’s degree and 2 to 4 years of experience.

The same level I wage in the two occupations present very different requirements. However, the wage level classifications do not reflect those requirements. For example, in Los Angeles, California, a computer and information research scientist position that requires a Ph.D. would be a level I wage position while an electrical engineer position that requires a bachelor’s degree and 3 years of experience would be a level II wage position. This is because a Ph.D. is the minimum entry level requirement for a computer and information research scientist, yet a bachelor’s degree and an additional 3 years of experience would qualify the electrical engineer for a level II wage.

The level I wage designation does not accurately reflect the relative difficulty of obtaining a Ph.D. or the greater complexity of the position. Thus, a higher OES wage level is a poor proxy for the complexity of a position or the level of requirements an individual must meet to work in the position. A position in one occupation may have a level I wage but perform tasks that are way more complex and require more skills and training than a position in a different occupation with a level II or III wage.

This disparity also exists among occupations within the same field. For example, according to O*NET, the computer and information research scientists occupation is a job zone 5 occupation which typically requires a Ph.D. and 4 to 10 years of experience, while the computer programmers occupation is a job zone 4 occupation which typically requires a four year bachelor’s degree and 2 to 4 years of experience. Even in the same field and working in the same county (Los Angeles), a computer and information research scientist position requiring a Ph.D. would be designated a level I wage position while a computer programmer position requiring a master’s degree would be designated a level II wage position.

Again, the wage levels do not accurately reflect the relative complexity of the positions or the extent of the requirements for an individual to work in the position.

V. Proposed Alternatives to Ease the Shortage of Available H-1Bs

By putting into place such a system of selecting H-1B cap-subject petitions, USCIS’s final rule would prioritize positions in occupations with lower entry level requirements over positions in occupations with higher entry level requirements. This selection prioritization based on OES wage levels would discourage H-1B employers from petitioning for positions in occupation categories that require higher skills. Thus, H-1B cap allocations would not go to the “best and brightest workers” but rather to positions for which the entry level requirements are relatively low and a higher degree or a few years of experience might increase the wage level to produce an advantage in the new selection system.

Alternatively, prioritizing H-1B petitions based on actual wages instead of wage levels would not work well either because that would disfavor rural and underdeveloped areas of the country, as well as important occupations that, nevertheless, do not command high wages, e.g. social workers.

Instead of basing the H-1B selection process on wages or wage levels, as currently proposed, alternative strategies would better serve the goal of ensuring that the most highly skilled foreign workers benefit from the temporary employment program. These strategies include raising the quota, exempting STEM major degree holders from the numerical cap, and prioritizing workers who have U.S. degrees.