DHS Announces New Rule for H-1B Lottery

On January 7, 2021, USCIS announced a final rule that is intended to modify the existing H-1B “lottery” selection process from its existing model, which is randomized, to a new model that prioritizes higher wage levels.  The broad effect of the rule would be that the highest paid H-1B applicants would be more likely to be selected, and entry level workers almost certainly will not be selected.

As background, the Department of Labor, utilizing wage data collected from the Bureau of Labor Statistics, calculates four wage “levels” based on the duties, requirements, and skills required for a given position in a given area.  These range from a level 1 entry level worker to a highly experienced or specialized level 4 worker.  The salaries at these levels are massively different.  For example, in the Denver metro area, a level 1 Software Developer would have to be paid $74,256 per year, where a level 4 Software Developer would have to be paid $128,898 per year.

The impact of this rule would be immense on many businesses, industries, and individuals, but perhaps most notable is the case of international students.  International students very often come to the United States, work at a company pursuant to their studies, and these companies eventually apply for the student to become an H-1B worker.  Without significant experience, and only being out of college for a short period of time, the student would normally be placed in a level 1, entry level position.  The rule ostensibly considers this situation, suggesting instead that students may acquire sufficient experience, and employers may be willing to pay these higher level salaries, but that proposition seems, at first blush, a bit detached from the reality of hiring and salary decision making.

The rule is, at least on an initial read, open to litigation, the Biden Administration has requested that agency heads consider postponing the rule’s effective date, and in any event the effective date of the rule falls in the middle of the registration period for this year’s lottery, so it is unclear whether employers will have to content with this new policy, either this year or in years to come.  It is, however, a signal that the H-1B program may still face additional changes and new hurdles as we move forward under a new administration.