CA District Court Sets Aside DHS Specialty Occupation and DOL H-1B Wage Rules

Yesterday, December 1, 2020, the District Court for the Northern District of California, set aside the IFRs issued by the Department of Labor and the DHS-USCIS (scheduled to take effect December 7th), finding that defendants “failed to show there was good cause to dispense with the rational and thoughtful discourse that is provided by the APA’s notice and comment requirements” (Chamber of Commerce, et al., v. DHS, et al., 12/1/20). The two Interim Final Rules are Strengthening the H-1B Nonimmigrant Visa Classification Program, and Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States .

In setting aside, the DHS IFR, the Court noted, “the DHS Rule makes a number of changes to the H-1B visa program, but Plaintiffs focus on revisions to the regulatory definitions of “specialty occupation” and the employer-employee relationship and on the decision to reduce the validity period for H-1B workers employed at third-party job sites from three years to one year. Because the current motions do not address Plaintiffs’ substantive challenges to the Rule, the Court does not address those changes in detail.”

The Court noted, “the DOL Rule changes the manner in which the DOL will calculate the prevailing wage rates. DOL asserted the current levels were “not advancing the purposes of the INA’s wage provisions” because the existing wage levels were “artificially low” and create an opportunity for employers to hire and train foreign workers at wages well below what their U.S. counterparts … make, creating an incentive – entirely at odds with the statutory scheme – to prefer foreign workers to U.S. workers, and causing downward pressure on the wages of the domestic workforce.” DOL Rule, 85 Fed. Reg. at 63,877. To remedy this perceived problem, DOL has adjusted the prevailing wage percentiles for Levels I and IV upward. Because of the formula set by statute, this also increased the percentiles for Levels II and III.”

Employers may breathe more easily for now since this decision applies across all 50 states. Several changes including limiting the H-1B approval to one-year at a time and the steep increases in prevailing wages that threatened to upend several H-1B extensions scheduled to be filed in the next six months, will no longer go into effect. Please stay tuned for more. The DOL will no doubt revise its OFLC prevailing wages page to reflect this decision, but this may take a few days.