Miller Mayer Memo: Court Vacates Interim Final Rules Significantly Changing H-1B Program, Prevailing Wages

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On December 1, 2020, a U.S. district court in California vacated two rules that made significant changes to the H-1B visa program for temporary professional workers. The court made its decision not on the merits of the rules but rather because the agencies did not follow notice-and-comment requirements that would have given the public an opportunity to weigh in.

The Department of Labor’s (DOL) rule raised prevailing wages for nonimmigrant H-1B, H-1B1, and E-3 foreign workers and immigrant EB-2, EB-3, and foreign workers by changing wage computations. The Department of Homeland Security’s (DHS) rule would have revised the definition of an H-1B “specialty occupation” and added definitions for “worksite” and “third-party worksite,” among other changes. The DOL rule took effect in October; the DHS rule was to take effect December 7, 2020.

The court acknowledged the Trump administration’s point that the COVID-19 pandemic is unprecedented in its scope and impact, and qualifies as an emergency. The court said, however, that the question was whether the government had demonstrated that the impact of the pandemic on domestic unemployment justified dispensing with the “due deliberation” that normally accompanies rulemaking to make changes to the H-1B visa program. The court concluded that the government had not demonstrated this.

Defendants must overcome a high bar to show that good cause exists for dispensing with the notice-and-comment requirements, the court noted. Good cause can be invoked in emergencies where delay would harm life, property, or public safety. However, good cause cannot arise as a result of an agency’s own delay. Quoting various cases, the court noted that if that were the case, “an agency unwilling to provide notice or an opportunity to comment could simply wait until the eve of a statutory, judicial, or administrative deadline, then raise up the ‘good cause’ banner and promulgate rules” without following normal Administrative Procedure Act (APA) requirements.

Both agencies cited “skyrocketing” and “widespread” unemployment rates as a basis for “immediate” action, the court noted, but they failed to issue their rules for over six months. Moreover, the agencies did not suggest that the problems exacerbated by the pandemic were new. For example, some semblance of the DHS rule has been on DHS’s regulatory agenda since 2017. Similarly, the Trump administration noted in 2017 that there were large numbers of unemployed workers and that the administration wanted to adjust the prevailing wage scale. The court also noted statements in the rules that corrective measures should have been taken long ago. Further, the agencies issued a number of proposed rules between March and October 2020, “at least one of which expressly requested input on the impact of the COVID-19 pandemic on the proposed rules,” making it reasonable to conclude that the agencies are not entitled to a presumption of urgency.

Because the good cause exception is to be “narrowly construed,” the court said it was appropriate to focus on how the pandemic is affecting domestic unemployment for the types of positions held by H-1B workers. The court found that the agencies’ assertion of a dire fiscal emergency faltered. For example, statistics regarding pandemic-related unemployment indicate that the unemployment is concentrated in service occupations and that a large number of job vacancies remain in the areas most affected by the interim final rules: computer operations that require high-skilled workers. Without any consultation with interested parties about the impact on U.S. employers, DHS and DOL made changes to policies on which the plaintiffs and their members have relied for years and that are creating uncertainty in planning and budgeting, the court said.

Notably, the court did not address the merits of the case. It is uncertain whether the government will appeal, or whether the incoming administration will reissue the rules with a comment period or make any changes. In the meantime, employers wishing to file non-complicated H-1B status extensions for their employees should confirm DOL compliance with this decision before proceeding.

DOL said it is taking steps to comply, and that employers may experience a “brief delay” in their ability to use the DOL wage system to submit labor condition applications (LCAs) and receive prevailing wage determinations until DOL updates the prevailing wage data in accordance with the court’s decision. Employers and their authorized attorneys or agents will be able to submit new LCAs using the correct survey data beginning on December 9, 2020, DOL said. Employers desiring review of a prevailing wage determination issued using the interim final rule’s calculations can request review from the National Prevailing Wage Center before January 4, 2021.

This post originally appeared on Miller Mayer. Reprinted with permission.


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