What Has Happened?

On July 17 of this year, United States Citizenship and Immigration Services (USCIS) submitted to the Federal Office of Management and Budget (OMB) a proposed regulation entitled Weighted Selection Process for Registrants and Petitioners Seeking to File Cap-Subject H-1B Petitions. The content of the proposed regulation has not been disclosed yet, but its title speaks for itself and strongly suggests that the proposed rule seeks to replace the current random lottery-based H-1B registration selection process with a new “weighted” or non-random selection process that would favor certain registration applications.

 

Do We Know What is in the Proposed Rule?

No. Although the text of the proposed regulation remains undisclosed, it is likely, however, that it will be similar or identical to a final rule that was published on January 8, 2021, at the end of the first Trump administration and was later withdrawn by the Biden administration. That final rule, entitled Modification of Registration Requirement for Petitioners Seeking to File Cap-Subject H-1B Petitions, sought to prioritize in the H-1B cap selection process registration applications with the highest offered wages. The summary of the 2021 final rule stated the following:

The Department of Homeland Security is amending its regulations governing the process by which USCIS selects H-1B registrations for the filing of H-1B cap-subject petitions by generally first selecting registrations based on the highest Occupational Employment Statistics (OES) prevailing wage level that the proffered wage equals or exceeds for the relevant Standard Occupational Classification (SOC) code and area(s) of intended employment.

 

How Will this New Selection Process Work?

If a similar or identical selection process is adopted in the recent proposed rule, the current random selection process for H-1B cap-subject registration applications would be replaced with a selection process that gives preference to applications that contain the highest offered wages and incentivizes H-1B petitioners to offer inflated wages in order to increase the likelihood that their registration applications are selected, even if such wages are higher than those paid to current employees in the same positions.

The terms of the 2021 final rule, which, as noted above, may also be adopted in the recent Proposed Rule, were the following:

• • If, as invariably happens, USCIS receives more registration applications than necessary to meet the annual H-1B quotas, the agency will, instead of conducting a lottery, “rank and select” these applications on the basis of the highest Occupational Employment Statistics (OES) wage level that is equaled or exceeded by the application’s offered wage for the relevant Standard Occupational Classification (SOC) code and area of intended employment. The highest ranking will be accorded to applications with an OES wage Level IV and the ranking will proceed in descending order with OES Level III, II, and I wages.
  • If there is no current OES prevailing wage information for the proffered position, USCIS will rank and select petitions based on the appropriate wage level that corresponds to the requirements of the proffered position.
  • If USCIS receives and ranks more registrations at a particular wage level than the projected number needed to meet the numerical limitation, USCIS will randomly select registration applications through a computerized lottery including all registration applications within that particular wage level until enough registrations needed to reach the annual numerical limitation are selected.
  • USCIS will compare the OES wage information in the registration application with any H-1B petition filed in connection with that registration to ensure that the employer adheres to the wage level it indicated.

 

What is a Level IV OES Wage?

The H-1B specialty occupation nonimmigrant category requires employers to pay the higher of the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question, or the “prevailing wage” for the occupational classification in the area of employment. The prevailing wage for an H-1B worker’s position can be determined through the Department of Labor’s (“DOL’s”) OES wage survey, which sets out four wage levels (I-IV) for each occupational classification in various United States geographical areas.

OES wage levels range from Level I (for “entry-level” positions) to Level IV (for “fully competent”) positions. The wage amounts listed in the OES Online Wage Library for the four levels per occupational classification correspond to respective percentile wages for the classification and geographical area.

A Level I wage amount corresponds to the 45^th percentile wage for a position in a particular geographical area; a Level II wage corresponds to the 62^nd percentile wage; a Level II wage corresponds to the 78^th percentile wage; and a Level IV wage corresponds to the 95^th percentile wage.

The practical effect of this levelling is that an H-1B worker whose wage falls within the OES Level IV must be paid more than 95% of the workers in the relevant occupational classification and geographic area. Put another way, the worker receiving an OES Level IV wage must be within the most highly paid 5% of employees in the occupational classification and geographic area.

 

Do the Proposed Rule’s Changes Mean We Have to Offer OES Level IV Wages to All Prospective H-1B Employees?

Under this new selection regime, a prospective employer that wishes to increase the likelihood that its H-1B cap registration application will be selected would have to offer to the H-1B beneficiary a wage that is at least equal to the OES Level IV wage for the beneficiary’s position to ensure that the application is ranked at the highest level. This is without regard to the fact that this position may be an entry-level one or one for which a lower wage has traditionally been paid, such as a position usually held by a recent university graduate.  Offering a wage that is at the OES Level III could reduce the likelihood that the registration application will be selected and offering a wage that is at the OES Level II or I will almost certainly result in the registration application not being selected.

 

How High Are OES Level IV Wages?

The following is a sampling of various OES Level IV annual wages. These reflect a variety of positions in the Information Technology industry in the San Francisco Bay Area.

• • SOC 15-1252 (Software Developers), Santa Clara County: $264,514
  • SOC 17-2071 (Electrical Engineers), Santa Clara County: $217,630
  • SOC 15-1252 (Software Developers), San Francisco County: $213,512
  • SOC 15-1252 (Software Developers), San Mateo County: $213,512
  • SOC 15-1252 (Software Developers), Alameda County: $213,512
  • SOC 11-3021 (Computer and Information Systems Managers), Santa Clara County: $388,918
  • SOC 15-2051 (Data Scientists), Santa Clara County: $275,850

These wages, which reflect annual base wages only, and not total compensation, are obviously extraordinarily high for typical positions of this type and many employers will be unwilling to offer them for positions that do not have the level of seniority associated with such a wage.

 

When Will the Proposed Rule Become Effective?

After OMB completes its review, the Proposed Rule will be returned within ninety days to USCIS, which will then publish the Proposed Rule in the Federal Register, allowing a period (typically, sixty days) for negative and positive public comments. The Proposed Rule will not become effective until after a review of the public comments, the submission of a Final Review for OMB review, and the publication of a Final Rule in the Federal Register with a future effective date (usually, thirty to sixty days from publication). If adopted, the rule could be effective when the Fiscal Year 2027 H-1B cap registration period begins in March of 2026. However, legal challenges to the Proposed Rule are also expected which could delay its effective date.