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Biden Administration proposes 18-month delay in calculating prevailing wages of H-1B

The Department of Labour has observed that the annual H-1B cap was reached within the first five business days each year from fiscal 2014 through fiscal 2020.

The Biden Administration has proposed an 18-month delay in the effective date of a final rule on calculating the prevailing wages of certain immigrants and non-immigrant workers, including those on the popular H-1B visas.

The proposed delay will provide the Department of Labour with sufficient time to consider the rule’s legal and policy issues thoroughly and issue an upcoming Request for Information and gather public comments on the sources and methods for determining prevailing wage levels, an official release said following the announcement on Monday.

This proposed rule follows an initial 60-day delay announced earlier this month.

The department based that action on a January 20, 2021, White House memo, the media release said.

The H-1B visa is a non-immigrant visa that allows U.S. companies to employ foreign workers in specialty occupations that require theoretical or technical expertise. The technology companies depend on it to hire tens of thousands of employees each year from countries like India and China.

Further delay on final rule’s effective date

The Department of Labour in its federal notification published earlier this month said that it is considering whether to propose a further delay of the final rule’s effective date and accompanying implementation periods.

The Department proposed to delay is in accordance with the Presidential directive as expressed in the memorandum of January 20, 2021, from the Assistant to the President and Chief of Staff, entitled “Regulatory Freeze Pending Review.” The Department invited written comments from the public for 15 days on the proposed delay of effective date. All comments had to be received by February 16, 2021.

The Biden Administration has proposed an 18-month delay in the effective date of a final rule on calculating the prevailing wages of certain immigrants and non-immigrant workers, including those on the popular H-1B visas. | File 

Published in January 2021, the final rule affects employers seeking to employ foreign workers on a permanent or temporary basis through certain immigrant visas or through H-1B, H-1B1 and E-3 non-immigrant visas, the Department of Labour said.

While the E3 visa is one for which only citizens of Australia are eligible, the H-1B1 visa is for the people from Singapore and Chile.

The proposed delay will also give agency officials sufficient time to compute and validate prevailing wage data covering specific occupations and geographic areas, complete necessary system modifications and conduct public outreach.

The rule is a carry-over from the Trump administration, which had proposed revisions mandatory salaries after losing a court battle to organisations including the Bay Area Council over an initial version.

Rule’s delay will result in the reduction of transfer payments

If imposed, workers on the H-1B at the lowest wage level would have to receive at least the 35th percentile of the prevailing wage for their job type and location, compared to the 45th percentile in the initial version. Workers at the highest wage level would have to receive the 90th percentile, compared to the 95th percentile.

According to the Department of Labour, the proposed rule’s delay in effective date will result in the reduction of transfer payments in the form of higher wages from employers to H-1B employees.

Additionally, the proposed rule would delay the potential for deadweight losses to occur in the event that requiring employers to pay a wage above what H-1B workers are willing to accept results in H-1B caps not to be met, it said.

The Department has observed that the annual H-1B cap was reached within the first five business days each year from fiscal 2014 through fiscal 2020.

“While the Department expects that the increase in wages may incentivise some employers to substitute domestic workers for H-1B employees, provided that domestic workers are available for the jobs, it is likely that the same number of H-1B visas will be allotted within the annual caps in the future,” it said.

To calculate the reduction of transfer payments the Department considered the transfer payments of the Final Rule as the baseline and shifted them according to the proposed rule’s new transition effective dates, it said.

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