Strengthening the H-1B Nonimmigrant Visa reintroduced and dead

Strengthening the H-1B Nonimmigrant Visa is resurfaced again in a different color as it was stuck down in Court in December 2020. Trump signed the final rule prior to leaving office.

U.S. Department of Homeland Security (DHS) attempted to rush through a regulation that would have required both H1B employers and end-clients to submit H1B petitions for workers placed at client sites. Although Trump signed the final rule prior to leaving office, his administration failed to have it printed in the Federal Register.

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Here are the details about the final rule rushed by Trump Administration:

DHS is finalizing the change to the regulatory definition of “employer-employee relationship”, and the portion of the definition of “United States employer”.

DHS will not finalize the changes to any other provisions implemented by the interim final rule (IFR), as DHS plans to pursue future rule making for those provisions.  They do not currently have legal effect given that the IFR was vacated by the U.S. District Court for the Northern District of California on December 1, 2020.

DHS released the final rule that will change the definition of “employer” in the H1B context on Jan 15th, 2021.

What this means? Any Consultants/Contractors/non FTEs  H1B worker employed at a client location, the end client also becomes the employer of the H1B worker as per the common-law test. Based on this interpretation, DHS says that both the primary employer and the end client are required to file two separate H1B petitions.

This is in addition to the first H1B petition filed by the H1B workers’ primary sponsor, who actually runs employee payroll.

At the same time, DOL also published a bulletin clarifying the new rule. The Office of Foreign Labor Certification (OFLC) is revising its interpretation of its regulations concerning which employers must file a Labor Condition Application (LCA). OFLC now interprets the regulations to require secondary common-law employers of H-1B workers to file an LCA.

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The final rule will go into effect in 60 days from the date of publication in the federal register. The actual implementation date is 180 days from the date of publication. If the rule is published in March, 2021, it would be actually effective from July, 2021. The final rule has not been published yet.

This rule will impact IT service and consulting firms largely that hires H-1B workers by forcing their clients to also file H-1Bs as secondary employers.

The Biden Administration could block the new rule along with other regulations finalized during the last days of the Trump Administration. Litigation is also anticipated after it takes effect, however there may be some impact during the course, till it is defeated in court.

DHS will not apply the new regulation to any pending petitions nor to previously approved petitions, either through reopening or through a notice of intent to revoke.

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