After losing a lawsuit brought by the Bay Area Council and others, the administration of President Donald Trump on Tuesday issued a new rule on mandatory wages for workers on the H-1B visa, intended for jobs requiring specialized skills and widely used by Silicon Valley tech firms.
The new rules are the administration’s second attempt at an effort it says is designed to protect American workers from cheaper, foreign labor. The council, which represents major companies including Apple, Google and Facebook, had argued that by significantly increasing required minimum pay, the first proposal would have gutted the H-1B program and proved disastrous for the economy and post-pandemic recovery. On Dec. 1, a judge in U.S. District Court in Oakland shot down the rule, saying the government had not shown good cause for imposing it without notice or opportunities for public comment.
The new rule also increases mandated pay for H-1B workers but at slightly lower rates. Workers on the visa at the lowest wage level must receive at least the 35th percentile of the prevailing wage for their job type and location, compared to the 45th percentile in the previous rule. Workers at the highest wage level must receive the 90th percentile, compared to the 95th percentile.
“Employers will still get roughly a 20% discount over median,” said Howard University professor Ron Hira, who studies the H-1B, adding that the discount varies by job type and geographic location.
The U.S. Department of Labor, in the text of Tuesday’s rule, said the existing required wage levels have been in place for 20 years.
“The U.S. Department of Labor is taking these steps to strengthen wage protections, address abuses in visa programs, and protect American workers from being undercut by cheaper foreign labor,” Labor Secretary Eugene Scalia said in a statement. “These changes help ensure that these important foreign worker programs function as Congress intended, while securing American workers’ opportunities for stable, good-paying jobs.”
It is unclear whether the new rule will be enacted. A spokeswoman for President-elect Joe Biden has said his administration will freeze recent Trump administration rules.
The Trump administration has cracked down on the H-1B program, dramatically increasing visa denials for staffing companies and outsourcers that contract out foreign workers. Critics have argued that these companies and their client firms use the H-1B to supplant U.S. workers, drive down wages and send work overseas. Major technology companies, who hire H-1B workers directly and also via staffing firms, contend the visa is crucial to securing the world’s top talent, and they lobby to increase the annual 85,000 cap on new visas.
Under the new rule, companies such as Google, which pay some workers much higher than prevailing wages but others at prevailing wages, won’t have to pay the costliest workers more. But they will have to boost salary for those being paid at the prevailing wage, Hira said.
Labor Department data show Google, which received 6,054 approvals in fiscal year 2019 for new and renewed H-1B visas, received 1,281 approvals in the fourth quarter of fiscal year 2020. For more than half those workers, pay levels were at least 20% higher than prevailing wages, according to Hira and the left-leaning Economic Policy Institute. Apple, which received 3,469 approvals in fiscal year 2019, received 755 approvals in the fourth quarter of fiscal year 2020, with pay levels at least 20% higher than prevailing wages for nearly three-quarters of them. Facebook, with 3,552 approvals in fiscal year 2019, received 1,247 approvals in the fourth quarter of fiscal year 2020, with pay levels at least 20% higher than prevailing wages for 44% of that group.
Staffing and outsourcing companies such as HCL America, whose workers ignited controversy when they replaced U.S. workers at UC San Francisco, will have to raise wages for most H-1B workers, Hira said. Of the 825 approvals HCL received in the fourth quarter of fiscal year 2020, 29% carried wages more than 20% higher than prevailing pay, Hira’s analysis of Labor Department data showed. At outsourcers Infosys and Wipro, 1% of approvals were over that level, while at outsourcer Cognizant, with 8,545 approvals, there were none.
Data on Cisco, which had 2,098 approvals in fiscal year 2019, show its H-1B pay practices more in line with the outsourcers, according to Hira’s analysis. Of 913 approvals in the fourth quarter of fiscal year 2020, the San Jose technology giant set pay of more than 20% of prevailing wage for 7%, the Labor Department data showed.
