Highlights : H1B Increase in Quota
Posted Dec 14, 1998

The American Competitiveness and Workforce Improvement Act of 1998 (ACWIA) provides for 115,000 H1B numbers for fiscal year (FY) 1999 and similarly for FY 2000 and an additional 107,500 H1B visas in FY 2001. The H1B cap returns to 65,000 in FY 2002 which starts on October 1, 2001.

INS believes that in November 1998, approximately 40,000 H1B petitions have already been approved against the current fiscal year's cap.

An employer must attest that it did not displace and will not displace any U.S. worker employed by it within the 90 day period before or after the filing of an H1B petition based on the LCA and that it will not place the H1B worker with another employer who has displaced or intends to displace an U.S. worker.

The new attestation provisions do not go into effect until after the Department of Labor, and the INS, have issued final regulations.

There are additional obligations on an H1B dependent employer. Employers must calculate whether they are "H1B dependent" each time they file an LCA. The calculation is based on the total number of full-time equivalent (FTE) employees of the employer, and the number of H1B non-immigrants employed by the employer at that time. A company will be considered to be dependent if it falls into one of these categories:

Companies with 1-25 FTE employees and more than 7 H1B non immigrants. Companies with 26-50 FTE employees and more than 15 H1B non immigrants. Companies with more than 50 FTE employees where the number of H1B non immigrants is equal to 15% or more of the total number of employees.

"Displace" means laying off a U.S. worker from a job that is "essentially the equivalent" of the job for which the H1B worker is being hired. To be considered "essentially equivalent," the job must have had essentially the same job responsibilities, and the U.S. worker holding it must have had substantially equivalent qualifications and experience to the H1B worker. Also, the job must be within the same area of employment.

An H1B dependent employer who places an H1B worker at a third-party work site "where there are indicia of an employment relationship" (which includes employment contractors) must inquire of the owner of the work site whether it has displaced (as that term is defined above) a U.S. worker during the 90 days before the date the H1B is placed there and whether it intends to displace a U.S. worker within 90 days after the date of placement. The law provides for strict liability on the part of the petitioning employer if the operator of the work site proceeds to displace a U.S. worker or has actually displaced a worker. In such a circumstance, the petitioning employer could still be fined for a violation, even though it has made the required inquiries. However, the INS cannot assess a debarment penalty unless the petitioning employer had actual knowledge of or had reason to know of the displacement. The petitioning employer also could be subject to debarment if it had been previously sanctioned for a violation of this provision by placing H1B workers at the same work site.

If the H1B non immigrant would otherwise qualify for EB1 preference either as a multinational manager or executive, outstanding professor or researcher, or as a person of extraordinary ability, the employer is not required to make the recruitment attestation. Also, as stated above, individuals with at least a masters degrees or who earn $60,000 are exempt from all of the new attestations.

The $500 filing fee was effective from December 1, 1998 and sunsets on October 1, 2001. The majority of the funds will be used by the Department of Labor for training programs for U.S. workers and the National Science Foundation for scholarships for low-income students in math, engineering and computer science. The fee must accompany H1B petitions for "new employment", and the first extension petition filed by an employer for a particular H1B employee. Under the law, the employer is required to pay this fee. The employer cannot require or accept reimbursement for the fee from the employee, because it risks a $1000 fine.

Institutions of higher education and their related or affiliated nonprofit entities, other nonprofit research institutions and government research institutions are not required to pay the fee.

This law also prohibits the practice of benching by requiring an employer who designates an H1B worker as "full-time" in the H1B petition to pay that worker full-time wages, regardless of any nonproductive time and for part time workers, the employer must pay the H1B employee for the number of hours designated on the H1B petition. The employer is required to begin paying the H1B non immigrant the required wage no later than 30 days after the worker enters the United States pursuant to an approved petition filed by that employer, or no later than 60 days after the date the employee becomes eligible to work for that employer, if the worker is already in the United States.

The Department of Labor will investigate complaints regarding failure to meet this requirement, in the same manner it investigates other violations of the H1B requirements.

The statute prohibits an employer from requiring an H1B worker to pay a "penalty" for resigning before a date agreed upon between the H1B worker and the employer. The determination of whether a particular type of payment constitutes a "penalty" is made in accordance with relevant state employment and contract law. The statute specifically provides that liquidated damages are not to be considered a "penalty." The Law Office of Sheela Murthy has previously summarized the major provisions of the law for the benefit of its subscribers and clients. Once the final regulations are promulgated by the Department of Labor, the attestations on employers will come into effect. However, the new fee, "no benching" rule and "no departure penalty" provisions are in effect now.