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Business Groups, Universities Sue Agencies Over H-1B Rules

Oct. 19, 2020, 11:49 PM

Business groups and universities are suing to strike down a pair of rules from the Labor and Homeland Security departments that overhaul the H-1B high-skilled guest worker program.

In their complaint, filed Monday at the U.S. District Court for the Northern District of California, the U.S. Chamber of Commerce, the National Association of Manufacturers, and Cornell and Stanford Universities, among others, claim that “if left unchecked,” the rules would “sever the employment relationship of hundreds of thousands of existing employees in the United States, and they would virtually foreclose the hiring of new individuals via the H-1B program.”

The agencies “promulgated these Rules without the notice-and-comment rulemaking required by the Administrative Procedure Act,” according to the complaint. “Because defendants have no ‘good cause’ to dispense with the APA’s most fundamental protection for the regulated public, the Court should swiftly set these Rules aside,” they said.

Representatives for DOL and DHS didn’t immediately respond to requests for comment on the complaint.

The lawsuit is the second to be filed in a federal court against the DOL measure, which went into effect immediately; the DHS rule is set to begin Dec. 7. A group of IT staffing companies sued to strike down the rule on Oct. 16 in the U.S. District Court for the District of New Jersey.

A third complaint against the DOL wage rule was filed late Monday in the U.S. District Court for the District of Columbia by another group of universities, colleges, and medical associations.

Additional plaintiffs in the San Francisco federal court case include the National Retail Federation; the Bay Area Council; the American Association of International Healthcare Recruitment; the Presidents’ Alliance on Higher Education and Immigration; the California Institute of Technology; University of Southern California; University of Rochester; University of Utah; and ARUP Laboratories.

Worker Protection

The agencies issued the contested regulations Oct. 8 in response to concerns of fraud in the H-1B program allowing employers, in some cases, to pay foreign workers less than comparable U.S. workers.

The DOL rule changes the four tiers of wages that an employer must pay to high-skilled guest workers, which are determined by the job and region where the visa holder will be employed, by raising the pay for those visa holders by about 30 percent at each of the four levels. The DHS rule narrows which jobs qualify as a specialty occupation.

The plaintiffs are seeking a preliminary injunction that blocks the measure from being in effect while they pursue a court order that would strike it down as arbitrary and capricious, and violative of the federal Administrative Procedure Act.

Faulty Data

Both lawsuits allege that the DOL’s decision to set substantially higher wage rates for H-1B visa holders doesn’t have evidence to justify the new wage tires.

“The rules being implemented by the Department of Homeland Security and the Department of Labor undermine high-skilled immigration in the U.S. and a company’s ability to retain and recruit the very best talent,” U.S. Chamber CEO Thomas J. Donohue said in a statement. “If these rules are allowed to stand, they will devastate companies across various industries.”

The IT Staffing companies in Friday’s lawsuit claim the DOL relied on “outdated, incorrect, or limited empirical data,” and “failed to consider readily available, relevant data and empirical studies.”

Their lawsuit said the new rule “conflicts with basic economic theory.”

Causes of action: Violation of the Administrative Procedure Act.

Relief: Preliminary injunction; declaratory judgment rules are unlawful.

Response: Representatives for DOL and DHS didn’t immediately respond to requests for comment.

Attorneys: William G. Gaede III and Paul Hughes with McDermott Will & Emery LLP.

The case is Chamber of Commerce et al v. DHS et al, N.D. Cal., No. 20-cv-07331, complaint 10/19/20.

To contact the reporter on this story: Genevieve Douglas in Washington at gdouglas@bloomberglaw.com

To contact the editors responsible for this story: Andrew Harris at aharris@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com

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