Trump Administration Rule Increasing H-1B Visa Wages Blocked

Dec. 3, 2020, 10:10 PM

The Trump administration can’t enforce a new rule mandating increased wages for H-1B visa holders against a large number of tech companies challenging the rule, in part because they’ll likely be able to prove the administration didn’t follow the proper procedure in issuing the rule, a federal court in New Jersey said Thursday.

Skilled foreign workers can receive H-1B visas to work temporarily in the U.S. in certain specialty occupations. Employers must pay these workers the higher of the actual or prevailing wage rate for the occupation in question. The Department of Labor sets four levels of prevailing wage rates for each occupation based on data from the Bureau of Labor Statistics.

President Trump in June issued Proclamation 10052, which suspended the entry of nearly all H-1B temporary workers and certain other visa applicants, saying the move was necessary to protect the U.S. labor market in light of the coronavirus pandemic and its economic disruption. The proclamation also ordered the Labor Department to take additional steps ensure that H-1B holders don’t “disadvantage U.S. workers.”

DOL in October announced an interim final rule that significantly increased the prevailing wage rates for H-1B workers, saying it would protect U.S. workers’ wages and job opportunities. The rule was made effective immediately.

It was challenged by a number of U.S. information technology and computer servicing companies that employ H-1B workers, including ITServe Alliance, a nonprofit corporation with over 1,250 IT companies as members.

The companies are entitled to a preliminary injunction blocking the administration from enforcing the rule against them while their case plays out, the U.S. District Court for the District of New Jersey said in an unpublished opinion.

The plaintiffs will likely be able to show the rule was procedurally deficient, because the department didn’t provide the public advance notice and the opportunity to comment on the proposed rule, the court said.

The administration argued that advanced notice and comment was impracticable because of the economic emergency stemming from the coronavirus pandemic. But although the pandemic “has clearly created an emergency in the overall employment market, there is no evidence that an emergency sufficient to dispense with the requirement for notice and comment exists within the labor market” that the rule seeks to address, the court said.

The plaintiffs will also likely be able to show that the Labor Department’s stated concern that advance notice and comment would lead to regulatory evasion, because it would lead employers to rush “to lock in lower wage rates” before the new rates became effective, “was not reasonable based on the facts present in this case,” Judge Stanley R. Chesler added.

Wasden Banias LLC represents the plaintiffs.

The case is ITServe All. Inc. v. United States, D.N.J., No. 2:20-cv-14604, unpublished 12/3/20.

To contact the reporter on this story: Brian Flood in Washington at bflood@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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