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Immigration Law Changes are a Mixed Bag for U.S. Employers

March 16, 2005

Businesses that employ—or may consider employing—foreign workers should take note of several statutory and regulatory changes adopted recently by Congress, the Department of Homeland Security Citizenship and Immigration Services (USCIS), and the Department of Labor. While most amendments were designed to streamline procedures, an employer not familiar with the new developments could easily create for itself unnecessary delay and regulatory uncertainty when hiring alien workers.

I-9 Compliance: Electronic Storage
Currently, to verify its employees’ eligibility for U.S. employment, an employer must complete I-9 forms by hand and store them on paper, microfilm or microfiche. The E-Storage/E-Signature bill signed in December authorizes employers to complete and store I-9s electronically. USCIS is likely to promulgate regulations fleshing out details, but the law will take effect no later than May 2005.

Program Electronic Review Management (PERM):
Streamlined Labor Certification

Labor certification is the first of three steps to obtain employment-based permanent resident status (green card). Sponsoring employers must recruit in the U.S. labor market to prove that qualified U.S. workers are not available to fill the job offered to the alien. The employer also must show that employing the foreign national will not adversely affect the wages and working conditions of similarly employed U.S. workers.

PERM goals. Backlogged for years, the current labor certification program has employers waiting up to four years for a decision on their labor certification applications. On December 27, 2004, the U.S. Department of Labor published its final rule implementing the long awaited PERM system to take effect on March 28, 2005. Designed to streamline labor certification and adjudicate applications in just 45-60 days, PERM eliminates the preliminary intake function now performed by state workforce agencies (in Wisconsin, the Department of Workforce Development) and requires direct electronic or mail filing with DOL.

Tougher recruitment requirements. In exchange for the promise of speedier adjudication, PERM imposes stricter recruitment requirements, including:

  • Wages at 100% of the prevailing wage - Currently, employers may meet the prevailing wage requirement by paying the alien worker only 95% of the prevailing wage for the position. PERM will require 100% of the prevailing wage. To provide employers with more salary options, PERM will require government wage surveys used to calculate prevailing wages to include four salary levels, instead of the current Level I and Level II.
  • Prevailing wage determinations - While PERM will eliminate most of the duties now performed by state workforce agencies, it will require employers to obtain a prevailing wage determination from the state workforce agency before filing their labor certification applications.
  • Job order - The employer will have to place an advertisement on the state job service network for 30 days.
  • Sunday newspaper ads - Currently, employers can run newspaper ads on lower-readership days. Under PERM, they will have to place two print ads in the Sunday edition at least 30, but not more than 180, days before filing. Professional positions may require an ad in a professional journal.
  • Identity of employer - Newspaper ads will have to identify the employer by name.
  • Three additional recruitment steps - PERM will require three additional recruitment steps performed no more than 180 days before filing, only one of which may occur within 30 days of filing. The options include, among others: job fairs, the employer’s web site, other job search web sites, on-campus recruiting, and private employment firms.
  • Recruitment report - As under current law, PERM will require the employer to file a recruitment report describing the recruitment steps taken and the results, including the number of U.S. workers rejected, categorized by the lawful job-related reasons for rejection.
  • Retention of supporting documents - Employers will have to retain documents supporting their applications for five years from the date of filing.

An employer wishing to avoid PERM’s stricter hiring and recruitment requirements must file a labor certification application under the old rules no later than March 27, 2005.

Converting old cases. PERM will permit an employer to withdraw a pending case and re-file it under PERM while retaining the “priority date” on which the original application was filed—as long as the converted case offers the “identical job opportunity” as the old case and the re-filed application complies with the new PERM recruitment requirements.

If an employer knows in advance that a pending labor certification can’t be re-filed without losing the priority date, the employer has two choices. The employer can withdraw a pending case, recruit in compliance with the new PERM requirements, and file a new labor certification application under the streamlined 45-60 day procedures. Or the employer can let the Department of Labor adjudicate its case under the old regulations.

The department intends to adjudicate 800,000 pending cases in 24-30 months under a “backlog reduction” plan.
Employers will need to weigh the pros and cons of waiting out a pending case through “backlog reduction,” converting a pending case or submitting a new filing. Each of these approaches offers its share of risks for both employer and employee.

The H-1B Visa Reform Act of 2004:
More Visas, Higher Fees

The H-1B visa category permits U.S. employers to hire alien professionals to fill professional jobs. The H-1B visa quota is 65,000 new visas per federal fiscal year (October to October). Recently, the demand for H-1B visas has been significantly greater than the supply, exhausting the quota as early as the first day of the fiscal year. The Omnibus Appropriations Act for FY 2005 addressed the H-1B visa quota problem by creating a limited quota exemption while charging U.S. employers higher fees to sponsor H-1B employees. The act:

  • Reinstates and increases the “training” fee - Before its sunset on October 1, 2003, non-exempt employers paid a $1,000 training fee set aside to help train U.S. workers to perform the jobs offered to alien hires. The new law reinstated the training fee and increased it to $1,500 for businesses employing more than 25 workers ($750 for those with 25 or fewer employees). Certain employers, such as educational and non-profit organizations, are still exempt. The new fee took effect on December 8, 2004.
  • Sets wages at 100% of the prevailing wage - Currently, employers may meet the H-1B prevailing wage requirement by paying only 95% of the prevailing wage for the position. The new law requires 100% of the prevailing wage. To provide employers with more salary options, the new law requires government wage surveys used to calculate prevailing wages to include four salary levels, instead of the current Level I and Level II. This provision takes effect on March 8, 2005.
  • Adds 20,000 slots to the 65,000 H-1B visa quota - Aliens who have earned a master’s degree or higher from a U.S. institution of higher education may avail themselves of the 20,000 new slots added to the quota. (Notwithstanding the act’s language, USCIS has indicated it may make the 20,000 slots available to all H-1B professionals, not just advanced degree holders.) These 20,000 slots, available after March 8, 2005, are expected to be exhausted by mid-April this year and soon after the start of each new fiscal year.
  • Imposes a fraud prevention and detection fee - This new $500 fee applies to all employers hiring H-1B workers and will take effect on March 8, 2005.

The L-1 Visa Reform Act of 2004:
Less Flexibility, Higher Fees

International companies that transfer specialized knowledge or executive personnel to the U.S. use the L-1 visa category, which has been under intense congressional scrutiny in recent years. The L-1 portion of the Omnibus Appropriations Act for
FY 2005 reined in some of the existing features of the L-1 visa. The act:

  • Limits “outsourcing” - L-1B (specialized knowledge) workers will be prohibited from working away from their petitioning employers’ work sites if the work will be controlled and supervised by a different employer or if the offsite arrangement is essentially a general labor-for-hire relationship rather than a situation directly related to the employee’s specialized knowledge. This limitation will apply to all L-1B petitions filed after June 6, 2005.
  • Reinstates the requirement of at least one-year prior employment abroad - Under current law, L-1 aliens applying under a “blanket L petition” (used primarily by large, multinational organizations transferring many employees) qualify for L-1 status based on only six months prior employment abroad by the foreign employer. The new law re-establishes the requirement that “blanket L petition” transfers must have worked abroad for at least one year for the foreign employer, the same as all other L-1 applicants.
  • Imposes a fraud prevention and detection fee - This new $500 fee applies to all employers hiring L-1 workers and will take effect on March 8, 2005.

USCIS-Proposed H-2B Program Reforms:
One-Stop Processing
The H-2B visa program allows U.S. employers to obtain visas for foreign workers to fill a one-time, peak load, intermittent, or seasonal need for labor when local workers aren’t available. Under current law, employers must comply with a time-consuming two-step process that includes labor certification by the Department of Labor—based on recruitment in the U.S. labor market to prove that qualified U.S. workers are not available—followed by USCIS approval of an H-2B petition.

In late January, USCIS proposed to eliminate labor certification in favor of a single H-2B petition electronically filed with the USCIS. Public comment will end April 8, 2005. The final form of the rule remains to be seen, but the concept is a welcome change for H-2B employers.

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