Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

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Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries. How will this new process work?

— Positive in Palo Alto

Dear Positive:

Thanks for your timely question! The Department of Homeland Security (DHS), which oversees U.S. Citizenship and Immigration Services (USCIS), finalized a new rule last week (Jan. 8), that replaces the random H-1B lottery with a pay-to-play system. There may be litigation that could change things before this year’s selection process, but interestingly, removing the randomness from the H-1B lottery is one point on which both Biden and Trump agree.

To find out more about all the changes that will impact this year’s H-1B process and how to prepare, register for our upcoming webinar on Jan. 20, on how to Get Ready for the H-1B FY2022 Lottery. In the meantime, listen to my recent H-1B podcast in which I discuss what the 2021 lottery will look like, and download our free H-1B guide. Also, check out the podcast episode on What Makes a Strong H-1B Petition.

Under this new wage-based H-1B allocation system, which is slated to go into effect on March 9, USCIS will select H-1B registrants based on the highest relative wages paid, taking into account the job, where it will be done and the job level (think of it like a career stage). This change is aimed at encouraging employers to offer higher salaries and higher-skilled positions to H-1B candidates to better protect the wages and working conditions of U.S. workers and increase the likelihood that H-1B visas will be awarded to the best and the brightest individuals. In a nutshell, this is great news for Silicon Valley companies that have cash and need to remove risk.

While the new rule substantially increases predictability in the “lottery” process, it may make it more difficult for companies that are unfunded, pre-revenue early-stage startups to get H-1B visas for founders or employees, particularly since other forms of compensation, such as equity or stock options, are not considered wages. So the lesson here is to get some predictable revenue or runway prior to Q2 when you need to submit the I-129 petition so you can demonstrate the “ability to pay” at a higher wage level.

It remains unclear whether President-elect Joe Biden will continue this H-1B selection process by wage. On the one hand, he promised to undo all Trump-era immigration regulations starting in his first 100 days. On the other hand, the immigration plan he released during his presidential campaign expresses support for reforming the temporary visa system so that it doesn’t disadvantage the American workforce.

In his plan, he stated that high-skilled visas like the H-1B “should not be used to disincentivize recruiting workers already in the U.S. for in-demand occupations. An immigration system that crowds out high-skilled workers in favor of only entry-level wages and skills threatens American innovation and competitiveness.” So, that’s in line with this pay-to-play regulation.

Biden’s transition spokesperson recently announced that on his first day as president on Jan. 20, Biden will issue a memo halting or delaying regulations and actions by Trump and his administration that have not yet gone into effect. This will give the Biden administration time to decide which regulations to rescind and which should be allowed to go into effect — including this new DHS rule, which won’t go into effect until nine days into the H-1B registration process, which begins on March 1 and runs through March 20.

Each year, the number of H-1B visas issued is capped at 85,000: 65,000 for individuals with a bachelor’s or higher degree and 20,000 for individuals with a master’s or higher degree from a U.S. institution. USCIS first selects enough registrants to reach the 65,000 bachelor’s cap and then will select enough registrants to reach the 20,000 master’s cap. The sponsoring companies of the H-1B candidates selected in the electronic system will be eligible to submit a paper-based, full H-1B petition.

Employers who sponsor an H-1B candidate must — at a minimum — pay the higher of either the actual wage paid to U.S. workers in a comparable position or the prevailing wage rate for occupations based on the location where the work will be performed. Prevailing wages are broken down into four levels based on experience, with Level I being an entry-level position and Level IV being the most experienced.

Under the new rule, USCIS will now select H-1B registrations based on highest relative wage, starting with the Level IV wage or above and then proceed to Level III, and so on. DHS estimates that all H-1B registrations offering a Level I wage will have no chance of being selected as long as the number of H-1B registrations exceeds the 85,000 cap. Even a Level II salary is iffy. That means recent graduates, as well as doctors, scientists, researchers and other professionals who are early on in their careers will have a very low chance of getting an H-1B unless their employers pay them Level III or higher salaries.

Based on H-1B registration data from March 2020, DHS estimated the number of candidates in each wage level that would be selected to apply for an H-1B:

Interestingly, it appears that any registration submitted prior to March 9, when the rule officially goes into effect, would not be subject to the rule. That means unless the H-1B registration period changes, employers who are registering H-1B candidates this year, particularly those with Level I or Level II wages, might be advantaged do so between March 1 through March 8.

DHS stated the H-1B Registration Tool (its website) will now require employers to select the highest wage level that the employer intends to pay — or pay in excess of — to the H-1B candidate. If the H-1B candidate will work in multiple locations or positions, the employer must select the lowest wage level that will be paid to the H-1B candidate.

By March 31, USCIS will notify sponsoring employers whether they have been selected to submit an H-1B petition on behalf of their H-1B candidate. Completed H-1B petitions will need to be submitted to USCIS by June 30. As part of this rule change, DHS also noted that it is changing Form I-129 (Petition for a Nonimmigrant Worker), the form used for applying for an H-1B visa. Employers need to make sure they use the correct form or risk having the petition delayed or even denied.

Reach out if you need assistance.

Best regards,

Sophie

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