USCIS to Publish Final Rule to Give Weighted Advantage to Higher Paid Positions in FY2027 H-1B Cap Lottery
Today, the US Citizenship and Immigration Services (USCIS) issued a final rule implementing a new ‘weighted’ H-1B cap lottery selection process. The Rule, which is slated to take effect for the upcoming FY2027 cap lottery season, will give higher odds of selection to persons being offered higher salaries. It is almost certain that the Rule will face legal challenges, and may be enjoined by a Federal Court before the lottery selection process starts.
Background
The H-1B program allows U.S. employers to petition for foreign workers for ‘specialty occupations’, defined as occupations that require at least a Bachelor’s degree in a specific field (e.g., Engineer, Lawyer, Doctor, etc.). The Immigration and Nationality Act allocates a limited number of new H-1Bs each fiscal year. Referred to as the ‘cap,’ this limit is currently set by Congress at 65,000, with an additional 20,000 set aside for graduates with U.S. advanced degrees. Because in most years the demand for new H-1Bs is higher than available numbers, the USCIS has implemented a random selection process, known as the ‘cap lottery.’ The lottery process has occasionally been changed by the USCIS over the past 30 years. Under the current process, US employers ‘register’ prospective new H-1B workers in the lottery in March of each year. H-1B petitions can then be filed for the selected workers during a 3-month period starting in April, six months prior to the beginning of the new fiscal year. The new lottery process would modify the process from a purely random process, to one that favors higher paid positions.
Overview
For H-1Bs and certain other immigration filings, the USCIS utilizes a prevailing wage framework that contains four levels. The first level (level I) is for entry level positions, and the fourth Level (level IV) is for the highest paid positions. The prevailing wage for each level is determined by the Department of Labor’s occupational category (the “SOC” code), and the area of intended employment. Under the new cap selection process, the employer will indicate in the registration application the area of intended employment, the SOC code, and the highest prevailing wage level that the sponsored foreign national’s salary would meet. The number of ‘shots’ that the registration will have in the lottery will correlate to the prevailing wage level indicated. Thus, a registration indicating a Level IV prevailing wage, will have four shots in the lottery, whereas a registration indicating Level I, will only have 1 shot.
Where multiple registrations are filed for the same person, the registration indicating the lowest prevailing wage would be used to determine the number of shots the person will have.
Impact
Unless enjoined, modified or withdrawn, the new Rule would give high odds of selection in the FY2027 to persons being offered positions with high salaries, and exceedingly low odds for entry level and other lower paid positions.
Winners and Losers
The new selection process would benefit companies that pay higher salaries, including many tech companies in AI and other emerging technologies that are competing most for global talent, while handicapping more traditional employers, as well as small startups that often rely on equity to partially compensate their workers.
Concerns
Concerns have already been raised about the legality, practicality and fairness of the new Rule:
Legality. Because the statute calls for a ‘random’ selection process without favoring certain kinds of positions, many believe that the Rule is inconsistent with statute. The Rule is therefore vulnerable to legal challenges, creating uncertainty for the upcoming cap lottery season.
Fraud Potential. The Rule does not provide clear means to prevent registrants from ‘gaming the system’ by indicating a high salary on the cap registration submission solely for the purpose of increasing odds in the lottery. For example, an employer may register a prospective H-1B worker for one position where the salary offered meets the level IV prevailing wage, but then move the worker to a different position where the salary only meets the Level I prevailing wage after the petition is approved.
Economic Impact. The Rule would make it difficult for most US employers to sponsor H-1Bs for new grads, thereby jeopardizing recruitment pipelines for high skilled workers. This may result in more high-tech positions moving offshore, to the detriment of the overall US economy.
Fairness to US Workers. In order to secure the best talent, US employers may pay the foreign workers more than similarly situated US workers for the sole purpose of securing their work authorization through the H-1B lottery process. This would be contrary to the stated purpose of the new Rule, which is to protect US workers, and may also subject the employer to discrimination claims.
What this means for our clients
We will be sending an invitation to a webinar in the coming days, and providing FAQs and other resources to help understand the new selection process and its implications. We recommend that employers continue with their existing plans to submit workers in the FY2027 H-1B lottery, even if it is believed that their salary will yield only a small chance of selection. We believe that there is a strong possibility that the Rule will be enjoined, or possibly withdrawn.