December 8, 2004 - USCIS today announced that new legislation affecting the H-1B, L-1 and prevailing wage rules was signed into law by the President. Increases in filing fees for certain H and L visa petitions are now in effect, while other provisions take effect within either 90 or 180 days, as described below.

Among its H-1B provisions, the so-called "L-1 Visa and H-1B Visa Reform Act":·

• Sets aside 20,000 additional H-1B visas for Master's (or higher) level graduates of U.S. colleges and universities annually, allowing for the filing of new H-1B petitions for qualified individuals. The extra visas will be in addition to the current 65,000 numerical cap. Initial H-1B's under this new visa allotment cannot be filed until March 8, 2005. ·
• Imposes a $1,500 H-1B "Education and Training Fee" for each H-1B petition filed for a new employer, change of employer, and first extension for an existing employer. Employers with fewer than 26 full time employees (including U.S. affiliates and subsidiaries) will pay a lower $750 fee. The Education and Training fee change is in effect for H-1B petitions filed on or after December 8, 2004. Second and subsequent extensions filed by the same employer are exempt from the Education and Training fee.
• Mandates a $500 Fraud Detection and Prevention fee per petition to all initial H-1B applications. The fraud fee provisions will be effective on March 8, 2005, but will not be required for same-employer extensions.
• Permanently reinstates the non-displacement and recruitment attestations for H-1B dependent employers. The additional attestations will be required beginning March 8, 2005.
• Allows the Department of Labor to self-start H-1B investigations without receiving a formal complaint, based only on "reasonable cause to believe" an employer has violated the H-1B rules (effective retroactively to October 1, 2003).
• Excuses employers who act in good faith from minor technical violations of the H-1B compliance rules, such as incorrect prevailing wage determinations. Employers will have a 10-day period to correct technical deficiencies.

The H-1B Visa Reform Act also changes the way that prevailing wages are determined for both H-1B and permanent residency petitions (per labor certification) by:

• Eliminating the 5% variance from prevailing wage for purposes of labor certifications, H-1B and H-1B1 visas, and requiring payment of 100% of the prevailing wage. While this provision is effective March 8, clarification will be required on its applicability to applications that were filed under the 95% rule and are currently pending.
• Requiring that Department of Labor wage surveys provide at least 4 levels of wages commensurate with the experience, education and the level of supervision requirements for the position. The rules also allow employers to carve out two middle tiers from the two-level Department of Labor OES survey according to a formula (effective March 8).

With the L-1 provisions, Congress was concerned with perceived abuses of the classification; the new legislation:

• Eradicates the 6-month pre-employment requirement for Blanket L employers. Effective June 6, 2005, all L applicants must have at least one year of continuous employment with the employer abroad before applying.
• Imposes a $500 Fraud Detection and Prevention fee per petition to all initial L-1 applications. As noted above, the $500 fee will be effective on March 8, 2005, and will not be required for same-employer extensions.
• Prohibits the issuance of L-1B "specialized knowledge" visas to foreign nationals primarily performing contract labor at client sites. The prohibition will apply in either of two situations: (1) if the employee will be principally controlled and supervised by the client; or (2) if the work does not involve the provision of a product or service for which specialized knowledge specific to the employer (effective June 6).
• Requires the creation of statistical reports on L-1 visa usage, including the issuance of the L-1B classification to employees working primarily offsite.
• Calls for the DHS Inspector General to report regarding vulnerabilities and potential abuses of the L visa program within six months from enactment, and create an Interagency Task Force comprised of representatives from DHS, DOJ and DOS to implement changes based on the report and raise related issues relevant to "national goals and transnational commerce."

BAL Comment:

As noted previously, while additional H-1B visa numbers are very welcome, the new provisions include setbacks for employers utilizing H-1B and L-1 visas. The altered approach to wage calculations might also adversely impact the labor certification program for permanent residence applications.

In return for unprecedented filing fee increases, H-1B employers are afforded up to 20,000 additional H-1B visas for FY 2005. The 20,000 visas will not be allocated until March 8, 2005, and it is likely that USCIS will not begin accepting petitions for these visas before March 8, 2005; it also appears likely that the additional FY 2005 visas will only be available to individuals who possess the appropriate degrees. Employers who have candidates who have, or who will soon receive U.S. Master’s degrees are encouraged to contact BAL regarding starting the H-1B application process. USCIS has announced that further guidance concerning eligibility and process will be forthcoming, and BAL will report these developments as they occur.

L-1 employers garnered no benefits from the new rules, but the final changes in the bill are far better than earlier restrictive proposals. For Blanket L employers, the new L-1 rules re-impose a one-year overseas employment requirement that was previously in effect. The increased filing fees and the client worksite limitations are not expected to severely damper the ability to transfer qualified workers for most multinational companies.

The new rules requiring that employers pay 100% of the prevailing wage established by DOL approved wage surveys will impact both the H-1B and labor certification processes, but might be mitigated by the increased number of possible salary tiers.

H-1B Press Release

L-1 Press Release