Workplace Labor Update - House Passes H-1B Increase Legislation – October 1998

By a vote of 288 to 133, the House of Representatives passed legislation (H.R. 3736) that will significantly increase the number of H-1B visas for the near future. The H-1B program enables U.S. employers to hire professional foreign nationals to work in the U.S. for up to six years in "specialty occupation" positions. On September 24, the House voted to increase the number of available H-1B visas to 115,000 for fiscal years 1999 and 2000, and to 107,500 for fiscal year 2001. Thereafter, the H-1B cap will revert to the current 65,000 level, which was reached in May of this year. The Senate is expected to pass the bill with minor opposition and with only slight adjustment to the provisions. Since the Clinton administration and key Republican Senators reached a compromise on the bill earlier, it is expected to be signed into law by the President in short order. Although the Administration had opposed an earlier version of the bill, a key provision of the compromise - creating an additional fee of $500 to file new H-1B petitions or requests for extensions of existing petitions - allayed the Administration's concern about U.S. workers being laid off and replaced with cheaper foreign labor. The increased filing fee is expected to raise approximately $250 million dollars to be used for training and scholarships for U.S. workers and for enforcement of the H-1B program's restrictions. The temporary increase in H-1B visa numbers should allow for adequate availability of H-1B visas for the near future. Indeed, there was good reason to fear that, should Congress not increase H-1B visa numbers, the FY 1999 cap would be reached as early as December 1998 or January 1999. The H-1B cap was reached for the first time in FY 1997, but only six weeks prior to the end of the fiscal year, so the impact on the availability of H-1B visas was minimal. By contrast, in fiscal year 1998, the cap was reached approximately five months prior to the end of the fiscal year, impacting the ability of U.S. employers to hire H-1B professionals. The bill passed in the House contains several key provisions in addition to the increased numbers of H-1B visas and filing fee of $500. The House bill includes stringent new attestation requirements for "H-1B dependent" employers, which are defined as businesses that employ 51 or more full-time employees and have a work force that includes at least 15% H-1B nonimmigrant employees, have at least 26 but not more than 50 full-time employees with a work force of more than 12 H-1B nonimmigrants, or have 25 or fewer full-time employees of which more than seven are H-1B workers. An H-1B dependent employer is required to attest that U.S. workers have not been and will not be laid off from an "essentially equivalent" position offered to the H-1B employee. This attestation includes positions at customer or client work sites; that is, the dependent employer must attest that the off-site owner has not laid off and will not lay off U.S. workers from essentially equivalent positions. An H-1B dependent employer also is required to demonstrate a good faith effort to hire U.S. workers for the job offered to the H-1B worker. If the H-1B employee has at least a master's degree (or equivalent) or earns at least $60,000 per year, however, the employer is exempt from the attestation requirements. Another provision imposes new fines of $1,000 to $35,000 for statutory violations for all violating employers - not only H-1B dependent employers - who may then be barred from using the H-1B program for up to three years for willful violations. We will be following developments on this key legislation and implementing regulations closely and reporting further in future editions of the Workplace Labor Update.