H-1B wages will rise by over 30%: Cato Institute

H-1B employers will have to increase actual wage offers by more than 30% following the US department of labour (DoL)’s new wage rules for H-1B employees, according to US public policy research organisation Cato Institute. This would significantly increase costs for Indian IT services companies that depend on H-1Bs, and will push them to hire locally, and/or move work to offshore locations like India.

H-1B employers will have to increase actual wage offers by more than 30% following the US department of labour (DoL)’s new wage rules for H-1B employees - Cato Institute

Vikram Shroff, head of HR law practice at law firm Nishith Desai Associates, said large technology companies may be able to comply with the wage increase rule, especially to get foreign talent. “However, several smaller and mid-sized employers who also rely on H-1B might find such conditions restrictive. Then, there is also the question of employer needing to proportionately increase the wages of the similarly employed workers, given that anti-discrimination laws are highly developed in the US,” he said.

Cato’s data has compared the new hourly prevailing wage rates with the actual hourly wage offers in 2020. The prevailing wage is the minimum wage that employers must pay to H-1B and other foreign workers.

David J Bier, an immigration policy analyst at the Cato Institute, said 94% of H-1B job offers were below the prevailing wage rates. The new prevailing wage rate is 20% higher than the actual wage offers for 88% of H-1B jobs in 2020, he said. 

Cato finds that TCS, which offers $36.5 an hour, will now be expected to pay $52.7, an increase of 44%. Wipro’s wages will go up from $38 an hour to $57 an hour, a 50% increase. Cognizant offers $42.4 an hour which can go up to $62 an hour. Among MNC IT services firms, Oracle will see a sharp rise in hourly wages paid, from $58.7 to $87 an hour. Among the technology companies, Apple will see a spike from $67 an hour to $89 an hour.

About H-1B Visa

What is H-1B Visa?

The H-1B is a visa in the United States under the Immigration and Nationality Act, section 101(a)(15)(H) that allows U.S. employers to temporarily employ foreign workers in specialty occupations. A specialty occupation requires the application of specialized knowledge and a bachelor's degree or the equivalent of work experience. 

What is the duration of stay?

The duration of stay is three years and is extendable to six years; after which the visa holder may need to reapply. Laws limit the number of H-1B visas that are issued each year: 188,100 new and initial H-1B visas were issued in 2019. Employers must generally withhold Social Security and Medicare taxes from the wages paid to employees in H-1B status.

Have the laws been modified?

The H-1B visa has its roots in the H1 visa of the Immigration and Nationality Act of 1952; the split between H-1A (for nurses) and H-1B was created by the Immigration Act of 1990. 

65,000 H-1B visas were made available each fiscal year, out of which employers could apply through Labor Condition Applications. Additional modifications to H1-B rules were made by legislation in 1998, 2000, in 2003 for Singapore and Chile, in the H-1B Visa Reform Act of 2004, 2008, and 2009. United States Citizenship and Immigration Services (USCIS) has modified the rules in the years since then.

Types of US Immigration Visa?

United States visa types : F1, H1B, J1, L1, B1

• F1

F1 is student visa and is required if you want to pursue degree course like BS, MS / MBA or PhD in USA. It's not a work visa.

• J1

J1 visa is for work and study related exchange programs.

Sometimes, a J-1 program will require that the beneficiary spend at least two years outside of the US (not in Countries Like Canada or UK) before being permitted to switch to a different non-immigrant visa or to permanent residency.This program is administered by the US information agency (USIA), a division of the Department of State.

To Obtain J1 Waiver - In some situations, a waiver may be granted if the 2-year departure would cause exceptional hardship to an applicant's family.

If the applicant imparted some benefit to the US (in Medicine), or if he participated in the program at his own expense.

 A "no objection" waiver can be issued if an applicant's home country does not object to the applicant's decision not to return home. To apply for this, the applicant must contact his country's embassy in the US, or if he has returned home, must apply through the foreign office.

If you can demonstrate a "well-founded fear of political or religious persecution" if forced to return to your country. You may be able to obtain a "Refugee," "Asylum," or "Persecution" status.

• H1B

It is a 'specialty occupation' visa for temporary employment. Its duration is three years (initial request), and later it can be extended for another three additional years. There are restrictions for dependents (they may not work).

You are allowed to work only for employer named in your H1B approval. You cannot transfer H1B petition from one employer to another. The new company must apply for a new H1B visa (or visa transfer) with the Department of Labor with copies of CV, transcripts and other documents.

• B1, B2

B1 Visitor for Business; B2 visa or visitor visa for Pleasure is available for coming to the US for business or pleasure. It can be granted from 30 days to 10 years (multiple entries with a maximum of 6 months stay in each visit) Nationals of some countries may be eligible to visit the US for up to 90 days without a visa.

• L-1 - Intra-company Transfer Visas

L-1 visas are available to workers, executives, managers and specialized employees moving to their employer's US site. Spouse of L1 visa can work too. Executives and managers holding L-1 visas may be eligible for permanent residency without the need for a labor certification. L-1 visa holders cannot change their employer (they will have to file H1B to change employer). There is NO L-1 transfer.

• Permanent Residency-Employment Based ("Green Card")

Green card holders can work for any employers, there are no restrictions. You can avail your green card in lottery scheme, via H1-B/L1 path (work related), exceptional persons (like researchers, Noble prize winners etc) or family sponsorship. 

• First Preference Persons of Extraordinary Ability, Outstanding Professors, and Researchers, and Multinational Executives and Managers
• Second Preference Persons Holding Advanced Degrees or Persons of Exceptional Ability in the Sciences, Arts or Business
• Third Preference Skilled Workers and Professionals
• Fourth Preference Employment Creation Investors

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