Home English New H1-B Visa Policy Explained: How new rules will impact Indian companies and students in the US?

New H1-B Visa Policy Explained: How new rules will impact Indian companies and students in the US?

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Despite the impeachment proceedings against him going forward to remove him from the office, US President Donald Trump has dealt another blow to the H1-B visa aspirants. The Trump administration, just days before his term ends, has now replaced the existing lottery system for selection of the visa beneficiaries with a newer system that will prioritise wages.

According to the new rule, announced by the US Department of Labour (DOL) late Tuesday night, stated that from now higher wages and skills will be given priority in issuing visas. The new wages rule also increases the mandated wages for the people working in the US on H1-B visas or holding the employment-based green card.

The move is aimed to protect the US workers from cheaper labour from abroad, but it can impact Indians working on H1-B visas and aspirants as they are the biggest beneficiaries of the visa regime. So as Trump’s protectionist agenda changes the rules for issuing H1-B visas, here’s how it will affect Indian visa holders and aspirants including students.

What is the new wage-based H1-B visa regime?

According to a report by Associated Press, the new wage rule gives priority to applications of those employers where the “proffered wage equals or exceeds” the prevailing level in that area of employment. The proffered wage will be the amount that the employer plans to pay the beneficiary. This will be done for both the 65,000 regular visas and the 20,000 advanced degree exemption visas.

How will the new rules work?

The DOL uses occupational employment statistics (OES) data to regulate the prevailing wages or average wage paid to employees in a particular job. The DOL further divides the prevailing wage into four tiers, which is based on the entry-level to experienced level. As per the new rules, it will be mandatory for the H1-B workers at the lowest wage level to receive at least 35th percentile of the prevailing wage for their job. This has been increased from the existing 17th percentile. Meanwhile, workers at the highest age level must receive 90th percentile.

How it will affect Indian companies and students?

Effects on Companies: The Indian companies, including HCL America and other staffing and outsourcing companies, will get affected by the new rules as their bottom line will be hit. The companies will have to raise the wages for most H1-B visa workers in order to keep a resource in their company. According to the US government data, reported by Mercury News, HCL paid more than 20 per cent of the prevailing wage to 29 per cent of its workers who received H1-B worker visas in the fourth quarter of the fiscal year 2020. For Infosys and Wipro, only 1 per cent of approvals were over that level, while at outsourcer Cognizant, there were none out of 8,545 approvals.

Effect on Students: The biggest setback will be faced by foreign students, fresh graduates and those who only have couple of years experience. According to the data, around 2 lakh Indian students are enrolled in universities across the US, making it one of the largest group of foreign students. In wage-based selection, employees, mostly senior executives that have higher salaries, have better chances of getting their petitions selected. This will leave out freshers whose salaries will not make them eligible for petitions. Universities have also expressed concerns as it will have a detrimental effect on the education provided by the to foreign students.

When will it come into effect?

The new rules will be published in the federal register on January 14, and the new rules will be made effective from March 9, 2021. If registration for the FY2021 cap season is set to open on March 1 like the last year, then the new rules cannot be implemented. Though the rule will take effect from March, its impact will not be immediate and the process will be staggered.

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