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Recent Changes to the H1B Visa Program

H1B Visas are a mechanism that enable American companies to recruit candidates for technical and other specialized positions globally.

The H1B Visa program was established in 1990. These visas allow U.S. employers to temporarily employ foreign workers in “specialty occupations” – those that requires the application of specialized knowledge and a bachelor's degree or the equivalent of work experience. The visa has a three-year duration, extendable to six years; after which visa holders must reapply.

Visas are granted by a lottery system.

The program is limited to 85,000 new visas annually. However, widespread exceptions to that limit are the rule. Last year (2019), 188,100 initial H-1B visas were issued.

What Actions Has the Trump Administration Taken?

The Trump administration’s stated goal is to encourage firms to fill positions with US citizens rather than with H1B visa holders. The administration has narrowed the scope of the H1B program and raised the cost of hiring people under it.

Earlier this year, the administration suspended the H1B program entirely because of the Covid epidemic, but this ban was overturned in the federal courts.

Over the last few months, a series of rulings from the Department of Homeland Security made major changes to the H1B Program.

1. October: The administration substantially raised the mandated minimum salaries for H1B visa holders. Every specialty job had a federally determined four tier wage system (going from entry level to the highest skills). Under the October rules, wages for entry level workers were raised from the 17th to the 45th percentile. Wages for the highest skills workers were raised from the 67th to the 95th percentile.

2. November: Four major changes were announced:

a. The administration substantially reduced the number of specialty occupations to which H1B visas apply

b. The education requirement was changed to require visa applicants to have a degree in their specialty field, where previously any degree or work experience in the field was sufficient

c. Visa length was shortened from three years to one year for outsourcing firms that hire workers to be deployed at client sites.

d. The lottery system for awarding visas was replaced by a system that prioritizes awarding visas for the highest-paying jobs

These changes are designed to substantially decrease the attractiveness of H1B employees because of higher wage and application costs (needing to reapply every year). Observers expect that there will be little motivation to hire H1B workers for entry level positions.

Will these changes last?

The impact of these changes is not yet clear.

1. Legal challenge: Forty-six firms, including Apple, Google, Amazon and Facebook, have sued the Administration claiming the rules constrain the ability to recruit top talent while harming innovation and competitiveness. There is a reasonable likelihood that the suit. The courts have recently ruled that Acting DHS Secretary Chad Wolf’s appointment is no longer legal, because he has held his “Acting” position for more than a year, so his ability to install new rules is in doubt.

2. The Biden Administration: President-elect Joe Biden has expressed support for raising wages of H1B workers, so his administration may maintain some of these rule changes.

3. Corporate Response: If the rules stand, possible responses include:

a. Greater emphasis on training of US Nationals to fill positions

b. Work shifting offshore to allow use of lower wage professionals

c. Near-shoring of “H1B professionals currently in the US” to offices in Canada.

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