Draft bill would boost H-1B worker pay for big visa users

Rep. Lofgren’s proposal, which has not yet been introduced, details pay formula and other visa system changes

The U.S. Capitol building in Washington
Matt Wade (CC BY-SA 2.0)

Pay for H-1B workers may increase significantly if a draft bill authored by Rep. Zoe Lofgren (D-Calif.) gets the bipartisan backing it will need to pass Congress.

The bill primarily relies on salary to distribute the visas. Firms that pay salaries well above the prevailing wage will have the best chance of getting a visa.

Lofgren has been working with Rep. Darrel Issa (R-Calif.), whose support in the GOP-controlled House is critical. The measure is now being distributed to stakeholders for feedback.

The "High-Skilled Integrity and Fairness Act of 2015" has been in the works since last year, is already drafted and appears to be complete. But that doesn't mean it will actually be introduced. Both sides continue to talk and there are no immediate plans to move forward on the legislation.

(To read the official summary of the bill, download the PDF.)

The H-1B visa is currently distributed via a lottery because requests for visas routinely exceed the annual 85,000-visa cap. While the bill doesn't eliminate the lottery in its entirety, it minimizes its importance.

The proposal is designed to encourage employers to pay 150% or 200% of the prevailing wage level. These employers will probably be assured of visa approval.

The prevailing wage system has four levels. Level 1 is for entry level; level 4 for the most experienced and capable employees. Prevailing wages vary widely nationally, depending on location.

In Gainesville, Fla., for instance, the prevailing wage for a level 4 computer programmer is $67,621. In San Francisco, it's $123,885.

A level 4 salary that is 200% of prevailing wage for a programmer in Gainesville would be $135,242. In San Francisco, it would be $247,770. (For prevailing wage information see the Foreign Labor Certification Data Center.)

The San Francisco employer doesn't gain an advantage over the Gainesville employer in the visa distribution because of the higher pay differential. What's important is a company's willingness to pay a percentage above the prevailing wage.

And wages alone don't set a priority in the visa distribution. Priority is given first to employers "that hire mainly U.S. workers." Next in line are H-1B dependent employers.

There are different thresholds for determining dependency, but for large users a dependent employer is someone with 15% or more of their employees on temporary visas.

The legislation sets aside 20% of the annual allocation of H-1B visas to firms with 50 or fewer employees. Small and start-up businesses would not be subject to the wage-based allocation.

For H-1B-dependent employers, the bill changes the $60,000 salary exemption level to a formula that would raise the minimum to about $130,000, based on the 35th percentile above the median for the most recent national annual wage for Computer and Mathematical Occupations.

H-1B dependent firms pay salaries of at least $60,000 - a figure set in 1998 - to get an exemption from rules that bar them from displacing a U.S. worker. The bill also eliminates the master's degree exemption.

But the legislation also includes what may be a new loophole by excluding workers from this higher wage if their employer has petitioned for permanent residence or a green card.

The bill also eliminates per-country caps on green cards. Employment-based green cards are capped at 140,000 a year, with no more than 7% from any one country. Such a move would help green card applicants in China and India, in particular, who make up the majority of those seeking permanent residency.

Ron Hira, an associate professor of public policy at Howard University, sees a number of problems with the legislation. The high wage required of H-1B dependent firms, such as Infosys, Cognizant and Tata Consultancy Services, may help non-dependent firms, such as IBM and Accenture, said Hira.

All these firms compete in the IT services sector, but non-dependent firms can continue paying the prevailing wage at level 1 for a 40% discount over an American worker, said Hira.

And, he said, visa-dependent firms could develop workarounds. A dependent employer could avoid paying the $130,000 wage by attesting that they won't displace U.S. workers. But Hira suspects affected firms may "figure out ways to meet the letter of the regulations but not the spirit."

Daniel Costa, the director of immigration law and policy research at the Economic Policy Institute, believes a more direct approach is possible. "I think it's crazy that they would just create a new, more expensive exemption for replacing U.S. workers, rather than just prohibit altogether the ability of companies to replace U.S. workers with H-1Bs," said Costa.

The visa-dependent firms can apply for green cards for all their workers to get around the dependence status, as well as bring in more L-1 visa workers (another temporary visa used for company transfers). The green card exemption is a "huge loophole," said Hira.

Other strategies by dependent firms could also include merging with non-dependent firms, said Hira.

Copyright © 2016 IDG Communications, Inc.

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