Congress Increases Number of H-1B Visas and Limits Out-Placement of L-1B Visa Holders

Among the many provisions of the Fiscal 2005 Omnibus Appropriations bill, H.R. 4818, Congress included provisions increasing the annual allocation of H-1B visas by 20,000 and limiting the placement of L-1B visa holders at third-party worksites. The President is expected to sign the legislation as current funding for government operations will expire on December 3, 2004.

The bill exempts from the annual numerical limitation on H-1B visas 20,000 graduates of U.S. universities or colleges who have earned a master's or higher degree. In exchange, the bill imposes an additional $1,500 fee on each H-1B visa petition, to be applied to the retraining and education of U.S. workers, implements an additional $500 "fraud prevention and detection fee" for each initial H-1B and L-1 visa petition, each petition to change employer, and each visa application under a blanket L petition, and reinstates the special non-displacement attestation for H-1B dependent employers and willful violators. Employers with no more than 25 employees benefit from a reduced H-1B visa fee of $750. The visa fraud fee applies only to principal aliens and not to spouses or children.

The bill also requires employers to pay H-1B visa holders at least 100% of the prevailing wage for their positions, rather than 95% of the prevailing wage as previously. On the plus side for employers, the bill directs the Department of Labor to make available prevailing wage surveys with 4 levels of wages, reflecting experience, education, and the level of supervision. The bill provides a formula for calculating the 2 intermediate wage levels if the Department of Labor provides a survey with only 2 levels. This requirement applies to all DOL prevailing wage determinations, including permanent labor certifications.

The Department of Labor's authority to investigate H-1B cases without a complaint is reinstated and broadened, provided that there is reasonable cause for the investigation. The bill gives employers a safe harbor from technical and procedural failures to comply if the employer made a good faith attempt to comply. The employer must correct any deficiencies within ten business days of notification by DOL. An employer may avoid any penalties or fines for failure to pay the prevailing wage if he can establish that the prevailing wage was calculated consistently with recognized industry standards and practices.

The legislation prohibits L-1B intracompany transferee specialized knowledge employees from being placed at an unaffiliated third party's worksite if the unaffiliated third party controls and supervises the employee or if such placement is essentially an arrangement to provide labor for hire to the third party rather than a placement in connection with the provision of a product or services for which specialized knowledge specific to the petitioning employer is needed. The bill also extends the period of prior continuous employment abroad required for blanket L visas from six months to one year.

The act will become effective 180 days after the date of enactment.