Thursday 25 February 2021
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Lawsuit against H-1B wage hike filed in US district court

This lawsuit is the first to challenge the DOL rule; other lawsuits, notably the one led by the AILA, are expected to be filed next week

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Politics India Lawsuit against H-1B wage hike filed in US district court

ITServe Alliance, with a clutch of its member companies, has filed a lawsuit in a US district court, against an ‘interim final rule’ that the US Department of Labour (DOL) had issued recently. This rule has reset wages upwards for H-1B workers across all four tiers or wage levels (representing the range of skills from the entry level to the highly experienced).

The plaintiffs point out that under the DOL rule, wages have been hiked by twenty-four to 50% or more for computer operations, where H-1B workers are typically employed, by them. Wage rates are also dependent on the geographical location of employment.
ITServe’s members, which comprise of over 1,400 member companies (many of them are founded by those of Indian origin), are unable to absorb, without material disruption to their operations, the cost increase imposed on them under the IFR. Several of them have long-term contracts with their clients that cannot be renegotiated.

This lawsuit, which was filed on Friday, is the first to challenge the DOL rule. Other lawsuits, including one led by the American Immigration Lawyers Association (AILA) are expected to be filed in the coming week.

The interim final rule (IFR), which was issued without inviting public comments, came into effect from 8 October, soon after being published in the Federal Register. All labour condition applications (LCAs) filed on or after this date are subject to the new and higher wage minimum standards. According to DOL, the objective of the rules is to protect American jobs by improving the accuracy of wages paid to foreign workers.

Simultaneously, the US Department of Homeland Security (DHS) had also issued its IFR which narrowed the eligibility criteria for H-1B visas and reduced the visa tenure to one year in case of third-party placements. However, this rule comes into effect only in early December.

Lawsuit against H-1B wage hikes filed in US district court

The plaintiffs state that DOL lacks the necessary factual and legal justification to invoke the good cause exception for avoiding the required notice and comment procedures. Available economic data and empirical studies do not support the agency’s contention that H-1B workers are paid less than American workers. It is based on flawed reasoning, the lawsuit adds.

The lawsuit challenges the DOL’s decision to set dramatically higher wage rates without following the notice and comment rulemaking procedures required under the Administrative Procedure Act. Plaintiffs have also challenged the DOL’s new wage rates as a violation of the Immigration and Nationality Act.

Lawsuit against H-1B wage hike filed in US district court
US President Donald Trump during an address on 18 September

“This new rule is designed to make it much more expensive to hire H-1B holders as well as to ‘punish’ those employers that rely on H-1B talent. By issuing this IFR, DOL is not only circumventing the legislative process of Congress but also their own normal rule making process. It’s not a coincidence that DOL and DHS issued interim final rules just four weeks away from the election,” states ITServe in its press release.

A spokesperson added, “This IFR is going to drive hundreds of thousands of jobs to off-shore markets. DOL’s IFR raises the required prevailing wages to over 80% in some cases, overnight. This haphazard and baseless rulemaking will hurt thousands of small and medium IT businesses. Instead of helping with job creation and economic growth in the middle of pandemic and recession, these government agencies are hurting the small businesses that are at the forefront of rebuilding the economy”.

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