Trump move to scrap lottery for H1-B visas may hike costs for companies

Venkatesh Ganesh Mumbai October 30 | Updated on October 30, 2020 Published on October 30, 2020

This may result in significant decline in visa applications, say experts

US President Donald Trump’s proposal to do away with the computerised lottery system for H1-B visas could push up business costs for companies, which could result in a significant reduction in visa applications.

Also read: Trump administration proposes to scrap computerised lottery system to select H-1B visas

The US Department of Homeland Security (DHS) issued a notification on the new system which will introduce a wage-level-based selection process. Currently, regardless of work experience, all H1-B visa applicants are picked from a common pool. Stakeholders have 30 days to respond to the notification, DHS said.

This development comes just days before the US Presidential elections. According to the DHS, modifying the H-1B cap selection process by replacing the random selection process with a wage-level-based selection process is a better way to allocate visas when demand exceeds supply. This new selection process would incentivise employers to offer higher wages or petition for positions requiring higher-skilled workers instead of using the programme to fill relatively lower-paid vacancies.

Also read: H-1B visa ban: Fortune 500 firms’ market cap plummeted to $100 billion

Wage hike proposal

Recently, the Trump administration proposed increasing the wages of H1-B workers by 20 per cent and L-1 visas by 75 per cent, which has been blocked by the US District Court for the Northern District of California.

Many in the industry are of the view that more clarity will emerge after the elections. “The government has not yet published the modalities of how this will be implemented but there is a possibility that this could be done using algorithms that select registrants with high salaries,” said Poorvi Chothani, founder and Managing Partner of LawQuest, a global immigration law firm.

Every year, on an average, the H1-B petitions number around 2 lakh. However, this year, at the end of March and early April, the application numbers were much lower and subsequently the government extended petitions to be filed till November 16, 2020. “This is because the first lottery did not hit the 85,000 quota and, coupled with frequent changes, we have paused our petitions,” said the CEO of an Indian-American company which does tech projects for US automotive majors.

Also read: Stop labouring over the new H-1B rules

Anything that is reasonable and does not deny the legitimate right of people to use their skills globally is welcome, said Ganesh Natarajan, Executive Chairman and founder of 5F World, formerly CEO of Zensar. “Paying higher wages for H1-B visas is bound to push up costs of doing business for companies and this will result in the economy ending up absorbing this cost, said said Sophie Alcorn, an immigration lawyer.

Change in the air

According to the US Citizenship and Immigration Services (USCIS), there were as many as 419,637 foreign nationals working in the US on H-1B visas as on October 5. Chothani is of the view that regardless of whether this final rule is implemented or not, with a plethora of changes to the H-1B programme recently, the scenario is going to be very different from what Indian IT companies are used to.

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Published on October 30, 2020
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