[Federal Register Volume 85, Number 196 (Thursday, October 8, 2020)]
[Rules and Regulations]
[Pages 63918-63965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22347]



[[Page 63917]]

Vol. 85

Thursday,

No. 196

October 8, 2020

Part VIII





Department of Homeland Security





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8 CFR Part 214





Strengthening the H-1B Nonimmigrant Visa Classification Program; 
Interim Final Rule

  Federal Register / Vol. 85, No. 196 / Thursday, October 8, 2020 / 
Rules and Regulations  

[[Page 63918]]


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DEPARTMENT OF HOMELAND SECURITY

8 CFR Part 214

[CIS No. 2658-20 DHS Docket No. USCIS-2020-0018]
RIN 1615-AC13


Strengthening the H-1B Nonimmigrant Visa Classification Program

AGENCY: U.S. Citizenship and Immigration Services, Department of 
Homeland Security.

ACTION: Interim final rule (IFR) with request for comments.

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SUMMARY: The Department of Homeland Security (DHS or the Department), 
is amending certain DHS regulations governing the H-1B nonimmigrant 
visa program. Specifically, DHS is: Revising the regulatory definition 
of and standards for a ``specialty occupation'' to better align with 
the statutory definition of the term; adding definitions for 
``worksite'' and ``third-party worksite''; revising the definition of 
``United States employer''; clarifying how U.S. Citizenship and 
Immigration Services (USCIS) will determine whether there is an 
``employer-employee relationship'' between the petitioner and the 
beneficiary; requiring corroborating evidence of work in a specialty 
occupation; limiting the validity period for third-party placement 
petitions to a maximum of 1 year; providing a written explanation when 
the petition is approved with an earlier validity period end date than 
requested; amending the general itinerary provision to clarify it does 
not apply to H-1B petitions; and codifying USCIS' H-1B site visit 
authority, including the potential consequences of refusing a site 
visit. The primary purpose of these changes is to better ensure that 
each H-1B nonimmigrant worker (H-1B worker) will be working for a 
qualified employer in a job that meets the statutory definition of a 
``specialty occupation.'' These changes are urgently necessary to 
strengthen the integrity of the H-1B program during the economic crisis 
caused by the COVID-19 public health emergency to more effectively 
ensure that the employment of H-1B workers will not have an adverse 
impact on the wages and working conditions of similarly employed U.S. 
workers. In addition, in strengthening the integrity of the H-1B 
program, these changes will aid the program in functioning more 
effectively and efficiently.

DATES: This interim final rule is effective on December 7, 2020. 
Written comments must be submitted on this interim final rule on or 
before December 7, 2020. Comments on the collection of information (see 
Paperwork Reduction Act section) must be received on or before November 
9, 2020. Comments on both the interim final rule and the collection of 
information received on or before November 9, 2020 will be considered 
by DHS and USCIS. Only comments on the interim final rule received 
between November 9, 2020 and December 7, 2020 will be considered by DHS 
and USCIS. Note: Comments received after November 9, 2020 only on the 
information collection will not be considered by DHS and USCIS.

ADDRESSES: You may submit comments on the entirety of this interim 
final rule package, identified by DHS Docket No. USCIS-2020-0018, 
through the Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the website instructions for submitting comments. Comments 
submitted in a manner other than the one listed above, including emails 
or letters sent to DHS or USCIS officials, will not be considered 
comments on the interim final rule and may not receive a response from 
DHS. Please note that DHS and USCIS cannot accept any comments that are 
hand-delivered or couriered. In addition, USCIS cannot accept comments 
contained on any form of digital media storage devices, such as CDs/
DVDs and USB drives. Due to COVID-19, USCIS is also not accepting 
mailed comments at this time. If you cannot submit your comment by 
using http://www.regulations.gov, please contact Samantha Deshommes, 
Chief, Regulatory Coordination Division, Office of Policy and Strategy, 
U.S. Citizenship and Immigration Services, Department of Homeland 
Security, by telephone at 202-272-8377 for alternate instructions.

FOR FURTHER INFORMATION CONTACT: Charles L. Nimick, Chief, Business and 
Foreign Workers Division, Office of Policy and Strategy, U.S. 
Citizenship and Immigration Services, Department of Homeland Security, 
20 Massachusetts Ave. NW, Suite 1100, Washington, DC 20529-2120. 
Telephone Number (202) 272-8377 (not a toll-free call). Individuals 
with hearing or speech impairments may access the telephone numbers 
above via TTY by calling the toll-free Federal Information Relay 
Service at 1-877-889-5627 (TTY/TDD).

SUPPLEMENTARY INFORMATION:

I. Table of Contents

II. Public Participation
III. Executive Summary
    A. Purpose and Summary of the Regulatory Action
    B. Legal Authority
    C. Summary of Costs and Benefits
IV. Background
    A. History and Purpose of the H-1B Visa Program
    B. Implementation of this Interim Final Rule
V. Discussion of the Provisions to Strengthen the H-1B Program
    A. Amending the Definition and Criteria for a ``Specialty 
Occupation''
    1. Amending the Definition of a ``Specialty Occupation''
    2. Amending the Criteria for Specialty Occupation Positions
    B. Defining ``Worksite'' and ``Third Party Worksite''
    C. Clarifying the Definition of ``United States Employer''
    1. Replacing ``contractor'' With ``company''
    2. Engaging the Beneficiary To Work
    3. Clarifying the ``Employer-Employee Relationship''
    D. Corroborating Evidence of Work in a Specialty Occupation
    E. Maximum Validity Period for Third-Party Placements
    F. Written Explanation for Certain H-1B Approvals
    G. Revising the Itinerary Requirement for H-1B Petitions
    H. Site Visits
    I. Severability
VI. Statutory and Regulatory Requirements
    A. Administrative Procedure Act
    B. Executive Orders 12866 (Regulatory Planning and Review), 
Executive Order 13563 (Improving Regulation and Regulatory Review), 
and Executive Order 13771 (Reducing Regulation and Controlling 
Regulatory Costs)
    1. Summary of Economic Impacts
    2. Provisions of the IFR with Economic Impacts
    3. Population
    i. Historical Population of H-1B Specialty Occupation Worker 
Program
    ii. Population Affected by the Rule
    4. Costs and Cost Savings of Regulatory Changes to Petitioners
    i. Estimated Wage by Type of Filers
    ii. Baseline Estimate of Current Costs
    iii. Detailed Economic Effects of Each Provision in the IFR
    a. Revising the Regulatory Definition and Standards for 
Specialty Occupation so They Align More Closely With the Statutory 
Definition of the Term
    1. Additional Costs Due to Changes in Form I-129 for H-1B 
Petitions
    b. Requiring Corroborating Evidence of Work in a Specialty 
Occupation
    1. Costs of Submitting Contracts, Work Orders, or Similar 
Evidence Establishing Specialty Occupation and Employer-Employee 
Relationship
    c. Codifying in Regulations Existing Authority To Conduct Site 
Visits and Other Compliance Reviews and Clarifying Consequences for 
Failure To Allow a Site Visit
    1. Cost of Worksite Inspections
    d. Eliminating the General Itinerary Requirement for H-1B 
Petitions

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    1. Cost Savings of Itinerary Requirement Exemption
    e. Limiting Maximum Validity Period for Third-Party Placement
    1. Costs of Requesting Authorization To Continue H-1B Employment
    f. Familiarization Cost
    5. Total Estimated and Discounted Net Costs of Regulatory 
Changes to Petitioners
    6. Costs to the Federal Government
    7. Benefits of the Regulatory Changes
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Congressional Review Act
    F. Executive Order 13132 (Federalism)
    G. Executive Order 12988 (Civil Justice Reform)
    H. Executive Order 13175 (Consultation and Coordination With 
Indian Tribal Governments)
    I. National Environmental Policy Act
    J. Paperwork Reduction Act
    1. USCIS Form I-129H1
    2. USCIS H-1B Registration Tool
    K. Signature

II. Public Participation

    DHS invites all interested parties to participate in this 
rulemaking by submitting written data, views, comments, and arguments 
on all aspects of this interim final rule. DHS also invites comments 
that relate to the economic, environmental, or federalism effects that 
might result from this interim final rule. Comments must be submitted 
in English, or an English translation must be provided. Comments that 
will provide the most assistance to DHS in implementing these changes 
will: Reference a specific portion of the interim final rule; explain 
the reason for any recommended change; and include data, information, 
or authority that supports such a recommended change. Comments 
submitted in a manner other than those listed in the ADDRESSES section, 
including emails or letters sent to DHS or USCIS officials, will not be 
considered comments on the interim final rule. Please note that DHS and 
USCIS cannot accept any comments that are hand delivered or couriered. 
In addition, USCIS cannot accept mailed comments contained on any form 
of digital media storage devices, such as CDs/DVDs and USB drives.
    Instructions: If you submit a comment, you must include the agency 
name (U.S. Citizenship and Immigration Services) and the DHS Docket No. 
USCIS-2020-0018 for this rulemaking. Regardless of the method used for 
submitting comments or material, all submissions will be posted, 
without change, to the Federal eRulemaking Portal at http://www.regulations.gov, and will include any personal information you 
provide. Therefore, submitting this information makes it public. You 
may wish to consider limiting the amount of personal information that 
you provide in any voluntary public comment submission you make to DHS. 
DHS may withhold information provided in comments from public viewing 
that it determines may impact the privacy of an individual or is 
offensive. For additional information, please read the Privacy and 
Security Notice available at http://www.regulations.gov.
    Docket: For access to the docket and to read background documents 
or comments received, go to http://www.regulations.gov, referencing DHS 
Docket No. USCIS-2020-0018. You may also sign up for email alerts on 
the online docket to be notified when comments are posted or a final 
rule is published.

III. Executive Summary

A. Purpose and Summary of the Regulatory Action

    Congressional intent behind creating the H-1B program was, in part, 
to help U.S. employers fill labor shortages in positions requiring 
highly skilled or educated workers using temporary workers.\1\ A key 
goal of the program at its inception was to help U.S. employers obtain 
the temporary employees they need to meet their business needs.\2\ To 
address legitimate countervailing concerns of the adverse impact 
foreign workers could have on U.S. workers, Congress put in place a 
number of measures intended to protect U.S. workers to ensure that H-1B 
workers would not adversely affect them. Immigration and Nationality 
Act (INA) section 212(n) and (p); 8 U.S.C. 1182(n) and (p). However, 
over time, legitimate concerns have emerged that indicate that the H-1B 
program is not functioning as originally envisioned and that U.S. 
workers are being adversely affected. On April 18, 2017, the President 
of the United States issued Executive Order (E.O.) 13788, Buy American 
and Hire American, instructing DHS to ``propose new rules and issue new 
guidance, to supersede or revise previous rules and guidance if 
appropriate, to protect the interests of U.S. workers in the 
administration of our immigration system.'' \3\ E.O. 13788 specifically 
directed DHS and other agencies to ``suggest reforms to help ensure 
that H-1B visas are awarded to the most-skilled or highest-paid 
petition beneficiaries.'' \4\
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    \1\ See H.R. Rep. 101-723(I) (1990), as reprinted in 1990 
U.S.C.C.A.N. 6710, 6721 (stating ``The U.S. labor market is now 
faced with two problems that immigration policy can help to correct. 
The first is the need of American business for highly skilled, 
specially trained personnel to fill increasingly sophisticated jobs 
for which domestic personnel cannot be found and the need for other 
workers to meet specific labor shortages.'').
    \2\ Bipartisan Policy Council, Immigration in Two Acts, Nov. 
2015, at 7, https://bipartisanpolicy.org/wp-content/uploads/2019/03/BPC-Immigration-Legislation-Brief.pdf, citing 1990 U.S.C.C.A.N. 
supra at 6721 (stating ``At the time [1990], members of Congress 
were also concerned about U.S. competitiveness in the global economy 
and sought to use legal immigration as a tool in a larger economic 
plan, stating that ``it is unlikely that enough U.S. workers will be 
trained quickly enough to meet legitimate employment needs, and 
immigration can and should be incorporated into an overall strategy 
that promotes the creation of the type of workforce needed in an 
increasingly global economy.'').
    \3\ See Executive Order 13788, Buy American and Hire American, 
82 FR 18837, sec. 5 (Apr. 18, 2017).
    \4\ See id. at sec. 5(b).
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    In response to the directives of E.O. 13788, DHS undertook a 
comprehensive review of all rules and policies regarding nonimmigrant 
visa classifications for temporary foreign workers, including the H-1B 
visa program. Although the H-1B program was intended to allow employers 
to fill gaps in their workforce and remain competitive in the global 
economy, it has expanded far beyond that, often to the detriment of 
U.S. workers. Data shows that the H-1B program has been used to 
displace U.S. workers and has led to reduced wages in a number of 
industries in the U.S. labor market.\5\ The economic crisis caused by 
the COVID-19 public health emergency has compounded those detrimental 
effects.
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    \5\ See e.g., Ron Hira and Bharath Gopalaswamy, Atlantic 
Council, Reforming US' High-Skilled Guestworker Program (2019), 
available at https://www.atlanticcouncil.org/in-depth-research-reports/report/reforming-us-high-skilled-immigration-program/.
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    The President of the United States addressed those harms in 
Proclamation Suspending Entry of Aliens Who Present a Risk to the U.S. 
Labor Market Following the Coronavirus Outbreak and directed DHS to 
pursue rulemaking that ensures that U.S. workers are not disadvantaged 
by H-1B workers.\6\ This interim final rule is consistent not only with 
that directive, but also with the aims of the Presidential Proclamation 
Suspension of Entry of Immigrants and Nonimmigrants Who Present a Risk 
to the United States Labor During the Economic Recovery Following the 
2019 Novel Coronavirus Outbreak.\7\ Section 5

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of Proclamation 10052 directs the Secretary of DHS to, ``as soon as 
practicable, and consistent with applicable law, consider promulgating 
regulations or take other appropriate action . . . ensuring that the 
presence in the United States of H-1B nonimmigrants does not 
disadvantage United States workers.'' In addition, this rule will 
further the policy objective of E.O. 13927, Accelerating the Nation's 
Economic Recovery from the COVID-19 Emergency by Expediting 
Infrastructure Investments and Other Activities.\8\
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    \6\ Proclamation 10014 of April 22, 2020, Suspension of Entry of 
Immigrants Who Present a Risk to the United States Labor Market 
During the Economic Recovery Following the 2019 Novel Coronavirus 
Outbreak, 85 FR 23441 (Apr. 27, 2020).
    \7\ Proclamation 10052 of June 22, 2020, Suspension of Entry of 
Immigrants and Nonimmigrants Who Present a Risk to the United States 
Labor Market During the Economic Recovery Following the 2019 Novel 
Coronavirus Outbreak, 85 FR 38263 (Jun. 25, 2020).
    \8\ See Executive Order 13927, Accelerating the Nation's 
Economic Recovery from the COVID-19 Emergency by Expediting 
Infrastructure Investments and Other Activities, 85 FR 35165, sec. 2 
(Jun. 9, 2020) (ordering that ``agencies should take all reasonable 
measures to . . . speed other actions . . . that will strengthen the 
economy and return Americans to work'').
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    Consistent with Congressional intent of the H-1B program, the Buy 
American and Hire American E.O. 13788, Presidential Proclamations 10014 
and 10052, and to ensure that U.S. workers are protected under U.S. 
immigration laws, DHS is proposing a number of revisions and 
clarifications, which are detailed below. As noted above, these changes 
are urgently needed to strengthen the H-1B program during the economic 
crisis caused by the COVID-19 public health emergency to more 
effectively ensure that the employment of H-1B workers will not 
negatively affect the wages and working conditions of similarly 
employed U.S. workers.
    By reforming key aspects of the H-1B nonimmigrant visa program, 
this rule will improve program integrity and better ensure that only 
petitioners who meet the statutory criteria for the H-1B classification 
are able to employ H-1B workers who are qualified for the 
classification. This, in turn, will protect jobs of U.S. workers as a 
part of responding to the national emergency, and facilitate the 
Nation's economic recovery.

B. Legal Authority

    The Secretary of Homeland Security's authority for these regulatory 
amendments is found in various sections of the INA, 8 U.S.C. 1101 et 
seq., and the Homeland Security Act of 2002 (HSA), Public Law 107-296, 
116 Stat. 2135, 6 U.S.C. 101 et seq. General authority for issuing this 
rule is found in section 103(a) of the INA, 8 U.S.C. 1103(a), which 
authorizes the Secretary to administer and enforce the immigration and 
nationality laws, as well as section 102 of the HSA, 6 U.S.C. 112, 
which vests all of the functions of DHS in the Secretary and authorizes 
the Secretary to issue regulations. See also 6 U.S.C. 202(4) (charging 
the Secretary with ``[e]stablishing and administering rules . . . 
governing the granting of visas or other forms of permission . . . to 
enter the United States to individuals who are not a citizen or an 
alien lawfully admitted for permanent residence in the United 
States''). Further authority for these regulatory amendments is found 
in:
     Section 101(a)(15)(H)(i)(b) of the INA, 8 U.S.C. 
1101(a)(15)(H)(i)(b), which classifies as nonimmigrants aliens coming 
temporarily to the United States to perform services in a specialty 
occupation or as a fashion model with distinguished merit and ability;
     Section 214(a)(1) of the INA, 8 U.S.C. 1184(a)(1), which 
authorizes the Secretary to prescribe by regulation the terms and 
conditions of the admission of nonimmigrants;
     Section 214(c) of the INA, 8 U.S.C. 1184(c), which, inter 
alia, authorizes the Secretary to prescribe how an importing employer 
may petition for an H nonimmigrant worker and the information that an 
importing employer must provide in the petition;
     Section 214(i) of the INA, 8 U.S.C. 1184(i), which defines 
the term ``specialty occupation;'' and
     Section 287(b) of the INA, 8 U.S.C. 1357(b), which 
authorizes USCIS to administer oaths and to take and consider evidence 
concerning any matter which is material and relevant to the 
administration and enforcement of the INA.
    Finally, under section 101 of HSA, 6 U.S.C. 111(b)(1)(F), a primary 
mission of the Department is to ``ensure that the overall economic 
security of the United States is not diminished by efforts, activities, 
and programs aimed at securing the homeland.''

C. Summary of Costs and Benefits

    This interim final rule will impose new annual costs of $24,949,861 
for petitioners completing and filing H-1B petitions \9\ with an 
additional time burden of 30 minutes. The changes in the H-1B petition, 
resulting from this interim final rule, result in additional time to 
complete and file the petition as compared to the time burden to 
complete the current form. By reducing uncertainty and confusion 
surrounding disparities between the statute and the regulations, this 
rule will better ensure that approvals are only granted for positions 
adhering more closely to the statutory definition. This rule will also 
result in more complete petitions and allow for more consistent and 
efficient adjudication decisions.
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    \9\ DHS estimates the costs and benefits of this rule using the 
newly published U.S. Citizenship and Immigration Services Fee 
Schedule and Changes to Certain Other Immigration Benefit Request 
Requirements, final rule (``Fee Schedule Final Rule''), and 
associated form changes, as the baseline. 85 FR 46788 (Aug. 3, 
2020). The Fee Schedule Final Rule was scheduled to go into effect 
on October 2, 2020. On September 29, 2020, the U.S. District Court 
for the Northern District of California issued a nationwide 
injunction, which prevents DHS from implementing the Fee Schedule 
Final Rule. See, Immigrant Legal Resource Center v. Wolf, No. 4:20-
cv-5883 (N.D. Cal. Sept. 29, 2020). DHS intends to vigorously defend 
this lawsuit and is not changing the baseline for this rule as a 
result of the litigation. Should DHS not prevail in the Fee Schedule 
Final Rule litigation, this rule may reflect overstated transfers, 
costs, and opportunity costs associated with the filing of the Form 
I-129.
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    DHS estimates $17,963,871 in annual costs to petitioners to submit 
contractual documents, work orders, or similar evidence required by 
this rule to establish an employer-employee relationship and qualifying 
employment. The petitioner must establish, at the time of filing, that 
it has actual work in a specialty occupation available for the 
beneficiary as of the start date of the validity period as requested on 
the petition. In addition, all H-1B petitions for beneficiaries who 
will be placed at a third-party worksite must submit evidence showing 
that the beneficiary will be employed in a specialty occupation, and 
that the petitioner will have an employer-employee relationship with 
the beneficiary.
    DHS estimates $1,042,702 for the total annual opportunity cost of 
time for worksite inspections of H-1B petitions. This interim final 
rule is codifying DHS' existing authority to conduct site visits and 
other compliance reviews and clarifying consequences for failure to 
allow a site visit. Conducting on-site inspections and other compliance 
reviews is critical to detecting and deterring fraud and noncompliance. 
Failure or refusal of the petitioner or third-party worksite parties to 
cooperate in a site visit or verify facts may be grounds for denial or 
revocation of any H-1B petition for workers performing services at 
locations which are a subject of inspection, including any third-party 
worksites.
    DHS estimates cost savings of $4,490,968 annually in eliminating 
the general itinerary requirement for H-1B petitions. Relative to the 
current regulation, this provision reduces the cost for petitioners who 
file on behalf of beneficiaries performing services in more than one 
location and submit itineraries.
    While the maximum validity period for a specialty occupation worker 
is

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currently 3 years, this interim final rule will limit the maximum 
validity period to 1 year for workers placed at third-party worksites. 
DHS estimates costs of $0 in FY 2021, $376,747,030 in FY 2022, 
$502,330,510 for each of FY 2023 through FY 2027, and $349,127,070 for 
each of FY 2028 through FY 2030, for the increasing number of Form I-
129H1 petitions to request authorization to continue H-1B employment 
for workers placed at third-party worksites. DHS will have greater 
oversight in such cases, which are most likely to involve 
noncompliance, fraud, or abuse, thereby strengthening the H-1B program.
    DHS estimates a one-time total regulation familiarization cost of 
$11,941,471 in FY2021. For the 10-year implementation period of the 
rule (FY 2021 through FY 2030), DHS estimates the annual net societal 
costs to be $51,406,937 (undiscounted) in FY 2021, $416,212,496 
(undiscounted) in FY 2022, $541,795,976 (undiscounted) from FY 2023 
through FY 2027 each year, $388,592,536 (undiscounted) from FY 2028 
through FY 2030 each year. DHS estimates the annualized net societal 
costs of the rule to be $430,797,915, annualized at 3-percent and 
$425,277,621, annualized at 7-percent discount rates.

IV. Background

A. History and Purpose of the H-1B Visa Program

    The H-1B nonimmigrant visa program allows U.S. employers to 
temporarily employ foreign workers in specialty occupations, defined by 
statute as occupations that require the theoretical and practical 
application of a body of highly specialized knowledge, and a bachelor's 
or higher degree in the specific specialty, or its equivalent. See INA 
sections 101(a)(15)(H)(i)(b) and 214(i); 8 U.S.C 1101(a)(15)(H)(i)(b) 
and 1184(i). The H-1B visa program also includes workers performing 
services related to a Department of Defense (DOD) cooperative research 
and development project or coproduction project, and services of 
distinguished merit and ability in the field of fashion modeling. See 
INA section 101(a)(15)(H)(i)(b), 8 U.S.C. 1101(a)(15)(H)(i)(b); 8 CFR 
214.2(h)(4)(i)(A).
    The number of aliens who may be issued initial H-1B visas or 
otherwise provided initial H-1B nonimmigrant status during any fiscal 
year has been capped at various levels by Congress over time, with the 
current numerical limit generally being 65,000 per fiscal year. See INA 
section 214(g)(1)(A); 8 U.S.C. 1184(g)(1)(A). Congress has also 
provided for various exemptions from the annual numerical allocations, 
including an exemption for 20,000 aliens who have earned a master's or 
higher degree from a United States institution of higher education. See 
INA section 214(g)(5) and (7); 8 U.S.C. 1184(g)(5) and (7). 
Additionally, Congress has exempted from the annual numerical 
allocations H-1B workers who are or will be employed at a nonprofit or 
public institution of higher education or a related or affiliated 
nonprofit entity, a nonprofit research organization, or a governmental 
research organization. See INA section 214(g)(5)(A)-(B), 8 U.S.C. 
1184(g)(5)(A)-(B). The 5-year average annual number of H-1B petitions 
approved outside the numerical limitations established by Congress, 
which also includes petitions for continuing H-1B workers who were 
previously counted toward an annual numerical allocation and who have 
time remaining on their 6-year period of authorized admission, see INA 
section 214(g)(7), 8 U.S.C. 1184(g)(7), was approximately 214,371 based 
on DHS data.\10\ As of September 30, 2019, the total H-1B authorized-
to-work population was approximately 583,420.\11\ The total H-1B 
authorized-to-work population, rather than the yearly cap, is more 
indicative of the scope of the H-1B nonimmigrant program and the urgent 
need to strengthen it to protect the economic interests of U.S. 
workers.
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    \10\ Office of Policy and Strategy, Policy Research Division 
(PRD) Claims 3 and USCIS analysis. July 29, 2020.
    \11\ U.S. Department of Homeland Security, U.S. Citizenship and 
Immigration Services, Office of Policy and Strategy, Policy Research 
Division, H-1B Authorized to Work Population Estimate, available at 
https://www.uscis.gov/sites/default/files/document/reports/USCIS%20H-1B%20Authorized%20to%20Work%20Report.pdf (reflecting that 
not all of the 583,420 H-1B workers were approved in the same fiscal 
year as the data used to estimate the population as of September 30, 
2019, was pulled on October 9, 2019).
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    Despite Congress' efforts to protect the interest of U.S. workers 
to ensure that H-1B workers will not adversely affect them,\12\ data 
show that the H-1B program has been subject to abuse or otherwise 
adversely affected U.S. workers from its inception.\13\ When the 
Immigration Act of 1990 (IMMACT 90) was introduced, Congress 
specifically sought to address ``the problem of H-visa abuse.'' \14\ As 
early as 1992, the U.S. Government Accountability Office (GAO) 
published a report noting concerns by representatives of organized 
labor that H-1B nonimmigrants were adversely affecting the wages and 
working conditions of U.S. workers, and were allowing U.S. employers to 
excessively rely on foreign labor.\15\ In September 2000, the GAO 
published another report highlighting documented allegations of and 
concerns relating to program misuse--such as employers paying workers 
less than comparable wages or employees using false credentials--and 
questioning whether the program adequately serves employers or protects 
workers.\16\ This report concluded that the H-1B ``program is 
vulnerable to abuse--both by employers who do not have bona fide jobs 
to fill or do not meet required labor conditions, and by potential 
workers who present false credentials.'' \17\ Such abuse threatens the 
wages and job opportunities of qualified U.S. workers. More GAO reports 
followed in 2003, 2006, and 2011, all continuing to report on the 
pervasive abuses and shortcomings in the H-1B program. For instance, 
the 2006 report highlighted common violations such as employers not 
paying their H-1B workers the required wage and owing them back 
wages.\18\ The 2011 reports cited to the high incidence of wage-related 
complaints against staffing companies, and concluded that the 
involvement of staffing companies in the H-1B program further weakens 
U.S. labor protections.\19\ Several news alerts and

[[Page 63922]]

investigative newsletters released in 2019 and 2020 by the Department 
of Labor (DOL) and Department of Justice (DOJ) highlighted convictions 
of individuals using their companies to engage in fraud through the H-
1B program.\20\
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    \12\ See INA section 212(n) and (p); 8 U.S.C. 1182(n) and (p).
    \13\ See, e.g., How H-1B Visas Have Been Abused Since the 
Beginning, CBS News, Aug. 13, 2017, https://www.cbsnews.com/news/how-h-1b-visas-have-been-abused-since-the-beginning/.
    \14\ 1990 U.S.C.C.A.N. 6710, 6724.
    \15\ U.S. Gov't Accountability Off., GAO/PEMD-92-17, Immigration 
and the Labor Market Nonimmigrant Alien Workers in the United 
States, at 17 (1992), https://www.gao.gov/assets/160/151654.pdf.
    \16\ U.S. Gov't Accountability Off., GAO/HEHS-00-157, H-1B 
Foreign Workers: Better Controls Needed to Help Employers and 
Protect Workers, at 4 (2000), https://www.gao.gov/new.items/he00157.pdf.
    \17\ GAO/HEHS-00-157, at 19.
    \18\ U.S. Gov't Accountability Off., GAO-06-901T, H-1B Visa 
Program: More Oversight by Labor can Improve Compliance with Program 
Requirements (2006), https://www.gao.gov/new.items/d06901t.pdf.
    \19\ U.S. Gov't Accountability Off., GAO-11-26, Reforms are 
Needed to Minimize the Risks and Costs of Current Program 60 (2011), 
https://www.gao.gov/assets/320/314501.pdf (``The involvement of 
staffing companies, whose share of H-1B workers is not precisely 
known but is likely not trivial, further weakens enforcement efforts 
because the end-user of the H-1B worker is not liable for complying 
with labor protection requirements.''); U.S. Gov't Accountability 
Off., GAO-11-505T, H-1B Visa Program Multifaceted Challenges Warrant 
Re-examination of Key Provisions 12 (2011), https://www.gao.gov/assets/90/82421.pdf (``Another factor that weakens protection for 
U.S. workers is the fact that the H-1B program lacks a legal 
provision to hold employers accountable to program requirements when 
they obtain H-1B workers through staffing companies'' and ``Wage and 
Hour investigators reported that a large number of the complaints 
they receive about H-1B employers were related to the activities of 
staffing companies.'').
    \20\ See, e.g., OIG Investigations Newsletter (U.S. Dep't of 
Lab., Off. of Inspector Gen.) (Dec. 1, 2019--Jan. 30, 2020), https://www.oig.dol.gov/public/oinewsletter/DOL-OIG%20Investigations%20Newsletter%20December%202019%20-%20January%202020.pdf (last visited Aug. 11, 2020); OIG 
Investigations Newsletter (U.S. Dep't of Lab., Off. of Inspector 
Gen.) (Oct. 1, 2019-Nov. 30, 2019), https://www.oig.dol.gov/public/oinewsletter/DOL-OIG%20Investigations%20Newsletter%20October%20-%20November%202019.pdf (last visited June 23, 2020); News Release 
(U.S. Dep't of Just., U.S. Att'y's Off.) (Feb. 19, 2020), https://www.justice.gov/usao-ednc/pr/corporate-president-kronsys-inc-cygtec-inc-and-arkstek-inc-sentenced-conspiracy-commit (last visited June 
23, 2020); News Release (U.S. Dep't of Just., U.S. Att'y's Off.) 
(Mar. 17, 2020), https://www.justice.gov/usao-nj/pr/owner-information-technology-companies-sentenced-15-months-prison-visa-fraud-and-tax (last visited June 23, 2020).
---------------------------------------------------------------------------

    DHS believes that the same concerns have persisted in recent years, 
as highlighted by certain petitions filed by entities within the 
information technology (IT) industry. In recent years, there has been a 
75 percent increase in the proportion of IT workers in the population 
of H-1B approved petitions--from 32 percent in FY 2003 to 56 percent in 
FY 2019.\21\ As a comparison, there has been a 16 percent increase in 
the proportion of IT workers in the U.S. civilian workforce--from 2.5 
percent in 2000 to 2.9 percent in 2014.\22\ At the same time, wages 
have largely remained flat in IT fields.\23\ For instance, the average 
IT wage was 189 percent of the national average in FY 2003 and 182 
percent in FY 2019.\24\ The disproportionate growth of H-1B petitions 
for computer-related occupations versus the percentage growth of IT 
positions in the U.S. economy, and the stagnation of IT wages, demands 
DHS seriously consider whether petitioners are using the H-1B program 
in a way that disproportionally benefits foreign IT workers and the 
companies who petition for them to the detriment of U.S. IT workers. 
DHS must also consider whether there is a correlation between the large 
flow of H-1B workers into the economy and the stagnation of wages for 
U.S. IT workers generally.\25\ If the employment of H-1B workers is 
having an adverse effect on similarly employed U.S. workers by way of 
reducing their wages or displacing U.S. workers by hiring H-1B workers, 
that adverse effect likely will be proportionately greater in the IT 
industry.
---------------------------------------------------------------------------

    \21\ Characteristics of H-1B Specialty Occupation Workers (H-
1B): Fiscal Year 2004 Issued November 2006. https://www.uscis.gov/sites/default/files/document/reports/h1b_fy04_characteristics.pdf 
(last visited Sept. 18,2020), Table 13A. IT related industry (IT 
industry number of petition approved is 70,189 and total number of 
petition approved is 217,340); Characteristics of H-1B Specialty 
Occupation Workers: Fiscal Year 2019 Annual Report to Congress 
October 1, 2018--September 30, 2019 (Mar. 5, 2020), https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf (last visited Aug. 11, 2020), Table 13A. IT 
related industry (IT industry number of petition approved is 217,447 
and total number of petition is 388,403). Calculations: 75% = 56%/
32%-1. 32% rounded = (70,189/217,340) * 100%, 56% rounded = 
(217,447/388,403) * 100%.
    \22\ U.S. Census Bureau, Occupations in Information Technology 
(Aug. 16, 2016), available at https://www.census.gov/content/dam/Census/library/publications/2016/acs/acs-35.pdf, p2. Figure 1.
    \23\ Hal Salzman, Daniel Kuehn, and B. Lindsay Lowell, Economic 
Policy Institute, Guestworkers in the High-Skill U.S. Labor Market: 
An analysis of supply, employment, and wage trends, Apr. 24, 2013, 
at 2, 23, available at https://files.epi.org/2013/bp359-guestworkers-high-skill-labor-market-analysis.pdf (``However, 
following the crash of 2001, wages declined and have been 
essentially flat for the decade.''); Sean McLain and Dhanya Ann 
Thoppil, Bulging Staff Cost, Shrinking Margins, CRISIL Research, 
(2019), available at https://www.crisil.com/en/home/our-analysis/reports/2019/05/bulging-staff-cost-shrinking-margins.html (analyzing 
local wages for computer-based occupations, along with H-1B wage 
rates prevalent for the same computer-based occupations across the 
U.S., and concluding that the average per hour rate for an H-1B-
based employee is ~$33 while a locally-based employee is ~$42). See 
generally Hira and Gopalaswamy, supra note 5, at 11 (``H-1B workers 
are underpaid and placed in substandard working conditions, while 
U.S. workers' wages are depressed, and they lose out on job 
opportunities'').
    \24\ See U.S. Department of Labor, Bureau of Labor Statistics, 
Occupational Employment Statistics, May 2003 National (XLS), 
available at https://www.bls.gov/oes/tables.htm (last visited Sept. 
22, 2020) (showing that the annual mean wage for SOC code 00-0000 
was $36,210 in May 2003); U.S. Department of Labor, Bureau of Labor 
Statistics, Occupational Employment Statistics, May 2019 National 
(XLS), available at https://www.bls.gov/oes/tables.htm (last visited 
Sept. 22, 2020) (showing that the annual mean wage for SOC code 00-
0000 was $53,490 in May 2019); U.S. Department of Labor, Bureau of 
Labor Statistics, Occupational Employment Statistics, May 2003 
National industry-specific (XLS), available at https://www.bls.gov/oes/tables.htm (last visited Sept. 28, 2020) (showing that the 
annual mean wage for SOC code 15-0000 and NAICS code 541000 was 
$68,420 in May 2003); U.S. Department of Labor, Bureau of Labor 
Statistics, Occupational Employment Statistics, May 2019 National 
Industry-Specific Occupational Employment and Wage Estimates, NAICS 
541000--Professional, Scientific, and Technical Services, available 
at https://www.bls.gov/oes/2019/may/naics3_541000.htm (last visited 
Sept. 28, 2020) (showing that the annual mean wage for SOC code 15-
0000 was $97,230 in May 2019). We calculated the percentages by 
dividing the 2019 figures by the 2003 figures for the respective SOC 
codes (189% = ($68,420/$36,210) * 100%, 182% = ($97,230/$53,490) * 
100%).
    \25\ Salzman, supra note 22, at 26 (``In other words, the data 
suggest that current U.S. immigration policies that facilitate large 
flows of guestworkers appear to provide firms with access to labor 
that will be in plentiful supply at wages that are too low to induce 
a significantly increased supply from the domestic workforce.'').
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    Moreover, many H-1B petitions for IT workers are filed by 
companies, including staffing companies,\26\ that place the H-1B 
workers at worksites of third-parties, i.e., companies that did not 
directly petition USCIS for H-1B workers. From FY 2018 to FY 2019 an 
average of 71 percent of all approved H-1B petitions in the IT industry 
involved third-party worksites (compared to 36 percent for all approved 
H-1B petitions across industries).\27\ As noted in the 2011 GAO report 
and evidenced by the recent convictions highlighted in the DOL and DOJ 
reports, the extensive involvement and lack of accountability of 
staffing companies within the H-1B program is a major factor that makes 
the program vulnerable to fraud and weakens protection for U.S. 
workers.\28\ DOL has received a large number of complaints about 
staffing companies and participated in several investigations that led 
to convictions of technology staffing companies for fraudulent 
involvement in the H-1B program.\29\
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    \26\ The term ``staffing companies'' refers to ``employers that 
apply for H-1B workers but ultimately place these workers at the 
worksites of other employers as part of their business model.'' GAO-
11-26, at 19.
    \27\ U.S. Department of Homeland Security, U.S. Citizenship and 
Immigration Services, Office of Policy and Strategy, Policy Research 
Division, Systems: C3 database, Database Queried: 05/20/2020, Report 
Created: 05/20/2020. This data is based on H-1B approvals where the 
petitioner reported ``off-site [work] at another company or 
organization's location'' on the Form I-129. The term ``off-site'' 
which is used on the Form I-129 has the same meaning as ``third-
party worksite.'' The I-129 does not ask a petitioner seeking to 
place a beneficiary ``off-site'' to specify whether it is a staffing 
company.
    \28\ GAO-11-505T, at 12; OIG Investigations Newsletter (Dec. 1, 
2019-Jan. 30, 2020), supra; OIG Investigations Newsletter (Oct. 1, 
2019-Nov. 30, 2020), supra; News Release (Feb. 19, 2020, supra; News 
Release (Mar. 17, 2020), supra.
    \29\ See supra note 17.
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    Some staffing companies may also be described as outsourcing 
companies, i.e., companies that are hired to perform services or 
produce goods for another company and, in some cases, also seek to 
transfer work from the United States to workers based abroad to reduce 
the overall costs of the services they provide to clients in the United 
States.\30\

[[Page 63923]]

Outsourcing companies have been criticized as ``gaming the system'' so 
that they have a ready pool of low-paid temporary workers, which 
ultimately hurts the wages of U.S. workers.\31\ The ``outsourcing'' 
business model involves using H-1B visas to bring relatively low-cost 
foreign workers into the United States and then contracting them out to 
other U.S. companies seeking their services.\32\ These H-1B workers are 
relatively ``low-paid'' or ``low-cost'' in the sense that they are 
often paid less than the local median salary for workers in the same 
occupation, in other words, often paid less than what the worker would 
command in a truly competitive open job market.\33\ H-1B employers are 
able to ``take advantage of program rules in order to legally pay many 
of their H-1B workers below the local median wage for the jobs they 
fill.'' \34\ By bringing in lower-paid foreign workers, U.S. companies, 
in turn, may be incentivized to avoid hiring more U.S. workers or, even 
worse, lay off their own, higher-paid U.S. workers who previously 
performed those services adequately and replace them with lower-paid H-
1B workers of lesser qualifications employed by a staffing company.\35\ 
An employer's preference for hiring H-1B workers based on their 
citizenship, immigration status, or national origin could violate the 
INA's anti-discrimination provision at INA section 274B, 8 U.S.C. 
1324b.\36\ Further still, the outsourcing companies may ultimately send 
their H-1B nonimmigrant workers back to their home countries to perform 
their jobs or move a significant amount of work overseas to capitalize 
on lower costs of business, taking away even more U.S. jobs.\37\ As a 
result, DHS is concerned that the current regulatory regime encourages 
some companies to use the H-1B visa as a tool to lower business costs 
at the expense of U.S. workers.\38\
---------------------------------------------------------------------------

    \30\ Merriam-Webster. (n.d.). Outsource. In Merriam-Webster.com 
dictionary. Retrieved August 3, 2020, from https://www.merriam-webster.com/dictionary/outsource (``to procure (something, such as 
some goods or services needed by a business or organization) from 
outside sources and especially from foreign or nonunion suppliers: 
To contract for work, jobs, etc., to be done by outside or foreign 
workers.''). While the word ``outsourcing'' can refer to the 
practice of locating work overseas, see e.g., GAO-11-26 at FN 48, it 
can also be used interchangeably with the word ``staffing'' to refer 
to the general practice of contracting out H-1B workers to third-
party clients, see Daniel Costa and Ron Hira, Economic Policy 
Institute, H-1B Visas and Prevailing Wage Levels, May 4, 2020, at 4, 
available at https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/ (describing the ``outsourcing business 
model'' as ``plac[ing] H-1B hires at third-party client sites.'').
    \31\ See, e.g ., Costa and Hira, supra note 30; Sarah Pierce and 
Julia Gelatt, Migration Policy Institute, Evolution of the H-1B: 
Latest Trends in a Program on the Brink of Reform, March 2018, at 2, 
available at https://www.migrationpolicy.org/research/evolution-h-1b-latest-trends-program-brink-reform; Karen Pedersen, Peter 
Eckstein, Sandra Candy Robinson, Commentary: The H-1B Visa Problem 
as IEEE-USA Sees It, Mar. 6, 2017, available at https://spectrum.ieee.org/view-from-the-valley/at-work/tech-careers/commentary-the-h1b-problem-as-ieeeusa-sees-it; HaeYoun Park, How 
Outsourcing Companies are Gaming the Visa System, N.Y. Times, Nov. 
10, 2015, available at https://www.nytimes.com/interactive/2015/11/06/us/outsourcing-companies-dominate-h1b-visas.html; Julia Preston, 
Large Companies Game H-1B Program, Costing the U.S. Jobs, N.Y. 
Times, Nov. 10, 2015, available at https://www.nytimes.com/2015/11/11/us/large-companies-game-h-1b-visa-program-leaving-smaller-ones-in-the-cold.html?action=click&contentCollection=U.S.&region=Footer&module=WhatsNext&version=WhatsNext&contentID=WhatsNext&moduleDetail=undefined&pgtype=Multimedia.
    \32\ Pedersen, Eckstein, and Robinson, supra note 33.
    \33\ Costa and Hira, supra note 30 (explaining that ``the market 
wage is the wage a U.S. worker would command for a position'' and 
that ``the most reasonable and closest proxy for a market wage is 
the median wage for an occupation in a local area''); Youyou Zhou, 
Most H-1B Workers are Paid Less, But It Depends on the Type of Job, 
The Associated press, Apr. 18, 2017, available at https://apnews.com/afs:Content:873580003 (workers in high-tech jobs such as 
computer science are often paid less than their American 
counterparts).
    \34\ Costa and Hira, supra note 30. As this article explains, 
these actions comport with the existing legal framework in which H-
1B employers are only required to pay the higher of the actual wage 
level for similarly situated employees or the prevailing wage. See 
section 212(n)(1)(A) of the Act. Further, based on the way the four 
wage levels are set, the lowest two permissible H-1B wage levels 
fall below the local median salaries. See section 212(p)(4) of the 
Act. For more general information on wage levels and how they are 
calculated, see Amy Marmer Nice, Wages and High-Skilled Immigration: 
How the Government Calculates Prevailing Wages and Why It Matters, 
American Immigration Council, Dec. 2017, available at https://www.americanimmigrationcouncil.org/sites/default/files/research/wages_and_high-skilled_immigration.pdf.
    \35\ Preston, supra note 33.
    \36\ See U.S. Department of Justice, Justice News, Justice 
Department Settles Claim Against Virginia-Based Staffing Company for 
Improperly Favoring Temporary Visa Workers Over U.S. Workers (July 
27, 2020), https://www.justice.gov/opa/pr/justice-department-settles-claim-against-virginia-based-staffing-company-improperly-favoring (announcing a settlement agreement with a provider of IT 
staffing and consulting services resolving a claim that one of the 
provider's offices ``discriminated against U.S. workers because of 
their citizenship status when it posted a job advertisement 
specifying a preference for non-U.S. citizens who held temporary 
work visas. . . . Under the INA, employers cannot discriminate based 
on citizenship, immigration status or national origin at any stage 
of their hiring process, including the posting of job 
advertisements, regardless of whether it affects the final hiring 
outcome.'').
    \37\ Preston, supra note 33.
    \38\ Maria L. Ontiveros, H-1B Visas, Outsourcing and Body Shops: 
A Continuum of Exploitation for High Tech Workers, 38 Berkeley J. 
Emp. & Lab. L. 1, 17 (2017); Grace Martinez, Comment, Legal 
Immigrants Displacing American Workers: How U.S. Corporations are 
Exploiting H-1B Visas to the Detriment of Americans, 86 UMKC L. Rev. 
209 (2017).
---------------------------------------------------------------------------

    U.S.-based companies that are not traditionally in the staffing or 
outsourcing business also have exploited the H-1B program in ways not 
contemplated by Congress.\39\ In recent years, U.S. companies such as 
The Walt Disney Company, Hewlett-Packard, University of California San 
Francisco, Southern California Edison, Qualcomm, and Toys ``R'' Us have 
reportedly laid off their qualified U.S. workers and replaced them with 
H-1B workers provided by H-1B-dependent outsourcing companies.\40\ In 
some cases, the replaced U.S. workers were even forced to train the 
foreign workers who were taking their jobs and sign nondisclosure 
agreements about this treatment as a condition of receiving any form of 
severance.\41\ These examples illustrate how the current regulatory 
regime of the H-1B program allows employers, whether staffing, 
outsourcing, or other types of companies, to exploit the H-1B program 
in ways not contemplated by Congress.
---------------------------------------------------------------------------

    \39\ Paayal Zaveri and Aditi Roy, Big American Tech Companies 
are Snapping up Foreign-Worker Visas, Replacing Indian Outsourcing 
Firms, CNBC, Apr. 20, 2018, available at https://www.cnbc.com/2018/04/20/big-american-tech-companies-are-snapping-up-h1-b-visas.html. 
See also H.R. REP. 105-657, 20-21 (stating ``[b]ecause the bill is 
so dramatically increasing the supply of foreign workers without 
there being firm evidence of a domestic labor shortage, it is 
imperative that we build into the H-1B program adequate protections 
for U.S. workers'').
    \40\ See Pierce and Gelatt, supra note 33, at 24; Hira and 
Gopalaswamy, supra note 22; Patrick Thibodeau, Southern California 
Edison IT Workers ``Beyond Furious'' Over H-1B Replacements, 
Computerworld, Feb. 4, 2015, available at https://www.computerworld.com/article/2879083/southern-california-edison-it-workers-beyond-furious-over-h-1b-replacements.html; DHS, Office of 
Inspector General, OIG-18-03, USCIS Needs a Better Approach to 
Verify H-1B Visa Participants, at 3 (Oct. 20, 2017), available at 
https://www.oig.dhs.gov/sites/default/files/assets/2017/OIG-18-03-Oct17.pdf.
    \41\ See Perrero v. HCL Am., Inc., No. 616CV112ORL31TBS, 2016 WL 
5943600, at 1 (M.D. Fla. Oct. 13, 2016) (``According to the 
allegations of the Complaint (Doc. 1), which are accepted in 
pertinent part as true for purposes of resolving the instant 
motions, Perrero is a former employee of [Disney]'s information 
technology (``IT'') department. (Doc. 1 at 6). HCL is an IT services 
provider. (Doc. 27 at 1). In January 2015, he and several hundred 
other [Disney] IT workers were fired; their responsibilities were 
filled by IT workers employed by HCL. (Doc. 1 at 6). The workers who 
replaced the Plaintiff and his co-workers were foreign nationals 
holding H-1B visas. (Doc. 1 at 7) [Disney] management told Perrero 
and his co-workers of their imminent firing more than 90 days in 
advance, and informed them that if they did not stay and train the 
HCL IT workers during that period, they would not get a bonus and 
severance pay.''). See also Costa and Hira, supra note 30 (``the 
laid-off U.S. workers were required to train their H-1B replacements 
to do their former jobs--and in some cases sign nondisclosure 
agreements saying they would not speak publicly about their 
experiences--as a condition of receiving severance pay.'').
---------------------------------------------------------------------------

    Employers that pay below-median wages to their H-1B workers (in 
other words, any employer not paying at least Level III wages) are not 
necessarily in violation of the law. Section 212(n)(1)(A) of the Act 
requires employers to pay at least the actual wage level paid to other 
similarly situated employees or the prevailing wage, whichever is 
higher. Since the

[[Page 63924]]

lowest two prevailing wage levels are currently set lower than the 
local median salary, employers offering wages at the two lowest 
permissible wage levels (Levels I and II) may be able to lawfully pay 
below-median wages.\42\ In FY 2019, 60 percent of all H-1B jobs were 
certified at the two lowest prevailing wage levels.\43\
---------------------------------------------------------------------------

    \42\ Costa and Hira, supra note 30 (explaining how the two 
lowest permissible H-1B prevailing wage levels are significantly 
lower than the local median salaries).
    \43\ Id. at 18.
---------------------------------------------------------------------------

    Moreover, H-1B employers that displace U.S. workers are not 
necessarily violating the law, either. While section 212(n)(1)(E) 
through (G) of the Act, 8 U.S.C. 1182(n)(1)(E)-(G), requires H-1B-
dependent employers \44\ to make certain attestations such as not 
displacing U.S. workers and taking good faith steps to recruit U.S. 
workers, the statute also offers broad exceptions to these requirements 
that, over time, have effectively gutted the U.S. worker recruitment 
requirement such as by utilizing third-party contractors \45\ or paying 
a $60,000 annual salary, among other things.\46\ DOL data establishes 
that 99.3 percent of all H-1B-dependent employers claim exemption from 
these attestation requirements,\47\ showing how easily and frequently 
H-1B-dependent employers are able to bypass statutory requirements 
intended to protect U.S. workers. In addition, these purported U.S. 
worker protections only apply to employers who are H-1B-dependent 
employers or have been found by DOL to have committed a willful failure 
to meet their Labor Condition Application (LCA) obligations or material 
misrepresentation in its application.\48\ However, employment 
discrimination in favor of H-1B visa holders over qualified U.S. 
workers may violate another part of the INA, at INA section 274B, 8 
U.S.C. 1324b.\49\
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    \44\ The term ``H-1B-dependent employer'' is defined at section 
212(n)(3) of the Act, 8 U.S.C. 1182(n)(3). As stated in H.R. REP. 
105-657, H.R. REP. 105-657, 23 (1998), H-1B-dependent companies 
``often do nothing but contract their foreign workers out to other 
companies--often after the other companies have laid off American 
workers. H-1B-dependent companies have been accused of a 
disproportionate share of H-1B abuses.''
    \45\ See e.g. Perrero v. HCL Am., Inc., supra at 3-4. (The Court 
rejected Plaintiff's argument that, because he and his Disney co-
workers were replaced by contracted HCL H-1B workers, ``HCL must 
have lied when it made the ```displacement' certification on the 
LCA.'' The Court found that the only way for HCL's certification on 
the LCA to be false would have been if the working conditions of 
HCL's U.S. worker employees, not Disney's, were adversely affected 
by HCL's H-1B hiring. Thus, by contracting through HCL as opposed to 
hiring directly, Disney and HCL circumvented worker protections, 
exploiting a loophole in the system designed to protect U.S. 
workers.). See also 144 Cong. Rec. E2323-01, 144 Cong. Rec. E2323-
01, E2323, 1998 WL 785735 (stating ``[t]he employers most prone to 
abusing the H-1B program are called `job contractors' or `job 
shops'. . . the[se] companies don't have to shoulder the obligations 
of being the legally recognized employers--the job contractors/shops 
remain the official employers'') (statement of Rep. Lamar Smith, 
then chairman of the Subcommittee on Immigration and Claims).
    \46\ For example, section 212(n)(3)(B) of the Act defines 
``exempt H-1B nonimmigrant'' as an H-1B nonimmigrant who receives 
annual wages equal to at least $60,000 or has attained a master's or 
higher degree (or its equivalent) in a related specialty. The 
$60,000 salary threshold was set in 1998 through the American 
Competitiveness and Workforce Improvement Act and has not been 
adjusted to date. If adjusted for inflation, the salary threshold 
for the exception to the U.S. worker recruitment would be over 
$93,000. See, U.S. Dep't of Labor, Bureau of Labor Statistics, CPI 
Inflation Calculator, https://www.bls.gov/data/inflation_calculator.htm (comparing data from October 1998 to May 
2020).
    \47\ U.S. Department of Labor, Employment and Training 
Administration, Office of Foreign Labor Certification, Public 
Disclosure File: LCA Data, Federal Fiscal Year: 2019.
    \48\ See INA section 212(n)(1)(E)(ii) and (G), 8 U.S.C. 
1182(n)(1)(E)(ii) and (G).
    \49\ See supra note 36.
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    Overall, these reports and studies expose significant gaps in the 
ability of the H-1B program, as currently structured, to serve its 
original intent to supplement the U.S. workforce with a limited number 
of highly skilled workers while protecting the economic interests of 
U.S. workers. The President's recent ``Proclamation Suspending Entry of 
Aliens Who Present a Risk to the U.S. Labor Market Following the 
Coronavirus Outbreak'' notes that the entry of additional workers 
through the H-1B program ``presents a significant threat to employment 
opportunities for Americans affected by the extraordinary economic 
disruptions caused by the COVID-19 outbreak.'' \50\ The changes made in 
the interim final rule will extend beyond the duration of the 
proclamation, but the threats described in the proclamation highlight 
the urgent need for strengthening of the H-1B program to protect U.S. 
workers. The Department's responsibility to ensure the safety and 
security of our country includes the protection of American 
workers.\51\ This responsibility includes ensuring, as much as 
possible, that American workers are not negatively affected by H-1B 
workers. Therefore, the Department believes it is imperative to issue 
this rule to strengthen the integrity of the H-1B program and make more 
certain that petitions are only approved for qualified beneficiaries 
and petitioners.
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    \50\ See Proclamation 10052 of June 22, 2020, Suspension of 
Entry of Immigrants and Nonimmigrants Who Present a Risk to the 
United States Labor Market During the Economic Recovery Following 
the 2019 Novel Coronavirus Outbreak, 85 FR 38263 (Jun. 25, 2020), 
available at https://www.govinfo.gov/content/pkg/FR-2020-06-25/pdf/2020-13888.pdf.
    \51\ Cf. section 101 of the Homeland Security Act of 2002, 6 
U.S.C. 111(b)(1)(F), stating that a primary mission of the 
Department is to ``ensure that the overall economic security of the 
United States is not diminished by efforts, activities, and programs 
aimed at securing the homeland.''
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B. Implementation of This Interim Final Rule

    This rule only will apply to petitions filed on or after the 
effective date of the regulation, including amended petitions or 
petition extensions. DHS will not apply the new regulations to any 
pending petitions nor to previously approved petitions, either through 
reopening or through a notice of intent to revoke.

V. Discussion of the Provisions To Strengthen the H-1B Program

A. Amending the Definition and Criteria for a ``Specialty Occupation''

1. Amending the Definition of a ``Specialty Occupation''
    DHS is revising the regulatory definition and standards for a 
``specialty occupation'' to align with the statutory definition of 
``specialty occupation.''
    Section 101(a)(15)(H)(i)(b) of the INA, 8 U.S.C. 
1101(a)(15)(H)(i)(b), describes, among others, nonimmigrants coming 
temporarily to the United States to perform services in a specialty 
occupation. Section 214(i)(1) of the INA, 8 U.S.C. 1184(i)(1) states, 
in relevant part, ``the term `specialty occupation' means an occupation 
that requires--(A) theoretical and practical application of a body of 
highly specialized knowledge, and (B) attainment of a bachelor's or 
higher degree in the specific specialty (or its equivalent) as a 
minimum for entry into the occupation in the United States.'' 
Currently, 8 CFR 214.2(h)(4)(ii) defines ``specialty occupation'' as an 
occupation which requires theoretical and practical application of a 
body of highly specialized knowledge in fields of human endeavor 
including, but not limited to, architecture, engineering, mathematics, 
physical sciences, social sciences, medicine and health, education, 
business specialties, accounting, law, theology, and the arts, and 
which requires the attainment of a bachelor's degree or higher in a 
specific specialty, or its equivalent, as a minimum for entry into the 
occupation in the United States.
    First, this rule amends the definition of a ``specialty 
occupation'' at 8 CFR 214.2(h)(4)(ii) to clarify that there must be a 
direct relationship between the required degree field(s) and the duties 
of the position. Consistent with existing USCIS policy and practice, a 
position

[[Page 63925]]

for which a bachelor's degree in any field is sufficient to qualify for 
the position, or for which a bachelor's degree in a wide variety of 
fields unrelated to the position is sufficient to qualify, would not be 
considered a specialty occupation as it would not require the 
application of a body of highly specialized knowledge.\52\ Similarly, 
the amended definition clarifies that a position would not qualify as a 
specialty occupation if attainment of a general degree, without further 
specialization, is sufficient to qualify for the position. This is 
consistent with the statutory requirement that a degree be ``in the 
specific specialty'' and has long been the position of DHS and its 
predecessor, Immigration and Naturalization Service (INS).\53\
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    \52\ See Caremax Inc v. Holder, 40 F. Supp. 3d 1182, 1187-88 
(N.D. Cal. 2014).
    \53\ See Royal Siam Corp. v. Chertoff, 484 F.3d 139, 147 (1st 
Cir. 2007) (stating ``[t]he courts and the agency consistently have 
stated that, although a general-purpose bachelor's degree, such as a 
business administration degree, may be a legitimate prerequisite for 
a particular position, requiring such a degree, without more, will 
not justify the granting of a petition for an H-1B specialty 
occupation visa''); see also Shanti, Inc. v. Reno, 36 F. Supp. 2d 
1151, 1166 (D. Minn.1999) (the proffered position's requirement of a 
business administration degree is a general degree requirement, and 
therefore, INS did not abuse its discretion in denying the H-1B 
petition); All Aboard Worldwide Couriers, Inc. v. Attorney General, 
8 F. Supp. 2d 379, 381 (S.D.N.Y. 1998) (INS did not abuse its 
discretion in determining that the proffered position did not 
qualify as a specialty occupation based on ``an absence of evidence 
that [the petitioner] require[s] job candidates to have a B.A. in a 
specific, specialized area.'').
---------------------------------------------------------------------------

    Under this new rule, the petitioner will have the burden of 
demonstrating that there is a direct relationship between the required 
degree in a specific specialty (in other words, the degree field(s) 
that would qualify someone for the position) and the duties of the 
position. In many cases, the relationship will be clear and relatively 
easy to establish. For example, it should not be difficult to establish 
that a required medical degree is directly correlated to the duties of 
a physician. Similarly, a direct relationship may be established 
between the duties of a lawyer and a required law degree, and the 
duties of an architect and a required architecture degree. In other 
cases, the direct relationship may be less readily apparent, and the 
petitioner may have to explain and provide documentation to meet its 
burden of demonstrating the relationship. To establish a direct 
relationship, the petitioner would need to provide information 
regarding the course(s) of study associated with the required degree, 
or its equivalent, and the duties of the proffered position, and 
demonstrate the connection between the course of study and the duties 
and responsibilities of the position.
    The requirement of a direct relationship between a degree in a 
specific specialty, or its equivalent, and the position should not be 
misconstrued as necessarily requiring a singular field of study. 
Section 214(i)(1) of the INA allows the ``attainment of a bachelor's or 
higher degree in the specific specialty (or its equivalent)'' (emphasis 
added). The placement of the phrase ``or its equivalent'' after the 
phrase ``in the specific specialty'' means that USCIS may accept the 
equivalent to a degree in a specific specialty, as long as that 
equivalent provides the same (or essentially the same) body of 
specialized knowledge.\54\ In general, provided the required fields of 
study are closely related, for example, electrical engineering and 
electronics engineering for the position of an electrical engineer, a 
minimum of a bachelor's or higher degree, or its equivalent, in more 
than one field of study may be recognized as satisfying the ``degree in 
the specific specialty (or its equivalent)'' requirement of section 
214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B). In such a case, the 
``body of highly specialized knowledge'' required by section 
214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A), essentially would be 
the same, and each field of study would be in a ``specific specialty'' 
directly related to the position consistent with section 214(i)(1)(B) 
of the INA, 8 U.S.C. 1184(i)(1)(B).
---------------------------------------------------------------------------

    \54\ See, e.g., Relx, Inc. v. Baran, 397 F. Supp. 3d 41, 54 
(D.D.C. 2019) (``There is no requirement in the statute that only 
one type of degree be accepted for a position to be specialized.''); 
Residential Fin. Corp. v. U.S. Citizenship & Immigration Servs., 839 
F. Supp. 2d 985, 997 (S.D. Ohio 2012) (stating that when determining 
whether a position is a specialized occupation ``knowledge and not 
the title of the degree is what is important.'').
---------------------------------------------------------------------------

    In cases where the petitioner lists degrees in multiple disparate 
fields of study as the minimum entry requirement for a position, the 
petitioner would have to establish how each field of study is in a 
specific specialty providing ``a body of highly specialized knowledge'' 
directly related to the duties and responsibilities of the particular 
position to meet the requirements of sections 214(i)(1)(A) and (B) of 
the INA, 8 U.S.C. 1184(i)(1)(A) and (B), the regulatory definition, and 
one of the four criteria at new 8 CFR 214.2(h)(4)(iii)(A).
    As such, a minimum entry requirement of a bachelor's or higher 
degree, or its equivalent, in multiple disparate fields of study would 
not automatically disqualify a position from being a specialty 
occupation. For example, a petitioner may be able to establish that a 
bachelor's degree in the specific specialties of either education or 
chemistry, each of which provide a body of highly specialized 
knowledge, is directly related to the duties and responsibilities of a 
chemistry teacher. In such a scenario, the ``body of highly specialized 
knowledge'' requirement of section 214(i)(1)(A) of the INA, 8 U.S.C. 
1184(i)(1)(A), and the ``degree in the specific specialty'' requirement 
of section 214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B), would both 
be met and the chemistry teacher position listing multiple disparate 
fields of study would be in a specialty occupation.
    In determining specialty occupation, USCIS interprets the 
``specific specialty'' requirement in section 214(i)(1)(B) of the INA, 
8 U.S.C. 1184(i)(1)(B), to relate back to the body of highly 
specialized knowledge requirement referenced in section 214(i)(1)(A) of 
the INA, 8 U.S.C. 1184(i)(1)(A), required by the specialty occupation 
in question, such that section 214(i)(1)(B) of the INA, 8 U.S.C. 
1184(i)(1)(B), is only met if the purported degree in a specific 
specialty or specialties, or its equivalent, provides a body of 
specialized knowledge directly related to the duties and 
responsibilities of the particular position as required by section 
214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A).
    If the minimum entry requirement for a position is a general degree 
without further specialization or an explanation as to what type of 
degree is required, the ``degree in the specific specialty (or its 
equivalent)'' requirement of section 214(i)(1)(B) of the INA, 8 U.S.C. 
1184(i)(1)(B), would not be satisfied. For example, a requirement of a 
general engineering degree for a position of software developer would 
not satisfy the specific specialty requirement. In such an instance, 
the petitioner would not satisfactorily demonstrate how a required 
general engineering degree provides a body of highly specialized 
knowledge that is directly related to the duties and responsibilities 
of a software developer position.\55\
---------------------------------------------------------------------------

    \55\ See supra note 54.
---------------------------------------------------------------------------

    Similarly, a petition with a requirement of an engineering degree 
in any or all fields of engineering for a position of software 
developer would not suffice unless the record establishes how each or 
every field of study within an engineering degree provides a body of 
highly specialized knowledge directly relating to the duties and 
responsibilities of the software

[[Page 63926]]

developer position.\56\ The issue is whether a proffered position 
requires the application of a body of highly specialized knowledge as 
required by section 214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A), 
and attainment of at least a bachelor's degree in the specific 
specialty (or its equivalent) as required by section 214(i)(1)(B) of 
the INA, 8 U.S.C. 1184(i)(1)(B). If an individual could qualify for a 
software developer position based on having a seemingly unrelated 
degree in any engineering field or in general engineering, or its 
equivalent, then it cannot be concluded that the position requires the 
application of a body of highly specialized knowledge and a degree in a 
specific specialty because someone with an entirely or largely 
unrelated degree may qualify to perform the job.\57\ In such a 
scenario, the requirements of sections 214(i)(1)(A) and (B) of the INA, 
8 U.S.C. 1184(i)(1)(A) and (B), would not be satisfied.
---------------------------------------------------------------------------

    \56\ The requirement of any engineering degree could include, 
for example, a chemical engineering degree, marine engineering 
degree, mining engineering degree, or any other engineering degree 
in a multitude of unrelated fields.
    \57\ In these examples, the educational credentials are referred 
to by the title of the degree for expediency. However, USCIS 
separately evaluates whether the beneficiary's actual course of 
study is directly related to the duties of the position, rather than 
merely the title of the degree. When applicable, USCIS will consider 
whether the beneficiary has education, specialized training, and/or 
progressively responsible experience that is equivalent to 
completion of a U.S. baccalaureate or higher degree in the specialty 
occupation.
---------------------------------------------------------------------------

    Similarly, a requirement of a bachelor's degree in an unspecified 
``quantitative field'' (which could include mathematics, statistics, 
economics, accounting, or physics) for a software developer position 
would be insufficient to meet the requirements of a specialty 
occupation unless the record identifies specific specialties within the 
wide variety of ``quantitative fields'' and establishes how each 
identified degree in a specific specialty provides a body of highly 
specialized knowledge, consistent with section 214(i)(1)(A) of the INA, 
8 U.S.C. 1184(i)(1)(A), that is directly related to the duties and 
responsibilities of the software developer position. While a position 
may allow a range of degrees, and apply multiple bodies of highly 
specialized knowledge, each of those qualifying degree fields must be 
directly related to the proffered position.
2. Amending the Criteria for Specialty Occupation Positions
    As quoted above, under section 214(i)(1) of the INA, 8 U.S.C. 
1184(i)(1), a ``specialty occupation'' requires attainment of a 
bachelor's or higher degree in the specific specialty (or its 
equivalent) as a minimum for entry into the occupation in the United 
States. However, the current regulatory criteria at 8 CFR 
214.2(h)(4)(iii)(A) states that a bachelor's degree be ``normally'' 
required, or ``common to the industry,'' or that the knowledge required 
for the position is ``usually associated'' with at least a bachelor's 
degree or equivalent. The words ``normally,'' ``common,'' and 
``usually'' are not found in the statute, and therefore, should not 
appear in the regulation. To conform to the statutory definition of a 
``specialty occupation'' and promote consistent adjudications, DHS is 
eliminating the terms ``normally,'' ``common,'' and ``usually'' from 
the regulatory criteria. See new 8 CFR 214.2(h)(4)(iii)(A). This change 
means that the petitioner will have to establish that the bachelor's 
degree in a specific specialty or its equivalent is a minimum 
requirement for entry into the occupation in the United States by 
showing that this is always the requirement for the occupation as a 
whole, the occupational requirement within the relevant industry, the 
petitioner's particularized requirement, or because the position is so 
specialized, complex, or unique that it is necessarily required to 
perform the duties of the specific position.
    The wording of the current regulatory criteria creates ambiguity. 
For example, the dictionary definition of ``normally'' is ``usually, or 
in most cases,'' and ``usually'' is defined as ``in the way that most 
often happens.'' \58\ ``Most'' is defined as ``the biggest number or 
amount (of), or more than anything or anyone else,'' \59\ and is a 
synonym for ``normally'' or ``usually.'' These definitions could be 
read to encompass anything from 51 percent to 99 percent, and possibly 
a broader range depending on the interpretation, highlighting how 
ambiguous they are. Use of these terms, if interpreted to mean that a 
position is a specialty occupation if merely 51 percent of positions 
within a certain occupation require at least a certain bachelor's 
degree, is inconsistent with the most natural read of, and arguably 
runs directly contrary to the statutory definition of, a ``specialty 
occupation'' which imposes a minimum entry requirement of a bachelor's 
or higher degree in the specific specialty (or its equivalent). See 
section 214(i)(1) of the INA, 8 U.S.C. 1184(i)(1). Thus, DHS believes 
that it is imperative to align the regulatory language with the 
statutory language and clarify that a bachelor's (or higher) degree in 
a directly related specific specialty is required. It will no longer be 
sufficient to show that a degree is normally, commonly, or usually 
required. In FY 2018, USCIS frequently issued Requests for Evidence 
(RFEs) in H-1B cases, requesting more evidence or explanations to 
establish that proffered positions qualified as specialty 
occupations.\60\ DHS believes that the revisions in this rule will 
clarify the requirements for establishing a specialty occupation and 
reduce the need for RFEs in future adjudications.
---------------------------------------------------------------------------

    \58\ Cambridge Dictionary, normally, https://dictionary.cambridge.org/us/dictionary/english/normally (last 
visited Sept. 9, 2020); Cambridge Dictionary, usually, https://dictionary.cambridge.org/us/dictionary/english/usually (last visited 
Sept. 9, 2020).
    \59\ Cambridge Dictionary, most, https://dictionary.cambridge.org/us/dictionary/english/most (last visited 
Sept. 9, 2020).
    \60\ See USCIS report Understanding Requests for Evidence 
(RFEs): A Breakdown of Why RFEs were Issued for H-1B Petitions in 
Fiscal Year 2018, available at https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/BAHA/understanding-requests-for-evidence-h-1b-petitions-in-fiscal-year-2018.pdf.
---------------------------------------------------------------------------

    In addition, DHS is replacing the phrase, ``To qualify as a 
specialty occupation,'' with the phrase ``A proffered position does not 
meet the definition of specialty occupation unless it also satisfies'' 
prior to setting forth the regulatory criteria. See new 8 CFR 
214.2(h)(4)(iii)(A). This change will clarify that meeting one of the 
regulatory criteria is a necessary part of--but not necessarily 
sufficient for--demonstrating that a position qualifies as a specialty 
occupation. This is not new; the criteria at current 8 CFR 
214.2(h)(4)(iii)(A) must be construed in harmony with and in addition 
to other controlling regulatory provisions and with the statute as a 
whole. In 2000, the U.S. Court of Appeals for the Fifth Circuit 
highlighted the ambiguity of the regulatory provision's current 
wording, and petitioners have misinterpreted the criteria in 8 CFR 
214.2(h)(4)(iii)(A) as setting forth both the necessary and sufficient 
conditions to qualify as a specialty occupation, a reading that 
resulted in some positions meeting one condition of 8 CFR 
214.2(h)(4)(iii)(A), but not the definition as a whole.\61\

[[Page 63927]]

These changes will eliminate this source of confusion.
---------------------------------------------------------------------------

    \61\ Defensor v. Meissner, 201 F.3d 384, 387 (5th Cir. 2000) 
(stating that current 8 CFR 214.2(h)(4)(iii)(A) ``appears to 
implement the statutory and regulatory definition of specialty 
occupation through a set of four different standards. However, this 
section might also be read as merely an additional requirement that 
a position must meet, in addition to the statutory and regulatory 
definition. The ambiguity stems from the regulation's use of the 
phrase `to qualify as.' In common usage, this phrase suggests that 
whatever conditions follow are both necessary and sufficient 
conditions. Strictly speaking, however, the language logically 
entails only that whatever conditions follow are necessary 
conditions. . . . If Sec.  214.2(h)(4)(iii)(A) is read to create a 
necessary and sufficient condition for being a specialty occupation, 
the regulation appears somewhat at odds with the statutory and 
regulatory definitions of `specialty occupation.' '').
---------------------------------------------------------------------------

    DHS also is amending 8 CFR 214.2(h)(4)(iii)(A)(1) by replacing the 
word ``position'' with ``occupation,'' so that it sets forth ``the 
minimum requirement for entry into the particular occupation in which 
the beneficiary will be employed.'' See new 8 CFR 
214.2(h)(4)(iii)(A)(1). DHS believes that replacing ``position'' with 
``occupation'' will clarify that the first criterion can be satisfied 
if the petitioner can show that its position falls within an 
occupational category for which all positions within that category have 
a qualifying minimum degree requirement.\62\ DHS further believes that 
this revision provides added clarity to the regulatory criteria as the 
criteria will flow from general to specific (i.e., occupation level to 
industry to employer to position). If the occupation requires at least 
a bachelor's degree in a specific specialty (e.g., lawyer or doctor) 
then it necessarily follows that a position in one of those occupations 
would require a degree and qualify as a specialty occupation. If that 
is not applicable, then the petitioner could submit evidence to show 
that at least a bachelor's degree in a specific specialty (or its 
equivalent) is required based on industry norms, the employer's 
particular requirement, or because of the particulars of the specific 
position. USCIS will continue its practice of consulting DOL's 
Occupational Outlook Handbook and other reliable and informative 
sources submitted by the petitioner, to assist in its determination 
regarding the minimum entry requirements for positions located within a 
given occupation.
---------------------------------------------------------------------------

    \62\ DHS generally determines a position's occupation or 
occupational category by looking at the standard occupational 
classification (SOC) code designated on the LCA.
---------------------------------------------------------------------------

    DHS further is amending 8 CFR 214.2(h)(4)(iii)(A)(2) by 
consolidating this criterion's second prong into the fourth criterion. 
See new 8 CFR 214.2(h)(4)(iii)(A)(2). The second prong of current 8 CFR 
214.2(h)(4)(iii)(A)(2), which focuses on a position's complexity or 
uniqueness, is similar to current 8 CFR 214.2(h)(4)(iii)(A)(4), which 
focuses on a position's complexity and specialization. In practice, 
they are frequently consolidated into the same analysis. This amendment 
streamlines both criteria, as well as the explanation and analysis in 
written decisions issued by USCIS pertaining to specialty occupation 
determinations, as such decisions discuss all four criteria and are 
necessarily repetitive because of the existing overlap between 8 CFR 
214.2(h)(4)(iii)(A)(2) and (4). This amendment also simplifies the 
analysis because petitioners may now demonstrate eligibility under this 
criterion if the position is ``so specialized, complex, or unique'' 
(emphasis added), as opposed to ``so complex or unique'' under current 
8 CFR 214.2(h)(4)(iii)(A)(2) and ``so specialized and complex'' under 
current 8 CFR 214.2(h)(4)(iii)(A)(4) (emphasis added). Notwithstanding 
these amendments, the analytical framework of the first prong of 8 CFR 
214.2(h)(4)(iii)(A)(2) generally will remain the same. Thus, a 
petitioner will satisfy new 8 CFR 214.2(h)(4)(iii)(A)(2) if it 
demonstrates that the specialty degree requirement is the minimum entry 
requirement for (1) parallel positions (2) at similar organizations (3) 
within the employer's industry in the United States. This criterion is 
intended for the subset of positions with minimum entry requirements 
that are determined not necessarily by occupation, but by specific 
industry standards. For example, registered nurses (RNs) generally do 
not qualify for H-1B classification because most RN positions normally 
do not require a U.S. bachelor's or higher degree in nursing (or a 
directly related field), or its equivalent, as the minimum for entry 
into these particular positions.\63\ However, advanced practice 
registered nurses generally would be specialty occupations due to the 
advanced level of education and training required for 
certification.\64\ For this criterion, DHS would continue its practice 
of consulting the DOL's Occupational Outlook Handbook and other 
reliable and informative sources, such as information from the 
industry's professional association or licensing body, submitted by the 
petitioner.
---------------------------------------------------------------------------

    \63\ See U.S. Dep't of Labor, Bureau of Labor Statistics, 
Occupational Outlook Handbook, ``Registered Nurses,'' https://www.bls.gov/ooh/healthcare/registered-nurses.htm#tab-4 (indicating 
that nurses can have a bachelor's or associate's degree in nursing, 
or a diploma from an approved nursing program) (last visited Jun. 
25, 2020).
    \64\ USCIS Policy Memorandum PM-602-0104, Adjudication of H-1B 
Petitions for Nursing Occupations (Feb. 18, 2015), available at 
https://www.uscis.gov/sites/default/files/USCIS/Laws/Memoranda/2015-0218_EIR_Nursing_PM_Effective.pdf.
---------------------------------------------------------------------------

    The third criterion at 8 CFR 214.2(h)(4)(iii)(A)(3) essentially 
will remain the same, other than the deletion of ``normally.'' This 
criterion still will recognize an employer's valid employment 
practices, provided that those practices reflect actual requirements. 
The additional sentence, ``The petitioner also must establish that the 
proffered position requires such a directly related specialty degree, 
or its equivalent, to perform its duties,'' simply will reinforce the 
existing requirements for a specialty occupation, in other words, that 
the position itself must require a directly related specialty degree, 
or its equivalent, to perform its duties. See new 8 CFR 
214.2(h)(4)(iii)(A)(3). Employers requiring degrees as a proxy for a 
generic set of skills will not meet this standard. Employers listing a 
specialized degree as a hiring preference will not meet this standard 
either. If USCIS were constrained to recognize a position as a 
specialty occupation merely because an employer has an established 
practice of demanding certain educational requirements for the 
proffered position--without consideration of whether the position 
requires the application of a body of highly specialized knowledge 
consistent with the degree requirement--then any beneficiary with a 
bachelor's degree in a specific specialty could be brought into the 
United States to perform work in a non-specialty occupation if the 
employer arbitrarily imposed such a degree requirement for the non-
specialty occupation position.\65\ With respect to the first part of 
this criterion, a petitioner could submit evidence of an established 
recruiting and hiring practice for the position to establish its 
requirements for the position. DHS is leaving the term ``established 
practice'' undefined to allow more flexibility for petitioners, 
although it notes that petitioners seeking to fill a position for the 
first time generally would not be able to demonstrate an ``established 
practice.'' \66\
---------------------------------------------------------------------------

    \65\ Defensor, 201 F.3d at 388 (noting ``If only [the 
employer]'s requirements could be considered, then any alien with a 
bachelor's degree could be brought into the United States to perform 
a non-specialty occupation, so long as that person's employment was 
arranged through an employment agency which required all clients to 
have bachelor's degrees. Thus, aliens could obtain six-year visas 
for any occupation, no matter how unskilled, through the subterfuge 
of an employment agency. This result is completely opposite the 
plain purpose of the statute and regulations, which is to limit H1-B 
[sic] visas to positions which require specialized experience and 
education to perform.'')
    \66\ First-time hirings are not precluded from qualifying under 
one of the other criteria.
---------------------------------------------------------------------------

    As discussed above, the criterion at the new 8 CFR 
214.2(h)(4)(iii)(A)(4) incorporates the second prong of current 8 CFR 
214.2(h)(4)(iii)(A)(2). See new 8 CFR 214.2(h)(4)(iii)(A)(4). No other 
substantive changes are being made to this criterion. Thus, the fourth 
criterion can be satisfied if the petitioner

[[Page 63928]]

demonstrates that the proffered position's job duties are so 
specialized, complex, or unique that they necessitate the attainment of 
a U.S. bachelor's degree in a directly related specific specialty, or 
its equivalent.
    DHS acknowledges that some petitioners may believe they have a 
reliance interest in retaining the existing regulatory framework for 
specialty occupation. For example, by eliminating the word ``normally'' 
from the regulatory criterion at 8 CFR 214.2(h)(4)(iii)(A)(1), some 
occupations that previously qualified under this criterion may no 
longer qualify because a bachelor's degree in a specific specialty or 
its equivalent is not always a minimum requirement for entry. To the 
extent that petitioners may have a reliance interest in retaining the 
current regulations, the government's interests in having the 
regulations conform to the best reading of the statutory definition and 
creating clearer standards to facilitate more consistent adjudications 
\67\ far outweigh any such reliance interest. It is important to note 
that, although some occupations will no longer qualify under 8 CFR 
214.2(h)(4)(iii)(A)(1), the petitioner may still establish that the 
proffered position satisfies any one of the other criteria at 8 CFR 
214.2(h)(4)(iii)(A)(2)-(4). None of the revised provisions 
categorically prevent any particular position from qualifying as a 
specialty occupation.
---------------------------------------------------------------------------

    \67\ See GAO/HEHS-00-157, at 25 (finding that ``a petition 
previously submitted and denied can be approved by another 
adjudicator, even if the denying adjudicator determined that the 
employer does not meet H-1B requirements'' owing to inconsistently 
available reasons for denials and information system limitations); 
GAO-11-26, at 27 (noting examples of instances in which 
``[e]xecutives at several companies'' experienced inconsistencies in 
the adjudication process, including decisions to deny or grant H-1B 
classification based on whether projects required ``specialty 
occupation'').
---------------------------------------------------------------------------

    Further, DHS recognizes the possibility that some petitions for H-
1B nonimmigrant classification might have been approved in error under 
the current regulation even though the petitions indicated that an 
alien could qualify to perform the relevant position based on a general 
degree. USCIS has generally denied such petitions on the basis that 
such petitions do not meet the statutory and regulatory definition of 
specialty occupation under the current regulation, but recognizes that 
a small number might have been approved in error and that similar 
petitions will be denied as a result of this Rule's clarification of 
the definition of ``specialty occupation.'' For example, by adding the 
phrase ``A position is not a specialty occupation if attainment of a 
general degree, such as business administration or liberal arts, 
without further specialization, is sufficient to qualify for the 
position'' at new 8 CFR 214.2(h)(4)(ii), positions where a general 
degree may qualify someone to perform the job, and that may have been 
erroneously approved as specialty occupations because of confusion 
created by the ambiguous wording in the current regulations, may now be 
denied. But again, to the extent that the revised regulations would 
result in the denial of some petitions that were erroneously approved 
under the current regulatory scheme, the government's interests in 
better adhering to the statute and better ensuring consistent 
adjudication far outweigh any interests petitioners may have in 
receiving continued petition approvals in a small number of cases based 
on error resulting from imprecise regulatory text. DHS notes that each 
case is decided on its own merits, and simply because a petition was 
approved previously does not guarantee that a similar petition would be 
approved in the future as prior approvals are not binding on USCIS.\68\ 
The burden of proof remains on the petitioner, even where an extension 
of stay in H-1B nonimmigrant status is sought.\69\
---------------------------------------------------------------------------

    \68\ Louisiana Philharmonic Orchestra v. INS, 2000 WL 282785 
(E.D. La.), aff'd 248 F.3d 1139 (5th Cir. 2001), cert. denied, 122 
S. Ct. 51 (2001); Matter of Church Scientology Intl, 19 I&N Dec. 
593, 597 (Comm'r 1988).
    \69\ See 8 CFR 103.2(b)(1) (``An applicant or petitioner must 
establish that he or she is eligible for the requested benefit at 
the time of filing the benefit request and must continue to be 
eligible through adjudication); 8 CFR 214.1(c)(5) (``Where an 
applicant or petitioner demonstrates eligibility for a requested 
extension, it may be granted at the discretion of the Service.'').
---------------------------------------------------------------------------

B. Defining ``Worksite'' and ``Third Party Worksite''

    DHS will add definitions for ``worksite'' and ``third-party 
worksite'' to the existing list of definitions at 8 CFR 
214.2(h)(4)(ii). See new 8 CFR 214.2(h)(4)(ii). First, DHS will define 
``worksite'' similar to the DOL definition of ``place of employment'' 
in 20 CFR 655.715 as ``the physical location where the work is actually 
performed by the H-1B nonimmigrant.'' A ``worksite'' will not include 
any location that would not be considered a ``worksite'' for LCA 
purposes, meaning that DHS will apply the same exclusions and examples 
of ``non-worksite locations'' as set forth in DOL's regulations.\70\ As 
H-1B petitioners and USCIS officers should already be familiar with the 
concept of ``worksite'' because it also applies in the LCA context, DHS 
believes that this definition does not represent a significant change. 
Second, DHS will define ``third-party worksite'' as ``a worksite, other 
than the beneficiary's residence in the United States, that is not 
owned or leased, and not operated, by the petitioner.'' See new 8 CFR 
214.2(h)(4)(ii).\71\ This definition is similar to the ``owned or 
operated'' test commonly used in the LCA context.\72\ Again, as this 
concept should already be familiar to H-1B petitioners and USCIS 
officers, this definition should not be a significant change.
---------------------------------------------------------------------------

    \70\ See 20 CFR 655.715 (definition of ``place of employment'').
    \71\ While the definition of ``third-party worksite'' will 
exclude the beneficiary's U.S. residence, employment of the 
beneficiary from home must still be in accordance with all 
applicable laws.
    \72\ See 20 CFR 655.734(a)(1)(ii)(A) (the petitioner's 
obligation requires proper notice at each place of employment 
``whether such place of employment is owned or operated by the 
employer or by some other person or entity'').
---------------------------------------------------------------------------

    The newly added definitions are helpful because the terms 
``worksite'' and ``third-party worksite'' are used elsewhere in the 
amended regulations. As explained below, the new employer-employee 
relationship definition specifically refers to the beneficiary's 
worksite as a relevant factor in determining whether such relationship 
exists (e.g., ``where the supervision is not at the petitioner's 
worksite, how the petitioner maintains such supervision,'' see new 8 
CFR 214.2(h)(4)(ii)). Further, a 1-year maximum validity period will 
apply whenever the beneficiary will be working at a third-party 
worksite. See new 8 CFR 214.2(h)(9)(iii)(A)(1). Finally, the new site 
visit provisions will clarify that inspections may include any third-
party worksites, as applicable. See new 8 CFR 214.2(h)(4)(i)(B)(7).

C. Clarifying the Definition of ``United States Employer''

    Currently, the term ``United States employer'' is defined at 8 CFR 
214.2(h)(4)(ii) as ``a person, firm, corporation, contractor, or other 
association, or organization in the United States'' which, among other 
things, ``[e]ngages a person to work within the United States'' and 
``[h]as an employer-employee relationship with respect to employees 
under this part, as indicated by the fact that it may hire, pay, fire, 
supervise, or otherwise control the work of any such employee.'' 
Through this rule, DHS is changing this definition by: (1) Striking the 
word ``contractor'' from the general definition of ``United States 
employer''; (2) inserting the word ``company'' in that general 
definition; (2) expanding upon the existing requirement to engage the 
beneficiary to work within the United

[[Page 63929]]

States; and (3) expanding upon the employer-employee relationship and 
the factors used to determine if a valid ``employer-employee 
relationship'' between the petitioner and the beneficiary exists or 
will exist. See new 8 CFR 214.2(h)(4)(ii).
    DHS believes these revisions are necessary to clarify the 
requirements to qualify as an employer for purpose of the H-1B 
classification. As previously discussed, the current regulation at 8 
CFR 214.2(h)(4)(ii) defines ``United States employer'' as an entity 
that has an ``employer-employee relationship'' with an ``employee.'' 
But these terms are not adequately defined. Section 101(a)(15)(H)(i)(b) 
of the INA, 8 U.S.C. 1101(a)(15)(H)(i)(b), defines an H-1B nonimmigrant 
as a worker coming temporarily to the United States to perform services 
in a specialty occupation, and for whom the intending ``employer'' has 
filed a labor condition application. Section 214(c)(1) of the INA, 8 
U.S.C. 1184(c)(1), states in relevant part that the question of 
importing any alien as an H-1B nonimmigrant shall be determined after 
consultation with appropriate agencies of the Government, upon petition 
of the importing employer. Congress continued using the term 
``employer'' and ``employment'' in subsequent amendments, but without 
specifically defining those terms. See, e.g., section 214(n) of the 
INA, 8 U.S.C. 1184(n), as amended by the American Competitiveness in 
the Twenty-first Century Act of 2000 (AC21), Public Law 106-313, 114 
Stat. 1251 (authorizing the H-1B nonimmigrant to accept new 
``employment'' upon the filing of an H-1B petition by the ``prospective 
employer''). DHS believes the revisions in this rule are necessary to 
clarify and strengthen the requirements to qualify as a United States 
employer for the H-1B program.
1. Replacing ``contractor'' With ``company''
    First, striking ``contractor'' will avoid potential confusion as 
the term ``contractor'' in the definition is misleading. The inclusion 
of ``contractors'' in the regulatory language could be read to suggest 
that contractors should generally qualify under the definition of a 
``United States employer.'' While a contractor is certainly not 
excluded from qualifying as a ``United States employer'' for purposes 
of an H-1B petition, the contractor, like any petitioner, must 
establish the requisite ``employer-employee relationship'' with the H-
1B beneficiary. This revision will also update the definition to 
include reference to ``company,'' as that term is commonly used to 
describe various types of business entities, such as limited liability 
companies.
    DHS acknowledges that third-party arrangements involving one or 
more contractors may be a legitimate business model.\73\ However, these 
types of business arrangements generally make it more difficult to 
assess whether the petitioner and the beneficiary have or will have the 
requisite employer-employee relationship. Typically, these types of 
business arrangements require the beneficiary to be placed at one or 
more third-party worksites, which are not owned or leased and not 
operated, by the petitioner. This placement, in itself, potentially 
dilutes the petitioner's control over the beneficiary. The difficulty 
of assessing control is increased in situations where there are one or 
more intermediary contractors (often referred to as ``vendors'') \74\ 
involved in the contractual chain. Overall, the more parties there are 
in the contractual chain, the more likely those other parties exert 
control over the beneficiary's work, and more importantly, potentially 
limit the amount of control, if any, that the petitioner would have 
over the beneficiary's employment. As a result, the relationship 
between the petitioner and the beneficiary becomes more attenuated.
---------------------------------------------------------------------------

    \73\ Karen Jensen, Barriers to H-1B Visa Sponsorship in the IT 
Consulting Industry: The Economic Incentive to Alter H-1B Policy, 35 
Fordham International Law Journal Volume 1027, 1036 (2017).
    \74\ The ``vendor'' concept is frequently referenced in H-1B 
petitions that involve the information technology (IT) industry. 
While the term is not precisely defined, petitions commonly refer to 
``primary vendors,'' who have an established or preferred 
relationship with a client, or ``implementing vendors,'' who bid on 
an IT project with a client and then implement the contract using 
their own staff. Primary or implementing vendors may turn to 
secondary vendors to fill staffing needs on individual projects. 
See, e.g., Acclaim Systems, Inc. v. Infosys, No. Civ.A. 13-7336, 
2016 WL 974136 at *2 (E.D. Pa. Mar. 11, 2016). As a result, the 
ultimate client project may be staffed by a team of H-1B 
beneficiaries who were petitioned for by different, unrelated 
employers.
---------------------------------------------------------------------------

    By removing the word ``contractor'', DHS seeks to avoid any 
confusion or mistaken belief that contractors should generally qualify 
as ``United States employers.'' Petitioners that are contractors are 
reminded of their burden, similar to all other H-1B petitioners, 
whether they are a person, corporation, or company, to establish the 
employer-employee relationship for each H-1B petition they file.
    Nevertheless, it is important to note that the deletion of the term 
``contractor'' from the regulatory definition does not mean that a 
contractor never would qualify as a ``United States employer'' for the 
purpose of filing an H-1B petition. A contractor may be a person, firm, 
company, corporation, or other association or organization, and the 
contractor (whatever the form) still may qualify as a U.S. employer of 
the H-1B beneficiary if the contractor demonstrates the requisite 
employer-employee relationship with the beneficiary.\75\ Because this 
change will not impact a contractor's continued ability to establish a 
valid employer-employee relationship on a case-by-case basis, DHS does 
not believe that removing the term ``contractor'' will have a 
substantive impact on the eligibility determination. The change is 
simply intended to remove a term that is typically associated with work 
arrangements that typically do not involve an employer and employee.
---------------------------------------------------------------------------

    \75\ DHS recognizes that this change will result in a definition 
of ``United States employer'' that is slightly different from DOL's 
definition of ``employer.'' 20 CFR 655.715 states in pertinent part: 
``Employer means a person, firm, corporation, contractor, or other 
association or organization in the United States that has an 
employment relationship with H-1B . . . nonimmigrants and/or U.S. 
worker(s).'' However, DHS does not believe this disparity would be 
significant, particularly because the DOL definition still requires 
the contractor to have an employment relationship with the H-1B 
nonimmigrant based on the common law. Furthermore, DHS definitions 
are separate from, and generally serve different purposes than, DOL 
definitions. While DOL may deem the person or entity filing an H-1B 
petition to be the employer for purpose of enforcing wage and other 
obligations, DHS must determine whether the petitioner qualifies as 
the intending or importing United States employer. See, e.g., 20 CFR 
655.705 (DOL administers the LCA process and most enforcement 
provisions).
---------------------------------------------------------------------------

2. Engaging the Beneficiary To Work
    As currently written in 8 CFR 214.2(h)(4)(ii), the requirement for 
a petitioner to ``[engage] a person to work within the United States'' 
has limited practical value. It does not specify that the petitioner 
should engage the beneficiary (rather than ``a person''). And it does 
not qualify the work to be performed within the United States. By 
stating in new 8 CFR 214.2(h)(4)(ii) that an employer must ``[engage] 
the beneficiary to work within the United States, and ha[ve] a bona 
fide, non-speculative job offer for the beneficiary,'' DHS seeks to 
provide more meaningful requirements for the definition of ``United 
States employer,'' consistent with statutory references to the 
intending or importing employer petitioning for an alien to perform 
services in a specialty occupation.\76\
---------------------------------------------------------------------------

    \76\ Consistent with the existing rule, this language does not 
and will not prohibit H-1B nonimmigrants from travelling 
internationally.

---------------------------------------------------------------------------

[[Page 63930]]

    New 8 CFR 214.2(h)(4)(ii) will make it clear that a petitioner must 
have non-speculative employment for the beneficiary at the time of 
filing.\77\ At the time of filing, the petitioner must establish that a 
bona fide job offer exists and that actual work will be available as of 
the requested start date.\78\ If the petitioner does not have any work 
available, then it cannot reasonably engage the beneficiary ``to work 
within the United States'' in order to qualify as a United States 
employer at the time of filing. See 8 CFR 214.2(h)(4)(ii).
---------------------------------------------------------------------------

    \77\ Cf. 8 CFR 103.2(b)(1) (eligibility must be established at 
the time of filing).
    \78\ The requested start date as indicated on the H-1B petition 
in this context may differ from when an H-1B nonimmigrant is 
considered to ``enter into employment'' for purposes of receiving 
required pay under DOL regulations. See 20 CFR 655.731(c)(6), 
section 212(n) of the INA. While DOL regulations provide for a 
limited period of time for the employer to place the beneficiary on 
the payroll, that is a separate rule pertaining to the employer's 
wage obligation under section 212(n) of the INA and does not pertain 
to the petitioner's obligation under section 214 of the INA and new 
8 CFR 214.2(h)(4)(ii) to establish that work is available for the 
beneficiary to perform as of the start date requested by the 
petitioner. The requirement in new 8 CFR 214.2(h)(4)(ii) will be met 
if work is available for the beneficiary as of the start date of 
intended employment requested on the H-1B petition.
---------------------------------------------------------------------------

    The agency long held and communicated the view that speculative 
employment is not permitted in the H-1B program. For example, a 1998 
proposed rule documented this position, stating that historically, 
USCIS (or the Service, as it was called at the time) has not granted H-
1B classification on the basis of speculative, or undetermined, 
prospective employment.\79\ This proposed rule explained that the H-1B 
classification was not intended as a vehicle for an alien to engage in 
a job search within the United States, or for employers to bring in 
temporary foreign workers to meet possible workforce needs arising from 
potential business expansions or the expectation of potential new 
customers or contracts.\80\ Speculative employment undermines the 
integrity and a key goal of the H-1B program, which is to help U.S. 
employers obtain the skilled workers they need to meet their business 
needs, subject to annual numerical limitations, while protecting the 
wages and working conditions of U.S. workers. Further, USCIS cannot 
reasonably ascertain whether the beneficiary will be employed in a 
specialty occupation if the employment is speculative.
---------------------------------------------------------------------------

    \79\ Petitioning Requirements for the H Nonimmigrant 
Classification, 63 FR 30419, 30419-20 (proposed June 4, 1998) (to be 
codified at 8 CFR part 214).
    \80\ Id. See also GAO/HEHS-00-157, supra at 10 (``The petition 
is required to contain the necessary information to show that a bona 
fide job exists . . . .''); Serenity Info Tech v. Cuccinelli, 2020 
WL 2544534, at *13 (N.D. Ga. 2020) (``Demonstrating that the 
purported employment is actually likely to exist for the beneficiary 
is a basic application requirement . . . .'').
---------------------------------------------------------------------------

    Note, however, that establishing non-speculative employment does 
not amount to demonstrating non-speculative daily work assignments 
through the duration of the requested validity period. DHS is not by 
this rule requiring employers to establish non-speculative and specific 
assignments for each and every day of the proposed period of 
employment.\81\ Again, under new 8 CFR 214.2(h)(4)(ii), a petitioner 
must demonstrate, at the time of filing, availability of actual work as 
of the requested start date.
---------------------------------------------------------------------------

    \81\ See ITServe Alliance, Inc. v. Cissna, 443 F.Supp.3d 14, 19 
(D.D.C. Mar. 10, 2020) (the U.S. District Court for the District of 
Columbia, in considering a requirement that an H-1B petitioner 
establish non-speculative assignments for the entire time requested 
in a petition, explained that ``very few, if any, U.S. employers 
would be able to identify and prove daily assignments for the future 
three years for professionals in a specialty occupation'' and that 
``[n]othing in [the definition of `specialty occupation'] requires 
specific and non-speculative qualifying day-to-day assignments for 
the entire time requested in the petition.''); Serenity, 2020 WL 
2544534, at *13 (citing ITServe). Speculative employment should not 
be confused with employment that is contingent on petition approval, 
visa issuance (when applicable), and the grant of H-1B status. DHS 
recognizes that employment may be actual, but contingent on petition 
approval and the alien being granted H-1B status.
---------------------------------------------------------------------------

3. Clarifying the ``Employer-Employee Relationship''
    Third, DHS will remove the phrase ``as indicated by the fact that 
it may hire, pay, fire, supervise, or otherwise control the work of any 
such employee'' from the current definition of ``United States 
employer,'' and replace that phrase with a separate, more extensive 
definition of ``employer-employee relationship'' based on USCIS' 
interpretation of existing common law. See new 8 CFR 214.2(h)(4)(ii). 
These revisions will clarify the test for establishing the requisite 
``employer-employee relationship'' and eliminate the ambiguity and 
confusion created by the existing regulation.
    The term ``employer-employee relationship'' at 8 CFR 
214.2(h)(4)(ii) is not adequately defined. The phrase in that provision 
which reads, ``as indicated by the fact that it may hire, pay, fire, 
supervise, or otherwise control the work of any such employee,'' does 
not give sufficient guidance. For example, it is unclear whether the 
five factors are entirely disjunctive, such that the test is met if any 
one factor is met, or whether the last factor (``or otherwise 
control'') is merely disjunctive of the fourth factor 
(``supervision''), such that the first three factors (``hire, pay, 
fire'') must always be met.\82\ Although some courts have viewed this 
phrase as establishing that any single listed factor, such as pay, in 
and of itself is sufficient to establish the requisite control,\83\ DHS 
agrees with the Fifth Circuit's statement in Defensor that the 
conjunctive interpretation, where ``hire, pay, fire, supervise'' are 
read together ``as one prong of the test and `otherwise control the 
work' is . . . viewed as an independent prong of the test accords 
better with the commonsense notion of employer.'' \84\ DHS firmly 
disagrees with the disjunctive interpretation because it leads to the 
illogical result of virtually any petitioner satisfying the definition, 
because H-1B petitioners are generally required to submit an LCA that 
includes an attestation that the petitioner will pay the beneficiary at 
least the required wage. If the regulation is read to set forth a five-
factor disjunctive test, then arguably all petitioners who submit an 
LCA would satisfy the pay factor, such that reference to other factors 
would be superfluous in any case where the petitioner is required to 
submit an LCA.
---------------------------------------------------------------------------

    \82\ See, e.g., Defensor, 201 F.3d at 388 (``Under Sec.  
214.2(h)(4)(ii)(2), an employer is someone who `[h]as an employer-
employee relationship with respect to the employees . . . , as 
indicated by the fact that it may hire, pay, fire, supervise, or 
otherwise control the work of any such employee.' It is unclear 
whether Vintage's ability to simply `hire' or `pay' an employee is 
sufficient standing alone to grant Vintage employer status under 
this definition. Another interpretation would be that `hire, pay, 
fire, supervise' are to be read conjunctively as one prong of the 
test and `otherwise control the work' is to be viewed as an 
independent prong of the test. Under the latter interpretation, 
merely being able to `hire' or `pay' an employee, by itself, would 
be insufficient to grant employer status to an entity that does not 
also supervise or actually control the employee's work . . . . [T]he 
second interpretation accords better with the commonsense notion of 
employer . . .'')
    \83\ See, e.g., ITServe, 2020 WL 1150186, at *17 (``The use of 
`or' distinctly informs regulated employers that a single listed 
factor can establish the requisite `control' to demonstrate and 
employer-employee relationship. This formulation makes evidence that 
there are multiple ways to demonstrate employer control, that is, by 
hiring or paying or firing or supervising or `otherwise' showing 
control.'').
    \84\ See Defensor, 201 F.3d at 388 (emphasis added).
---------------------------------------------------------------------------

    In the absence of specific, clear, and relevant statutory or 
regulatory definitions, USCIS has interpreted these terms consistent 
with its understanding of current common law. In 2010, USCIS provided 
clarifying policy guidance regarding the employer-employee regulation 
and factors based on the common law that USCIS officers should consider 
when adjudicating H-1B

[[Page 63931]]

petitions.\85\ While the listed factors were based on the agency's 
interpretation of the common law, they were specifically tailored to 
the H-1B program based on the agency's expertise and experience dealing 
with challenges posed particularly by cases where the beneficiary was 
placed at a third-party worksite.\86\ This policy guidance remained in 
effect for more than a decade and was only recently rescinded in 
response to a recent court decision finding the policy guidance, as 
applied, to be a new substantive rule that required rulemaking in 
accordance with the Administrative Procedure Act (APA), 5 U.S.C. 551 et 
seq.\87\ This interim final rule will restore, with additional 
clarification, the policy that existed since 2010 and only recently was 
rescinded due to a judicial ruling on procedural grounds.
---------------------------------------------------------------------------

    \85\ USCIS Policy Memorandum HQ 70/6.2.8, Determining Employer-
Employee Relationship for Adjudication of H-1B Petitions, Including 
Third-Party Site Placements (Jan. 8, 2010). This memorandum was 
superseded and archived on June 17, 2020. Therefore, it can be found 
in the Supporting Documents accompanying this interim final rule.
    \86\ For example, the 2010 memorandum's listed factor of ``does 
the petitioner supervise the beneficiary and is such supervision 
off-site or on-site'' was an elaboration of the common-law factor of 
``the location of the work,'' Darden, 503 U.S. at 323-24, but was 
tailored to issues commonly presented by H-1B cases where the 
petitioner claimed to supervise the beneficiary, but was not 
physically located at the same worksite as the beneficiary and end-
client.
    \87\ See, e.g., ITServe, 2010 WL 1150186, at *2 (``The current 
CIS interpretation of the employer-employee relationship requirement 
is inconsistent with its regulation, was announced and applied 
without rulemaking, and cannot be enforced.'').
---------------------------------------------------------------------------

    USCIS interprets the term ``employer-employee relationship'' to be 
the ``conventional master-servant relationship as understood by common-
law agency doctrine.'' \88\ That doctrine, as explained by the Supreme 
Court, requires an evaluation of the hiring party's right to control 
the manner and means by which the product is accomplished ``among the 
other factors'' relevant to the employer-employee relationship.\89\ As 
the common law test contains ``no shorthand formula or magic phrase 
that can be applied to find the answer, . . . all of the incidents of 
the relationship must be assessed and weighed with no one factor being 
decisive.'' \90\
---------------------------------------------------------------------------

    \88\ See Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 
U.S. 440, 445 (2003); Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 
318, 323 (1992) (quoting Cmty. for Creative Non-Violence v. Reid, 
490 U.S. 730 (1989)).
    \89\ Darden, 503 U.S. at 323-24.
    \90\ Id. at 324 (quoting NLRB v. United Ins. Co. of Am., 390 
U.S. 254, 258 (1968)); see also Clackamas, 538 U.S. at 445.
---------------------------------------------------------------------------

    Foremost, in addition to restoring through this rule the 
longstanding policy that USCIS has applied until recently but had 
rescinded in order to reduce the potential for additional APA-based 
litigation, the revised regulation will make clear that USCIS will 
assess and weigh all relevant aspects of the relationship. See new 8 
CFR 214.2(h)(4)(ii). DHS does not believe that any one factor should be 
decisive. To do otherwise could be construed as contrary to the Supreme 
Court's declaration in Nationwide Mutual Ins. Co. v. Darden that ``all 
of the incidents of the relationship must be assessed and weighed with 
no one factor being decisive.'' \91\
---------------------------------------------------------------------------

    \91\ 503 U.S. at 324.
---------------------------------------------------------------------------

    Paragraph (1) of the revised ``employer-employee'' definition lists 
non-exhaustive factors to be considered in the totality of the 
circumstances in cases where the H-1B beneficiary does not possess an 
ownership interest in the petitioning organization or entity. The 
revised regulation lists the following factors: (i) Whether the 
petitioner supervises the beneficiary and, if so, where such 
supervision takes place; (ii) where the supervision is not at the 
petitioner's worksite, how the petitioner maintains such supervision; 
(iii) whether the petitioner has the right to control the work of the 
beneficiary on a day-to-day basis and to assign projects; (iv) whether 
the petitioner provides the tools or instrumentalities needed for the 
beneficiary to perform the duties of employment; (v) whether the 
petitioner hires, pays, and has the ability to fire the beneficiary; 
(vi) whether the petitioner evaluates the work-product of the 
beneficiary; (vii) whether the petitioner claims the beneficiary as an 
employee for tax purposes; (viii) whether the petitioner provides the 
beneficiary any type of employee benefits; (ix) whether the beneficiary 
uses proprietary information of the petitioner in order to perform the 
duties of employment; (x) whether the beneficiary produces an end-
product that is directly linked to the petitioner's line of business; 
and (xi) whether the petitioner has the ability to control the manner 
and means in which the work product of the beneficiary is accomplished. 
By listing these factors out, DHS is making clear that no single factor 
is dispositive and that all factors must be taken into consideration to 
the extent applicable and appropriate to the facts of the specific 
case.
    While the new regulation will clarify the employer-employee 
relationship test, it is largely consistent with past USCIS policy and 
practice and the standard familiar to USCIS officers and H-1B 
petitioners.\92\ Specifically and as mentioned earlier, in 2010, USCIS 
issued a policy memorandum, ``Determining Employer-Employee 
Relationship for Adjudication of H-1B Petitions, Including Third-Party 
Site Placements'' \93\ which explained the agency's approach of relying 
on common law doctrine, as articulated by the Supreme Court, to 
interpret the existing regulatory provision. This memorandum elaborated 
on a number of factors that USCIS considers particularly relevant in 
the H-1B context, based on its interpretation of the common law and the 
facts typically present in H-1B adjudications based on USCIS' 
experience. New 8 CFR 214.2(h)(4)(ii) incorporates the same factors 
listed in this memorandum with two exceptions, neither of which would 
have a significant impact on the adjudication of H-1B petitions. More 
specifically, the 2010 memorandum stated the third factor as, ``Does 
the petitioner have the right to control the beneficiary on a day-to-
day basis if such control is required?'' In clarifying the factors in 
this regulation, DHS is not including the misleading phrase, ``if such 
control is required,'' that was previously included in the 2010 USCIS 
policy guidance because this phrase implies that control is not 
necessarily required. DHS believes that the petitioner should be 
required to demonstrate control, which includes, but is not limited to, 
the inquiry of whether the petitioner has the right to control day-to-
day.
---------------------------------------------------------------------------

    \92\ As early as 2009, various Administrative Appeals Office 
(AAO) non-precedent decisions began relying on the common law 
doctrine, as articulated by the Supreme Court, to analyze the 
regulatory provision for employer-employee relationship at 8 CFR 
214.2(h)(4)(ii). See, e.g., (Identifying Information Redacted by 
Agency) Petition for a Nonimmigrant Worker Pursuant to Section 
101(a)(15)(H)(i)(b) of the Immigration and Nationality Act, 8 U.S.C. 
S 1101, 2009 WL 3555560, at *2-3 (applying the common law test as 
described by the Supreme Court to determine the employer-employee 
relationship); (Identifying Information Redacted by Agency) Petition 
for a Nonimmigrant Worker Pursuant to Section 101(a)(15)(H)(i)(b) of 
the Immigration and Nationality Act, 8 U.S.C. S 1101, 2009 WL 
3555481, at *2-3 (same); (Identifying Information Redacted by 
Agency) Petition for a Nonimmigrant Worker Pursuant to Section 
101(a)(15)(H)(i)(b) of the Immigration and Nationality Act, 8 U.S.C. 
S 1101, 2009 WL 4982248, at *7-8 (same).
    \93\ See supra note 85.
---------------------------------------------------------------------------

    The 2010 memorandum contained another potentially confusing or 
inaccurate statement in footnote 6 that the employer-employee 
relationship ``hinges upon the right to control.'' USCIS now believes 
that this statement places an undue emphasis on the right to control 
and that the best interpretation of existing case law is that

[[Page 63932]]

``right to control'' is just one factor in the overall common law 
analysis rather than the determinative test. Specifically, the Supreme 
---------------------------------------------------------------------------
Court in Darden stated:

    In determining whether a hired party is an employee under the 
general common law of agency, we consider the hiring party's right 
to control the manner and means by which the product is 
accomplished. Among the other factors relevant to this inquiry are 
the skill required; the source of the instrumentalities and tools; 
the location of the work; the duration of the relationship between 
the parties; whether the hiring party has the right to assign 
additional projects to the hired party; the extent of the hired 
party's discretion over when and how long to work; the method of 
payment; the hired party's role in hiring and paying assistants; 
whether the work is part of the regular business of the hiring 
party; whether the hiring party is in business; the provision of 
employee benefits; and the tax treatment of the hired party 
(emphasis added).\94\
---------------------------------------------------------------------------

    \94\ Darden, 503 U.S. at 323-24.

    While the first sentence suggests that the test is right to 
control, the second sentence suggests that right to control is one of 
many factors, rather than the test. Further, in Clackamas 
Gastroenterology Assocs., P.C. v. Wells, the Supreme Court focused on 
``the common-law element of control [a]s the principal guidepost that 
should be followed in this case,'' and proceeded to analyze ```the 
extent of control' that one may exercise over the details of the work 
of the other,'' \95\ which again suggests that the test does not hinge 
on the right to control. In Clackamas, the Supreme Court also 
emphasized that the employer-employee relationship depends on all 
incidents of the relationship, with no one factor being decisive.\96\ 
As the quoted language in these cases suggests, the employer-employee 
relationship does not hinge upon any single factor. Thus, the 2010 
memorandum's emphasis on the right to control arguably is in tension 
with these Supreme Court decisions. DHS believes that the new 
definitions in 8 CFR 214.2(h)(4)(ii), along with this explanation, will 
clarify that the right to control is not determinative and will not, in 
itself, be sufficient to demonstrate an employer-employee relationship, 
consistent with common law.
---------------------------------------------------------------------------

    \95\ Clackamas, 538 U.S. at 448.
    \96\ 538 U.S. at 451 (quoting Darden and NLRB).
---------------------------------------------------------------------------

    DHS believes that this clarification of ``right to control'' as one 
factor rather than a determinative factor is not a clear departure from 
the way USCIS has generally applied the common law test over many 
years. While the rescinded 2010 memorandum indicated that the 
determination hinges on the right to control, the analysis has always 
required an evaluation of the totality of the facts involved, 
including, in part, the degree to which the petitioner exercises actual 
control over the beneficiary's work. Some officers have placed more 
weight on the relevance of the actual control exercised, or to be 
exercised, when making the determination. For example, various 
Administrative Appeals Office (AAO) non-precedent decisions, citing the 
rule established in Darden, have stated that we ``. . . must examine 
who has actual control, not just the right to control, the 
beneficiary's work.'' \97\ Other officers may have placed less weight 
on the relevance of the actual control exercised, or to be exercised, 
and more weight on the petitioner's legal right to control the 
beneficiary's work. In 2018, USCIS provided further clarification on 
its website regarding the implementation of the 2010 policy memorandum 
interpreting the employment relationship regulatory requirement:
---------------------------------------------------------------------------

    \97\ See, e.g., Matter of K-I-S- Inc., 2019 WL 2090064, at *4 
(AAO Apr. 24, 2019) (citing Darden, 503 U.S. at 323); Matter of A- 
Inc., 2017 WL 3034820, at *6 (AAO June 29, 2017) (observing that 
``if mid-vendors or the end-client exercise actual control over his 
work on a daily basis, then we cannot find the Petitioner to be the 
Beneficiary's `employer' for H-1B purposes'' (emphasis in 
original)).

    Although the 2010 memorandum states that the ``employer-employee 
relationship hinges on the right to control'' the beneficiary's 
employment, the factors that are generally taken into consideration 
when assessing the relationship primarily focus on who actually 
takes/will take the action rather than the right to take certain 
action. For example, when assessing whether the petitioner provides 
or will provide the tools or instrumentalities for the beneficiary, 
the primary focus is not whether the petitioner has the right to 
provide such tools or instrumentalities, but whether the petitioner 
actually provides or will provide such items.\98\
---------------------------------------------------------------------------

    \98\ See https://www.uscis.gov/news/public-releases-topic/business-immigration/questions-answers-memoranda-establishing-employer-employee-relationship-h-1b-petitions.

    Accordingly, as reflected on the USCIS website in the 2018 
clarification, whether the petitioner actually controls the 
beneficiary's employment has been an important factor in the overall 
analysis.
    Therefore, DHS believes that this provision will not represent a 
clear change in longstanding past practice.\99\ The revised provision, 
however, will clarify that the employer-employee relationship 
determination will be based on the totality of the circumstances. USCIS 
will analyze the applicability of the relevant factors listed in the 
definition based on the specific evidence provided by the petitioner 
when making the employment relationship determination, consistent with 
its historical past practice. USCIS will assess and weigh each factor 
as it exists or will exist ``in the reality of the actual working 
relationship.'' \100\ Thus, even though the ``right to control the work 
of the beneficiary'' is listed as a relevant factor, it is one among 
many factors that will be weighed. USCIS will also consider other 
factors, as noted above, including the petitioner's ability to control 
the manner and means in which the work product of the beneficiary is 
accomplished. Similarly, when assessing whether the petitioner provides 
or will provide the tools or instrumentalities for the beneficiary, 
USCIS believes that the primary focus should not be on whether the 
petitioner has the right to provide such tools or instrumentalities, 
but whether the petitioner actually provides or will provide such 
items.\101\ While another person or entity may have the right to 
provide tools or instrumentalities to the worker, the relevant point of 
focus is on who will actually provide the tools or instrumentalities. 
For example, if the tools or instrumentalities will be provided by the 
H-1B beneficiary or end-client, that fact may weigh against a finding 
that the petitioner will be the employer. If, however, the petitioner 
will provide the tools and instrumentalities for the beneficiary to 
perform the work, that fact would weigh in favor of a finding that the 
petitioner will be the employer. Overall, the petitioner will be 
required to demonstrate that it can actually take the claimed actions 
when it comes to these factors. It will not be enough for a petitioner 
to simply show that it retains the right to control.\102\
---------------------------------------------------------------------------

    \99\ While USCIS rescinded the 2010 and 2018 policy guidance on 
June 17, 2020, and has abstained from applying the common law 
analysis in its adjudication of employer-employee relationship, this 
is merely a temporary change to allow for rulemaking to occur and 
avoid continued litigation of this issue. See USCIS Policy 
Memorandum PM-602-0114, Rescission of Policy Memoranda (June 17, 
2020), available at https://www.uscis.gov/sites/default/files/USCIS/Laws/Memoranda/2020/PM-602-0114_ITServeMemo.pdf. This interim 
practice, however, has only been for a short period of time and 
certainly not long enough to create any reliance interests based on 
this interim practice.
    \100\ NLRB, 390 U.S. at 259; see Darden, 503 U.S. at 323-24.
    \101\ See Darden, 503 U.S. at 323-324 (listing ``the source of 
the instrumentalities and tools,'' as opposed to the right to 
provide such instrumentalities and tools).
    \102\ DHS believes that this new regulation is not necessarily 
inconsistent with the DOL definition of ``Employed, employed by the 
employer, or employment relationship'' at 20 CFR 655.715. Although 
the DOL regulation states that ``the key determinant is the putative 
employer's right to control the means and manner in which the work 
is performed,'' it also recognizes that ``[A]ll of the incidents of 
the relationship must be assessed and weighed with no one factor 
being decisive.'' Further, in promulgating the regulation, DOL 
acknowledged that a list of factors based on the common law provided 
a ``useful framework'' for analyzing an employment relationship. 
Labor Condition Applications and Requirements for Employers Using 
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion 
Models; Labor Certification Process for Permanent Employment of 
Aliens in the United States, 65 FR 80110, 80139 (Dec. 20, 2000). To 
the extent that there are inconsistencies, DHS believes the common 
law supports the proposition that right to control alone is not 
sufficient to establish an employer-employee relationship, and that 
all incidents of the relationship must be considered in making the 
determination.

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[[Page 63933]]

    Paragraph (2) of the revised provision lists additional factors 
that would be considered in cases where the H-1B beneficiary possesses 
an ownership interest in the petitioning organization or entity. These 
factors include: (i) Whether the petitioning entity can hire or fire 
the beneficiary or set the rules and parameters of the beneficiary's 
work, (ii) whether and, if so, to what extent the petitioner supervises 
the beneficiary's work, (iii) whether the beneficiary reports to 
someone higher in the petitioning entity, (iv) whether and, if so, to 
what extent the beneficiary is able to influence the petitioning 
entity, (v) whether the parties intended that the beneficiary be an 
employee, as expressed in written agreements or contracts, and (vi) 
whether the beneficiary shares in the profits, losses, and liabilities 
of the organization or entity. All of these are additional factors, 
meaning that they would supplement, not replace, the other factors 
listed in paragraph (1) of the revised definition. These additional 
factors mirror the Supreme Court's analysis in Clackamas, consistent 
with DHS's position that the term ``employer,'' undefined in the 
statute, should be interpreted consistent with the common law. These 
additional factors, as provided in Clackamas, are also familiar to 
USCIS officers and H-1B petitioners given the specific references to 
Clackamas in the 2010 policy guidance that was in effect until June 
2020.\103\
---------------------------------------------------------------------------

    \103\ 538 U.S. at 448-449.
---------------------------------------------------------------------------

    DHS recognizes that, as a general principle of law, a corporation 
is a separate legal entity from its shareholders.\104\ Nevertheless, 
DHS may look beyond the corporate entity to assess whether a valid 
employment relationship exists between the petitioner and the 
beneficiary such that the petitioner, rather than the beneficiary, 
truly qualifies as an ``employer'' pursuant to the statute. Absent 
unusual factual circumstances, a beneficiary who is the sole or 
majority shareholder of the petitioning entity, does not report to 
anyone higher within the organization, is not subject to the decisions 
made by a separate board of directors, and has veto power over 
decisions made by others on behalf of the organization, will likely not 
be considered an ``employee'' of that entity for H-1B purposes. On the 
other hand, if a beneficiary is bound by decisions (including the 
decision to terminate the beneficiary's position) made by a separate 
board of directors or similar managing authority, and does not have 
veto power (including negative veto power) over those decisions, then 
the mere fact of his or her ownership interest will not necessarily 
preclude the beneficiary from being considered an employee.
---------------------------------------------------------------------------

    \104\ See Matter of Aphrodite Invs. Ltd., 17 I&N Dec. 530 
(Comm'r 1980); Matter of Tessel, Inc., 17 I&N Dec. 631 (Act. Assoc. 
Comm'r 1980).
---------------------------------------------------------------------------

    USCIS considered alternatives for defining the term ``employer[,]'' 
including revising the current regulatory definition to delete and 
replace the disjunctive ``or'' with ``and[,]'' or listing the common 
law factors verbatim from existing case law. USCIS declined to simply 
delete and replace the disjunctive ``or[,]'' and otherwise retain the 
current regulation, as it fails to provide the same level of 
clarification and guidance as the new definition listing factors 
relevant to employer-employee relationship determinations, including 
those where the beneficiary has an ownership interest in the 
petitioner. USCIS also declined simply to cite to the existing case law 
or list the factors verbatim from the existing case law. USCIS believes 
that its officers and H-1B petitioners are most familiar with the 
general factors as articulated in the rescinded 2010 policy memorandum. 
USCIS seeks to restore the policy that has guided H-1B adjudications of 
this issue for more than a decade, with certain changes for added 
clarity, and believes that the definition in this interim final rule 
best accomplishes that goal with the least amount of potential 
disruption for USCIS officers and H-1B petitioners. USCIS rescinded the 
2010 policy memorandum because of a recent court decision finding the 
memorandum, as applied, imposed a substantive rule that departs from 
the existing regulation, thereby failing to comply with the APA's 
rulemaking requirements. This interim final rule will restore the 
policy as articulated in the 2010 memorandum, with additional 
clarifications, in compliance with the APA.
    DHS recognizes that some petitioners may have developed a reliance 
interest based on H-1B adjudications subsequent to the June 2020 
rescission of the 2010 policy memorandum. DHS believes, however, that 
the reliance interest some petitioners may have based on recent 
adjudications does not outweigh the importance of restoring guidance, 
with additional clarification, that has existed since 2010 and on which 
USCIS officers and H-1B petitioners have relied to assess eligibility 
for H-1B classification. The disjunctive wording of the current 
regulation is confusing for USCIS officers and H-1B petitioners alike, 
and DHS believes that any reliance interest that may have developed in 
the short time since June 2020 should yield to restoring guidance that 
is more detailed and less ambiguous for all involved in the H-1B 
program.

D. Corroborating Evidence of Work in a Specialty Occupation

    Pursuant to section 101(a)(15)(H)(i)(b) of the INA, 8 U.S.C. 
1101(a)(15)(H)(i)(b), an H-1B nonimmigrant must be coming temporarily 
to the United States to perform services in a specialty occupation. 
USCIS interprets this statutory provision to require that the 
petitioner must actually have work in the specialty occupation listed 
in the H-1B petition available for the beneficiary as of the start date 
of intended employment. Therefore, DHS is making it clear at new 8 CFR 
214.2(h)(4)(iv)(C) that the petitioner must establish, at the time of 
filing, that it has actual work in a specialty occupation available for 
the beneficiary as of the start date of the validity period as 
requested on the petition. New 8 CFR 214.2(h)(4)(iv)(C) complements the 
revised definition of ``United States employer'' at new 8 CFR 
214.2(h)(4)(ii) requiring evidence of a bona fide, non-speculative job 
offer. Read together, both new provisions reinforce that speculative 
employment is not permitted in the H-1B program. As stated earlier, 
USCIS cannot reasonably ascertain whether the beneficiary will be 
employed in a specialty occupation if the employment is 
speculative.\105\ USCIS must assess the actual services to be performed 
to determine whether the alien will be performing services in a 
specialty occupation. That determination necessarily requires review 
and analysis

[[Page 63934]]

of the actual work to be performed and cannot be based on speculation.
---------------------------------------------------------------------------

    \105\ Again, speculative employment should not be confused with 
employment that is contingent on petition approval, visa issuance 
(when applicable), and the grant of H-1B status. DHS recognizes that 
employment may be actual, but contingent on petition approval and 
the alien being granted H-1B status.
---------------------------------------------------------------------------

    Importantly, new 8 CFR 214.2(h)(4)(iv)(C) clarifies the types of 
corroborating evidence petitioners must submit in third-party placement 
cases. Based on USCIS' program experience, petitioners who regularly 
place their workers at third-party worksites often submit 
uncorroborated statements describing the role the H-1B beneficiary will 
perform at the third-party worksite. Such statements, without 
additional evidence, are generally insufficient to establish by a 
preponderance of the evidence that the H-1B beneficiary will actually 
perform work in a specialty occupation. Moreover, such uncorroborated 
statements are generally insufficient to establish that the petitioner 
will have and maintain an employer-employee relationship while the 
beneficiary works at the third-party worksite.\106\ Therefore, where a 
beneficiary will be placed at one or more third-party worksites, DHS 
will require the petitioner to submit evidence such as contracts, work 
orders, or other similar evidence (such as a detailed letter from an 
authorized official at the third-party worksite) to establish that the 
beneficiary will perform services in a specialty occupation at the 
third-party worksite(s), and that the petitioner will have an employer-
employee relationship with the beneficiary. See new 8 CFR 
214.2(h)(4)(iv)(C).
---------------------------------------------------------------------------

    \106\ See Part II.A. above, for descriptions of program 
violations and other issues arising with third-party placements. See 
also 144 Cong. Rec. E2323-01, E2323, 1998 WL 785735 (stating ``[t]he 
employers most prone to abusing the H-1B program are called `job 
contractors' or `job shops'. Much, or all, of their workforces are 
composed of foreign workers on H-1B visas. Many of these companies 
make no pretense of looking for American workers and are in business 
to contract their H-1Bs out to other companies. The companies to 
which the H-1Bs are contracted benefit in that the wages paid to the 
foreign workers are often well below what comparable Americans would 
receive. Also, the companies don't have to shoulder the obligations 
of being the legally recognized employers-the job contractors/shops 
remain the official employers'') (statement of Rep. Lamar Smith, 
then chairman of the Subcommittee on Immigration and Claims).
---------------------------------------------------------------------------

    If submitting contracts, the petitioner should include both the 
master services agreement and the accompanying work order(s), 
statement(s) of work, or other similar legally-binding agreements under 
different titles. These contracts should be signed by an authorized 
official of the third-party entity that will use the beneficiary's 
services. In general, the master services agreement (also commonly 
called a supplier agreement) sets out the essential contract terms and 
provides the basic framework for the overall relationship between the 
parties.\107\ The work order or statement of work provides more 
specific information, such as the scope of services to be performed, 
details about the services, and the allocation of responsibilities 
among the parties.\108\ The petitioner may also submit a detailed 
letter signed by an authorized official of the ultimate end-client 
company or companies where the beneficiary will actually work. Other 
types of corroborating evidence may include technical documentation, 
milestone tables, marketing analyses, cost-benefit analyses, brochures, 
and funding documents, insofar as this evidence corroborates that the 
petitioner will have an employer-employee relationship with the 
beneficiary, and that the beneficiary will perform services in a 
specialty occupation at the third-party worksite(s). Overall, the 
totality of the evidence submitted by the petitioner must be detailed 
enough to provide a sufficiently comprehensive view of the work 
available and substantiate, by a preponderance of the evidence, the 
terms and conditions under which the work will be performed. 
Documentation that merely sets forth the general obligations of the 
parties to the agreement, or which do not provide specific information 
pertaining to the actual work to be performed, would generally be 
insufficient.\109\
---------------------------------------------------------------------------

    \107\ See Sec.  49:35. Contract scope--Master services 
agreement, 3 Successful Partnering Between Inside and Outside 
Counsel Sec.  49:35.
    \108\ See Sec.  49:37. Contract scope--Statements of work, 3 
Successful Partnering Between Inside and Outside Counsel Sec.  
49:37.
    \109\ When requested evidence may contain trade secrets, for 
example, the petitioner may redact or sanitize the relevant sections 
to provide a document that is still sufficiently detailed and 
comprehensive, yet does not reveal sensitive commercial information. 
Although a petitioner may always refuse to submit confidential 
commercial information if deemed too sensitive, the petitioner must 
also satisfy the burden of proof. Cf. Matter of Marques, 16 I&N Dec. 
314, 316 (BIA 1977) (``The respondent had every right to assert his 
claim under the Fifth Amendment. However, in so doing he runs the 
risk that he may fail to carry his burden of persuasion with respect 
to his application for discretionary relief.'').
---------------------------------------------------------------------------

    Further, in cases where the beneficiary is staffed to a third-
party, the submitted corroborating documents should generally 
demonstrate the requirements of the position as imposed by the third-
party entity (commonly referred to as the ``end-client'') that will use 
the beneficiary's services. As noted in Defensor v. Meissner, if only 
the petitioner's requirements are considered, ``then any beneficiary 
with a bachelor's degree could be brought into the United States to 
perform work in a non-specialty occupation, so long as that person's 
employment was arranged through an employment agency that required all 
[staffed workers] to have bachelor's degrees.'' \110\ This result would 
be completely opposite of the plain purpose of the statute and 
regulations, which is to limit H-1B visas to positions which require 
specialized education to perform duties that require theoretical and 
practical application of a body of highly specialized knowledge.\111\ 
However, not all third-party placements would necessarily require such 
evidence. For example, where the beneficiary is placed at a third-
party's worksite, but performs work as part of a team of the 
petitioner's employees, including an on-site supervisor employed by the 
petitioner and who manages the work of the petitioner's employees, the 
requirements of the position as established by the petitioner may be 
determinative. USCIS will make the determination as to whether the 
requirements of the petitioner or third-party entity are controlling on 
a case-by-case basis, taking into consideration the totality of the 
relevant circumstances, as described above.
---------------------------------------------------------------------------

    \110\ 201 F.3d at 387-88.
    \111\ Id.
---------------------------------------------------------------------------

    Finally, new 8 CFR 214.2(h)(4)(iv)(C) will also state that, in 
accordance with 8 CFR 103.2(b) and 214.2(h)(9), USCIS may request 
copies of contracts, work orders, or other similar corroborating 
evidence on a case-by-case basis in all cases, regardless of where the 
beneficiary will be placed. While USCIS already has general authority 
to request any document it deems necessary, this additional provision 
will make it clear that USCIS has authority to specifically request 
contracts and other similar evidence. This provision will apply to any 
H-1B petition, including a petition where the petitioner indicates that 
the beneficiary will exclusively work in-house. For example, if a 
petitioner indicates that the beneficiary will develop system software 
for a client but will perform such work exclusively at the petitioner's 
premises, USCIS may request a copy of the client contract or other 
corroborating evidence to confirm that the relevant work exists to 
ensure that the beneficiary will be employed in a specialty occupation.

E. Maximum Validity Period for Third-Party Placements

    While DHS recognizes that third-party arrangements may generally be 
part of a legitimate business model, this business model presents more 
challenges in the context of the H-1B program and USCIS' ability to 
better ensure eligibility and compliance. Accordingly, DHS will

[[Page 63935]]

set a 1-year maximum validity period for all H-1B petitions in which 
the beneficiary will be working at a third-party worksite. See new 8 
CFR 214.2(h)(9)(iii)(A)(1). To make the determination of whether a 
beneficiary will be working or placed at a third-party worksite, USCIS 
will rely on information contained in the H-1B petition and any 
accompanying LCA, which must identify each worksite where the 
beneficiary will work and the name of any third-party entity (secondary 
entity) at each worksite.\112\
---------------------------------------------------------------------------

    \112\ The Labor Condition Application for H-1B, H-1B1 and E-3 
Nonimmigrant Workers Form ETA-9035CP--General Instructions for the 
9035 & 9035E, defines ``secondary entity'' as ``another entity at 
which or with which LCA workers will be placed during the period of 
certification.'' See https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/Form%20ETA-9035CP%20Instructions.pdf.
---------------------------------------------------------------------------

    Although the maximum period of authorized admission for an H-1B 
nonimmigrant has been established by Congress in section 214(g)(4) of 
the INA, 8 U.S.C. 1184(g)(4), Congress did not specify the validity 
period for an approved H-1B visa petition. Congress authorized DHS to 
promulgate regulations setting the validity period, including a range 
of validity periods not to exceed the maximum period of authorized 
admission. Id. In relevant part, section 214(a)(1) of the INA, 8 U.S.C. 
1184(a)(1), states, ``the admission to the United States of any alien 
as a nonimmigrant shall be for such time and under such conditions as 
the [Secretary] may by regulations prescribe . . . .'' See also section 
214(c)(1) of the INA, 8 U.S.C. 1184(c)(1) (``The question of importing 
any alien as [an H-1B nonimmigrant] in any specific case or specific 
cases shall be determined by [DHS] . . . upon petition of the importing 
employer . . . . The petition shall be in such form and contain such 
information as [DHS] shall prescribe.''). Under current regulations at 
8 CFR 214.2(h)(9)(iii), the maximum validity period an H-1B petition 
may be approved is ``up to three years,'' which necessarily allows for 
lesser periods as well. USCIS has an established practice of approving 
H-1B petitions for less than 3 years for various reasons, such as to 
conform to the dates of the accompanying LCA. See id. Further, DHS 
regulations already limit the validity period to 1 year in cases of 
temporary licensure. See 8 CFR 214.2(h)(4)(v)(C). Likewise, DHS will 
now limit the validity period for third-party placement petitions to a 
maximum of 1 year.
    DHS believes that the 1-year limit is reasonable given the nature 
of third-party placements. In general, the nature of contracting work 
leads to beneficiaries being more transient, as well as greater 
potential for changes to the terms and conditions of employment. 
Specifically, these are situations where the petitioner is not the end-
user of the H-1B worker's services, and the beneficiary performs work 
for another entity at that other entity's worksite. DHS believes that 
enhanced monitoring of compliance is valuable and needed to ensure that 
the beneficiary is being employed consistent with the terms and 
conditions of the petition approval.\113\ The fact that 6 to 12 month 
work orders are common in petitions involving third-party placements, 
based on USCIS' program experience and review of evidence in such 
cases,\114\ supports DHS's belief that limiting the validity period to 
up to one year is reasonable as it more closely aligns with the length 
of time that a beneficiary would generally be assigned under a 
particular work order. It is also common based on USCIS' program 
experience that, despite the requirement that the petitioner must file 
an amended or new H-1B petition with the corresponding LCA when there 
is a material change in the terms and conditions of employment,\115\ 
once a certain work order expires, a petitioner may obtain another work 
order under changed terms and conditions, including a different work 
location, or even assign the beneficiary to a different client, without 
timely filing the required amended or new petition. Such unaccounted 
changes increase the risk of violations of H-1B program requirements. 
DHS believes that continuing to approve third-party petitions for 
longer periods of time, including the maximum three-year validity 
period, would greatly diminish USCIS' ability to properly monitor 
program compliance in cases where fraud and abuse are more likely to 
occur.
---------------------------------------------------------------------------

    \113\ This includes, among other terms and conditions, that the 
petitioner is maintaining the required employer-employee 
relationship with the beneficiary. Enhanced monitoring of the 
employer-employee relationship is particularly important in cases 
where a staffing company uses H-1B workers to fill positions 
previously occupied by the petitioner's in-house employees.
    \114\ See, e.g., Matter of I-S-S- LLC, Appeal of California 
Service Center Decision Form I-129, Petition for a Nonimmigrant 
Worker, 2017 WL 959844, at *5 (the Petitioner stated in its support 
letter that ``industry convention is to issue work orders for a 
short duration and continue extending them through project 
completion.''); Matter of K-T-, Inc. Appeal of Vermont Service 
Center Decision Form I-129, Petition for a Nonimmigrant Worker, 2019 
WL 1469913, at *4 (the Petitioner asserted that contract extensions 
for six-month intervals are common within the IT consulting 
industry); (Identifying Information Redacted by Agency) Petition for 
a Nonimmigrant Worker Pursuant to Section 101(a)(15)(H)(i)(b) of the 
Immigration and Nationality Act, 8 U.S.C. S 1101, 2013 WL 4775077, 
at *8 (on appeal, counsel states that in the petitioner's industry, 
it is standard to issue work orders or statements of work for short-
term project, which typically last for six to nine months, and that 
it ``is neither typical nor normal for a company to have a 
[statement of work] that covers a three-year period of time.'').
    \115\ See 8 CFR 214.2(h)(2)(i)(E) (requiring that a petitioner 
file an amended or new petition to reflect any material changes in 
the terms and conditions of employment or training or the alien's 
eligibility as specified in the original approved petition), 
(h)(11)(i)(A) (requiring the petitioner to ``immediately notify the 
[agency] of any changes in the terms and conditions of employment of 
a beneficiary which may affect eligibility''); Matter of Simeio 
Solutions, LLC, 26 I&N Dec. 542, 547 (AAO 2015).
---------------------------------------------------------------------------

    DHS considered an alternative of limiting validity periods only 
when the beneficiary would ``primarily'' work at a third-party 
worksite. DHS believes that this alternative would allow petitioners to 
easily avoid the limited validity period provision. For example, if 
``primarily'' were defined to mean more than half of the time, the 
petitioner could claim that a beneficiary would not work 51% of the 
time (and thus not ``primarily'') at a third-party worksite to 
circumvent this limitation. This would undermine the effectiveness of 
the rule. It would also create additional burdens on DHS in that it 
would require adjudicators to review and evaluate evidence regarding 
where a beneficiary would ``primarily'' be placed. Further, DHS 
believes that excluding any location that would not require an LCA from 
the definition of ``worksite'' provides sufficient flexibility in the 
application of this rule.\116\ Therefore, DHS rejected the alternative 
of limiting validity periods only when the beneficiary would 
``primarily'' work at a third-party worksite.
---------------------------------------------------------------------------

    \116\ For example, DOL's definition of worksite (which DHS 
adopts) excludes locations where an H-1B nonimmigrant's job 
functions may necessitate frequent changes of location with little 
time spent at any one location, such as jobs that are peripatetic in 
nature. See 20 CFR 655.715.
---------------------------------------------------------------------------

    DHS believes that limiting approvals for third-party placement 
petitions to a maximum of 1 year will allow the agency to more 
consistently and thoroughly monitor a petitioner's and beneficiary's 
continuing eligibility, including whether the beneficiary has 
maintained H-1B status, whether the beneficiary's position remains a 
specialty occupation (e.g., whether the terms of the contract or 
placement have changed), and whether any changes in the nature of the 
placement interfere with the necessary employer-employee relationship 
between the petitioner and the beneficiary, through the adjudication of 
more frequent petitions

[[Page 63936]]

requesting an extension of status.\117\ Additionally, it will reduce 
the potential for employer violations. Based on the agency's experience 
in administering the H-1B program, significant employer violations, 
including placing beneficiaries in non-specialty occupation jobs, may 
be more likely to occur when petitioners place beneficiaries at third-
party worksites.\118\ In many instances, the relationship between the 
petitioning employer and the H-1B beneficiary is more attenuated when 
the beneficiary is working at a third-party worksite. Petitioners who 
contract H-1B workers out to another company at a third-party worksite 
generally have less visibility into the actual work being performed, 
including whether it is the appropriate work for a specialty 
occupation, the hours worked, and the relationship between the 
beneficiary and his or her on-site supervisor. As the GAO stated in its 
2011 report to Congress, DOL's Wage and Hour investigators reported 
that a large number of the complaints they received were related to the 
activities of staffing companies, where the H-1B beneficiary is placed 
at a third-party worksite.\119\
---------------------------------------------------------------------------

    \117\ The approval of a new or amended petition for a 
beneficiary placed at a third-party worksite will also be limited to 
a maximum of 1 year. See 8 CFR 214.2(h)(2)(i)(E); see also Matter of 
Simeio Solutions, LLC, supra at 547.
    \118\ U.S. Department of Homeland Security, U.S. Citizenship and 
Immigration Services, Policy Research Division (2019). Summary of H-
1B Site Visits Data (showing a higher rate of noncompliance for 
petitioners who indicated the beneficiary works at an off-site or 
third-party location compared to worksites where the beneficiary 
does not work off-site). See also, e.g., U.S. Gov't Accountability 
Office, GAO-11-26, H-1B Visa Program: Reforms are Needed to Minimize 
the Risks and Costs of Current Program (2011) (describing the lack 
of accountability and types of common violations for staffing 
companies).
    \119\ GAO-11-26, supra.
---------------------------------------------------------------------------

    DHS believes that fraud and abuse is more likely to occur in cases 
involving third-party placements, as evidenced by the higher rate of 
noncompliance in those cases. Noncompliance is determined when an 
immigration officer conducts a compliance review to ensure that the 
petitioner (employer) and beneficiary (job applicant or other potential 
employee) follow the terms and conditions of their petition.\120\ This 
process includes reviewing the petition and supporting documents, 
researching information in public records and government systems, and, 
where possible, interviewing the petitioner and beneficiary through 
unannounced site visits.\121\ DHS analyzed a sampling of H-1B petitions 
filed during FYs 16-19 (through March 27, 2019) and found that the 
noncompliance rate for petitioners who indicated the beneficiary works 
at an off-site or third-party location is much higher compared to 
worksites where the beneficiary does not work off-site (21.7 percent vs 
9.9 percent).\122\ DHS believes that limiting the maximum validity 
period for petitions where beneficiaries are placed at third-party 
worksites is reasonable given this significantly higher noncompliance 
rate, and so will also encourage compliance with the regulations and 
improve the program's overall integrity.
---------------------------------------------------------------------------

    \120\ See U.S. Department of Homeland Security, U.S. Citizenship 
and Immigration Services, Administrative Site Visit and Verification 
Program (last updated Sept. 9, 2019), https://www.uscis.gov/about-us/directorates-and-program-offices/fraud-detection-and-national-security/administrative-site-visit-and-verification-program (last 
visited Sept. 18, 2020).
    \121\ Id.
    \122\ U.S. Department of Homeland Security, U.S. Citizenship and 
Immigration Services, Policy Research Division (2019). Summary of H-
1B Site Visits Data.
---------------------------------------------------------------------------

    When approving an H-1B petition involving third-party placement, 
USCIS will generally consider granting the maximum validity period of 1 
year, barring a separate consideration consistent with the controlling 
statutes and DHS regulations (such as the beneficiary reaching the 6-
year maximum period of authorized admission pursuant to section 
214(g)(4) of the INA, and not being eligible for an exemption from that 
6-year limit) compelling a shorter approval period. This general 
practice will have the added benefit of providing petitioners who 
provide sufficient evidence a degree of certainty with respect to what 
validity period to request and to expect, if approved. If a petitioner 
indicates in the H-1B petition or LCA that the beneficiary will be 
working at a third-party worksite, then the maximum validity period the 
petitioner should request is 1 year. And if USCIS approves such 
petition for the maximum period of 1 year after making a determination 
that the petitioner has met its burden of proof, then there should be 
no reason to dispute the length of the validity period since it is set 
by regulation.\123\
---------------------------------------------------------------------------

    \123\ Note, however, that a petitioner is not precluded from 
filing a motion or appeal.
---------------------------------------------------------------------------

    As with any petition requesting an extension of stay, a petition 
requesting a 1-year extension of stay for a beneficiary who will work 
at a third-party worksite may be accompanied by either a new, or a 
photocopy of the prior, LCA from DOL that the petitioner continues to 
have on file, provided that the LCA is still valid for the period of 
time requested and properly corresponds to the petition. See 8 CFR 
214.2(h)(15)(ii)(B). In this sense, a prior LCA is still valid if the 
validity period does not expire before the end date of the extension 
petition's requested validity period.\124\ However, note that a new LCA 
is required if there are any material changes in the terms and 
conditions of employment or training or the alien's eligibility as 
specified in the original approved petition. See 8 CFR 
214.2(h)(2)(i)(E) (requiring that a petitioner file an amended or new 
petition to reflect any material changes in the terms and conditions of 
employment or training or the alien's eligibility as specified in the 
original approved petition, and that ``this requirement includes a new 
labor condition application'').
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    \124\ Because the maximum validity period of a certified LCA is 
three years, see 20 CFR 655.750(a), DHS recognizes that the validity 
date of the LCA and the requested validity date in the extension 
petition will not always match. DHS will accept a prior LCA as long 
as that LCA is still valid, as explained above.
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    DHS recognizes that new 8 CFR 214.2(h)(9)(iii)(A)(1) will require 
those affected petitioners to submit extension petitions more 
frequently, thereby incurring more filing costs. DHS further recognizes 
that some of these affected petitioners may incur significantly higher 
filing costs with each extension petition, namely, the 9-11 Response 
and Biometric Entry-Exit Fee (Pub. L. 114-113 Fee) of $4,000.\125\ If 
the Fee Schedule Final Rule takes effect, the Public Law 114-113 Fee 
would apply to any petitioner filing an H-1B petition that employs 50 
or more employees in the United States if more than 50 percent of the 
petitioner's employees in the aggregate are in H-1B, L-1A or L-1B 
nonimmigrant status, including filing an extension of stay 
request.\126\ DHS recognizes the increased cost on this population of 
affected petitioners, but believes this increased cost is justified due 
to the importance of better ensuring compliance with the terms and 
conditions of the petition approval in these instances, as explained 
above. Additionally, nothing in this rulemaking limiting the maximum

[[Page 63937]]

validity period to 1 year for H-1B aliens placed at third-party 
worksites would directly result in such alien worker being unable to 
obtain the statutory maximum six years of H-1B status. Instead, through 
this rulemaking, petitioners with this business model will have to pay 
more filing costs for the continued use of H-1B workers than they 
currently do. It is valuable to note that the amount and parameters of 
the Public Law 114-113 Fee is mandated by Congress. In creating the 
Public Law 114-113 Fee, the goal was to impose this additional fee on 
employers that overly rely on H-1B or L nonimmigrant workers.\127\
---------------------------------------------------------------------------

    \125\ Consolidated Appropriations Act, 2016, Public Law 114-113, 
December 18, 2015, 129 Stat 2242.
    \126\ Presently, the Public Law 114-113 fee is required for H-1B 
petitions filed by certain petitioners only when the Fraud Fee also 
applies, meaning that it is not currently required for H-1B 
extensions. The Fee Schedule Final Rule will require payment of the 
Public Law 114-113 fee for all H-1B petitions filed by those 
petitioners, unless the petition is an amended petition without an 
extension of stay request. While implementation of the Fee Schedule 
Final Rule has been enjoined, DHS nevertheless estimates costs of 
this interim final rule based on the fees that will be required if 
the injunction is lifted and the Fee Schedule Final Rule takes 
effect so as to avoid underestimating potential costs of this 
interim final rule. See supra note 9.
    \127\ 85 FR at 46867.
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F. Written Explanation for Certain H-1B Approvals

    DHS is amending its regulations to require its issuance of a brief 
explanation when an H-1B nonimmigrant petition is approved but USCIS 
grants an earlier end validity date than requested by the petitioner. 
See new 8 CFR 214.2(h)(9)(i)(B). Providing such an explanation will 
help ensure that the petitioner is aware of the reason for the limited 
validity approval.

G. Revising the Itinerary Requirement for H-1B Petitions

    DHS is revising the itinerary requirement at 8 CFR 
214.2(h)(2)(i)(B) (for service or training in more than one location) 
to specify that this particular provision will not apply to H-1B 
petitions. See new 8 CFR 214.2(h)(2)(i)(B). DHS is making this revision 
in response to a recent court decision specific to H-1B petitions.\128\ 
The itinerary requirement at 8 CFR 214.2(h)(2)(i)(B) will still apply 
to other H classifications. In addition, DHS will still apply the 
itinerary requirement at 8 CFR 214.2(h)(2)(i)(F)(1) for H-1B petitions 
filed by agents.
---------------------------------------------------------------------------

    \128\ See ITServe, 2020 WL 1150186, at *21 (``the itinerary 
requirement in the INS 1991 Regulation [codified at 8 CFR 
214.2(h)(2)(i)(B)] . . . has been superseded by statute and may not 
be applied to H-1B visa applicants'').).
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H. Site Visits

    Pursuant to its general authority under sections 103(a) and 287(b) 
of the INA, 8 U.S.C. 1103(a) and 1357(b), and 8 CFR 2.1, USCIS conducts 
inspections, evaluations,-verifications, and compliance reviews to 
ensure that an alien is eligible for the benefit sought and that all 
laws have been complied with before and after approval of such 
benefits. These inspections and other compliance reviews may be 
conducted telephonically or electronically, as well as through physical 
on-site inspections (site visits). The existing authority to conduct 
inspections is vital to the integrity of the immigration system as a 
whole, including the H-1B program specifically, and protecting American 
workers. In this rule, DHS is adding regulations specific to the H-1B 
program to codify its existing authority and clarify the scope of 
inspections--particularly on-site inspections--and the consequences of 
a petitioner's or third party's refusal or failure to fully cooperate 
with these inspections.\129\ See new 8 CFR 214.2(h)(4)(i)(B)(7). The 
authority of USCIS to conduct on-site inspections or other compliance 
reviews to verify information does not relieve the petitioner of its 
burden of proof or responsibility to provide information in the 
petition (and evidence submitted in support of the petition) that is 
complete, true, and correct.
---------------------------------------------------------------------------

    \129\ Although DHS is only revising H-1B regulations at this 
time, DHS reiterates that it has the same authority to conduct on-
site inspections and other compliance reviews for other nonimmigrant 
and immigrant categories.
---------------------------------------------------------------------------

    In 2008, USCIS conducted a review of 246 randomly selected H-1B 
petitions filed between October 1, 2005, and March 31, 2006, and found 
violations ranging from ``document fraud to deliberate misstatements 
regarding job locations, wages paid, and duties performed'' in 20.7 
percent of the cases reviewed.\130\ Following this, in July 2009, USCIS 
started the Administrative Site Visit and Verification Program as an 
additional way to verify information in certain visa petitions. Under 
this program, USCIS Fraud Detection and National Security (FDNS) 
officers make unannounced site visits to collect information as part of 
a compliance review. A compliance review verifies whether petitioners 
and beneficiaries are following the immigration laws and regulations 
that are applicable in a particular case. This process includes 
researching information in government databases, reviewing public 
records and evidence accompanying the petition, and interviewing the 
petitioner and beneficiary.\131\ It also includes conducting site 
visits.
---------------------------------------------------------------------------

    \130\ Written Testimony of Donald Neufeld, Associate Director, 
Service Center Operations Directorate, USCIS (March 31, 2011), 
available at https://www.uscis.gov/sites/default/files/USCIS/Resources/Congress/Testimonies/2011/testimony_2011331_H-1B_Neufeld.pdf.
    \131\ Outside of the Administrative Site Visit and Verification 
Program, USCIS conducts forms of compliance review in every case, 
whether it is by researching information in relevant government 
databases or by reviewing public records and evidence accompanying 
the petition.
---------------------------------------------------------------------------

    In addition, beginning in 2017, USCIS began taking a more targeted 
approach in conducting site visits related to the H-1B program. USCIS 
started focusing on H-1B-dependent employers (those who have a high 
ratio of H-1B workers as compared to U.S. workers, as defined in 
section 212(n) of the INA), cases in which USCIS cannot validate the 
employer's basic business information through commercially available 
data, and employers petitioning for H-1B workers who work off-site at 
another company or organization's location.
    The site visits conducted by USCIS through the Administrative Site 
Visit and Verification Program have uncovered a significant amount of 
noncompliance in the H-1B program. From Fiscal Year (FY) 2013 through 
FY 2016, USCIS conducted 30,786 H-1B compliance reviews. Of those, 
3,811 (12 percent) were found to be noncompliant.\132\ From FY 2016 
through March 27, 2019, USCIS conducted 20,492 H-1B compliance reviews 
and found 2,341 (11.4 percent) to be noncompliant.\133\ Further, DHS 
analyzed the results of the compliance reviews from FY16-FY19 and found 
that the noncompliance rate for petitioners who indicated the 
beneficiary works at an off-site or third-party location is much higher 
compared to worksites where the beneficiary does not work off-site 
(21.7 percent versus 9.9 percent, respectively).\134\
---------------------------------------------------------------------------

    \132\ USCIS, Fiscal Year 2017 Report to Congress: H-1B and L-1A 
Compliance Review Site Visits, Fraud Detection and National Security 
Compliance Review Data (October 1, 2012 to September 30, 2016), p. 7 
(January 17, 2018), available at https://www.dhs.gov/sites/default/files/publications/USCIS%20-%20H-1B%20and%20L-1A%20Compliance%20Review%20Site%20Visits.pdf (last visited Aug. 11, 
2020).
    \133\ Department of Homeland Security, U.S. Citizenship and 
Immigration Services, Policy Research Division (PRD) (2019). Summary 
of H-1B Site Visits Data.
    \134\ Id.
---------------------------------------------------------------------------

    Site visits are important to maintaining the integrity of the H-1B 
program and in detecting and deterring fraud and noncompliance with H-
1B program requirements.\135\ By better

[[Page 63938]]

ensuring program integrity and detecting and deterring fraud and 
noncompliance, DHS will better ensure that the H-1B program is used 
appropriately and that the economic interests of U.S. workers are 
protected. Therefore, as noted above, DHS is adding regulations 
specific to the H-1B program to set forth the scope of on-site 
inspections and the consequences of a petitioner's or third party's 
refusal or failure to fully cooperate with these inspections. The new 
regulations make clear that inspections may include, but are not 
limited to, an on-site visit of the petitioning organization's 
facilities, interviews with its officials, review of its records 
related to compliance with immigration laws and regulations, and 
interviews with any other individuals or review of any other records 
that USCIS may lawfully obtain and that it considers pertinent to 
verify facts related to the adjudication of the H-1B petition, such as 
facts relating to the petitioner's and beneficiary's H-1B eligibility 
and compliance. See new 8 CFR 214.2(h)(4)(i)(B)(7)(i). The new 
regulation also clarifies the possible scope of an inspection, which 
may include the petitioning organization's headquarters, satellite 
locations, or the location where the beneficiary works or will work, 
including third-party worksites, as applicable. DHS believes that the 
ability to inspect various locations is critical since the purpose of a 
site inspection is to confirm information related to the H-1B petition, 
and any one of these locations may have information relevant to a given 
petition.
---------------------------------------------------------------------------

    \135\ DHS acknowledges the 2017 Office of Inspector General 
report that addressed concerns with the H-1B site visit program and 
made recommendations for improvement. OIG-18-03, supra. Since the 
issuance of this report, USCIS has greatly improved its site visit 
program pursuant to the report's recommendations, such that USCIS 
believes the concerns addressed in the 2017 report no longer 
pertain. Specifically, the report's assessment that ``USCIS site 
visits provide minimal assurance that H-1B visa participants are 
compliant and not engaged in fraudulent activity'' no longer 
pertains. As of March 31, 2019, the recommendations have been 
resolved. See DHS, Office of Inspector General, DHS Open Unresolved 
Recommendations Over Six Months Old, as of March 31, 2019, https://www.oig.dhs.gov/sites/default/files/DHS-Open-Recommendations-As-Of-033119_053019.pdf (not listing OIG-18-03 as an ``open unresolved'' 
report). DHS maintains that site visits, generally, are an important 
and effective tool for the H-1B program. The new site visit 
provisions at 8 CFR 214.2(h)(4)(i)(B)(7)(i) will directly support 
USCIS' continued efforts to strengthen the effectiveness of the site 
visit program and the integrity of the H-1B program overall.
---------------------------------------------------------------------------

    The new regulation also states that, if USCIS is unable to verify 
facts related to an H-1B petition or to compliance with H-1B petition 
requirements due to the failure or refusal of the petitioner or third-
party to cooperate with a site visit,\136\ then such failure or refusal 
may be grounds for denial or revocation of any H-1B petition for H-1B 
workers performing services at the location or locations which are a 
subject of inspection, including any third-party worksites. See new 8 
CFR 214.2(h)(4)(i)(B)(7)(iii). This new provision will put petitioners 
on notice of the specific consequences for noncompliance, whether by 
them or by a contractual third-party. It has long been established 
that, in H-1B visa petition proceedings, it is the petitioner's burden 
to establish eligibility for the immigration benefit sought.\137\ If 
USCIS conducts a site visit in order to verify facts related to the H-
1B petition or to verify that the beneficiary is being employed 
consistent with the terms of the petition approval, and is unable to 
verify relevant facts and otherwise confirm compliance, then DHS 
believes that it would be reasonable to conclude that the petitioner 
will not have met its burden of proof and the petition may be properly 
denied or revoked. This would be true whether the unverified facts 
relate to a petitioner worksite or a third-party worksite at which a 
beneficiary has been or will be placed by the petitioner. It would also 
be true whether the failure or refusal to cooperate is by the 
petitioner or a third-party.
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    \136\ In the context of a FDNS field inquiry, failure to 
cooperate means that contact with the petitioner or third party was 
made, the FDNS officer had the chance to properly identify her/
himself, and the petitioner or third party refused to speak to the 
officer or agreed to speak, but did not provide the information 
requested within the time period specified.
    \137\ See section 291 of the INA, 8 U.S.C. 1361; Matter of 
Otiende, 26 I&N Dec. 127, 128 (BIA 2013).
---------------------------------------------------------------------------

    In addition, with respect to a failure or refusal to cooperate by a 
third-party, DHS believes this provision is reasonable because the 
third-party is benefiting from the services performed by the H-1B 
worker at its location. The third-party should not be permitted to 
benefit from the services performed by the H-1B worker if it 
simultaneously refuses to allow DHS access to verify that those 
services are being performed in accordance with the law. Additionally, 
if this provision did not apply to third-party worksites, such that a 
third-party's failure to cooperate with a site visit could not be 
grounds for denial or revocation, then this would create an unfair 
loophole with respect to third-party worksites, which could be 
exploited by unscrupulous petitioners and undermine the integrity of 
the H-1B program.
    As with all other new provisions in this interim final rule, new 8 
CFR 214.2(h)(4)(i)(B)(7)(iii) will apply to petitions filed on or after 
the effective date of the regulation. If, for example, a third-party 
refuses to cooperate with a site visit conducted after the effective 
date of the regulation, but in connection with a petition that was 
filed before the effective date of the regulation, USCIS will make a 
final decision on that petition under the legal framework in effect at 
the time the petition was filed.

I. Severability

    Finally, DHS has added a clause to clarify its intent with respect 
to the provisions being amended or added by this rule; DHS intends that 
all the provisions covered by this rule function separately from one 
another and be implemented as such. Therefore, in the event of 
litigation or other legal action preventing the implementation of some 
aspect of this rule, DHS intends to implement all others to the 
greatest extent possible.

VI. Statutory and Regulatory Requirements

A. Administrative Procedure Act

    The COVID-19 pandemic is an unprecedented ``economic cataclysm.'' 
\138\ This is one of the direst national emergencies the United States 
has faced in its history. In just one week, unemployment claims 
skyrocketed from ``a historically low number'' to the most extreme 
unemployment ever recorded: Nearly quintuple the previous worst-ever 
level of unemployment claims, observed during the 1982 recession.\139\ 
DHS must respond to this emergency immediately.
---------------------------------------------------------------------------

    \138\ Ben Casselman et al., New Data Shows Staggering Toll of 
Outbreak, N.Y. Times, Mar. 27, 2020, at A1.
    \139\ Front Page of the New York Times, N.Y. Times, Mar. 27, 
2020, at A1; Casselman et al., supra note 140, at A1. See also id. 
tbl. 1.
---------------------------------------------------------------------------

    Accordingly, this rule is being issued without prior notice and 
opportunity to comment pursuant to 5 U.S.C. 553(b)(B). The 
Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., authorizes an 
agency to issue a rule without prior notice and opportunity to comment 
when the agency for good cause finds that those procedures are 
``impracticable, unnecessary, or contrary to the public interest.'' 5 
U.S.C. 553(b)(B). The good cause exception for forgoing notice and 
comment rulemaking ``excuses notice and comment in emergency 
situations, . . . or where delay could result in serious harm.'' Jifry 
v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 2004). Although the good cause 
exception is ``narrowly construed and only reluctantly countenanced,'' 
the Department has appropriately invoked the exception in this case, 
for the reasons set forth below.\140\
---------------------------------------------------------------------------

    \140\ Tenn. Gas Pipeline Co. v. FERC, 969 F.2d 1141, 1144 (D.C. 
Cir. 1992) (quoting New Jersey v. EPA, 626 F.2d 1038, 1046 (D.C. 
Cir.1980)).
---------------------------------------------------------------------------

    The pandemic emergency's economic impact is an ``obvious and 
compelling fact'' that justifies good cause to forgo regular notice and 
comment. Such good cause is ``justified by obvious and compelling facts 
that can be judicially noticed.'' Mobil Oil Corp. v. Dep't of Energy, 
728 F.2d 1477, 1490 (Temp. Emer. Ct. App. 1983).
    The reality of the COVID-19 national emergency is omnipresent and

[[Page 63939]]

undeniable. In addition to ``obvious and compelling facts'' known to 
virtually all Americans during this pandemic, multiple executive orders 
and declarations further establish the fact of a ``crisis,'' ``fiscal 
calamity,'' and unprecedented national emergency. Sorenson Commc'ns 
Inc. v. F.C.C., 755 F.3d 702, 707 (D.C. Cir. 2014) (``Though no 
particular catechism is necessary to establish good cause, something 
more than an unsupported assertion is required.''). Good cause to forgo 
notice and comment in this instance is consistent with the principle 
that ``use of these exceptions by administrative agencies should be 
limited to emergency situations.'' Am. Fed'n of Gov't Emp., AFL-CIO v. 
Block, 655 F.2d 1153, 1156 (D.C. Cir. 1981). ``Emergencies, though not 
the only situations constituting good cause, are the most common.'' 
Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1484 n.2 (9th Cir. 
1992).
    On January 31, 2020, the Secretary of Health and Human Services 
declared a public health emergency under section 319 of the Public 
Health Service Act in response to COVID-19.\141\ On March 13, 2020, 
President Trump declared a National Emergency concerning the COVID-19 
outbreak, retroactive to March 1, 2020, to control the spread of the 
virus in the United States.\142\ On June 4, the President issued the 
E.O. 13927 Accelerating the Nation's Economic Recovery from the COVID-
19 Emergency by Expediting Infrastructure Investments and Other 
Activities, which among other things urges agencies to ``take all 
appropriate steps to use their lawful emergency authorities and other 
authorities to respond to the national emergency and to facilitate the 
Nation's economic recovery . . . [including] other actions . . . that 
will strengthen the economy and return Americans to work.'' \143\ On 
June 22, 2020, the President issued a Proclamation Suspending Entry of 
Aliens Who Present a Risk to the U.S. Labor Market Following the 
Coronavirus Outbreak.\144\ On June 29, 2020, the President issued 
further clarification in a Proclamation on Amendment to Proclamation 
10052.\145\ Subject to certain exceptions, the proclamation, as 
amended, restricts the entry of certain immigrants and nonimmigrants, 
including certain H-1B nonimmigrants, into the United States through 
December 31, 2020 as their entry would be detrimental to the interests 
of the United States. The proclamation notes that ``between February 
and April of 2020 . . . more than 20 million United States workers lost 
their jobs in key industries where employers are currently requesting 
H-1B and L workers to fill positions.'' While the proclamation only 
restricts new entries (with certain exceptions) by aliens who do not 
have H-1B visas or other listed travel documents on the effective date 
of the proclamation, Section 5 of the proclamation directs the 
Secretary of Homeland Security to ``as soon as practicable, and 
consistent with applicable law, consider promulgating regulations or 
take other appropriate action regarding . . . ensuring that the 
presence in the United States of H-1B nonimmigrants does not 
disadvantage United States workers.'' The issuance of this interim 
final rule to strengthen the integrity of the H-1B nonimmigrant visa 
program is thus also consistent with the aims of the new proclamation.
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    \141\ HHS, Determination that a Public Health Emergency Exists, 
https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx (last reviewed Aug. 11, 2020). See also HHS, Determination 
of Public Health Emergency, 85 FR 7316 (Feb. 7, 2020).
    \142\ Proclamation 9994 of March 13, 2020, Declaring a National 
Emergency Concerning the Coronavirus Disease (COVID-19) Outbreak, 85 
FR 15337 (Mar. 18, 2020). See also White House, Proclamation on 
Declaring a National Emergency Concerning the Novel Coronavirus 
Disease (COVID- 19) Outbreak, https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/ (last 
visited Aug. 11, 2020).
    \143\ See Executive Order 13927, Accelerating the Nation's 
Economic Recovery from the COVID-19 Emergency by Expediting 
Infrastructure Investments and Other Activities, 85 FR 35165, sec. 2 
(Jun. 9, 2020).
    \144\ Proclamation 10052 of June 22, 2020, Suspension of Entry 
of Immigrants and Nonimmigrants Who Present a Risk to the United 
States Labor Market During the Economic Recovery Following the 2019 
Novel Coronavirus Outbreak, 85 FR 38263 (Jun. 25, 2020).
    \145\ Proclamation 10054 of June 29, 2020, Amendment to 
Proclamation 10052, 85 FR 40085 (Jul. 2, 2020).
---------------------------------------------------------------------------

    H-1B workers comprise a much larger share of the U.S. labor market 
than the 65,000 annual numerical limitations and therefore have the 
potential to impact the availability of job opportunities for similarly 
situated U.S. workers who may be competing for jobs with H-1B workers 
as well as their wages and working conditions, particularly in 
industries where H-1B workers are predominantly employed. In recent 
years, the overwhelming majority of H-1B petitions have been filed for 
positions in the one industry, the IT industry--the share of H-1B 
workers in computer-related occupations grew from 32 percent in FY 2003 
to 56 percent in FY2019.\146\ The 5-year average annual number of H-1B 
petitions approved outside the numerical limitations established by 
Congress, which includes petitions for continuing H-1B workers who were 
previously counted toward an annual numerical allocation and who have 
time remaining on their 6-year period of authorized admission, see INA 
section 214(g)(7), 8 U.S.C. 1184(g)(7), was approximately 214,371 based 
on DHS data.\147\ As of September 30, 2019, the total H-1B authorized-
to-work population was approximately 583,420.\148\ The total H-1B 
authorized-to-work population, rather than the yearly cap, is more 
indicative of the scope of the H-1B program and the urgent need to 
strengthen it to protect the economic interests of U.S. workers. This 
is particularly urgent given the exceptionally high unemployment rate 
in the United States--10.2 percent as of August 7, 2020.\149\ In 
addition to high unemployment generally, there has been a significant 
jump in unemployment due to COVID-19 between August 2019 and August 
2020 in two industry sectors where a large number of H-1B workers are 
employed, from 4.7 percent to 8.6 percent in the Information sector, 
and from 3.2 to 7.2 percent in the Professional and Business Services 
sector.\150\
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    \146\ See supra note 1.
    \147\ Office of Policy and Strategy, Policy Research Division 
(PRD) Claims 3 and USCIS analysis. July 29, 2020.
    \148\ See supra note 11.
    \149\ U.S. Dep't of Labor, Bureau of Labor Statistics, Economic 
News Release, Employment Situation News Release (Aug. 7, 2020), 
available at https://www.bls.gov/news.release/archives/empsit_08072020.htm (last visited Aug. 11, 2020).
    \150\ See, e.g., U.S. Dep't of Labor, Bureau of Labor 
Statistics, Economic News Release, Table A-14. Unemployed Persons by 
Industry and Class of Worker, Not Seasonally Adjusted (last modified 
Sept. 23, 2020), available at https://www.bls.gov/news.release/empsit.t14.htm (last visited Sept. 29, 2020); United States Census 
Bureau, Industry and Occupation Code Lists & Crosswalks, Census 2017 
Industry List with Crosswalk, available at https://www.census.gov/topics/employment/industry-occupation/guidance/code-lists.html (last 
visited Aug. 11, 2020). ``Information'' sector includes internet 
publishing and broadcasting and web search portals, and Data 
processing, hosting, and related services. ``Professional and 
Business Services, i.e. Professional, Scientific, and Management, 
and Administrative and Waste Management Services'' includes Computer 
systems design and related services, and Management, scientific, and 
technical consulting services.
---------------------------------------------------------------------------

    The changes being made through this rule clarify statutory 
requirements and limit the potential for fraud and abuse in the H-1B 
program, thereby protecting the wages, working conditions, and job 
opportunities of U.S. workers, while continuing to provide U.S. 
employers with access to qualified workers consistent with 
congressional intent. Namely, this rule clarifies the requirements for 
petitioners to prove that H-1B workers will be employed in a specialty 
occupation, as required by 8 U.S.C. 1182(i). This requirement is

[[Page 63940]]

intended to ensure that the H-1B classification is used as intended by 
Congress while ensuring that H-1B workers are not negatively affecting 
U.S. workers. The rule revises the definition of ``United States 
employer'' and defines the term ``employer-employee relationship'' to 
more clearly establish what it means for the petitioner to be a U.S. 
employer for purposes of H-1B petition eligibility. In addition, the 
rule limits the petition validity period for third-party placements to 
a maximum of 1 year. Finally, this rule includes consequences for the 
failure to comply with USCIS site visits--one of the key ways in which 
USCIS verifies information provided by the petitioner and ensures 
compliance with statutory and regulatory requirements. The rule makes 
clear that if USCIS is denied access to a worksite to conduct a site 
visit, USCIS can deny or revoke any H-1B petition for workers 
performing services at that worksite. These changes cumulatively limit 
the potential for fraud and abuse, particularly in third-party worksite 
cases, and better ensure that petitioners have insight into and a 
tangible connection to the work H-1B beneficiaries will be doing in 
order to ensure that H-1B beneficiaries will be employed by the 
petitioning employers in specialty occupations to fill structural skill 
and employment gaps in the U.S. labor force. Given exceptionally high 
unemployment in the United States--highest since the Great 
Depression,\151\ including in the industries where a large share of H-
1B workers is employed--these regulatory changes are urgently needed to 
ensure that the Nation continues toward economic recovery without 
disadvantaging U.S. workers.
---------------------------------------------------------------------------

    \151\ Andrew Soergel, Unemployment Highest Since Great 
Depression as Coronavirus Collapses Labor Market, U.S. News & World 
Report, May 8, 2020, https://www.usnews.com/news/national-news/articles/2020-05-08/unemployment-highest-since-great-depression-as-coronavirus-collapses-labor-market.
---------------------------------------------------------------------------

    Courts have found ``good cause'' under the APA when an agency is 
moving expeditiously to avoid significant economic harm to a program, 
program users, or an industry. For example, an agency may rely upon the 
good-cause exception to address ``a serious threat to the financial 
stability of [a government] benefit program,'' Nat'l Fed'n of Fed. 
Emps. v. Devine, 671 F.2d 607, 611 (D.C. Cir. 1982), and ``[c]ourts 
have upheld a `good cause' exception when notice and comment could 
result in serious damage to important interests. Id. at 611-12.
    Here, delay in responding to the COVID-19 economic emergency and 
its cataclysmic unemployment crisis threatens a ``weighty, systemic 
interest'' that this rule protects: Ensuring the employment of H-1B 
workers is consistent with the statutory requirements for the program 
and thus is not disadvantaging U.S. workers. Mack Trucks, Inc. v. 
E.P.A., 682 F.3d 87, 94 (D.C. Cir. 2012). Already, the impact of the 
COVID-19 unemployment crisis is projected to last a decade.\152\ Loss 
or prolonged lack of employment reduces or eliminates an unemployed 
person's income, and therefore has the tendency to reduce that person's 
demand for goods and services as a consumer. This reduced demand can 
cause further job losses among the producers that would otherwise 
supply the unemployed person's demands. Therefore, the faster the 
United States can address high unemployment, the better it can protect 
future employment. But the slower unemployment recovers in the present, 
the longer it will languish into the future. Good cause to forego 
notice and comment rulemaking in this case is ``an important safety 
valve to be used where delay would do real harm.'' U.S. Steel Corp. v. 
E.P.A., 595 F.2d 207, 214 (5th Cir. 1979). Each effort to strengthen 
the United States labor market for U.S. workers during this emergency, 
however marginal in isolation, is necessary to accomplish the goal of 
facilitating an economic recovery in the aggregate.
---------------------------------------------------------------------------

    \152\ See, e.g., Annekin Tappe, Unemployment rate won't recover 
for the next decade, CBO projects, CNN, July 2, 2020, https://www.cnn.com/2020/07/02/economy/congressional-budget-office-projections-economy/index.html; Congressional Budget Office, An 
Update to the Economic Outlook: 2020 to 2030 (July 2, 2020), 
available at https://www.cbo.gov/system/files/2020-07/56442-CBO-update-economic-outlook.pdf (last visited Aug. 11, 2020).
---------------------------------------------------------------------------

    Furthermore, the relatively limited scope of this rule also 
conforms it to the proper application of the ``good cause'' exception. 
First, this rule operates as an interim rule, not yet a final rule, and 
thus may be subject to change in the future. ``[T]he interim status of 
the challenged rule is a significant factor'' favoring the good cause 
``determination.'' Mid-Tex Elec. Co-op., Inc. v. F.E.R.C., 822 F.2d 
1123, 1132 (D.C. Cir. 1987). Second, the rule only affects several 
discrete aspects of the H-1B program, as discussed above.``[T]he less 
expansive the interim rule, the less the need for public comment.'' 
Tennessee Gas Pipeline Co. v. F.E.R.C., 969 F.2d 1141, 1144 (D.C. Cir. 
1992) (citing AFL-CIO v. Block, 655 F.2d at 1156). ``The more expansive 
the regulatory reach of these rules, of course, the greater the 
necessity for public comment.'' 655 F.2d at 1156.
    Therefore, consistent with the above authorities, the Department is 
bypassing notice and comment requirements of 5 U.S.C. 553(b) and (c) to 
urgently respond to the COVID-19 resulting economic crises, including 
high unemployment. Instead of amending its regulations through notice 
and comment rulemaking which is generally a lengthy process, DHS is 
taking post-promulgation comments and providing a 60-day delayed 
effective date to ensure that the regulated public has advanced notice 
to adjust to these regulatory changes.

B. Executive Orders 12866 (Regulatory Planning and Review), Executive 
Order 13563 (Improving Regulation and Regulatory Review), and Executive 
Order 13771 (Reducing Regulation and Controlling Regulatory Costs)

    Executive Orders (E.O.) 12866 and 13563 direct agencies to assess 
the costs, benefits, and transfers of available alternatives, and if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits, including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity. E.O. 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
Pursuant to E.O. 12866 (Regulatory Planning and Review), the Office of 
Information and Regulatory Affairs (OIRA), of the Office of Management 
and Budget has determined that this is an economically significant 
regulatory action. However, OIRA has waived review of this regulation 
under E.O. 12866, section 6(a)(3)(A).
1. Summary of Economic Impacts
    DHS is amending its regulations governing H-1B specialty occupation 
nonimmigrant workers in this interim final rule. DHS is implementing a 
number of revisions and clarifications to better ensure that each H-1B 
nonimmigrant worker will be working for a qualified petitioner and in a 
job which meets the statutory definition of specialty occupation, and 
to help protect the wages and working conditions of U.S. workers while 
improving the integrity of the H-1B program. This interim final rule 
amends the relevant sections of DHS regulations to reflect these 
changes.
    For this analysis, DHS uses the term ``H-1B petition'' or ``Form I-
129 H-1B'' to generally refer to the historical Form I-129 (H 
Classification Supplement, H-1B and H-1B1 data collection) and the 
planned Form I-129H1 that may replace the historical form. Where it is 
more

[[Page 63941]]

accurate to specifically refer to the Form I-129H1 that will take 
effect if the Fee Schedule Final Rule takes effect, DHS uses the term 
``Form I-129H1.'' \153\
---------------------------------------------------------------------------

    \153\ DHS estimates the costs and benefits of this rule using 
the newly published U.S. Citizenship and Immigration Services Fee 
Schedule and Changes to Certain Other Immigration Benefit Request 
Requirements, final rule (``Fee Schedule Final Rule''), and 
associated form changes, as the baseline. 85 FR 46788 (Aug. 3, 
2020). The Fee Schedule Final Rule was scheduled to go into effect 
on October 2, 2020. On September 29, 2020, the U.S. District Court 
for the Northern District of California issued a nationwide 
injunction, which prevents DHS from implementing the Fee Schedule 
Final Rule. See, Immigrant Legal Resource Center v. Wolf, No. 4:20-
cv-5883 (N.D. Cal. Sept. 29, 2020). DHS intends to vigorously defend 
this lawsuit and is not changing the baseline for this rule as a 
result of the litigation. Should DHS not prevail in the Fee Schedule 
Final Rule litigation, this rule may reflect overstated transfers, 
costs, and opportunity costs associated with the filing of the Form 
I-129.
---------------------------------------------------------------------------

    For the 10-year implementation period of the rule (FY2021 to 
FY2030), DHS estimates the annual net societal costs to be $51,406,937 
(undiscounted) in FY2021, $416,212,496 (undiscounted) in FY2022, 
$541,795,976 (undiscounted) from FY2023 to FY2027 each year, 
$388,592,536 (undiscounted) from FY2028 to FY2030 each year. DHS 
estimates the annualized net societal costs of the rule to be 
$430,797,915, annualized at 3-percent and $425,277,621, annualized at 
7-percent discount rates.
    Table 1 provides a detailed summary of the regulatory changes and 
their impacts.

                      Table 1--Summary of Provisions and Impacts of the Interim Final Rule
----------------------------------------------------------------------------------------------------------------
                                       Description of change      Estimated costs of      Estimated benefits of
              Provision                     to provision              provisions                provisions
----------------------------------------------------------------------------------------------------------------
(a) Revising the regulatory           The changes in the Form  Quantitative:             Quantitative:
 definition and standards for          I-129H1 result in       Petitioners--             Petitioners--
 specialty occupation so they align    additional time to       $24,949,861       None.
 more closely with the statutory       complete and file Form   costs annually for       DHS/USCIS--
 definition of the term.               I-129H1 as compared to   petitioners completing    None.
                                       the time burden to       and filing Form I-129H1  Qualitative:
                                       complete the current     petitions with an        Petitioners--
                                       Form I-129. The time     additional time burden    None.
                                       burden will change to    of 30 minutes.           DHS/USCIS--
                                       4.5 hours from the      DHS/USCIS--                By reducing
                                       current 4.0 hours. DHS   None.             uncertainty and
                                       applies the additional  Qualitative:               confusion surrounding
                                       time burden to          Petitioners--              disparities between
                                       complete and file Form   None.             the statute and the
                                       1-129H1 (0.5 hours per  DHS/USCIS--                regulations, this rule
                                       petition).               None.             will better ensure
                                                                                          that approvals are
                                                                                          only granted for
                                                                                          positions adhering
                                                                                          more closely to the
                                                                                          statutory definition.
                                                                                          This rule will also
                                                                                          result in more
                                                                                          complete petitions and
                                                                                          allow for more
                                                                                          consistent and
                                                                                          efficient adjudication
                                                                                          decisions.
(b) Requiring corroborating evidence  The petitioner must      Quantitative:             Quantitative:
 of work in a specialty occupation 8   establish, at the time  Petitioners--             Petitioners--
 CFR 214.2(h)(4)(iv).                  of filing, that it has   $17,963,871 in    None.
                                       actual work in a         costs annually to        DHS/USCIS--
                                       specialty occupation     petitioners to submit     None.
                                       available for the        contractual documents,   Qualitative:
                                       beneficiary as of the    work orders, or similar  Petitioners--
                                       start date of the        evidence required by      None.
                                       validity period as       this rule to establish   DHS/USCIS--
                                       requested on the         an employer-employee      Written
                                       petition. In addition,   relationship and          evidentiary
                                       all H-1B petitions for   qualifying employment.    requirements would
                                       beneficiaries who will  DHS/USCIS--                serve the critical
                                       be placed at a third-    None.             purpose of informing
                                       party worksite must     Qualitative:               USCIS of the terms and
                                       submit evidence         Petitioners--              conditions of the work
                                       showing that the         None.             to be performed.
                                       beneficiary will be     DHS/USCIS--
                                       employed in a            None.
                                       specialty occupation,
                                       and that the
                                       petitioner will have
                                       an employer-employee
                                       relationship with the
                                       beneficiary. USCIS may
                                       request copies of
                                       contracts, work
                                       orders, or other
                                       similar corroborating
                                       evidence on a case-by-
                                       case basis in all
                                       cases, regardless of
                                       where the beneficiary
                                       will be placed.

[[Page 63942]]

 
(c) Codifying in regulations          DHS is clarifying that   Quantitative:             Quantitative:
 existing authority to conduct site    inspections and other   Petitioners--             Petitioners--
 visits and other compliance           compliance reviews may   $1,042,702        None.
 reviews, and clarifying               include, but are not     annually for the total   DHS/USCIS--
 consequences for failure to allow a   limited to, a visit of   annual opportunity cost   None.
 site visit 8 CFR                      the petitioning          of time for worksite     Qualitative:
 214.2(h)(4)(i)(B)(7).                 organization's           inspections of H-1B      Petitioners--
                                       facilities, interviews   petitions.                None.
                                       with its officials,     DHS/USCIS--               DHS/USCIS--
                                       review of its records    None.            Conducting on-site
                                       related to compliance   Qualitative:               inspections and other
                                       with immigration laws   Petitioners--              compliance reviews is
                                       and regulations, and     None.             critical to detecting
                                       interviews with any     DHS/USCIS--                and deterring fraud
                                       other individuals or    None.                      and noncompliance.
                                       review of any other                                Failure or refusal of
                                       records that USCIS                                 the petitioner or
                                       considers pertinent to                             third-party worksite
                                       the petitioner's H-1B                              parties to cooperate
                                       eligibility and                                    in a site visit or
                                       compliance. An                                     verify facts may be
                                       inspection may be                                  grounds for denial or
                                       conducted at locations                             revocation of any H-1B
                                       including the                                      petition for workers
                                       petitioning                                        performing services at
                                       organization's                                     locations which are a
                                       headquarters,                                      subject of inspection,
                                       satellite locations,                               including any third-
                                       or the location where                              party worksites.
                                       the beneficiary works
                                       or will work,
                                       including third-party
                                       worksites, as
                                       applicable.
(d) Eliminating the general           This provision change    Quantitative:             Quantitative:
 itinerary requirement for H-1B        eliminates the general  Petitioners--             Petitioners--
 petitions 8 CFR 214.2(h)(2)(i)(B).    itinerary requirement    None.             Cost savings
                                       for H-1B petitions.     DHS/USCIS--                $4,490,968 annually.
                                                                None.             Total cost
                                                               Qualitative:               savings over 10-year
                                                               Petitioners--              ranges.
                                                                None.            DHS/USCIS--
                                                               DHS/USCIS--                None.
                                                                None.            Qualitative:
                                                                                         Petitioners--
                                                                                          None.
                                                                                         DHS/USCIS--
                                                                                          None.
(e) Limiting maximum validity period  Under current            Quantitative:             Quantitative:
 for third-party placement 8 CFR       regulations at 8 CFR    Petitioners--             Petitioners--
 214.2(h)(9)(iii)(A)(1).               214.2(h)(9)(iii), the    Costs $0 in       None.
                                       maximum validity         FY2021, $376,747,030 in  DHS/USCIS--
                                       period an H-1B           FY2022, $502,330,510 in   None.
                                       petition may be          FY2023-FY2027 each       Qualitative:
                                       approved is ``up to      year, $349,127,070 in    Petitioners--
                                       three years''. While     FY2028-FY2030 each year   None.
                                       the maximum validity     for the increasing Form  DHS/USCIS--
                                       period for a specialty   I-129H1 petitions to      USCIS would
                                       occupation worker is     request authorization     have greater oversight
                                       currently 3 years,       to continue H-1B          for those H-1B
                                       this interim final       employment for workers    petitions most likely
                                       rule will limit the      placed at third-party     to involve fraud and
                                       maximum validity         worksites.                abuse, thereby
                                       period to 1 year for    DHS/USCIS--                strengthening the H-1B
                                       workers placed at        None.             program.
                                       third-party worksites.  Qualitative:
                                       This provision will     Petitioners--
                                       result in more           None.
                                       extension petitions     DHS/USCIS--
                                       from petitioners with    None.
                                       beneficiaries who work
                                       at third-party
                                       worksites.
(f) Providing a Written Explanation   DHS will revise the      Quantitative:             Quantitative:
 for Certain H-1B Limited Approvals    regulations to require  Petitioners--             Petitioners--
 8 CFR 214.2(h)(9)(i).                 issuance of a brief      None.             None.
                                       explanation when an H-  DHS/USCIS--               DHS/USCIS--
                                       1B nonimmigrant          None.             None.
                                       petition is approved    Qualitative:              Qualitative:
                                       but USCIS grants an     Petitioners--             Petitioners--
                                       earlier validity         None.             Providing a
                                       period end date than    DHS/USCIS--                written explanation
                                       requested by the         None.             for limited validity
                                       petitioner.                                        period will help
                                                                                          ensure that the
                                                                                          petitioner is aware of
                                                                                          the reason for shorter
                                                                                          validity periods.
                                                                                         DHS/USCIS--
                                                                                          None.

[[Page 63943]]

 
(g) Familiarization Cost............  Familiarization costs    Quantitative:             Quantitative:
                                       comprise the            Petitioners--             Petitioners--
                                       opportunity cost of      One-time cost     None.
                                       the time spent reading   of $11,941,471 in        DHS/USCIS--
                                       and understanding the    FY2021.                   None.
                                       details of a rule in    DHS/USCIS--               Qualitative:
                                       order to fully comply    None.            Petitioners--
                                       with the new            Qualitative:               None.
                                       regulation(s).          Petitioners--             DHS/USCIS--
                                                                None.             None.
                                                               DHS/USCIS--
                                                                None.
----------------------------------------------------------------------------------------------------------------

    In addition to the impacts summarized above, Table 2 presents the 
accounting statement and as required by Circular A-4.\154\
---------------------------------------------------------------------------

    \154\ White House, Office of Management and Budget, Circular A-4 
(Sept. 17, 2003), available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf (last visited Aug. 11, 
2020).

                                      Table 2--OMB A-4 Accounting Statement
                                           [$, 2019 for FY2021-FY2030]
----------------------------------------------------------------------------------------------------------------
                                                               Minimum         Maximum
             Category                  Primary estimate       estimate        estimate        Source citation
----------------------------------------------------------------------------------------------------------------
                                                    BENEFITS
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Benefits       (3 percent) N/A......             N/A             N/A  RIA.
 (discount rate in parenthesis).
                                    (7 percent) N/A......             N/A             N/A  RIA.
                                   -------------------------------------------------------
Annualized quantified, but un-                               N/A                           RIA.
 monetized, benefits.
                                   -------------------------------------------------------
Unquantified Benefits.............  The purpose of the changes in this interim final rule  RIA.
                                     is to ensure that each H-1B nonimmigrant beneficiary
                                      will be working for a qualified petitioner and in a
                                     job that meets the statutory definition of specialty
                                          occupation. In addition, these changes will
                                      strengthen U.S. worker protections while improving
                                        the integrity of the H-1B program by preventing
                                                        fraud and abuse
----------------------------------------------------------------------------------------------------------------
                                                      COSTS
----------------------------------------------------------------------------------------------------------------
Annualized monetized costs          (3 percent)            ..............  ..............  RIA.
 (discount rate in parenthesis).     $430,797,915.
                                    (7 percent)            ..............  ..............  RIA.
                                     $425,277,621.
                                   -------------------------------------------------------
Annualized quantified, but un-                               N/A
 monetized, costs.
                                   -------------------------------------------------------
Qualitative (unquantified) costs..                           N/A
----------------------------------------------------------------------------------------------------------------
                                                    TRANSFERS
----------------------------------------------------------------------------------------------------------------
Annualized monetized transfers:     N/A..................             N/A             N/A
 ``on budget''.
From whom to whom?
Annualized monetized transfers:     N/A..................             N/A             N/A
 ``off-budget''.
From whom to whom?................  N/A..................             N/A             N/A
----------------------------------------------------------------------------------------------------------------
  Miscellaneous Analyses/Category                          Effects                            Source Citation
----------------------------------------------------------------------------------------------------------------
Effects on state, local, and/or                              N/A
 tribal governments.
                                   -------------------------------------------------------
Effects on small businesses.......                           N/A
                                   -------------------------------------------------------
Effects on wages..................                           N/A
                                   -------------------------------------------------------
Effects on growth.................                           N/A
----------------------------------------------------------------------------------------------------------------


[[Page 63944]]

2. Provisions of the Interim Final Rule With Economic Impacts
    The H-1B nonimmigrant visa program helps U.S. employers meet their 
business needs by temporarily employing foreign workers in specialty 
occupations. A specialty occupation is defined as an occupation that 
requires (1) theoretical and practical application of a body of highly 
specialized knowledge, and (2) the attainment of a bachelor's degree 
(or higher) in the specific specialty (or its equivalent) as a minimum 
qualification for entry into the occupation in the United States.\155\ 
The H-1B visa program also includes workers performing services related 
to a Department of Defense (DOD) cooperative research and development 
project or coproduction project, and services of distinguished merit 
and ability in the field of fashion modeling.
---------------------------------------------------------------------------

    \155\ See INA 214(i)(l), 8 U.S.C. 1184(i)(l).
---------------------------------------------------------------------------

    As discussed in detail in the preamble, the purpose of the changes 
in the rule is to better ensure that each H-1B nonimmigrant worker will 
be working for a qualified petitioner and in a job that meets the 
statutory definition of specialty occupation. Additionally, the changes 
help strengthen the integrity of the H-1B program and better ensure 
that visas are only awarded to qualified beneficiaries and petitioners.
    DHS is amending its regulations governing H-1B specialty occupation 
workers by providing revisions and clarifications that will better 
align the regulations with Congressional intent and will strengthen the 
integrity of the H-1B program. DHS is making the following amendments 
to the H-1B regulations through this interim final rule:
    (a) Revising the regulatory definition and criteria for determining 
whether the job the H-1B beneficiary will be employed in is in a 
specialty occupation, so they align more closely with the statutory 
definition of the term;
    (b) Requiring corroborating evidence of work in a specialty 
occupation;
    (c) Codifying in regulations existing authority to conduct site 
visits and other compliance reviews, and consequences for failure to 
allow a site visit; and
    (d) Eliminating the general itinerary requirement for H-1B 
petitions.
    (e) Limiting maximum validity period for third-party placements;
    (f) Providing a written explanation for certain H-1B approvals.
    In the sections that follow, DHS discusses the quantified economic 
impacts of each provision listed above except for provision f) which 
has no quantifiable economic impact. Provision f) is qualitatively 
discussed in benefits section vi.
3. Population
    In order to estimate the economic effects of this interim final 
rule, DHS forecasts the affected population for the ten-year period 
from the beginning of fiscal year (FY) 2021. The affected population is 
defined as the annual population of Form I-129H1 \156\ petitions for 
specialty occupation workers. DHS assumes that there are three primary 
components that determine the population forecast: The historical 
number of H-1B petitions, the expected change in the number of 
petitions due to macroeconomic changes, and the expected changes in the 
number of petitions due to provisions in this interim final rule.
---------------------------------------------------------------------------

    \156\ See supra notes 9 and 153.
---------------------------------------------------------------------------

    The historical number of H-1B petitions is summarized in Table 3 
below. In each year between FY2015 and FY2019, DHS received between 
123,203 and 141,190 initial H-1B petitions, with an annual average of 
133,451 initial petitions received. In addition, DHS received between 
235,566 and 279,946 H-1B extension petitions, with an annual average of 
268,405 extension petitions received. Ignoring macroeconomic effects 
and any effects of this interim final rule, DHS does not expect the 
number of initial petitions approved to trend upwards or downwards. 
This is borne out in the data: Neither the annual number of initial 
petitions nor the annual number of extension petitions exhibit a trend; 
both series rise and fall over the five-year historical period. Absent 
changes in macroeconomic conditions and changes due to this interim 
final rule, DHS would expect similar numbers in FY2021 to FY2030.

[[Page 63945]]



                              Table 3--Total Receipts, Approvals of Form I-129 H-1B by Type of Petition, FY 2015 to FY 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Number of       Number of                       Number of       Number of
                                                             Number of        initial        extension       Number of        initial        extension
                       Fiscal year                           petitions       petitions       petitions       petitions       petitions       petitions
                                                             received        received        received        approved        approved        approved
                                                               A = B + C               B               C       D = E + F               E               F
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015....................................................         368,160         132,594         235,566         238,956          91,267         147,689
2016....................................................         398,800         129,098         269,702         304,911          87,765         217,146
2017....................................................         403,149         123,203         279,946         326,798          82,041         244,757
2018....................................................         418,596         141,190         277,406         298,625          76,747         221,878
2019....................................................         420,574         141,170         279,404         365,199         124,816         240,383
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................       2,009,279         667,255       1,342,024       1,534,489         462,636       1,071,853
    5-yr average........................................         401,856         133,451         268,405         306,898          92,527         214,371
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Office of Policy and Strategy, Policy Research Division (PRD), Claims 3 and USCIS analysis. July 29, 2020.

    The number of H-1B petition submissions is partially dependent on 
macroeconomic conditions. For example, a drastic improvement in U.S. 
economic conditions may result in higher demand from U.S. employers for 
H-1B specialty occupation workers. DHS acknowledges future uncertainty 
surrounding the impacts of the COVID pandemic on the U.S. economy but 
does not expect this to significantly alter the affected population 
described. Consequently, the impacts of this interim final rule are 
evaluated based on an assumed continuation of the conditions observed 
in the historical data period (FY2015-2019) over the projected period 
(FY2021-2030). Thus, DHS does not incorporate any macroeconomic changes 
in its population forecast.
    Finally, the number of H-1B petitions may also change due to 
behavioral responses to provisions in the interim final rule. For 
example, provisions that increase filing costs may discourage potential 
petitioners from filing, and provisions that decrease the term of the 
H-1B validity period may result in increased filings by the same 
petitioners. DHS examined each of the provisions and determined that 
one provision would materially change the filing behavior of potential 
petitioners: This interim final rule will reduce the maximum validity 
period for third-party placement to one year compared to the three-year 
current maximum validity period. This provision will result in more 
petitions from petitioners with beneficiaries who work at third-party 
worksites. DHS incorporates this increase in its FY2021-2030 forecasts 
of the affected population. A detailed discussion of this provision's 
effect on the forecasted population of petition is provided in the 
corresponding cost analysis subsection.
---------------------------------------------------------------------------

    \157\ U.S. Department of Homeland Security, U.S. Citizenship and 
Immigration Services, Characteristics of H-1B Specialty Occupation 
Workers: Fiscal Year 2019 Annual Report to Congress October 1, 2018-
September 30, 2019, 19-21 (Mar. 5, 2020), https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf (last visited Aug. 11, 2020).
    \158\ The number of petitions approved is based on the validity 
start date. If validity start date is unavailable, approval is based 
on approval date. The number of petitions denied is based on the 
date the application was denied irrespective of the initial date of 
submission.
---------------------------------------------------------------------------

    DHS acknowledges that changes to the H-1B program may impact 
dependent H-4 nonimmigrants. DHS is unable to quantify the number of H-
1B workers that will be ineligible or no longer apply for a visa due to 
this interim final rule and is therefore unable to quantify the costs 
to the dependent H-4 nonimmigrants. H-1B nonimmigrant workers who are 
the beneficiaries of petitions that are denied as a result of the 
petitioner's failure to establish eligibility or noncompliance with the 
changes made by this rule would be required to seek eligible employment 
to avoid additional impacts to their dependents.
    DHS acknowledges that some industries may be affected more than 
others. According to FY2019 Annual Report to Congress,\157\ 
approximately half of H-1B petitions approved are for industries 
related to computers, software, or data processing. These industries 
would be most affected by this rule.
i. Historical Population of H-1B Specialty Occupation Worker Program
    Table 4 shows the number of receipts, approvals, and denials for 
all Form I-129 H-1B petitions including initials and extensions from 
FY2015 to FY2019.\158\ During this period, the total annual receipts 
for Form I-129 H-1B petitions have steadily increased each year and 
ranged from a low of 368,160 in FY 2015 to a high of 420,574 in FY 
2019. Accordingly, over the 5-year period, USCIS received an average of 
401,856 Form I-129 H-1B petitions and approved an average of 306,898 
petitions annually. DHS estimates the approval rate for Form I-129 H-1B 
petitions is about 78 percent and the denial rate is about 22 percent.

[[Page 63946]]



              Table 4--Total Receipts, Approvals, and Denials of Form I-129 H-1B Petitions With an H-1B Classification, FY 2015 to FY 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Number of
                                                             Number of       Number of       Number of       petitions     Approval rate    Denial rate
                       Fiscal year                           petitions       petitions       petitions      approved or         (%)             (%)
                                                           received \a\      approved         denied        denied \b\
                                                                       A               B               C       D = B + C         E = B/D         F = C/D
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015....................................................         368,160         238,956          69,179         308,135            77.5            22.5
2016....................................................         398,800         304,911          78,782         383,693            79.5            20.5
2017....................................................         403,149         326,798          82,316         409,114            79.9            20.1
2018....................................................         418,596         298,625         104,174         402,799            74.1            25.9
2019....................................................         420,574         365,199         106,311         471,510            77.5            22.5
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................       2,009,279       1,534,489         440,762       1,975,251  ..............  ..............
    5-yr average........................................         401,856         306,898          88,152         395,050            77.7            22.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Office of Policy and Strategy, Policy Research Division (PRD), Claims 3 and USCIS analysis. July 29, 2020. Number of Petition Denied data is
  pulled on April 22, 2020.
\a\ The number of petitions received includes all initial petitions and petitions for extension.
\b\ The sum of petitions approved or denied does not equal the number of petitions received because some petitions are revoked, withdrawn, or still
  pending.

    To determine the cost of preparing and filing a petition, DHS 
assumes that petitioners may use human resources (HR) specialists (or 
others that provide equivalent services) (hereafter HR specialist) or 
use lawyers or accredited representatives \159\ to complete and file 
Form I-129 H-1B petitions. A lawyer or accredited representative 
appearing before DHS must file Notice of Entry of Appearance as 
Attorney or Accredited Representative (Form G-28) to establish the 
eligibility and authorization of a lawyer or accredited representative 
to represent a client (applicant, petitioner, requestor, beneficiary or 
derivative, or respondent) in an immigration matter before DHS. Table 5 
presents the total number of Form G-28 filings by petitioners who filed 
Form I-129 H-1B. DHS estimates that about 74 percent (73.5 percent 
rounded up) of Form I-129 H-1B petitions were completed and filed by a 
lawyer or other accredited representative (hereafter lawyer). DHS 
assumes the remaining 26 percent of Form I-129 H-1B petitions were 
completed and filed by HR specialists.
---------------------------------------------------------------------------

    \159\ Accredited representatives are defined in 8 CFR 
292.1(a)(4) as a person representing an organization described in 8 
CFR 292.2 who has been accredited by the Board. USCIS limited its 
analysis to HR specialists, in-house lawyers, and outsourced lawyers 
to present estimate cost. However, USCIS understands that not all 
occupations employ individuals with these occupations and; 
therefore, recognizes equivalent occupations may also prepare and 
file these petitions.

         Table 5--Total Number of Forms G-28 a filed with Form I-129 H-1B Petitions, FY 2015 to FY 2019
----------------------------------------------------------------------------------------------------------------
                                                                                                Percent of form
                                                          Receipts of form  Number of form G-      I-129 H-1B
                      Fiscal year                            I-129 H-1B       28 Filed with     petitions filed
                                                             Petitions       form I-129 H-1B    with  form G-28
                                                                                petitions             (%)
                                                                         A                  B            C = B/A
----------------------------------------------------------------------------------------------------------------
2015...................................................            368,160            257,771               70.0
2016...................................................            398,800            273,497               68.6
2017...................................................            403,149            292,390               72.5
2018...................................................            418,596            324,206               77.5
2019...................................................            420,574            329,399               78.3
                                                        --------------------------------------------------------
    Total..............................................          2,009,279          1,477,263  .................
    5-year Average.....................................            401,856            295,453               73.5
----------------------------------------------------------------------------------------------------------------
**Source: Office of Policy and Strategy, Policy Research Division (PRD) and USCIS analysis. April 22, 2020.
\a\ Form G-28 has no filing fee.


[[Page 63947]]

    Petitioners who use lawyers or accredited representatives to 
complete and file Form I-129 H-1B petitions may either use an in-house 
lawyer or hire an outsourced lawyer.\160\ Of the total number of Form 
I-129 H-1B petitions filed between FY2015 and FY2019 by lawyers or 
accredited representatives (74 percent), DHS estimates that 24 percent 
of Form I-129 H-1B petitions filed by lawyers were filed by in-house 
lawyers while the remaining 50 percent were filed by outsourced 
lawyers.\161\
---------------------------------------------------------------------------

    \160\ DHS uses the terms ``in-house lawyer'' and ``outsourced 
lawyer'' to differentiate between the types of lawyers that may file 
Form I-129H1 on behalf of an employer petitioning for an H-1B 
beneficiary.
    \161\ DHS uses data from the longitudinal study conducted in 
2003 and 2007 on legal career and placement of lawyers, which found 
that 18.6, 55, and 26.2 percent of lawyers practice law at 
government (federal and local) institutions, private law firms, and 
private businesses (as inside counsel), respectively. See Dinovitzer 
et al (2009). After the JD II: Second Results from a National Study 
of Legal Careers, The American Bar Foundation and the National 
Association for Law Placemen (NALP) Foundation for Law Career 
Research and Education, Table 3.1, p. 27. https://www.law.du.edu/documents/directory/publications/sterling/AJD2.pdf.
    Among those working in private law firms and private businesses 
(55 and 26.2 percent, respectively), DHS estimates that while 67.7 
percent of lawyers practice law in private law firms, the remaining 
32.3 percent practice in private businesses (55 percent + 26.2 
percent = 81.2 percent, 67.7 percent = 55/81.2 *100, 32.2 percent = 
26.2/81.2*100). Because 74 percent of the H-1B petitions are filed 
by lawyers or accredited representatives, DHS multiplies 74 percent 
by 32.3 and 67.7 percent to estimate the proportion of petitions 
filed by in-house lawyers (working in private businesses) and 
outsourced lawyer (working in private law firms), respectively.
    24 (rounded) percent of petitions filed by in-house lawyers = 74 
percent of petitions filed by lawyers or accredited representatives 
x 32.3 percent of lawyers work in private businesses.
    50 (rounded) percent of petitions filed by in-house lawyers = 74 
percent of petitions filed by lawyers or accredited representatives 
x 67.7 percent of lawyers work in private law firms.
---------------------------------------------------------------------------

ii. Population Affected by the Rule
    DHS uses the estimates derived from the historical data shown in 
tables 4 and 5 to estimate the baseline population. Accordingly, the 
baseline population consists of 401,856 Form I-129 H-1B petitions 
received annually, which is disaggregated into the percent of Form I-
129 H-1B petitions filed by HR specialists (26 percent), in-house 
lawyers (24 percent), or outsourced lawyer (50 percent). Additionally, 
DHS uses these percentage shares to disaggregate the 306,898 H-1B 
petitions approved annually. For each provision, DHS further estimates 
the subpopulation that is affected by that particular provision using 
the same proportion of HR specialist, in-house lawyer, and outsourced 
lawyer. These estimates are detailed in the separate provision 
discussed in the cost analysis of this interim final rule.

          Table 6--Summary of Estimated Average Number of Petitions Received Annually by Type of Filer
----------------------------------------------------------------------------------------------------------------
                                                                                                     Number of
                                                     Estimated       Number of       Number of       petitions
               Affected population                    average        petitions       petitions       filed by
                                                    population      filed by HR    filed by in-     outsourced
                                                     affected       specialists    house lawyers      lawyers
                                                               A     B = A x 26%     C = A x 24%     D = A x 50%
----------------------------------------------------------------------------------------------------------------
Estimated average number of Form I-129 H-1B              401,856         104,483          96,445         200,928
 petitions received annually....................
Estimated average number of petitions approved           306,898          79,793          73,656         153,449
 annually.......................................
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.

    As discussed above, DHS forecasts an increase in the affected 
population due to the new interim final rule. Table 7 below summarizes 
this increase for FY2021-FY2030. The forecasted increase is discussed 
in detail in section ``Limiting maximum validity period for third-party 
placements.''

                    Table 7--Forecasting Total Receipts of Form I-129H1 for FY2021 to FY2030
----------------------------------------------------------------------------------------------------------------
                                                             Historical         Estimated
                                                           baseline: \a\       increase in      Total estimated
                      Fiscal year                            number of          number of          number of
                                                             petitions          petitions          petitions
                                                              received           received           received
----------------------------------------------------------------------------------------------------------------
2021...................................................            401,856                  0            401,856
2022...................................................            401,856            110,483            512,339
2023...................................................            401,856            147,311            549,167
2024...................................................            401,856            147,311            549,167
2025...................................................            401,856            147,311            549,167
2026...................................................            401,856            147,311            549,167
2027...................................................            401,856            147,311            549,167
2028...................................................            401,856            147,311            549,167
2029...................................................            401,856            147,311            549,167
2030...................................................            401,856            147,311            549,167
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.
\a\ Historical Baseline is the 5-year averages of received H-1B petitions for FY2015-2019 from Table 4.


[[Page 63948]]

4. Costs and Cost Savings of Regulatory Changes to Petitioners
i. Estimated Wage by Type of Filers
    As previously discussed, DHS assumes that a petitioner will use an 
HR specialist, in-house lawyer, or outsourced lawyer to complete and 
file Form I-129H1 petitions.\162\ In this analysis, DHS estimates the 
opportunity cost of time for these occupations using average hourly 
wage rates of $32.58 for HR specialists and $69.86 for lawyers.\163\ 
These average hourly wage rates do not account for worker benefits such 
as paid leave, insurance, and retirement. DHS accounts for worker 
benefits when estimating the opportunity cost of time by calculating a 
benefits-to-wage multiplier using the most recent DOL, Bureau of Labor 
Statistics (BLS) report detailing average compensation for all civilian 
workers in major occupational groups and industries. DHS estimates the 
benefits-to-wage multiplier is 1.46.\164\
---------------------------------------------------------------------------

    \162\ DHS limits its analysis to HR specialists, in-house 
lawyers, and outsourced lawyer to present estimated costs. However, 
DHS acknowledges that not all entities employ individuals with these 
occupations and, therefore, recognizes equivalent occupations may 
also prepare and file these petitions.
    \163\ See U.S. Dep't of Labor, Bureau of Labor Statistics, 
Occupational Employment Statistics, May 2019 National Occupational 
Employment and Wage Estimates-National, SOC 13-1071--Human Resources 
Specialist and SOC 23-1011--Lawyers, available at https://www.bls.gov/oes/2019/may/oes_nat.htm (last visited Aug. 11, 2020).
    \164\ The benefits-to-wage multiplier is calculated as follows: 
($37.10 Total Employee Compensation per hour) / ($25.47 Wages and 
Salaries per hour) = 1.457 = 1.46 (rounded) See U.S. Dep't of Labor, 
Bureau of Labor Statistics, Economic News Release, Employer Cost for 
Employee Compensation (December 2019), Table 1 (Mar. 19, 2020), 
available at https://www.bls.gov/news.release/archives/ecec_03192020.pdf (last visited Aug. 11, 2020). Employer costs per 
hour worked for employee compensation and costs as a percent of 
total compensation: Civilian workers, by major occupational and 
industry group.
---------------------------------------------------------------------------

    For petitioners filing Form I-129 H1, DHS calculates the average 
total rate of compensation as $47.57 per hour for an HR specialist, 
where the average hourly wage is $32.58 per hour worked and average 
benefits are $14.99 per hour.\165\ Additionally, DHS calculates the 
average total rate of compensation as $102.00 per hour for an in-house 
lawyer, where the average hourly wage is $69.86 per hour worked and 
average benefits are $32.14 per hour.\166\ Moreover, DHS recognizes 
that a petitioner may choose, but is not required, to hire an 
outsourced lawyer to prepare and file the H-1B petition. Therefore, DHS 
calculates the average total rate of compensation as $174.65 per hour 
for an outsourced lawyer, where the average hourly wage is $69.86 per 
hour worked and the average benefits are $104.79 per hour.\167\ Table 6 
shows the compensation rates used in this analysis.
---------------------------------------------------------------------------

    \165\ Calculation of the weighted mean hourly wage for HR 
specialists: $32.58 per hour x 1.46 = $47.566 = $47.57 (rounded) per 
hour.
    \166\ Calculation of weighted mean hourly wage for in-house 
lawyers: $102.00 average hourly total rate of compensation for in-
house lawyer = $69.86 average hourly wage rate for lawyer (in-house) 
x 1.46 benefits-to-wage multiplier.
    \167\ Calculation of weighted mean hourly wage for outsourced 
lawyer: $174.65 average hourly total rate of compensation for 
outsourced lawyer = $69.86 average hourly wage rate for lawyer (in-
house) x 2.5 conversion multiplier. DHS uses a conversion multiplier 
of 2.5 to estimate the average hourly wage rate for outsourced 
lawyer based on the hourly wage rate for an in-house lawyer. DHS has 
used this conversion multiplier in various previous rulemakings. For 
example, the DHS analysis in, Exercise of Time-Limited Authority to 
Increase the Fiscal Year 2018 Numerical Limitation for the H-2B 
Temporary Nonagricultural Worker Program, 83 FR 24905 (May 31, 
2018), used a multiplier of 2.5 to convert in-house attorney wages 
to the cost of outsourced attorney wages.

 Table 8--Summary of Estimated Wages for Form I-129 H-1B Petition Filers
                            by Type of Filer
------------------------------------------------------------------------
                                                              Hourly
                                                           compensation
                                                               rate
------------------------------------------------------------------------
Human Resources (HR) Specialist.........................          $47.57
In-house Lawyer.........................................          102.00
Outsourced Lawyer.......................................          174.65
------------------------------------------------------------------------
Source: USCIS analysis.

ii. Baseline Estimate of Current Costs
    In the current filing process, an employer petitioning on behalf of 
an H-1B specialty occupation worker must complete and file Form I-
129H1. The filing fee for Form I-129H1 is $555 per petition and the 
time burden to review instructions and complete and submit Form I-129H1 
is 4.0 hours per petition.\168\ To estimate petitioners' postage cost 
of mailing a package containing a completed Form I-129H1 petition and 
all required supporting documents to USCIS, DHS uses the shipping price 
of United States Postal Service (USPS) Domestic Priority Mail Express 
Flat Rate Envelopes, which is priced at $27.55 per package.\169\
---------------------------------------------------------------------------

    \168\ See supra notes 9 and 153.
    \169\ Although petitioners may choose other means of shipping, 
for the purposes of this analysis, DHS uses the shipping prices of 
United States Postal Service (USPS) Domestic Priority Mail Express 
Flat Rate Envelopes, which is currently priced at $27.55 per 
package, as a proxy estimate for the postage cost of mailing a 
package containing completed Form I-129H1. DHS also assumes that the 
package on average weighs three pounds and ships locally or in zone 
1 or 2. See U.S. Postal Service, Price List, Notice 123, Effective 
January 26, 2020, available at https://pe.usps.com/text/dmm300/Notice123.htm#_c011 (last visited Aug. 11, 2020).
---------------------------------------------------------------------------

    Public Law 114-113 requires payment of $4,000 for certain H-1B 
petitions filed by employers that meet the statute's 50 employee/50 
percent test. The Fee Schedule Final Rule, if it takes effect, would 
extend applicability of the Public Law 114-113 fee, such that it would 
be required for all H-1B petitions filed by those employers, unless the 
petition is an amended petition without an extension of stay 
request.\170\ In order to estimate the number of petitions that would 
require the Public Law 114-113 fee, DHS uses the estimated percentage 
of H-1B petitions filed by petitioners that have 50 or more employees 
and 50 percent of the employees are in the H-1B or L-1 visa 
classification: 26 percent. This fee applies to certain petitions filed 
on or before September 30, 2027.\171\ The affected population to which 
the $4,000 fee is applied is 104,483, which is 26 percent of 401,856, 
the average number of petitions received annually from FY2015 to 
FY2019.
---------------------------------------------------------------------------

    \170\ See supra note 126. Currently, the Public Law 114-113 fee 
is required for H-1B petitions filed by certain petitioners only 
when the Fraud Fee also applies, meaning that it is not currently 
required for H-1B extensions. While implementation of the Fee 
Schedule Final Rule has been enjoined, DHS nevertheless estimated 
costs of this interim final rule based on the fees that will be 
required if the injunction is lifted and the Fee Schedule Final Rule 
takes effect so as to avoid underestimating potential costs of this 
interim final rule.
    \171\ See supra note 126.
---------------------------------------------------------------------------

    DHS applies a fraud prevention and detection fee of $500 to certain 
H-1B petitions.\172\ In order to estimate the number of petitions that 
will be filed with the fraud prevention and detection fee DHS uses the 
percentage of H-1B petitions filed with the fraud prevention and 
detection fee in FY2018 (52 percent) and multiplied by the 5-year 
average number of petitions received annually from FY2015 to FY2019 in 
Table 9 below (401,856). Therefore, the fraud prevention and detection 
fee is applied to 208,965 petitions.
---------------------------------------------------------------------------

    \172\ See section 214(c)(12)(A) of the INA, 8 U.S.C. 
1184(c)(12)(A).

[[Page 63949]]



  Table 9--Number of H-1B Petition Filed for Fraud Prevention and Detection Fee and ACWIA Fee or Exemption From
                                              ACWIA Fee for FY 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                     Estimated
                                                                      FY2018        Percentage       petitions
----------------------------------------------------------------------------------------------------------------
Total Petitions Filed...........................................         418,799  ..............       401,856 *
----------------------------------------------------------------------------------------------------------------
                                       Fraud Prevention and Detection Fee
----------------------------------------------------------------------------------------------------------------
Total Petitions Filed with Fee..................................         218,333         52% \b\     208,965 \g\
----------------------------------------------------------------------------------------------------------------
                                                    ACWIA Fee
----------------------------------------------------------------------------------------------------------------
Total Petitions Filed:
    Without any fee exemptions..................................         277,979         66% \c\     265,225 \h\
    With at least one exemption.................................         140,820         34% \d\     136,631 \i\
Size of Employer:
    Full time employees <26.....................................          39,333         11% \e\      29,175 \j\
    Full time employees >25.....................................         316,972         89% \f\     235,946 \k\
    Number of employees unknown.................................          62,494  ..............  ..............
    Total without unknown.......................................     356,305 \a\  ..............  ..............
----------------------------------------------------------------------------------------------------------------
Source: Report on H-1B Petitions, Fiscal Year 2018 Annual Report to Congress, March 18, 2019 (Table 2 and Table
  4).
* 5-year average number of petitions received annually from FY2015 to FY2019 (401,856) is from Table 4.
\a\ Total without unknown (356,305) = Total Petitions Filed FY2018 (418,799) - Number of employees unknown
  (62,494).
\b\ Percentage of Total Petitions filed with Fraud Fee FY2018 (52%) = Total petitions filed with Fee FY2018/
  Total petitions filed FY2018 = 218,333/418,799.
\c\ Percentage of Total petitions filed without any ACWIA fee exemptions FY2018 (66%) = Total petitions filed
  without any ACWIA fee exemption FY2018/Total petitions filed FY2018 = 277,979/418,799.
\d\ Percentage of Total petitions filed with at least one ACWIA fee exemptions FY2018 (34%) = Total petitions
  filed with at least one ACWIA fee exemption FY2018/Total petitions filed FY2018 = 140,820/418,799.
\e\ Percentage of Full-time employees <26 FY2018 (11%) = Full time employees <26 FY2018/Total without unknown
  FY2018 = 39,333/356,305.
\f\ Percentage of Full-time employees >25 FY2018 (89%) = Full time employees >25 FY2018/Total without unknown
  FY2018 = 316,972/356,305.
\g\ Total estimated petitions filed with Fraud Fee (208,965) = 5-year average number of petitions received
  annually from FY2015 to FY2019 (401,856) * Percentage of Total Petitions filed with Fraud Fee FY2018 (52%).
\h\ Total estimated petitions filed without any ACWIA fee exemptions (265,225) = 5-year average number of
  petitions received annually from FY2015 to FY2019 (401,856) * Percentage of Total petitions filed without any
  ACWIA fee exemptions FY2018 (66%).
\i\ Total estimated petitions filed with at least one ACWIA fee exemptions FY2019 (136,631) = 5-year average
  number of petitions received annually from FY2015 to FY2019 (401,856) * Percentage of Total petitions filed
  with at least ACWIA fee exemptions FY2018 (34%).
\j\ Estimated Full-time employees <26 (29,175) = Total estimated petitions filed without any ACWIA fee
  exemptions (265,225) * Percentage of Full-time employees <26 FY2018 (11%).
\k\ Estimated Full-time employees >25 (235,946) = Total estimated petitions filed without any ACWIA fee
  exemptions (265,225) * Percentage of Full-time employees >25 FY2018 (89%).

    DHS also applies the American Competitiveness and Workforce 
Improvement Act (ACWIA) fee.\173\ Certain petitions are exempt from the 
ACWIA fee and, when required, the amount of the fee depends on the size 
of the entity. It is $750 for employers with 25 or fewer full-time 
employees or $1,500 for employers with 26 or more full-time employees. 
In order to estimate the number of petitions that will be filed with 
the ACWIA fee, DHS uses the percentage of H-1B petitions filed with the 
ACWIA fee in FY2018 (66 percent) and the 5-year average of the annual 
number of H-1B petitions received (401,856) from Table 9 above. Total 
estimated petitions filed with the ACWIA fee is 265,225 as described in 
Table 9. Among the estimated petitions filed with the ACWIA fee 
(265,225) using the percentage of H-1B petitions filed with the ACWIA 
fee in FY2018 there are 29,175 (11 percent) employers with 25 or fewer 
full-time employees and 235,946 (89 percent) employers with 26 or more 
full-time employees also as described in Table 9. Based on these 
estimated annual number of petitions, DHS estimates that 29,175 
petitions would require an ACWIA fee of $750 and 235,946 petitions 
would require an ACWIA fee of $1,500 for each fiscal year for FY2021 to 
FY2030.
---------------------------------------------------------------------------

    \173\ See INA 214(c)(9), 8 U.S.C. 1184(c)(9).
---------------------------------------------------------------------------

    Table 10 shows the total annual cost of filing Form I-129 H-1B 
using the historical data on petitions received for FY2015 to FY2019. 
The baseline population is estimated using the 5-year average of the 
annual number of H-1B petitions received from FY2015 to FY2019 
(401,856) in Table 4. Various fees are applied to the proportion of the 
baseline population as described in Table 9. DHS estimates the total 
annual cost under current regulation is $1,331,915,275, or an average 
of $3,314 per petition received. This baseline cost per petition 
received is applied to the baseline population for FY2021 to 
FY2027.\174\ Since the Public Law 114-113 Fee of $4,000 is currently 
set to expire at the end of FY2027, DHS removes this fee from its 
baseline per petition cost in fiscal years FY2028 to FY2030. For those 
years, the baseline cost per petition received is estimated to be 
$2,274 per petition received.\175\
---------------------------------------------------------------------------

    \174\ Average per petition received cost ($3,314, rounded) = 
Total annual cost ($1,331,915,275)/5-year average petition received 
annually (401,856) for FY2015 to FY2019.
    \175\ Average per petition received cost without Public Law 114-
113 Fee of $4,000 ($2,274, rounded) = Total annual cost without 
Public Law 114-113 Fee of $4,000 ($913,983,275)/5-year average 
petition received annually (401,856) for FY2015 to FY2019; Total 
annual cost without Public Law 114-113 Fee of $4,000 ($913,983,275) 
= Total annual cost ($1,331,915,275)--Public Law 114-113 fee 
($417,932,000) from Table 10.

[[Page 63950]]



             Table 10--Estimated Annual Baseline (Current) Cost of Filing Form I-129 H-1B Petitions
----------------------------------------------------------------------------------------------------------------
                                                     Affected       Time burden    Compensation    Total annual
                   Cost items                       population        (hours)          rate            cost
                                                               A               B               C   D = A x B x C
----------------------------------------------------------------------------------------------------------------
Opportunity cost of time to complete Form I-129
 petitions by:
    HR specialist...............................         104,483             4.0          $47.57     $19,881,025
    In-house lawyer.............................          96,445             4.0          102.00      39,349,560
    Outsourced lawyer...........................         200,928             4.0          174.65     140,368,301
Form I-129 filing fee cost......................         401,856  ..............             555     223,030,080
Public Law 114-113 fee..........................         104,483  ..............           4,000     417,932,000
Fraud prevention and detection fee..............         208,965  ..............             500     104,482,500
ACWIA fee <26...................................          29,175  ..............             750      21,881,059
ACWIA fee >25...................................         235,946  ..............           1,500     353,919,617
Postage cost per package to mail completed Form          401,856  ..............           27.55      11,071,133
 I-129..........................................
                                                 ---------------------------------------------------------------
        Total Baseline Cost.....................  ..............  ..............  ..............   1,331,915,275
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.

    DHS estimates the total annual additional costs of the regulatory 
changes or cost savings from the regulatory changes. DHS presents each 
of these costs/cost savings separately in sections that follow.
iii. Detailed Economic Effects of Each Provision in the Interim Final 
Rule
    The interim final rule changes the requirements governing the 
petitioning process for H-1B specialty occupation workers, which will 
result in additional costs for petitioners. The additional costs 
include increase in time burden of completing and filing an H-1B 
petition, submitting contractual documents, work orders, or similar 
documentary evidence if the beneficiary will work at a third-party 
worksite, requesting authorization to continue H-1B employment beyond 1 
year for a subset of petitioners, codifying existing authority for 
conducting worksite inspections, and clarifying petition denials or 
revocations for failure to cooperate with a site inspection. In 
addition, the interim final rule will eliminate the general itinerary 
requirement for H-1B petitions which will result in cost savings for 
petitioners.
    The additional cost and cost savings discussed above reflect 
changes to per petition costs. In addition, the interim final rule will 
also increase the affected population. To better illustrate the effects 
of each provision, DHS disentangles the effects of changes in per-
petition costs from the effects of changes in the affected population. 
This is illustrated in the Diagram 1 below.\176\ In Diagram 1, the 
vertical axis denotes per-petition costs and the horizontal axis 
denotes the affected population. The area of the shaded rectangle thus 
represents the current, baseline cost of preparing and filing H-1B 
petitions to petitioners. The provisions that affect the per-petition 
cost, including additional costs changes in Form I-129 H-1B, submitting 
corroborating evidence, and additional cost savings from itinerary 
requirement exemption, are represented as rectangles above the baseline 
population, denoting that the additional costs are calculated based on 
the baseline population. Separately, DHS adds a rectangle to the right 
of the baseline cost rectangle to represent the additional costs 
resulting from population changes due to the provision to limit the 
maximum validity period for third-party worksites. As the rectangle 
illustrates, DHS incorporates the per-petition cost increases into the 
cost calculation of the population increase. Finally, DHS separately 
estimates the cost of worksite inspections, which is represented by the 
small rectangle on the top. The number of worksite inspections does not 
depend on the number of H-1B petitions received and is not expected to 
be affected by the provision that limits the validity period.
---------------------------------------------------------------------------

    \176\ Diagram 1 excludes a one-time familiarization cost.

---------------------------------------------------------------------------

[[Page 63951]]

[GRAPHIC] [TIFF OMITTED] TR08OC20.002

a. Revising the Regulatory Definition and Standards for Specialty 
Occupation So They Align More Closely With the Statutory Definition of 
the Term
1. Additional Costs Due To Changes in Form I-129 for H-1B Petitions
    DHS is amending its regulations governing H-1B specialty occupation 
workers by making a number of revisions and clarifications to 
strengthen the integrity of the H-1B program, thereby better protecting 
the wages and working conditions of U.S. workers. DHS is amending Form 
I-129H1, which must be filed by petitioners on behalf of H-1B 
beneficiaries, in order to align them with the regulatory changes DHS 
is making in the interim final rule. The changes to Form I-129H1 will 
result in an increased time burden to complete and submit the form.
    As discussed, the current estimated time burden to complete and 
file Form I-129H1 takes a total of 4.0 hours per petition.\177\ As a 
result of the changes in this interim final rule, DHS estimates the 
total time burden to complete and file Form I-129H1 will be 4.5 hours 
per petition, to account for the additional time petitioners will spend 
on reviewing instructions, gathering the required documentation and 
information, completing the request, preparing statements, attaching 
necessary documentation, and submitting the request. DHS estimates the 
time burden will increase by a total of 30 minutes (0.5 hours) per 
petition.\178\
---------------------------------------------------------------------------

    \177\ See supra note 9.
    \178\ 0.5 hours additional time to complete and file new Form I-
129H1 = (4.5 hours to complete and file new Form I-129 H1)--(4.0 
hours to complete and file current Form I-129H1).
---------------------------------------------------------------------------

    To estimate the additional cost of filing due to changes in Form I-
129H1 petitions, DHS applies the additional estimated time burden to 
complete and file Form I-129H1 (0.583 hours) to the respective total 
population and compensation rate of who may file, including an HR 
specialist, in-house lawyer, or outsourced lawyer.
    The total affected population for this provision is the number of 
petitions, including both initial and continuing petitions, for FY2021-
2030. The total affected population for FY2021-2030 is estimated using 
the 5-year average of the annual number of H-1B petitions received for 
FY2015-FY2019, as listed in Table 4. Although the provision's increase 
in time burden may affect the total affected population, DHS believes 
that any effect would be de minimis: The estimated cost of the 
additional 30 minutes of time burden per petition is $62,\179\ which is 
less than 0.06 percent of $107,000,\180\ the average annual

[[Page 63952]]

earnings of all H-1B nonimmigrant workers. DHS believes that this cost 
increase may lead to de minimis changes on the margin to the set of 
petitioners.
---------------------------------------------------------------------------

    \179\ Calculation: The estimated cost of the additional 30 
minutes of time burden per petition ($72, rounded) = ($47.57 (HR 
specialist hourly wage rate, Table 6) * 26% (percent of H-1B 
petitions filed by HR specialist, Table 5) + $102 (In-house lawyer 
hourly wage rate, Table 6) * 24% (percent of H-1B petitions filed by 
in-house lawyer, Table 5) + $174.65 (Outsourced lawyer hourly wage 
rate, Table 6) *50% (percent of H-1B petitions filed by outsourced 
lawyer, Table 5))*0.5 (30 minute increase in time burden).
    \180\ This is the annual average earning of all H-1B 
nonimmigrant workers in all industries with known occupations 
(excluding industries with unknown occupations) for FY 2019. It is 
what employers agreed to pay the nonimmigrant workers at the time 
the petitions were filed and estimated based on full-time employment 
for 12 months, even if the nonimmigrant worker worked fewer than 12 
months. Source: USCIS, March 5, 2020. See Characteristics of H-1B 
Specialty Occupation Workers, Fiscal Year 2019, p.16, Table 10, 
supra note 21.
---------------------------------------------------------------------------

    As shown in Table 11, DHS estimates the total additional annual 
cost to petitioners of completing and filing Form I-129H1 petitions 
will be approximately $24,949,861, or an average of $62 per petition 
received.\181\
---------------------------------------------------------------------------

    \181\ Additional annual cost per petition received for 
completing and filing Form I-129 H-1B petitions ($62, rounded) = 
Total baseline cost ($24,949,861)/5-year average petition received 
annually (401,856).

Table 11--Additional Opportunity Costs of Time to Petitioners for Filing Form I-129H1 Petitions From an Increase
                                                 in Time Burden
----------------------------------------------------------------------------------------------------------------
                                                                    Additional
                                                  Total affected  time burden to   Compensation
                   Cost items                       population     complete form       rate         Total cost
                                                                  I-129H (hours)
                                                               A               B               C   D = A x B x C
----------------------------------------------------------------------------------------------------------------
Opportunity cost of time to complete Form I-129
 H1 petitions by:
    HR specialist...............................         104,483             0.5          $47.57      $2,485,128
    In-house lawyer.............................          96,445             0.5          102.00       4,918,695
    Outsourced lawyer...........................         200,928             0.5          174.65      17,546,038
----------------------------------------------------------------------------------------------------------------
        Total...................................         401,856  ..............  ..............      24,949,861
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.

b. Requiring Corroborating Evidence of Work in a Specialty Occupation
1. Costs of Submitting Contracts, Work Orders, or Similar Evidence 
Establishing Specialty Occupation and Employer-Employee Relationship
    Petitioners who regularly place their workers at third-party 
worksites often submit uncorroborated statements describing the role 
the H-1B beneficiary will perform at the third-party worksite. Such 
statements by the petitioner, without additional corroborating 
evidence, are generally insufficient to establish by a preponderance of 
the evidence that the H-1B beneficiary will actually perform specialty 
occupation work, and that the petitioner will have an employer-employee 
relationship with the beneficiary. Therefore, where a beneficiary will 
be placed at one or more third-party worksites, DHS will require the 
petitioner to submit evidence such as contracts, work orders, or other 
similar evidence to establish that the beneficiary will perform 
services in a specialty occupation at the third-party worksite(s), and 
that the petitioner will have an employer-employee relationship with 
the beneficiary.\182\
---------------------------------------------------------------------------

    \182\ See new 8 CFR 214.2(h)(4)(iv)(C).
---------------------------------------------------------------------------

    DHS estimates the time burden required to gather and submit 
corroborating evidence (such as contracts, work orders, or similar 
evidence) for petitioners with third-party worksite beneficiaries. DHS 
notes that corroborating evidence will have to be detailed enough to 
provide a sufficiently comprehensive view of the work available, and 
the terms and conditions under which the work will be performed at the 
third-party worksite. Since these petitioners will generally need to 
provide more documentation than petitioners who do not seek to employ 
H-1B workers at third-party worksite locations, DHS estimates the time 
burden for petitioners will be approximately 1 hour to gather and 
submit these documents as required under this interim final rule.\183\ 
DHS requests public comment on this time burden estimate.
---------------------------------------------------------------------------

    \183\ DHS notes that it is using approximate time burden 
estimates in this analysis because DHS does not have relevant 
information on how much time it would take affected petitioners to 
gather and submit corroborating evidence as required in the interim 
final rule. Therefore, DHS assumes 1 hour for the time to gather and 
submit written evidentiary document requirements.
---------------------------------------------------------------------------

    Since the terms ``worksite'' and ``third-party worksite'' are 
referenced in the new regulations, this interim final rule defines 
these terms. For example, the new regulation defining an employer-
employee relationship refers to the ``worksite'' where the beneficiary 
will be employed as a relevant factor. The term ``off-site'' used on 
the Form I-129 H-1B has the same meaning as ``third-party worksite.'' 
\184\ Therefore, DHS uses the data on off-site locations to forecast 
the number of petitions involving a third-party worksite. To estimate 
the population impacted by the requirements for third-party worksites, 
DHS uses data on approved Form I-129 H-1B petitions. DHS uses available 
data for FY 2018 and FY 2019 to estimate the percentage of petitions 
that are approved for third-party worksites. Accordingly, Table 12 
shows the average number of Form I-129 H-1B petitions approved in FY 
2018 and FY 2019 for workers placed at off-site location. Nearly 36 
percent of petitions were approved for workers placed at off-site 
locations.\185\ DHS uses the estimated 36 percent as the proportion of 
both the population of received petitions and the population of 
approved petitions that are third-party worksite.
---------------------------------------------------------------------------

    \184\ See supra note 27.
    \185\ Estimate based on data obtained from the Office of Policy 
and Strategy, Policy Research Division (PRD). 36 (rounded) percent 
petitions approved for off-site locations in FY 2018 and FY2019 = 
239,916 total petitions approved for off-site locations in FY 2018 
and FY2019 / 671,209 total petitions approved in FY 2018 and FY2019.

                  Table 12--Form I-129 H-1B Petitions for Workers Placed at Off-Site Locations
----------------------------------------------------------------------------------------------------------------
                                                           Total approved
                                                           petitions for                       Percent placed at
                      Fiscal year                        workers placed at    Total approved        off-site
                                                              off-site          petitions        locations (%)
                                                             locations
----------------------------------------------------------------------------------------------------------------
2018...................................................            112,071            302,159               37.1

[[Page 63953]]

 
2019...................................................            127,845            369,050               34.6
                                                        --------------------------------------------------------
    Total..............................................            239,916            671,209               71.7
    2-year Average.....................................            119,958            335,605              35.8
----------------------------------------------------------------------------------------------------------------
Source: USCIS, Office of Policy and Strategy, Policy Research Division (PRD). May 27, 2020.

    Based on DHS' previous estimate of the average annual total number 
of receipts of Form I-129 H-1B petitions (401,856), we estimate that 
approximately 144,668 petitions would be filed requesting workers to be 
placed at third-party worksites.\186\ To estimate the total cost of 
submitting documentary evidence as per the requirements of this 
provision, DHS multiplies the rate of compensation according to who 
would file the petition (an HR specialist, in-house lawyer, or 
outsourced lawyer, respectively) among the affected population by the 
estimated time burden to submit the documents. As shown in Table 13, 
DHS estimates that the total annual cost of submitting corroborating 
evidence (such as contracts, work orders or similar documents) required 
by this rule is $17,963,871 for the population of 144,668 petitions of 
workers placed at third-party worksites.
---------------------------------------------------------------------------

    \186\ DHS uses the proportion of workers approved for off-site 
locations petitions (36 percent) as an approximate measure to 
estimate the number of workers to be placed at third-party worksites 
from the total number of petitions filed. 144,668 petitions filed 
requesting workers to be placed at third-party worksites = 401,856 
petitions filed annually x 36 percent.
---------------------------------------------------------------------------

    To estimate the effect of this provision in conjunction with other 
provisions that change the forecasted population, DHS calculates the 
cost of this provision on a per-petition-received basis. The annual 
cost of this provision, divided amongst the entire population of 
received petitions, would average out to approximately $45 per received 
petition.\187\
---------------------------------------------------------------------------

    \187\ The annual cost of the provision per received petition 
($45) = Total annual cost of submitting corroborating evidence 
($17,963,871)/Total number of H-1B petitions filed annually 
(401,856).

      Table 13--Form I-129 H1 Petitioners' Cost for Submitting Corroborating Evidence To Establish That the
      Beneficiary Will Be Employed by the Petitioner in a Specialty Occupation at the Third-Party Worksite
----------------------------------------------------------------------------------------------------------------
                                                     Affected       Time burden    Compensation
                   Cost items                       population        (hours)          rate         Total cost
                                                               A               B               C   D = A x B x C
----------------------------------------------------------------------------------------------------------------
Opportunity cost of time to complete Form I-129
 H1 petitions by:
    HR specialist a.............................          37,614               1          $47.57      $1,789,298
    In-house lawyer b...........................          34,720               1          102.00       3,541,440
    Outsourced lawyer c.........................          72,334               1          174.65      12,633,133
                                                 ---------------------------------------------------------------
        Total...................................         144,668  ..............  ..............      17,963,871
----------------------------------------------------------------------------------------------------------------
Source: USCIS Analysis.
a 37,614 petitions filed by HR specialist annually = 144,668 petitions request workers to be placed at third-
  party worksite annually x 26 percent.
b 34,720 petitions filed by in-house lawyers annually = 144,668 petitions request workers to be placed at third-
  party worksites annually x 24 percent.
c 72,334 petitions filed by outsourced lawyer annually = 144,668 petitions request workers to be place at third-
  party worksites annually x 50 percent.

    Although the provision's increase in time burden may affect the 
total affected population, DHS believes that any effect would be de 
minimis: The estimated cost of the additional one hour of time burden 
per petition involving third-party worksites is $124,\188\ which is 
less than 0.12 percent of $107,000,\189\ the average annual earnings of 
all H-1B nonimmigrant workers. DHS believes that this cost increase is 
so small that no potential petitioner would change their decision to 
file based solely on this change.
---------------------------------------------------------------------------

    \188\ Calculation: The estimated cost of the additional one hour 
of time burden per petition ($124, rounded) = $47.57 (HR specialist 
hourly wage rate, Table 6) * 26% (percent of H-1B petitions filed by 
HR specialist, Table 5) + $102 (In-house lawyer hourly wage rate, 
Table 6) * 24% (percent of H-1B petitions filed by in-house lawyer, 
Table 5) + $174.65 (Outsourced lawyer hourly wage rate, Table 6) * 
50% (percent of H-1B petitions filed by outsourced lawyer, Table 5).
    \189\ This is the annual average earning of all H-1B 
nonimmigrant workers in all industries with known occupations 
(excluding industries with unknown occupations) for FY 2019. It is 
what employers agreed to pay the nonimmigrant workers at the time 
the petitions were filed and estimated based on full-time employment 
for 12 months, even if the nonimmigrant worker worked fewer than 12 
months. See Characteristics of H-1B Specialty Occupation Workers, 
Fiscal Year 2019, p.16, Table 10, supra note 21.
---------------------------------------------------------------------------

c. Codifying in Regulations Existing Authority To Conduct Site Visits 
and Other Compliance Reviews and Clarifying Consequences for Failure To 
Allow a Site Visit
1. Cost of Worksite Inspections
    Using its general authority, USCIS may conduct audits, on-site 
inspections, compliance reviews, or investigations to help verify a 
petitioner's and beneficiary's H-1B eligibility and better ensure that 
all laws have been complied with before and after approval of such 
benefits.\190\ The existing authority to

[[Page 63954]]

conduct on-site inspection is critical to the integrity of the H-1B 
program to detect and deter fraud and noncompliance. In this rule, DHS 
is adding regulations specific to the H-1B program to codify its 
existing authority and clarify the scope of inspections--particularly 
on-site inspections--and the consequences of a petitioner's or third 
party's refusal or failure to fully cooperate with these inspections.
---------------------------------------------------------------------------

    \190\ See Section 103 of the INA and 8 CFR part 2.1. As stated 
in subsection V.A.5.ii(d) of this analysis, this interim final rule 
will also clarify the possible scope of an inspection, which may 
include the petitioning organization's headquarters, satellite 
locations, or the location where the beneficiary works or will work, 
including third-party worksites, as applicable.
---------------------------------------------------------------------------

    To be clear, USCIS has historically conducted site visits and has 
had the authority to deny or revoke petitions for reasons including 
noncompliance with a site visit request. However, the authority to 
conduct a site visit is not currently codified in CFR for the H-1B 
program. Since this interim final rule newly codifies this authority, 
DHS quantitatively estimates the costs associated with conducting site 
visits. Also, the provision delineates that failure or refusal to 
cooperate with a site visit request and allow USCIS to verify facts may 
result in denial or revocation. DHS considers this part of the 
provision as a clarification to existing regulations \191\ and 
discusses the benefits of this clarification qualitatively.
---------------------------------------------------------------------------

    \191\ See 8 CFR 214.2(h)(11)(iii)(A).
---------------------------------------------------------------------------

    In July 2009, USCIS started the Administrative Site Visit and 
Verification Program (ASVVP) \192\ as an additional method to verify 
information in certain visa petitions under scrutiny. Under this 
program, Fraud Detection and National Security (FDNS) officers were 
authorized to make unannounced site visits to collect information as 
part of a compliance review, which verifies whether petitioners and 
beneficiaries are following the immigration laws and regulations that 
are applicable in a particular case. This process includes researching 
information in government databases, reviewing public records and 
evidence accompanying the petition, interviewing the petitioner and/or 
beneficiary, and conducting site visits. Once the site visit is 
completed, the FDNS officers write a Compliance Review Report, 
identifying any indicators of fraud or noncompliance to assist USCIS in 
subsequent final adjudicative decisions (for example, a notice of 
intent to revoke the petition approval).
---------------------------------------------------------------------------

    \192\ See U.S. Citizenship and Immigration Services--
Administrative Site Visit and Verification Program, available at 
https://www.uscis.gov/about-us/directorates-and-program-offices/fraud-detection-and-national-security/administrative-site-visit-and-verification-program (last visited Aug. 11, 2020).
---------------------------------------------------------------------------

    Site visits conducted by USCIS have uncovered noncompliance in the 
H-1B program. From FY 2013 to 2016, USCIS conducted 30,786 H-1B 
compliance reviews, of which 3,811 (12.4 percent) were found to be 
noncompliant.\193\ From FY 2016 to March 27, 2019, USCIS conducted 
20,492 H-1B compliance reviews and found 2,341 (11.4 percent) to be 
noncompliant.\194\ However, when disaggregated by worksite location, 
the noncompliance rate is found to be higher for workers placed at an 
off-site or third-party location compared to workers placed at a 
petitioner's onsite location (21.7 percent and 9.9 percent, 
respectively).\195\ As a result, starting in 2017, USCIS began 
conducting more targeted site visits related to the H-1B program, 
focusing on the cases of H-1B-dependent employers (employers who have a 
high ratio of H-1B workers compared to U.S. workers, as defined by 
statute) for whom USCIS cannot validate the employer's basic business 
information through commercially available data, and on employers 
petitioning for H-1B workers who work off-site at another company or 
organization's location.
---------------------------------------------------------------------------

    \193\ See supra note 132.
    \194\ USCIS, Office of Policy and Strategy, Policy Research 
Division (OP&S PRD), Summary of H-1B Site Visits Data.
    \195\ Id.
---------------------------------------------------------------------------

    DHS seeks to ensure that the H-1B program is used appropriately and 
the interests of U.S. workers are protected. Hence, the interim final 
rule codifies in regulation USCIS' existing authority to conduct site 
visits and other compliance reviews and will make clear that 
inspections and other compliance reviews may include, but are not 
limited to, worksite visits including petitioners' headquarters, 
satellite locations, or third-party worksites, and interviews or review 
of records, as applicable.
    The interim final rule will also clarify the consequences of a 
petitioner's or third party's refusal or failure to cooperate with 
these inspections. This interim final rule will make clear that 
inspections may include, but are not limited to, a visit of the 
petitioning organization's facilities, interviews with its officials, 
review of its records related to compliance with immigration laws and 
regulations, and interviews with any other individuals or review of any 
other records that USCIS considers pertinent to the petitioner's H-1B 
eligibility and compliance.\196\ The interim final rule also explains 
the possible scope of an inspection, which may include the petitioning 
organization's headquarters, satellite locations, or the location where 
the beneficiary works or will work, including third-party worksites, as 
applicable. Additionally, the new regulation states that if USCIS is 
unable to verify facts related to an H-1B petition due to the failure 
or refusal of the petitioner or a third-party to cooperate with a site 
visit, then such failure or refusal may be grounds for denial or 
revocation of any H-1B petition for H-1B workers performing services at 
the location or locations which are a subject of inspection, including 
any third-party worksites.\197\ This provision further strengthens the 
integrity of the H-1B program and helps to detect and prevent fraud and 
abuse.
---------------------------------------------------------------------------

    \196\ See new 8 CFR 214.2(h)(4)(i)(B)(7)(i).
    \197\ See new 8 CFR 214.2(h)(4)(i)(B)(7)(iii).
---------------------------------------------------------------------------

    In order to estimate the population impacted by site visits, DHS 
uses historical site inspection data. The site inspections were 
conducted at Form I-129 H-1B petitioners' on-site locations and third-
party worksites from FY2015 to FY2019. Table 14 shows the number of 
worksite inspections conducted each year and the average duration of 
time for conducting each worksite inspection. During this period, the 
annual number of worksite inspections has increased each year and 
ranged from a low of 4,413 in FY2015 to a high of 10,384 in FY2019.

 Table 14--Total Number of Worksite Inspections Conducted for Form I-129
    H-1B Petitioners and Average Inspection Time, FY 2015 to FY 2019
------------------------------------------------------------------------
                                                        Average duration
                                        Number of         for worksite
            Fiscal year                  worksite          inspection
                                       inspections          (hours)
------------------------------------------------------------------------
2015..............................              4,413               0.94

[[Page 63955]]

 
2016..............................              7,046               0.91
2017..............................              7,174               1.04
2018..............................              7,718               1.16
2019..............................             10,384               1.23
                                   -------------------------------------
    Total.........................             36,735               5.28
------------------------------------------------------------------------
Source: USCIS, Fraud Detection & National Security (FDNS), DS database,
  May 28, 2020.

    The number of worksite inspections does not depend on the number of 
H-1B petitions received. It depends on DHS resources to conduct the 
site visits. DHS uses the highest annual number of worksite inspections 
in past five years (10,384 in FY2019) as the estimated annual 
population of worksite visits for the next 10 years. DHS also uses 1.23 
hours from FY2019 historical data for the estimated duration for 
worksite inspection, which includes interviewing the beneficiary, the 
on-site supervisor or manager and other workers, as applicable, and 
reviewing all records pertinent to the H-1B petitions available to 
USCIS when requested during inspection.
    DHS assumes that a supervisor or manager would be present on behalf 
of a petitioner while a USCIS immigration officer conducts the worksite 
inspection in addition to the beneficiary. The beneficiary would be 
interviewed to verify the date employment started, work location, 
hours, salary, or other terms of employment, to corroborate the 
information provided in an approved petition. The supervisor or manager 
would be the most qualified employee at the location who could answer 
all questions pertinent to the petitioning organization and its H-1B 
nonimmigrant workers. They would also be able to gather and provide the 
proper records considered pertinent to USCIS immigration officers. 
Consequently, for the purposes of this economic analysis, DHS assumes 
that on average two individuals will be interviewed during each 
worksite inspection: The beneficiary and the supervisor or manager. DHS 
uses their respective compensation rates in the estimation of the 
worksite inspection costs.\198\ However, if any other worker or on-site 
manager is interviewed, the same compensation rates would apply.
---------------------------------------------------------------------------

    \198\ Any other USCIS costs associated with the worksite 
inspections (i.e., travel and deskwork relating to other research, 
review and document write up) are not estimated here because these 
costs are covered by fees collected from petitioners filing Form I-
129 for H-1B petitions. All such costs are discussed under the 
Federal Government Cost section.
---------------------------------------------------------------------------

    DHS uses hourly compensation rates to estimate the opportunity cost 
of time a beneficiary and supervisor or manager would incur during 
worksite inspections. Based on data obtained from a USCIS report for 
Fiscal Year 2019, DHS estimates that an H-1B worker earned an average 
of $107,000 per year, or $51.44 hourly wage in FY 2019.\199\ The annual 
salary does not include non-cash compensation and benefits, such as 
health insurance and transportation. DHS adjusts the average hourly 
wage rate using a benefits-to-wage multiplier to estimate the average 
hourly compensation of $75.11 for an H-1B nonimmigrant worker.\200\ DHS 
uses an average compensation rate of $85.96 for a supervisor or manager 
in the estimation of the opportunity cost of time he or she would incur 
during worksite inspections.\201\ Of the 1.23 hours of worksite 
inspection time (see Table 14), DHS has no information on how long a 
USCIS immigration officer would take to interview a beneficiary, or 
supervisor, or manager. In this analysis, DHS assumes that it would 
take 0.49 hours to interview a beneficiary and 0.74 hours to interview 
a supervisor or manager.\202\
---------------------------------------------------------------------------

    \199\ This is the annual average earning of all H-1B 
nonimmigrant workers in all industries with known occupations 
(excluding industries with unknown occupations) for FY 2019. It is 
what employers agreed to pay the nonimmigrant workers at the time 
the applications were filed and estimated based on full-time 
employment for 12 months, even if the nonimmigrant worker worked 
fewer than 12 months. See Characteristics of H-1B Specialty 
Occupation Workers, Fiscal Year 2019, p.16, Table 10, at supra note 
21. $51.44 hourly wage = $107,000 annual pay / 2,080 annual work 
hours. According to U.S. Department of Labor (DOL) that certifies 
the Labor Condition Application of the H-1B worker, a full-time H-1B 
employee works 40 hours per week for 52 weeks for a total of 2,080 
hours in a year. DOL, Wage and hour Division: Fact Sheet #68--What 
Constitutes a Full-Time Employee Under H-1B Visa Program? July 2009. 
See https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs68.pdf (last visited Aug. 11, 2020).
    \200\ Hourly compensation of $75.11 = $51.44 average hourly wage 
rate for H-1B worker x 1.46 benefits-to-wage multiplier. See section 
V.A.5. for estimation of the benefits-to-wage multiplier.
    \201\ Hourly compensation of $85.96 = $58.88 average hourly wage 
rate for Management Occupations (national) x 1.46 benefits-to-wage 
multiplier. See U.S. Dep't of Labor, Bureau of Labor Statistics, 
Occupational Employment Statistics, May 2019 National Occupational 
Employment and Wage Estimates National, SOC 11-0000--Management 
Occupations, available at https://www.bls.gov/oes/current/oes110000.htm (last visited Aug. 11, 2020).
    \202\ DHS assumes that an interview with the beneficiary takes 
40% of the inspection duration, while an interview with the 
supervisor or manager takes 60%. In addition to the inspection, DHS 
assumes the supervisor or manager will need additional time to 
gather and discuss the records/documents provided to the USCIS 
Immigration Officer. Duration of interview hours for beneficiaries 
(0.49) = Inspection duration (1.23) x 40% = 0.42 (rounded). Duration 
of interview hours for supervisors or managers (0.74) = Inspection 
duration (1.23) x 60% = 0.74.
---------------------------------------------------------------------------

    In Table 15, DHS estimates the total annual opportunity cost of 
time for worksite inspections of H-1B petitions by multiplying the 
average annual number of worksite inspections (10,384) by the average 
duration the interview would take for a beneficiary (0.49) or 
supervisor or manager (0.74) and their respective compensation rates. 
DHS obtains the total annual cost of the H-1B worksite inspections to 
be $1,042,702 for this provision.

[[Page 63956]]



             Table 15--Estimated Annual Petitioners' Cost of Worksite Inspection for H-1B Petitions
----------------------------------------------------------------------------------------------------------------
                                                                      Average
                                                     Number of      duration of    Compensation
                    Cost item                        worksite        interview         rate         Total cost
                                                    inspections       (hours)
                                                               A               B               C   D = A x B x C
----------------------------------------------------------------------------------------------------------------
Beneficiaries' opportunity cost of time during            10,384            0.49          $75.11        $382,172
 worksite inspections...........................
Supervisors or managers' opportunity cost of              10,384            0.74           85.96         660,530
 time during worksite inspections...............
                                                 ---------------------------------------------------------------
    Total.......................................  ..............            1.23  ..............       1,042,702
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.

    If USCIS decides to conduct a pre-approval inspection, satisfactory 
completion of such inspection will be a condition for approval of any 
petition. In this interim final rule, it may be grounds for denial or 
revocation of any H-1B petition for H-1B workers performing services at 
the location or locations which are subject of inspection, including 
any third-party worksites, if USCIS is unable to verify relevant facts 
due to failure or refusal of the petitioner or third-party worksite 
parties to cooperate in a site visit.\203\
---------------------------------------------------------------------------

    \203\ See new 8 CFR 214.2(h)(4)(i)(B)(7)(ii) and (iii).
---------------------------------------------------------------------------

    DHS notes that the site visit provision could create an incentive 
for employers to cooperate, and to provide further evidence to support 
the Form I-129 H-1B petition, for an adjudicative decision. The new 
provision will notify petitioners of the specific consequences for 
noncompliance, whether by them or by officials at the third-party 
worksite. If USCIS conducts a site visit in order to verify facts 
related to the H-1B petition, including whether the beneficiary is 
being employed consistent with the terms of the petition approval, then 
DHS believes that it would be reasonable to conclude that the 
petitioner will not have met its burden of proof and the petition may 
be properly denied or revoked if USCIS is unable to verify relevant 
facts to determine compliance or because of failure or refusal to 
comply with the site inspection. This would be true whether the 
unverified facts relate to a petitioner worksite or a third-party 
worksite at which a beneficiary has been or will be placed by the 
petitioner. It would also be true whether the failure or refusal to 
cooperate is by the petitioner or a third-party.
d. Eliminating the General Itinerary Requirement for H-1B Petitions
1. Cost Savings of Itinerary Requirement Exemption
    Current regulations require an itinerary with the dates and 
locations of the services to be provided if a Form I-129 H-1B petition 
indicates that the beneficiary will be performing services in more than 
one location.\204\ This interim final rule eliminates this requirement 
for H-1B petitioners. DHS is revising 8CFR 214.2(h)(2)(i)(B) to specify 
that the itinerary requirement for service or training in more than one 
location will not apply to H-1B petitions. See new 8CFR 
214.2(h)(2)(i)(B). DHS is making this revision in response to a recent 
court decision specific to H-1B petitions.\205\ The itinerary 
requirement at 8 CFR 214.2(h)(2)(i)(B) will still apply to other H 
classifications. In addition, DHS will still apply the itinerary 
requirement at 8 CFR 214.2(h)(2)(i)(F) for H-1B petitions filed by 
agents.
---------------------------------------------------------------------------

    \204\ See current 8 CFR 214.2(h)(2)(i)(B).
    \205\ See, ITServe All., Inc. v. Cissna, No. CV 18-2350 (RMC), 
2020 WL 1150186 (D.D.C. Mar. 10, 2020).
---------------------------------------------------------------------------

    DHS calculates economic impacts of this provision relative to the 
current regulation. Relative to the current regulation this provision 
reduces the cost for the petitioners who file on behalf of 
beneficiaries performing services in more than one location and 
submitting itineraries. However, due to the absence of detailed data on 
the number of petitioners who file on behalf of beneficiaries 
performing services in more than one location, DHS uses the number of 
petitions filed annually for workers placed at off-site locations as a 
proxy for petitioners with beneficiaries performing services in 
multiple locations. DHS assumes the petitions filed for workers placed 
at off-site locations are likely to indicate that beneficiaries will be 
performing services at multiple locations and, therefore, petitioners 
are likely to submit itineraries. DHS estimates that the number of 
petitions filed annually for workers placed at off-site locations who 
may submit itineraries using average number of petitions received 
annually from FY2015 to FY2019 and the proportion of off-site workers 
approved petitions. The estimated number of petitions filed annually 
for workers placed at off-site location is 144,668.\206\ DHS estimates 
the cost savings based on the opportunity cost of time of preparing and 
submitting an itinerary by multiplying the estimated time burden to 
gather itinerary information (0.25 hours) \207\ by the compensation 
rate of an HR specialist, in-house lawyer or outsourced lawyer, 
respectively. Table 16 shows that the estimated annual cost savings due 
to the elimination of the itinerary requirement, $4,490,968. Since the 
itinerary is normally submitted with the Form I-129 H-1B package, there 
would be no additional postage savings.
---------------------------------------------------------------------------

    \206\ DHS uses the proportion of workers placed at off-site 
location (36 percent from Table 12) as an approximate measure to 
estimate the number of petitions received annually for workers 
performing services in multiple locations from the total number of 
petitions filed. 144,528 petitions filed for workers performing 
services in multiple locations = 401,468 total petitions filed 
annually x 36 percent.
    \207\ DHS assumes that it would not take more than 0.25 hours 
(or 15 minutes) because this itinerary information should be readily 
available from the petitioners' records during the time of filing 
the petitions.
---------------------------------------------------------------------------

    To estimate the effect of this provision in conjunction with other 
provisions that change the forecasted population, DHS calculates the 
cost savings of this provision on a per-petition-received basis. The 
annual cost savings of this provision, divided amongst the entire 
population of received petitions, would average out to approximately 
$11 per received petition.\208\
---------------------------------------------------------------------------

    \208\ Additional annual cost savings per petition received for 
itinerary requirement exemption for H-1B petitions ($11, rounded) = 
Total baseline cost savings ($4,490,968)/5-year average petition 
received annually (401,856).

[[Page 63957]]



Table 16--Estimated Cost Savings to Form I-129H1 Petitioners Due to the Elimination of the Itinerary Requirement
----------------------------------------------------------------------------------------------------------------
                                                     Affected       Time burden    Compensation    Total annual
                                                  population \a\      (hours)          rate            cost
                                                               A               B               C       A x B x C
----------------------------------------------------------------------------------------------------------------
Opportunity cost of time to complete Form I-      ..............  ..............  ..............  ..............
 129H1 petitions by:
    HR specialist...............................          37,614            0.25          $47.57        $447,325
    In-house lawyer.............................          34,720            0.25          102.00         885,360
    Outsourced lawyer...........................          72,334            0.25          174.65       3,158,283
                                                 ---------------------------------------------------------------
        Total...................................         144,668  ..............  ..............       4,490,968
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.
\a\ The estimated number of petitions filed annually for workers placed at off-site location 144,668.
HR specialist (37,614) = 144,668 x Percent of petitions filed by HR specialist (26%).
In-house lawyer (34,720) = 144,668 x Percent of petitions filed by in-house lawyer (24%).
Outsourced lawyer (72,334) = 144,668 x Percent of petitions filed by outsourced lawyer (50%).

e. Limiting Maximum Validity Period for Third-Party Placement
1. Costs of Requesting Authorization To Continue H-1B Employment
    DHS is amending the maximum validity period for a petition approved 
for workers placed at third-party worksites. Under current regulations 
at 8 CFR 214.2(h)(9)(iii), the maximum validity period an H-1B petition 
may be approved is ``up to three years''. This interim final rule will 
limit the maximum validity period to 1 year for workers placed at 
third-party worksites.\209\ This provision will result in more 
extension petitions from petitioners with beneficiaries who work at 
third-party worksites.
---------------------------------------------------------------------------

    \209\ See new 8 CFR 214.2(h)(9)(iii)(A)(1).
---------------------------------------------------------------------------

    DHS estimates the increase in petitions for FY2021 to FY2030 due to 
the reduction in maximum validity period. Although the maximum validity 
period for a specialty occupation worker is 3 years, the average 
validity period for approved H-1B beneficiaries is 28 months.\210\ 
Since the interim final rule limits the validity period for petitions 
indicating that the beneficiary will work at a third-party worksite to 
up to 1 year (12 months), petitioners seeking to continue the 
employment of beneficiaries placed at third-party worksites will have 
to file extension petitions more frequently to request authorization to 
continue such H-1B employment. The reduction in average validity period 
from 28 months to 12 months or less will increase the frequency of 
petitions by 28/12 times annually for FY 2023 and onwards. There is a 
transition period in FY2021 and FY2022, which is explained in detail 
below.
---------------------------------------------------------------------------

    \210\ See supra note 11.
---------------------------------------------------------------------------

    To determine the number of petitions under the current regulations, 
DHS uses the historical 5-year average number of petitions approved for 
FY2015 to FY2019 (306,898) \211\ and the proportion of workers approved 
for off-site locations petitions (36 percent) as an approximate measure 
to estimate the number of workers to be placed at third-party 
worksites.\212\ DHS estimates the number of petitions approved annually 
for workers placed at third-party worksite as 110,483 \213\ under the 
28 month average validity period. DHS assumes that 110,483 petitions 
are approved uniformly across 12 months, or 9,207 \214\ petitions per 
month.
---------------------------------------------------------------------------

    \211\ Table 4. Total Receipts, Approvals, and Denials of Form I-
129 Petitions with an H-1B Classification, FY 2015 to FY 2019.
    \212\ Table 12. Form I-129 H-1B petitions for Workers placed at 
Off-site Locations.
    \213\ Calculation: Estimated number of petitions approved 
annually for workers placed at third-party worksite 110,483 = 5-year 
average number of petitions approved for FY2015 to FY2019 (306,898) 
* Percentage of workers approved for off-site locations petitions 
36%.
    \214\ Calculation: 9,207 = Estimated number of petitions 
approved annually for workers placed at third-party worksite 
110,483/12 months.
---------------------------------------------------------------------------

    For FY2021 DHS estimates no additional increase in petitions due to 
this provision because any associated costs would occur at the end of 
the petition validity period when the petitioner seeks to file an 
extension petition. Any petition filed in FY2021 under the provision's 
maximum validity period of 12 months for workers placed at third party 
worksites would have otherwise been filed under the current 
regulations, which is up to 3 years. The baseline population already 
accounts for these petitions. The reduction in maximum validity period 
from 3 years to 12 months would increase the number of filed petitions 
starting 12 months after the effective date of this interim final rule, 
which would be in FY2022. Those petitions pending or approved prior to 
the effective date of this interim final rule would still be subject to 
the current regulation maximum validity period of 3 years, unless an 
amended petition is filed.
    For FY2022, DHS estimates an additional 110,483 extension petitions 
due to this provision. These additional extension petitions would be 
filed by petitioners who had third-party worksite petitions filed in 
FY2021 that require an extension under the interim final rule's 12 
month maximum validity period but would not have required an extension 
under the current 28 month average validity period.
    For each year between FY2023 and FY2030, DHS estimates an 
additional 147,311 extension petitions due to this provision. These 
additional extension petitions represent the sum of 110,483 petitions 
filed in the previous fiscal year plus 36,828 \215\ extension petitions 
from four months of the fiscal year prior to the previous fiscal year, 
all of which may have maintained their validity under the current 28 
month average validity period.\216\ The summary table is presented 
above in section ``Population Affected by the Rule'' in Table 7.
---------------------------------------------------------------------------

    \215\ For example, in FY2025 extension petitions consist of 
those petitions filed in FY2024 whose maximum 12 month validity 
period would expire in FY2025 and 4 month worth of petitions filed 
in FY2023 that would have had their 28 month average validity period 
expire in FY2025. Therefore, 4 month worth of petition (36,828, 
rounded) = 4 months * (Estimated number of petitions approved 
annually for workers placed at third-party worksite 110,483/12 
months).
    \216\ Additional 147,311 extension petitions = 110,483 Petitions 
filed in the previous fiscal year + 36,828 Extension petitions from 
four months of the fiscal year prior to the previous fiscal year.
---------------------------------------------------------------------------

    DHS estimates the additional costs resulting from the population 
changes due to the limiting maximum validity period for third-party 
worksites using the forecasted increase in the number of petitions 
received as discussed above. The cost per additional petition is the 
sum of the baseline cost per petition received, additional annual cost 
per petition received for completing and

[[Page 63958]]

filing Form I-129H1 petitions, additional annual cost per petition 
received for submitting corroborating evidence for H-1B petitions, and 
the annual cost savings per petition received for itinerary requirement 
exemption for H-1B petitions. Arithmetically, this is obtained by 
adding $3,314, $62, $45, and ($11) to equal $3,410 for FY2021 to 
FY2027. Due to the expiration of the Public Law 114-113 Fee at the end 
of FY2027, the cost for FY2028 to FY2030 is obtained by adding $2,274, 
$62, $45, and ($11) to equal $2,370.\217\
---------------------------------------------------------------------------

    \217\ Additional annual cost per petition received for each 
provision is calculated in the relevant section. Sum of cost per 
petition received for each provision ($3,410) = Additional annual 
cost per petition received for completing and filing Form I-129 H-1B 
petitions ($62) + Additional annual cost per petition received for 
submitting corroborating evidence for H-1B petitions ($45) - 
Additional annual cost savings per petition received for itinerary 
requirement exemption for H-1B petitions ($11) + Baseline cost per 
petition received ($3,314) for FY2021 to FY2027. Sum of cost per 
petition received for each provision ($2,370) = Additional annual 
cost per petition received for completing and filing Form I-129 H-1B 
petitions ($62) + Additional annual cost per petition received for 
submitting corroborating evidence for H-1B petitions ($45) - 
Additional annual cost savings per petition received for itinerary 
requirement exemption for H-1B petitions ($11) + Baseline cost per 
petition received ($2,274) for FY2028 to FY2030.
---------------------------------------------------------------------------

    This provision's estimated annual increase in costs to petitioners 
is the product of the estimated additional population and estimated 
cost per petition received, both described above. Table 17 delineates 
these costs for each fiscal year between FY2021 and FY2030.

             Table 17--Forecasting Increase in Cost Due to Population Increase for FY2021 to FY2030
----------------------------------------------------------------------------------------------------------------
                                                                  Estimated
                                                                 increase in      Cost per         Estimated
                         Fiscal year                              number of       petition      increase in cost
                                                                  petitions       received     due to population
                                                                  received                          increase
                                                                            A               B              A x B
----------------------------------------------------------------------------------------------------------------
2021.........................................................               0          $3,410                  0
2022.........................................................         110,483           3,410       $376,747,030
2023.........................................................         147,311           3,410        502,330,510
2024.........................................................         147,311           3,410        502,330,510
2025.........................................................         147,311           3,410        502,330,510
2026.........................................................         147,311           3,410        502,330,510
2027.........................................................         147,311           3,410        502,330,510
2028.........................................................         147,311           2,370        349,127,070
2029.........................................................         147,311           2,370        349,127,070
2030.........................................................         147,311           2,370        349,127,070
----------------------------------------------------------------------------------------------------------------
Source: USCIS Analysis.

f. Familiarization Cost
    Familiarization costs comprise the opportunity cost of the time 
spent reading and understanding the details of a rule in order to fully 
comply with the new regulation(s). To the extent that an individual or 
entity directly regulated by the rule incurs familiarization costs, 
those familiarization costs are a direct cost of the rule. The entities 
directly regulated by this rule are the employers who file H-1B 
petitions. There were 48,084 unique employers who filed H-1B petitions 
in FY2019.\218\ DHS assumes that the petitioners require approximately 
two hours to familiarize themselves with the rule. Using the average 
total rate of compensation of HR specialists, In-house lawyer, and 
Outsourced lawyer from Table 8 and assuming one person at each entity 
familiarizes his or herself with the rule, DHS estimates a one-time 
total familiarization cost of $11,941,471 in FY2021.
---------------------------------------------------------------------------

    \218\ Source: Office of Policy and Strategy, Policy Research 
Division (PRD), Claims 3 and USCIS analysis, August 18, 2020.

                               Table 18--Familiarization Costs to the Petitioners
----------------------------------------------------------------------------------------------------------------
                                                                    Additional
                                                  Total affected  time burden to   Compensation
                   Cost items                       population      familiarize        rate         Total cost
                                                                      (hours)
                                                               A               B               C   D = A x B x C
----------------------------------------------------------------------------------------------------------------
Opportunity cost of time to familiarize the rule
 by:
    HR specialist...............................          12,502               2          $47.57      $1,189,440
    In-house lawyer.............................          11,540               2          102.00       2,354,160
    Outsourced lawyer...........................          24,042               2          174.65       8,397,871
                                                 ---------------------------------------------------------------
        Total...................................          48,084  ..............  ..............      11,941,471
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.


[[Page 63959]]

5. Total Estimated and Discounted Net Costs of Regulatory Changes to 
Petitioners
    DHS presents the total annual estimated costs and cost savings 
annualized over a 10-year implementation period resulting from 
regulatory changes in this interim final rule. Table 19 shows the total 
annual cost of the rule to be $55,897,905 in FY2021, $420,703,464 in 
FY2022, $546,286,944 in each of FY2023 to FY2027, and $393,083,504 in 
each of FY2028 to FY2030 to the petitioners. DHS also estimates the 
total annual savings of the rule to petitioners to be $4,490,968. 
Therefore, the estimated total annual net costs to petitioners to be 
$51,406,937 in FY2021, $416,212,496 in FY2022, $541,795,976 in each of 
FY2023 to FY2027, and $388,592,536 in each of FY2028 to FY2030.

  Table 19--Summary of Estimated Annual Net Costs to Petitioners in the Interim Final Rule for FY2021 to FY2030
----------------------------------------------------------------------------------------------------------------
                                       Total estimated    Total estimated    Total estimated    Total estimated
  Costs or cost savings (provision)      annual cost        annual cost        annual cost        annual cost
                                            FY2021             FY2022         FY2023-FY2027      FY2028-FY2030
----------------------------------------------------------------------------------------------------------------
(a) Petitioners' additional cost of         $24,949,861        $24,949,861        $24,949,861        $24,949,861
 filing Form I-129H1 petitions......
(b) Petitioners' cost of submitting          17,963,871         17,963,871         17,963,871         17,963,871
 evidence establishing employer-
 employee relationship and specialty
 occupation work when the
 beneficiary will be working at a
 third-party worksite...............
(c) Petitioners' cost of worksite             1,042,702          1,042,702          1,042,702          1,042,702
 inspection.........................
(e) Petitioners' cost of requesting                   0        376,747,030        502,330,510        349,127,070
 authorization to continue H-1B
 employment more frequently because
 of limitation on validity period
 for third-party worksite petitions.
(f) Petitioners' cost of                     11,941,471                  0                  0                  0
 familiarization to the rule........
                                     ---------------------------------------------------------------------------
    Total Annual Costs..............         55,897,905        420,703,464        546,286,944        393,083,504
(d) Petitioners' cost savings due to          4,490,968          4,490,968          4,490,968          4,490,968
 eliminating general H-1B itinerary
 requirement........................
                                     ---------------------------------------------------------------------------
    Total Annual Cost Savings.......          4,490,968          4,490,968          4,490,968          4,490,968
                                     ---------------------------------------------------------------------------
    Total Annual Net Costs..........         51,406,937        416,212,496        541,795,976        388,592,536
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.
Calculation: Total annual net costs = Total annual costs-Total annual cost savings.

    To compare costs over time, DHS applies a 3 percent and a 7 percent 
discount rate to the total estimated costs associated with this interim 
final rule. Table 20 shows the summary undiscounted and discounted 
total net costs to Form I-129H1 petitioners over a 10-year period. DHS 
estimates the 10-year total net cost of the rule to petitioners to be 
approximately $4,342,376,923 undiscounted, $3,674,793,598 discounted at 
3-percent, and $2,986,972,052 discounted at 7-percent. Over the 10-year 
implementation period of the rule, DHS estimates the annualized costs 
of the rule to be $430,797,915 annualized at 3-percent, $425,277,621 
annualized at 7-percent.

                         Table 20--Total Estimated Net Costs of this Interim Final Rule
                                                [FY 2021-FY 2030]
----------------------------------------------------------------------------------------------------------------
                                                                             Total net costs    Total net costs
                      Fiscal year                         Total net costs    (discounted at 3   (discounted at 7
                                                           (undiscounted)        percent)           percent)
----------------------------------------------------------------------------------------------------------------
2021...................................................        $51,406,937        $49,909,648        $48,043,867
2022...................................................        416,212,496        392,320,196        363,536,113
2023...................................................        541,795,976        495,820,069        442,266,905
2024...................................................        541,795,976        481,378,707        413,333,556
2025...................................................        541,795,976        467,357,968        386,293,043
2026...................................................        541,795,976        453,745,600        361,021,536
2027...................................................        541,795,976        440,529,709        337,403,304
2028...................................................        388,592,536        306,758,536        226,164,394
2029...................................................        388,592,536        297,823,822        211,368,593
2030...................................................        388,592,536        289,149,342        197,540,741
                                                        --------------------------------------------------------
    Total..............................................      4,342,376,923      3,674,793,598      2,986,972,052
    Annualized.........................................  .................        430,797,915        425,277,621
----------------------------------------------------------------------------------------------------------------
Source: USCIS analysis.

    E.O. 13771 directs agencies to reduce regulation and control 
regulatory costs. This interim final rule is considered an E.O. 13771 
regulatory action. DHS estimates the total cost of this rule is 
$292,051,988 annualized using a 7

[[Page 63960]]

percent discount rate over a perpetual time horizon in 2016 dollars and 
discounted back to 2016.
6. Costs to the Federal Government
    DHS is revising the regulations to require issuance of a brief 
explanation when an H-1B nonimmigrant petition is approved, but the 
validity period end date is earlier than the end date requested by the 
petitioner at the time of filing. The cost for providing a written 
explanation of the rationale for limiting the approval validity end 
date in such cases will be borne by USCIS.
    The INA provides for the collection of fees at a level that will 
ensure recovery of the full costs of providing adjudication and 
naturalization services by DHS, including administrative costs and 
services provided without charge to certain applicants and 
petitioners.\219\ DHS notes USCIS establishes its fees by assigning 
costs to an adjudication based on its relative adjudication burden and 
use of USCIS resources. Fees are established at an amount that is 
necessary to recover these assigned costs such as clerical, officers, 
and managerial salaries and benefits, plus an amount to recover 
unassigned overhead (such as facility rent, IT equipment and systems, 
or other expenses) and immigration services provided without charge. 
Consequently, since USCIS immigration fees are based on resource 
expenditures related to the benefit in question, USCIS uses the fee 
associated with an information collection as a reasonable measure of 
the collection's costs to USCIS. DHS notes the time necessary for USCIS 
to review the information submitted with the forms relevant to this 
interim final rule includes the time to adjudicate the benefit request. 
These costs are captured in the fees collected for the benefit request 
from petitioners. DHS notes that this rule may increase USCIS' costs 
associated with adjudicating immigration benefit requests. Future 
adjustments to the fee schedule may be necessary to recover these 
additional operating costs and will be determined during USCIS' next 
comprehensive biennial fee review.
---------------------------------------------------------------------------

    \219\ See INA section 286(m), 8 U.S.C. 1356(m).
---------------------------------------------------------------------------

7. Benefits of the Regulatory Changes
    This rule specifies the conditions under which DHS intends to 
implement the changes in the current rule regarding petitions for H-1B 
specialty occupation workers filed using Form I-129H1. Although the H-
1B program was intended to allow employers to fill gaps in their 
workforce and remain competitive in the global economy, it has in fact 
expanded far beyond that, often to the detriment of U.S. workers. As 
discussed above, the H-1B program has been used to displace U.S. 
workers, and has led to reduced wages in a number of industries in the 
U.S. labor market. In this interim final rule, DHS is implementing 
revisions and clarifications to ensure that each H-1B nonimmigrant 
beneficiary is working for a qualified petitioner and in a job meeting 
the statutory requirements of a specialty occupation. The benefits of 
each provision in the interim final rule is discussed in detail below.
    DHS is updating Form I-129H1 for H-1B petitions to incorporate the 
regulatory changes in this interim final rule. Although this will 
result in petitioners incurring additional costs while filing H-1B 
petitions, USCIS can use the additional credible evidence requested in 
the H-1B petitions to potentially reduce the number of Requests for 
Evidence (RFEs) sent to petitioners, which ultimately would allow for 
more efficient and timely adjudication decisions.
    Where a beneficiary will be placed at one or more third-party 
worksites, DHS will require the petitioner to submit evidence such as 
contracts, work orders, or other similar evidence to establish that the 
petitioner will have an employer-employee relationship with the 
beneficiary, and that the beneficiary will perform services in a 
specialty occupation at the third-party worksite(s). While USCIS 
already has general authority to request any document it deems 
necessary, this interim final rule states that USCIS may request copies 
of contracts, work orders, or other similar corroborating evidence on a 
case-by-case basis in all cases, regardless of where the beneficiary 
will be placed. This supporting evidence will allow USCIS to confirm 
that beneficiaries working at third-party worksites will have a valid 
employment relationship with the petitioner and will be performing 
qualifying specialty occupation services while working at the third-
party worksite.
    Based on the noncompliance uncovered by USCIS site visits,\220\ DHS 
is adding additional requirements specific to the H-1B program to set 
forth the scope of on-site inspections and the consequences of a 
petitioner's or third-party's refusal or failure to fully cooperate 
with these inspections. DHS believes that site visits are important to 
maintain the integrity of the H-1B program by detecting and deterring 
fraud and noncompliance. As a result, USCIS can ensure that the H-1B 
program is used appropriately and the economic interests of U.S. 
workers are protected. The ability to detect and deter fraud and 
noncompliance will strengthen the H-1B program and hence outweigh any 
overall adjudication delays resulting from the worksite visits. Under 
this rule, such failure or refusal to cooperate and allow USCIS to 
verify facts may be grounds for denial or revocation of any H-1B 
petition for workers performing services at the location or locations 
which are subjects of inspection, including any third-party worksites. 
DHS is clarifying that failure or refusal to cooperate with a site 
visit or other compliance review may be grounds for denial or 
revocation of a petition.
---------------------------------------------------------------------------

    \220\ See supra note 132.
---------------------------------------------------------------------------

    DHS believes that limiting approvals for third-party placement 
petitions to a maximum of 1-year would allow the agency to more 
consistently and thoroughly monitor a petitioner's and beneficiary's 
continuing eligibility. DHS believes that limiting the validity period 
for petitions where beneficiaries are placed at third-party worksites, 
where fraud and abuse is more likely to occur, would also increase 
compliance with the regulations and improve the program's overall 
integrity. This general practice will have the added benefit of 
providing a degree of certainty to petitioners with respect to what 
validity period to request and to expect, if approved.
    DHS will revise the regulations to require issuance of a brief 
explanation when an H-1B nonimmigrant petition is approved but USCIS 
grants an earlier validity period end date than requested by the 
petitioner. Providing a written explanation for limited validity period 
will help ensure that the petitioner is aware of the reason for shorter 
validity periods.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 605(b), as 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996, Public Law 104-121 (March 29, 1996), requires Federal agencies to 
consider the potential impact of regulations on small entities during 
the development of their rules. ``Small entities'' are small 
businesses, not-for-profit organizations that are not dominant in their 
fields, and governmental jurisdictions with populations of less than 
50,000. A regulatory flexibility analysis is not required when a rule 
is exempt from notice and comment rulemaking. This IFR is exempt from 
the notice and comment rulemaking, as stated in the Administrative 
Procedure Act (APA), 5 U.S.C. 551 et seq. of the preamble.

[[Page 63961]]

Therefore, a regulatory flexibility analysis is not required for this 
rule.

D. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among 
other things, to curb the practice of imposing unfunded Federal 
mandates on State, local, and tribal governments. Title II of UMRA 
requires each Federal agency to prepare a written statement assessing 
the effects of any Federal mandate in a proposed or final agency rule 
that may result in a $100 million or more expenditure (adjusted 
annually for inflation) in any one year by State, local, and tribal 
governments, in the aggregate, or by the private sector. The inflation-
adjusted value equivalent of $100 million in 1995 adjusted for 
inflation to 2019 levels by the Consumer Price Index for All Urban 
Consumers (CPI-U) is approximately $168 million based on the Consumer 
Price Index for All Urban Consumers.\221\
---------------------------------------------------------------------------

    \221\ See U.S. Dep't of Labor, Bureau of Labor Statistics, 
Historical Consumer Price Index for All Urban Consumers (CPI-U): 
U.S. City Average, All Items, available at https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-202003.pdf (last visited 
Aug. 11, 2020).
    Calculation of inflation: (1) Calculate the average monthly CPI-
U for the reference year (1995) and the current year (2019); (2) 
Subtract reference year CPI-U from current year CPI-U; (3) Divide 
the difference of the reference year CPI-U and current year CPI-U by 
the reference year CPI-U; (4) Multiply by 100 = [(Average monthly 
CPI-U for 2019 - Average monthly CPI-U for 1995)/(Average monthly 
CPI-U for 1995)] * 100 = [(255.657 - 152.383)/152.383] * 100 = 
(103.274/152.383) *100 = 0.6777 * 100 = 67.77 percent = 68 percent 
(rounded).
    Calculation of inflation-adjusted value: $100 million in 1995 
dollars * 1.68 = $168 million in 2019 dollars.
---------------------------------------------------------------------------

    While this interim final rule may result in the expenditure of more 
than $100 million by the private sector annually, the rulemaking is not 
a ``Federal mandate'' as defined for UMRA purposes.\222\ The cost of 
preparation of H-1B petitions (including required evidence) and the 
payment of H-1B nonimmigrant petition fees by petitioners or other 
private sector entities is, to the extent it could be termed an 
enforceable duty, one that arises from participation in a voluntary 
Federal program, applying for immigration status in the United 
States.\223\ This interim final rule does not contain such a mandate. 
The requirements of Title II of UMRA, therefore, do not apply, and DHS 
has not prepared a statement under UMRA. Therefore, no actions were 
deemed necessary under the provisions of the UMRA.
---------------------------------------------------------------------------

    \222\ See 2 U.S.C. 658(6).
    \223\ See 2 U.S.C. 658(7)(A)(ii).
---------------------------------------------------------------------------

E. Congressional Review Act

    The Office of Information and Regulatory Affairs has determined 
that this interim final rule is a major rule as defined by 5 U.S.C. 
804, also known as the ``Congressional Review Act,'' as enacted in 
section 251 of the Small Business Regulatory Enforcement Fairness Act 
of 1996, Public Law 104-121, 110 Stat. 847, 868 et seq. Accordingly, 
this rule will be effective at least 60 days after the date on which 
Congress receives a report submitted by DHS under the Congressional 
Review Act, or 60 days after the IFR's publication, whichever is later.

F. Executive Order 13132 (Federalism)

    This interim final rule would not have substantial direct effects 
on the states, on the relationship between the National Government and 
the states, or on the distribution of power and responsibilities among 
the various levels of government. Therefore, in accordance with section 
6 of Executive Order 13132, it is determined that this interim final 
rule does not have sufficient federalism implications to warrant the 
preparation of a federalism summary impact statement.

G. Executive Order 12988 (Civil Justice Reform)

    This interim final rule meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988.

H. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    This interim final rule does not have ``tribal implications'' 
because it does not have substantial direct effects on one or more 
Indian tribes, on the relationship between the Federal Government and 
Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes. Accordingly, E.O. 
13175, Consultation and Coordination with Indian Tribal Governments, 
requires no further agency action or analysis.

I. National Environmental Policy Act

    DHS analyzes actions to determine whether the National 
Environmental Policy Act, Public Law 91-190, 42 U.S.C. 4321 through 
4347 (NEPA), applies to them and, if so, what degree of analysis is 
required. DHS Directive 023-01 Rev. 01 (Directive) and Instruction 
Manual 023-01-001-01 Rev. 01, Implementation of the National 
Environmental Policy Act (Instruction Manual) establish the policies 
and procedures that DHS and its components use to comply with NEPA and 
the Council on Environmental Quality (CEQ) regulations for implementing 
NEPA, 40 CFR parts 1500 through 1508.
    The CEQ regulations allow federal agencies to establish, with CEQ 
review and concurrence, categories of actions (``categorical 
exclusions'') which experience has shown do not individually or 
cumulatively have a significant effect on the human environment and, 
therefore, do not require an Environmental Assessment (EA) or 
Environmental Impact Statement (EIS). 40 CFR 1507.3(b)(2)(ii), 1508.4. 
Categorical exclusions established by DHS are set forth in Appendix A 
of the Instruction Manual. Under DHS NEPA implementing procedures, for 
an action to be categorically excluded, it must satisfy each of the 
following three conditions: (1) The entire action clearly fits within 
one or more of the categorical exclusions; (2) the action is not a 
piece of a larger action; and (3) no extraordinary circumstances exist 
that create the potential for a significant environmental effect. 
Instruction Manual section V.B(2)(a)-(c).
    This rule amends regulations governing the H-1B temporary 
nonimmigrant specialty occupation program to improve the integrity of 
the program, and more closely conform the regulatory framework to that 
of the Act. Specifically, DHS is revising the regulatory definition and 
standards for determining whether an alien will be employed in a 
``specialty occupation'' to align with the statutory definition of the 
term. The rule is also revising the definition of ``United States 
employer,'' and ``employer-employee relationship,'' to clarify how 
USCIS will determine whether there is an employer-employee relationship 
between the petitioner and the beneficiary. In addition, the rule is 
limiting the validity period for third-party placement petitions to a 
maximum of 1 year; providing for a written explanation for certain 
approved petitions where the validity period is limited to 1 year or 
less; amending the itinerary provision applicable to petitioners of 
temporary nonimmigrant workers to clarify it does not apply to H-1B 
petitioners; and codifying USCIS' H-1B site visit authority, including 
addressing the potential consequences of refusing a site visit. The 
primary purpose of these changes is to better ensure that each H-1B 
nonimmigrant worker will be working for a qualified employer and in a 
position that meets the statutory definition of a ``specialty 
occupation.'' While this rule tightens regulatory eligibility criteria 
and may result in denials of some H-1B

[[Page 63962]]

petitions, this rule does not change the number of H-1B workers that 
may be employed by U.S. employers; the rule leaves unchanged the 
statutory numerical limitations and cap exemptions. It also does not 
change rules for where H-1B nonimmigrants may be employed.
    Generally, DHS believes NEPA does not apply to a rule intended to 
strengthen an immigration program because any attempt to analyze its 
potential impacts would be largely speculative, if not completely so. 
DHS cannot reasonably estimate how many petitions will be filed for 
workers to be employed in specialty occupations following the changes 
made by this rule or whether the regulatory amendments herein will 
result in an overall change in the number of H-1B petitions that are 
ultimately approved, and the number of H-1B workers who are employed in 
the United States in any fiscal year. DHS has no reason to believe that 
the amendments to H-1B regulations would change the environmental 
effect, if any, of the existing regulations. Therefore, DHS has 
determined that even if NEPA were to apply to this action, this rule 
clearly fits within categorical exclusion A3(d) in the Instruction 
Manual, which provides an exclusion for ``promulgation of rules . . . 
that amend an existing regulation without changing its environmental 
effect.'' This rule maintains the current human environment by making 
improvements to the H-1B program during the economic crisis caused by 
COVID-19 in a way that will more effectively prevent the employment of 
H-1B workers from negatively impacting the working conditions of U.S. 
workers who are similarly employed. This rule is not a part of a larger 
action and presents no extraordinary circumstances creating the 
potential for significant environmental effects. Therefore, this action 
is categorically excluded and no further NEPA analysis is required.

J. Paperwork Reduction Act

1. USCIS Form I-129 \224\
---------------------------------------------------------------------------

    \224\ As indicated elsewhere in this rule, DHS estimated the 
costs and benefits of this rule using the newly published U.S. 
Citizenship and Immigration Services Fee Schedule and Changes to 
Certain Other Immigration Benefit Request Requirements, final rule 
(``Fee Schedule Final Rule''), and related form changes, as the 
baseline. 85 FR 46788 (Aug. 3, 2020). The Fee Schedule Final Rule 
was scheduled to go into effect on October 2, 2020. On September 29, 
2020, the U.S. District Court for the Northern District of 
California issued a nationwide injunction, which prevents DHS from 
implementing the Fee Schedule Final Rule. See, Immigrant Legal 
Resource Center v. Wolf, No. 4:20-cv-5883 (N.D. Cal. Sept. 29, 
2020). While DHS intends to vigorously defend this lawsuit and is 
not changing the economic baseline for this rule as a result of the 
litigation, it is using the currently approved Form I-129, and not 
the form version associated with the enjoined Fee Schedule Final 
Rule for the purpose of seeking OMB approval of form changes 
associated with this rule. Should DHS prevail in the Fee Schedule 
Final Rule litigation and is able to implement the form changes 
associated with that rule, DHS will comply with the Paperwork 
Reduction Act and seek approval of the information collection 
changes associated with this rule, based on the version of the Form 
I-129 that is in effect at that time.
---------------------------------------------------------------------------

    Under the Paperwork Reduction Act of 1995, Public Law 104-13, all 
agencies are required to submit to OMB, for review and approval, any 
reporting requirements inherent in a rule. The revised information 
collection has been submitted to OMB for review and approval as 
required by the PRA.
    DHS invites comment on the impact of this rule to the collection of 
information. In accordance with the PRA, the information collection 
notice is published in the Federal Register to obtain comments 
regarding the proposed edits to the information collection instrument. 
Comments are encouraged and will be accepted until November 9, 2020. 
All submissions received must include the agency name and OMB Control 
Number 1615-0009 in the body of the submission. To avoid duplicate 
submissions, please use only one of the methods under the ADDRESSES and 
Public Participation sections of this interim final rule to submit 
comments. Comments on this information collection should address one or 
more of the following four points:
    (1) Evaluate whether the collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, for example, permitting 
electronic submission of responses.
Overview of Information Collection
    (1) Type of Information Collection: Revision of a Currently 
Approved Collection.
    (2) Title of the Form/Collection: Petition for a Nonimmigrant 
Worker.
    (3) Agency form number, if any, and the applicable component of the 
DHS sponsoring the collection: I-129; USCIS.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract: Primary: Business or other for-profit. USCIS 
uses the data collected on this form to determine eligibility for the 
requested nonimmigrant petition and/or requests to extend or change 
nonimmigrant status. An employer (or agent, where applicable) uses this 
form to petition USCIS for an alien to temporarily enter as a 
nonimmigrant in certain classifications. An employer (or agent, where 
applicable) also uses this form to request an extension of stay or 
change of status on behalf of the alien worker. The form serves the 
purpose of standardizing requests for certain nonimmigrant workers and 
ensuring that basic information required for assessing eligibility is 
provided by the petitioner while requesting that beneficiaries be 
classified under certain nonimmigrant employment categories. It also 
assists USCIS in compiling information required by Congress annually to 
assess effectiveness and utilization of certain nonimmigrant 
classifications.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: The estimated 
total number of respondents for the information collection I-129 is 
294,751 and the estimated hour burden per response is 2.84 hours; the 
estimated total number of respondents for the information collection E-
1/E-2 Classification Supplement to Form I-129 is 4,760 and the 
estimated hour burden per response is 0.67 hours; the estimated total 
number of respondents for the information collection Trade Agreement 
Supplement to Form I-129 is 3,057 and the estimated hour burden per 
response is 0.67 hours; the estimated total number of respondents for 
the information collection H Classification Supplement to Form I-129 is 
96,291 and the estimated hour burden per response is 2.5 hours; the 
estimated total number of respondents for the information collection H-
1B and H-1B1 Data Collection and Filing Fee Exemption Supplement is 
96,291 and the estimated hour burden per response is 1 hour; the 
estimated total number of respondents for the information collection L 
Classification Supplement to Form I-129 is 37,831 and the estimated 
hour burden per response is 1.34 hours; the estimated total number of 
respondents for the information collection O and P Classifications 
Supplement to Form I-129 is 22,710 and the estimated hour burden per

[[Page 63963]]

response is 1 hour; the estimated total number of respondents for the 
information collection Q-1 Classification Supplement to Form I-129 is 
155 and the estimated hour burden per response is 0.34 hours; the 
estimated total number of respondents for the information collection R-
1 Classification Supplement to Form I-129 is 6,635 and the estimated 
hour burden per response is 2.34 hours.
    (6) An estimate of the total public burden (in hours) associated 
with the collection: The total estimated annual hour burden associated 
with this collection of information is 1,268,331 hours.
    (7) An estimate of the total public burden (in cost) associated 
with the collection: The estimated total annual cost burden associated 
with this collection of information is $70,681,290.
2. USCIS H-1B Registration Tool
    Under the Paperwork Reduction Act of 1995, Public Law 104-13, all 
agencies are required to submit to OMB, for review and approval, any 
reporting requirements inherent in a rule. The revised information 
collection has been submitted to OMB for review and approval as 
required by the PRA.
    DHS invites comment on the impact to the collection of information. 
In accordance with the PRA, the information collection notice is 
published in the Federal Register to obtain comments regarding the 
proposed edits to the information collection instrument. Comments are 
encouraged and will be accepted until November 9, 2020. All submissions 
received must include the agency name and OMB Control Number 1615-0144 
in the body of the submission. To avoid duplicate submissions, please 
use only one of the methods under the ADDRESSES and Public 
Participation sections of this interim final rule to submit comments. 
Comments on this information collection should address one or more of 
the following four points:
    (1) Evaluate whether the collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
Overview of Information Collection
    (1) Type of Information Collection: Revision of a Currently 
Approved Collection.
    (2) Title of the Form/Collection: H-1B Registration Tool.
    (3) Agency form number, if any, and the applicable component of the 
DHS sponsoring the collection: OMB-64; USCIS.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract: Primary: Business or other for-profit. USCIS 
will use the data collected through the H-1B Registration Tool to 
select a sufficient number of registrations projected to meet the 
applicable H-1B cap allocations and to notify registrants whether their 
registration was selected.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: The estimated 
total number of respondents for the information collection H-1B 
Registration Tool is 275,000 and the estimated hour burden per response 
is 0.583 hours.
    (6) An estimate of the total public burden (in hours) associated 
with the collection: The total estimated annual hour burden associated 
with this collection of information is 160,325 hours.
    (7) An estimate of the total public burden (in cost) associated 
with the collection: The estimated total annual cost burden associated 
with this collection of information is $0.

K. Signature

    The Acting Secretary of Homeland Security, Chad F. Wolf, having 
reviewed and approved this document, is delegating the authority to 
electronically sign this document to Chad R. Mizelle, who is the Senior 
Official Performing the Duties of the General Counsel for DHS, for 
purposes of publication in the Federal Register.

List of Subjects in 8 CFR Part 214

    Administrative practice and procedure, Aliens, Cultural exchange 
program, Employment, Foreign officials, Health professions, Reporting 
and recordkeeping requirements, Students.

    Accordingly, DHS amends chapter I of title 8 of the Code of Federal 
Regulations as follows:

PART 214--NONIMMIGRANT CLASSES

0
1. The authority citation for part 214 continues to read as follows:

    Authority:  6 U.S.C. 202, 236; 8 U.S.C. 1101, 1102, 1103, 1182, 
1184, 1186a, 1187, 1221, 1281, 1282, 1301-1305 and 1372; sec. 643, 
Pub. L. 104-208, 110 Stat. 3009-708; Pub. L. 106-386, 114 Stat. 
1477-1480; section 141 of the Compacts of Free Association with the 
Federated States of Micronesia and the Republic of the Marshall 
Islands, and with the Government of Palau, 48 U.S.C. 1901 note and 
1931 note, respectively; 48 U.S.C. 1806; 8 CFR part 2; Pub. L. 115-
218.

0
2. Amend Sec.  214.2 by:
0
a. Revising paragraph (h)(2)(i)(B);
0
b. Adding paragraph (h)(4)(i)(B)(7);
0
c. In paragraph (h)(4)(ii):
0
i. Adding a definition for ``Employer-employee relationship'' in 
alphabetical order;
0
ii. Revising the definition of ``Specialty occupation;''
0
ii. Adding a definition for ``Third-party worksite'' in alphabetical 
order;
0
iii. Revising the definition of ``United States employer;'' and
0
iv. Adding a definition for ``Worksite'' in alphabetical order;
0
d. Revising paragraph (h)(4)(iii)(A);
0
e. Adding paragraph (h)(4)(iv)(C);
0
f. Redesignating paragraph (h)(9)(i) introductory text as paragraph 
(h)(9)(i)(A);
0
g. Adding paragraph (h)(9)(i)(B);
0
h. Revising paragraph (h)(9)(iii)(A)(1); and
0
i. Adding paragraph (h)(24).
    The revisions and additions read as follows:


Sec.  214.2  Special requirements for admission, extension, and 
maintenance of status.

* * * * *
    (h) * * *
    (2) * * *
    (i) * * *
    (B) Service or training in more than one location. A petition that 
requires services to be performed or training to be received in more 
than one location must include an itinerary with the dates and 
locations of the services or training. The itinerary must be submitted 
to USCIS with the Petition for a Nonimmigrant Worker, or successor 
form, as provided in the form instructions. The address that the 
petitioner specifies as its location on the Petition for a Nonimmigrant 
Worker must be where the petitioner is located for purposes of this 
paragraph (h)(2)(i)(B). This paragraph (h)(2)(i)(B) does not apply to 
H-1B petitions.
* * * * *
    (4) * * *
    (i) * * *

[[Page 63964]]

    (B) * * *
    (7)(i) The information provided on an H-1B petition and the 
evidence submitted in support of such petition may be verified by USCIS 
through lawful means as determined by USCIS, including telephonic and 
electronic verifications and on-site inspections. Such inspections may 
include, but are not limited to, a visit of the petitioning 
organization's facilities, interviews with the petitioning 
organization's officials, review of the petitioning organization's 
records related to compliance with immigration laws and regulations, 
and interviews with any other individuals or review of any other 
records that USCIS may lawfully obtain and that it considers pertinent 
to verify facts related to the adjudication of the H-1B petition, such 
as facts relating to the petitioner's and beneficiary's H-1B 
eligibility and compliance. An inspection may be conducted at locations 
including the petitioning organization's headquarters, satellite 
locations, or the location where the beneficiary works or will work, 
including third-party worksites, as applicable.
    (ii) USCIS may conduct on-site inspections or other compliance 
reviews as described in paragraph (h)(4)(i)(B)(7)(i) of this section at 
any time after the filing of an H-1B petition. If USCIS decides to 
conduct a pre-approval inspection, satisfactory completion of such 
inspection will be a condition for approval of any petition.
    (iii) USCIS conducts on-site inspections or other compliance 
reviews to verify facts related to the adjudication of the petition and 
compliance with H-1B petition requirements. If USCIS is unable to 
verify such facts due to the failure or refusal of the petitioner or a 
third-party worksite party to cooperate in an inspection or other 
compliance review, then such failure or refusal to cooperate and allow 
USCIS to verify facts may result in denial or revocation of any H-1B 
petition for H-1B workers performing services at the location or 
locations which are a subject of inspection or compliance review, 
including any third-party worksites.
* * * * *
    (ii) * * *
    Employer-employee relationship means the conventional master-
servant relationship consistent with the common law. The petitioner 
must establish that its offer of employment as stated in the petition 
is based on a valid employer-employee relationship that exists or will 
exist. In considering whether the petitioner has established that a 
valid ``employer-employee relationship'' exists or will exist, USCIS 
will assess and weigh all relevant aspects of the relationship with no 
one factor being determinative.
    (1) In cases where the H-1B beneficiary does not possess an 
ownership interest in the petitioning organization or entity, the 
factors that USCIS may consider to determine if a valid employment 
relationship will exist or continue to exist include, but are not 
limited to:
    (i) Whether the petitioner supervises the beneficiary and, if so, 
where such supervision takes place;
    (ii) Where the supervision is not at the petitioner's worksite, how 
the petitioner maintains such supervision;
    (iii) Whether the petitioner has the right to control the work of 
the beneficiary on a day-to-day basis and to assign projects;
    (iv) Whether the petitioner provides the tools or instrumentalities 
needed for the beneficiary to perform the duties of employment;
    (v) Whether the petitioner hires, pays, and has the ability to fire 
the beneficiary;
    (vi) Whether the petitioner evaluates the work-product of the 
beneficiary;
    (vii) Whether the petitioner claims the beneficiary as an employee 
for tax purposes;
    (viii) Whether the petitioner provides the beneficiary any type of 
employee benefits;
    (ix) Whether the beneficiary uses proprietary information of the 
petitioner in order to perform the duties of employment;
    (x) Whether the beneficiary produces an end-product that is 
directly linked to the petitioner's line of business; and
    (xi) Whether the petitioner has the ability to control the manner 
and means in which the work product of the beneficiary is accomplished.
    (2) In cases where the H-1B beneficiary possesses an ownership 
interest in the petitioning organization or entity, additional factors 
that USCIS may consider to determine if a valid employment relationship 
will exist or continue to exist include, but are not limited to:
    (i) Whether the petitioning entity can hire or fire the beneficiary 
or set the rules and parameters of the beneficiary's work;
    (ii) Whether and, if so, to what extent the petitioner supervises 
the beneficiary's work;
    (iii) Whether the beneficiary reports to someone higher in the 
petitioning entity;
    (iv) Whether and, if so, to what extent the beneficiary is able to 
influence the petitioning entity;
    (v) Whether the parties intended that the beneficiary be an 
employee, as expressed in written agreements or contracts; and
    (vi) Whether the beneficiary shares in the profits, losses, and 
liabilities of the organization or entity.
* * * * *
    Specialty occupation means an occupation that requires:
    (1) The theoretical and practical application of a body of highly 
specialized knowledge in fields of human endeavor, such as 
architecture, engineering, mathematics, physical sciences, social 
sciences, medicine and health, education, business specialties, 
accounting, law, theology, or the arts; and
    (2) The attainment of a U.S. bachelor's degree or higher in a 
directly related specific specialty, or its equivalent, as a minimum 
for entry into the occupation in the United States. The required 
specialized studies must be directly related to the position. A 
position is not a specialty occupation if attainment of a general 
degree, such as business administration or liberal arts, without 
further specialization, is sufficient to qualify for the position. 
While a position may allow a range of degrees or apply multiple bodies 
of highly specialized knowledge, each of those qualifying degree fields 
must be directly related to the proffered position.
    Third-party worksite means a worksite, other than the beneficiary's 
residence in the United States, that is not owned or leased, and not 
operated, by the petitioner.
    United States employer means a person, firm, corporation, company, 
or other association or organization in the United States which:
    (1) Engages the beneficiary to work within the United States, and 
has a bona fide, non-speculative job offer for the beneficiary;
    (2) Has an employer-employee relationship with respect to employees 
under this part; and
    (3) Has an Internal Revenue Service Tax identification number.
    Worksite means the physical location where the work actually is 
performed by the H-1B nonimmigrant. A ``worksite'' will not include any 
location that would not be considered a ``worksite'' for Labor 
Condition Application (LCA) purposes.
    (iii) * * *
    (A) Criteria for specialty occupation position. A proffered 
position does not meet the definition of specialty occupation in 
paragraph (h)(4)(ii) of this section unless it also satisfies at least 
one of the following criteria:

[[Page 63965]]

    (1) A U.S. baccalaureate or higher degree in a directly related 
specific specialty, or its equivalent, is the minimum requirement for 
entry into the particular occupation in which the beneficiary will be 
employed;
    (2) A U.S. baccalaureate or higher degree in a directly related 
specific specialty, or its equivalent, is the minimum requirement for 
entry into parallel positions at similar organizations in the 
employer's United States industry;
    (3) The employer has an established practice of requiring a U.S. 
baccalaureate or higher degree in a directly related specific 
specialty, or its equivalent, for the position. The petitioner must 
also establish that the proffered position requires such a directly 
related specialty degree, or its equivalent, to perform its duties; or
    (4) The specific duties of the proffered position are so 
specialized, complex, or unique that they can only be performed by an 
individual with a U.S. baccalaureate or higher degree in a directly 
related specific specialty, or its equivalent.
* * * * *
    (iv) * * *
    (C) The petitioner must establish, at the time of filing, that it 
has actual work in a specialty occupation available for the beneficiary 
as of the start date of the validity period as requested on the 
petition. When a beneficiary will be placed at one or more third-party 
worksites, the petitioner must submit evidence such as contracts, work 
orders, or other similar corroborating evidence showing that the 
beneficiary will perform services in a specialty occupation at the 
third-party worksite(s), and that the petitioner will have an employer-
employee relationship with the beneficiary. In accordance with 8 CFR 
103.2(b) and paragraph (h)(9) of this section, USCIS may request copies 
of contracts, work orders, or other similar corroborating evidence on a 
case-by-case basis in all cases, regardless of where the beneficiary 
will be placed.
* * * * *
    (9) * * *
    (i) * * *
    (B) Where the petition is approved with an earlier validity period 
end date than requested by the petitioner, the approval notice will 
provide or be accompanied by a brief explanation for the validity 
period granted.
* * * * *
    (iii) * * *
    (A)(1) H-1B petition in a specialty occupation. The maximum 
validity period for an approved petition classified under section 
101(a)(15)(H)(i)(b) of the Act for an alien in a specialty occupation 
is 3 years. However, where the beneficiary will be working at a third-
party worksite, the maximum validity period for an approved petition is 
1 year. In all instances, the approved petition may not exceed the 
validity period of the labor condition application.
* * * * *
    (24) Severability. (i) [Reserved]
    (ii) The following provisions added or revised by the changes made 
to the H-1B nonimmigrant visa classification program, as of December 7, 
2020, are intended to be implemented as separate and severable from one 
another: paragraphs (h)(2)(i), (h)(4)(i)(B)(7), (h)(4)(ii) (definitions 
of employer-employee, specialty occupation, third-party worksite, U.S. 
employer, and worksite), (h)(4)(iii)(A), (h)(4)(iv)(C), (h)(9)(i)(B), 
and (h)(9)(iii)(A)(1) of this section. If one or more of the paragraphs 
in the preceding sentence is not implemented, DHS intends that the 
remaining paragraphs will remain valid and be implemented to the 
greatest extent possible.
* * * * *

Chad R. Mizelle,
Senior Official Performing the Duties of the General Counsel, U.S. 
Department of Homeland Security.
[FR Doc. 2020-22347 Filed 10-6-20; 4:15 pm]
BILLING CODE 9111-97-P