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First case against H-1B wage increases filed in United States District Court

MUMBAI: ITServe Alliance, with a number of associated companies, filed a lawsuit in a United States district court against a “provisional final rule” recently issued by the United States Department of Labor (DOL). This rule reset wages upwards for H-1B workers at all four wage levels or levels (representing the range of skills from entry level to highly experienced).
Plaintiffs point out that under the DOL rule, wages have been raised by twenty-four to fifty percent or more for IT operations, where H-1B workers are typically employed, by them. Wage rates also depend on the geographic location of employment.
ITServe’s members, which include over 1
,400 member companies (many of which are founded by those of Indian origin), are unable to absorb, without substantial disruption to their operations, the increased costs imposed on them by the IFR. Many of them have long-term contracts with their clients that cannot be renegotiated.
This lawsuit, which was filed on Friday, is the first to challenge the DOL rule. Other lawsuits, including one led by the American Immigration Lawyers Association (AILA), are expected to be filed next week.
As previously reported by TOI, the final interim standard (IFR) which was issued without inviting public comments, went into effect on October 8, shortly after it was published in the federal register. All applications on working conditions (LCA) submitted after that date are subject to the new minimum wage standards. According to DOL, the goal of the rules is to protect American jobs by improving the accuracy of wages paid to foreign workers.

At the same time, the US Department of Homeland Security (DHS) had also issued its IFR which narrowed eligibility criteria for H-1B visas and shortened the visa duration to one year in case of third party placements. . However, this rule will only take effect in early December.
Plaintiffs argue that DOL does not have the factual and legal justification necessary to invoke the plea for good cause to avoid the required notification and comment procedures. The agency’s contention that H-1B workers are paid less than American workers is not supported by available economic data and empirical studies and is based on erroneous reasoning, the lawsuit adds.
The case disputes the DOL’s decision to set significantly higher wage rates without following the notification and comment regulatory procedures required by the Administrative Procedure Act. Plaintiffs also challenged the DOL’s new wage rates as a violation of immigration and nationality law.
“This new rule is intended to make it much more expensive to hire H-1B holders and to” punish “those employers who rely on H-1B talent. By publishing this IFR, DOL is not just bypassing the Congressional legislative process. but also its normal rule-making process. It is no coincidence that DOL and DHS have issued interim final rules just four weeks before the election, “ITServe says in its press release.
A spokesperson added: “This IFR will bring hundreds of thousands of jobs to offshore markets. DOL’s IFR raises the prevailing wages required to over 80% in some cases, overnight. This haphazard and unfounded regulation will hurt thousands of small and medium IT businesses. Instead of helping with job creation and economic growth in the midst of a pandemic and recession, these government agencies are harming small businesses that are at the forefront of rebuilding the economy.

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