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The H-1B and L visa programs have been indispensable tools for U.S. businesses to hire foreign nationals. Historically, Congress maintains a balance between the protection of U.S. labor and employer needs for foreign workers. The latest immigration measures affecting these categories are part of the “Consolidated Appropriations Act, 2005″ (H.R. 4818), signed into law by President Bush on Dec. 8, 2004. Division J, Title IV of the act contains the H-1B and L-1 Visa Reform Acts, which provide for more annual H-1B visas, tighter regulation of certain L-1 workers and increased filing fees for both visa categories. THE H-1B VISA REFORM ACT H-1B visas are available to foreign professionals in occupations for which a bachelor’s degree is required. The number of new H-1B visas available is capped at 65,000 per fiscal year. Of that total, 1,400 are reserved for Chilean nationals, and 5,400 are reserved for Singaporean nationals, for entries under the Free Trade Agreements with those countries. Therefore, only 58,200 H-1B visas are generally available. This number is so inadequate that on Oct. 1, 2004, the U.S. Citizenship and Immigration Service announced that the annual limit on new H-1B petitions had already been reached for Fiscal Year 2005, which runs from Oct. 1, 2004 to Sept. 30, 2005. The 65,000 new H-1Bs for Fiscal Year 2006 will not be available until Oct. 1, 2005. The H-1B Visa Reform Act fails to address the dearth of available visa numbers per year. However, one provision provides a reprieve for H-1B employers, creating an exemption from the annual cap for up to 20,000 foreign nationals with master’s or higher-level degrees from U.S. universities. Previous exemptions from the cap were limited to employment by certain nonprofit organizations and institutes of higher education and related research organizations. On March 4, 2005, the USCIS unexpectedly announced that petitions for new H-1B visas would not be accepted until regulations on the topic are published, despite the March 8 effective date of this provision under The H-1B Visa Reform Act. On March 8, the USCIS issued a press release stating that the additional 20,000 H-1B visas to be available in fiscal year 2005 will not be limited to graduates of U.S. university master’s degree or higher programs, contrary to initial guidance. The general availability of these 20,000 additional H-1B visas applies only to fiscal year 2005. At the time this article was finalized, the USCIS regulations on this provision have yet to be released. Competition for these newly allocated visas is certain to be fierce; thus, employers should file their petitions as soon as the USCIS will accept them. Another significant provision of the H-1B Visa Reform Act requires employers to meet 100 percent of the prevailing wage, defined as the average wage paid for an occupation in a specific geographical location. Prior regulations provided a 5 percent variance. The prevailing wage rate is included in the labor condition application, certified by the U.S. Department of Labor as part of the H-1B petition process. The LCA is an employer’s attestation of four criteria, one of which is that the H-1B worker will receive the higher of the prevailing wage or the actual wage paid by the employer to similarly qualified individuals in the occupation. Congress further amended prevailing wage regulations by mandating that the DOL’s two-tier wage survey be replaced by at least four levels, commensurate with experience, education, and level of supervision. The H-1B Visa Reform Act provides a simple mathematical formula by which employers may calculate the four wage levels. U.S. businesses also may continue to use private surveys, as long as they comply with DOL regulations. The act further modifies employer obligations under the LCA program by reinstating special attestations for employers that are either H-1B dependent or “willful violators.” H-1B dependent employers are those whose full-time equivalent workforce includes at least 15 percent in H-1B status. Willful violators are employers found to have committed a willful failure or misrepresentation within five years before filing the H-1B petition. This requirement, which sunset on Sept. 30, 2003, will be reinstated on March 8, 2005. Thereafter, subject employers must also attest that prior to the LCA submission, they conducted a good faith recruitment of U.S. workers, and that no U.S. workers were displaced. Importantly, the new law reinstates DOL’s authority to investigate employer compliance in the LCA program, which also sunset on Sept. 30, 2003. The act expands DOL’s authority to investigate those situations where there is reasonable cause to believe that a U.S. employer has not complied with one or more of the LCA attestations. The Secretary of Labor may also start investigations based on information from a known source (who is not a DOL officer or employee) likely to have personal knowledge of the employer’s practices. There is a 12-month deadline on information received regarding an employer’s noncompliance. If the DOL does not commence an investigation within the 12-month period, it may not charge the employer for the particular offense. Employers will be given notice of an investigation, unless that notice would compromise the investigation. When the DOL investigation reveals a technical or procedural violation, an employer may assert a “good-faith” defense, by showing that it made good-faith efforts to comply with the regulations. Employers will be given 10 days to remedy these deficiencies. If DOL determines there is a good-faith attempt to correct the violations, the employer will be shielded from further action. A major provision of the new act significantly increases the fees for H-1B petitions. Beginning in 1998, employers (other than certain nonprofit organizations, institutions of higher education and government research organizations) were obligated to pay a $1,000 “education and training fee” to provide job training and further education for U.S. workers. This fee sunset on Sept. 30, 2003. The H-1B Visa Reform Act immediately reinstated and raised this fee to $1,500 for employers with at least 25 full-time equivalent employees. All other employers must pay $750. The fee will be distributed to the DOL, National Science Foundation, and USCIS, as follows: DOL, for education and training projects and LCA processing; the National Science Foundation, for scholarships in math, science, engineering and technology for low-income students, and primary and secondary math, science and technology educational grants; and USCIS, for processing cases. The fee applies to the first H-1B petition by any employer and the first extension of stay with the same employer. It does not apply to a second or subsequent extension with the same employer. Only the H-1B petitioning employer is subject to the fee. The act also instituted a “fraud detection and prevention fee” for both H-1B and L-1 employers of $500, effective March 8, 2005. This fee was implemented due to widespread reports of fraud in the H-1B and L-1 programs. The fee will be used to fund antifraud efforts by the Department of State, the Department of Homeland Security and DOL (for LCA enforcement activities). The fee is paid only on initial petitions to USCIS or DOS (for L blanket petitions made at a U.S. Consulate abroad). THE L-1 VISA REFORM ACT The L-1 intracompany transferee classification is reserved for managers (L-1A), executives (L-1A) and employees with specialized knowledge of the company or its products, processes or business (L-1B), once they have been employed abroad in one of those capacities by a related entity for a requisite period of time. The new law makes two important changes to the L visa category, which take effect on June 6, 2005. The act addresses the issue of outsourcing by prohibiting issuance of L-1B visas to specialized knowledge employees who will be stationed primarily at the worksite of an unaffiliated employer, and whose work will be controlled and supervised by the unaffiliated employer. The act also bars an employer from placing an L-1B specialized knowledge worker at a third-party worksite as labor for hire. These changes apply to initial, extension, or amendment L petitions. Furthermore, beginning June 6, 2005, beneficiaries of initial L blanket petitions must show one year (as opposed to six months) of continuous qualifying employment abroad before transferring to the United States. Due to suspicions of abuse in the L visa program, the L-1 Visa Reform Act mandates that DHS’s Inspector General (IG) maintain statistics on all L-1 petitions filed, approved, extended and amended. DHS commenced record keeping on Dec. 8, 2004 and must report to Congress on the “vulnerabilities and potential abuses” of the L-1 visa category no later than June 8, 2005. The act also mandates creation, by June 6, 2005, of an L Visa Interagency Task Force, comprised of personnel from DHS, DOS, and the Department of Justice. The Task Force will implement and monitor enforcement of the IG’s recommendations. Furthermore, within six months of the submission of the IG’s report to Congress, the Task Force will submit recommendations to Congress on its findings, including any suggested legislation. The final significant provision of the act is the new $500 fraud prevention and detection fee, described above. This fee applies to an initial L petition, whether filed at the USCIS or at a U.S. Consulate. THE FUTURE OF THESE VISA CLASSIFICATIONS Many of the new immigration measures have already gone into effect, such as the H-1B “education and training fee.” Other provisions will involve notification from USCIS or DOL before they can be properly implemented, and some measures will require new regulations. The government’s latitude to conduct investigations, and the allocation of funds for that purpose, provides for new avenues of investigation and enforcement. Finally, the increase in fees for both visa categories will impact the financial decisions an employer must make when sponsoring a foreign worker in either visa category. The H-1B and L visa classifications remain the workhorse categories by which U.S. companies may employ foreign workers. It seems apparent, however, that Congress is seeking to balance the desire of employers to freely access foreign workers against the protection of the U.S. labor market. The recent legislation, and new activity in Congress, suggests that any permissive immigration legislation will be balanced by enforcement provisions. Christine Alber and Parisa Salimi are associates in the immigration and nationality group at Proskauer Rose of Newark , N.J .

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