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New Trump H-1B Visa Restrictions Will Harm Companies

On June 22, 2020, Donald Trump issued a new presidential proclamation that will suspend the entry of foreign nationals on H-1B, L, H-2B and J temporary visas until at least December 31, 2020. The proclamation, which continues to ban the entry of most new immigrants, justifies the new restrictions with sparse economic data and reasoning. International students working on Optional Practical Training were spared, at least for the time being. The proclamation recommends federal agencies consider issuing new restrictive H-1B regulations, although the legality of such regulations is unclear.

The Practical Impact of the Presidential Proclamation: No one will be allowed to obtain a new H-1B, L, H-2B or J visa and to enter the United States, with some exceptions, before December 31, 2020, and the proclamation can be extended beyond that date. Exemptions include individuals “essential to the U.S. food supply chain,” and “any alien whose entry would be in the national interest,” which could include those directly involved in providing care or conducting research on Covid-19. Waivers, attorneys note, can take weeks or months, even if approved, due to operational and other issues, such as when U.S. consulates will conduct interviews and issue visas. The J visa holders barred are those “participating in an intern, trainee, teacher, camp counselor, au pair, or summer work travel program.”

The proclamation states, “The suspension and limitation on entry . . . of this proclamation shall apply only to any alien who: (i) is outside the United States on the effective date of this proclamation; (ii) does not have a nonimmigrant visa that is valid on the effective date of this proclamation; and (iii) does not have an official travel document other than a visa . . . that is valid on the effective date of this proclamation or issued on any date thereafter that permits him or her to travel to the United States and seek entry or admission.”

An individual outside the country whose registration was selected in March 2020 for a new H-1B visa would not be allowed to enter the United States and begin working if he or she has never been in the United States or, for another reason, does not have a recent valid visa or travel document, note attorneys.

“The employers who will be most affected are those who filed H-1B cap cases, and who were looking to bring key staff to the United States,” said William Stock of Klasko Immigration Partners in an interview. “In the short term, there will be little practical effect for those international students in the United States who are looking to change status to H-1B, and for employers looking to hire H-1B employers away from other companies. Current H-1B employees who have already been issued a visa that has not expired will be able to continue to use it. The proclamation does not appear to apply to H-1B employees in the United States today who travel overseas and need a visa to return, but those H-1Bs should not travel without consulting a lawyer, and should be aware they risk being stuck abroad for weeks or months.”

The Likelihood of a Successful Legal Challenge: Observers expect there to be legal challenges to the proclamation, and the limited economic justification provided in the presidential proclamation for suspending the entry of H-1B and L-1 visa holders guarantees it.

The unemployment rate for individuals in computer occupations declined from 3% in January 2020 (before the pandemic spread in the U.S.) to 2.8% in April 2020, and fell again to 2.5% in May 2020, according to an analysis of the Bureau of Labor Statistics’ Current Population Survey by the National Foundation for American Policy (NFAP). The unemployment rate in computer occupations has been stable and, in fact, falling. The vast majority of H-1B visa holders work in computer occupations.

It seems dubious to observers for the administration to cite the overall national unemployment rate to justify blocking the entry of an executive of a multinational corporation or another employee who already works for the company on an L visa, or to prevent the entry of individuals on H-1B visas in occupations with low unemployment rates. Jon Baselice of the U.S. Chamber of Commerce said preventing businesses from transferring executives and workers into the country will discourage them from investing in the United States, which will harm job creation.

Positive economic statements from administration officials also undermine the justification for the new restrictions. During June 10, 2020, Senate testimony, Treasury Secretary Steven T. Mnuchin said, “We remain confident that the overall economy will continue to improve dramatically in the third and fourth quarters.” These are the quarters covered in the proclamation. In remarks delivered on June 5, 2020, Donald Trump said, “I think you’re going to have a very good August, a very good July, but a spectacular – maybe spectacular September, but a spectacular October, November, December.”

Commenting before the release of the proclamation, Jonathan Wasden, a partner with Wasden Banias, LLC, said, “Section 212(f) [the authority used in presidential proclamations] is all about emergency powers. If the outlook for the future of the economy is so positive and robust, as stated in the president’s remarks, then there is no emergency on the horizon that we need to be protected from by using the powers under 212(f).”

The presidential proclamation mentions the number of U.S. workers who lost jobs in March and April – but not in May – in “key industries where employers are currently requesting H-1B and L workers to fill positions.” A term like “key industries” can mean anything, since many types of employers hire high-skilled foreign nationals, but the economic data show in the occupations that match those of H-1B visa holders the unemployment rate has declined since January 2020.

“The proclamation makes no attempt at a rational economic argument,” said labor economist and NFAP Senior Fellow Mark Regets. “It assumes there is a fixed number of jobs, which no economist believes, that any new entrant into the labor market must take a job from someone else, and cites a number about lost jobs without noting that research shows hiring people in high-skilled positions often supports jobs for other workers at a company.” 

“A court may decide that relying on purely domestic and economic considerations as the justification for the proclamation means the proclamation will not get the deference normally given the president’s exercise of foreign affairs and national security powers,” said William Stock. “Indeed, a court has enjoined a prior ban that was justified with domestic economic considerations, relying on the Supreme Court’s observation that it assumes Section 212(f) would not allow the president to ‘override particular provisions of the INA.’ Since the INA [Immigration and Nationality Act] already contains provisions that constrain the economic impact of some visa categories but not others, this ban overrides those provisions by deleting whole sections of the INA that allow certain temporary visas on certain specific conditions.”

“The Supreme Court ruled that courts must defer to the executive branch in this area,” said Lynden Melmed, a partner at Berry Appleman & Leiden and former chief counsel for USCIS, in an interview. “But lower courts, particularly in the 9th Circuit, have shown little tolerance for the gaps in logic. Even if the administration ultimately wins at the Supreme Court, an injunction could push this issue beyond the election.”

Potential H-1B Regulations: A 212(f) proclamation can prevent the entry of individuals but not directly affect foreign nationals inside the United States. The proclamation sought to remedy that with language asking the Department of Labor (DOL) to “consider promulgating regulations or take other appropriate action to ensure” H-1B visa holders do not “disadvantage” U.S. workers.

“The Department of Labor may move forward with actions that will raise H-1B wage obligations,” said Melmed. “Employers are already required to pay H-1B professionals the same amount as peer U.S. workers, so DOL is not fixing a flaw in the system but is instead looking to increase costs on U.S. companies that employ foreign workers.” New requirements or regulations could have trouble in court, since immigration law specifies an employer’s H-1B wage requirements, and the administration is likely to run into legal obstacles if it seeks to invent new wages rules that go beyond the statute.

It is also possible the Department of Labor will attempt to change rules on what critics call the “displacement” of U.S. workers. That, too, could run into legal troubles. “Congress has not given the Department of Labor much room to change the standards regarding contracting situations,” said Melmed. “If the agency goes too far, a court is likely to strike down the policy change as exceeding the agency’s authority.” Melmed also notes in the modern economy U.S. companies are adapting to e-commerce and other new challenges. “Restricting the ability of U.S. companies to contract with other companies that provide specialized services may harm the ability of U.S. companies to adapt and compete, which would ultimately harm U.S. workers.”

The proclamation also asks the Department of Homeland Security to “consider promulgating regulations or take other appropriate action regarding the efficient allocation of [H-1B] visas.” This statement encourages U.S. Citizenship and Immigration Services (USCIS) to change the H-1B lottery, which is used when USCIS receives more registrations (under the new system) than are allowed under the 85,000 annual limit.

The administration’s preferred method to change the lottery by awarding new H-1B petitions in the order of highest to lowest salary would likely be found unlawful by the courts, say attorneys. “That would be a straight-up contradiction of the statutory language,” said William Stock. The statute states, “Aliens who are subject to the numerical limitations . . . shall be issued visas (or otherwise provided nonimmigrant status) in the order in which petitions are filed for such visas or status.”

Even though the end date of the presidential proclamation is December 31, 2020, analysts suspect that if the courts do not block it and Donald Trump is reelected, then the proclamation could last much longer, perhaps even for years. “In the digital economy, you hire where the talent is,” said Aaron Levie, CEO of Box. “When you restrict immigration, the jobs still get created, just somewhere else. And later down the road, when those individuals create the next Google, it won’t be here.”

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