Legislative Update: Sens. Hatch and Flake Propose Employment-Based Reforms

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At a glance

• The I-Squared Act of 2018 would increase the H-1B cap to a baseline of 85,000 per year and up to 195,000 in years of high demand, with expanded cap exemptions.  In high-demand years, a priority system would be used to allocate cap numbers, with highest priority given to advanced-degree holders.
• The bill would reform the employment-based immigrant quota system by eliminating the per-country cap on immigrant visas, recapturing unused immigrant visa from prior years, and exempting dependents, holders of U.S. advanced degrees in designated STEM fields, individuals of extraordinary ability, and outstanding professors and researchers from immigrant visa numerical limits.
• A new program would allow qualifying employers to sponsor foreign professionals for conditional permanent residence using streamlined procedures if they have engaged in U.S. worker recruitment, participate in E-Verify, pay a $10,000 fee per petition and agree to initiate the permanent residence process within one year after the beneficiary is hired.  The program would be capped at 35,000 immigrant visas per year.  
• Foreign students would no longer be required to maintain a foreign residence, allowing them to pursue permanent residence in F-1 status.

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A closer look at the I-Squared Act

Sens. Orrin Hatch and Jeff Flake’s Immigrant Innovation Act of 2018 (I-Squared) seeks improvements to the U.S. high-skilled immigration system, with increased obligations for sponsoring employers.  Key provisions of the bill are briefly reviewed below.  For more information, see Fragomen’s detailed summary:

H-1B cap reforms

• Higher H-1B quota:  The H-1B cap would be increased to a baseline of 85,000 per year, with a market escalator that would raise the cap to a maximum of 195,000 in years when demand is high.  If the cap were not reached in a fiscal year, it would be reduced in the following year though not below 85,000.
• Expanded cap exemptions: The bill would retain the cap exemption of 20,000 for U.S. advanced-degree graduates and would introduce a new and unlimited exemption for advanced-degree holders for whom an employment-based green card case is begun within a year after they commence H-1B status.
• Priority system for cap number allocation:  If the cap were reached in the first five business days of the cap season, a priority system would be used to allocate cap numbers.  Priority would be given to (1) cap-subject U.S. advanced degree holders; (2) beneficiaries holding  doctoral degrees earned outside the United States; and (3) foreign nationals holding U.S. bachelor’s degrees in designated STEM fields.

New H-1B employer obligations

• Non-replacement of U.S. workers: H-1B employers would be prohibited from hiring an H-1B worker with the intent of replacing a U.S. worker or compelling a U.S. worker to train his or her H-1B replacement, unless the U.S. worker were being promoted or voluntarily transferring, departing employment or retiring.
• Unused H-1B petitions:  Employers could be subject to fines and potential debarment for unused or underused H-1B cap approvals. Employers could avoid fines by withdrawing petitions and demonstrating changed circumstances affecting the need for an H-1B worker, but withdrawal would not shield an employer with a high percentage of withdrawals or a high rate of employee resignations within the first three months of petition validity.  Visas unused because of employer withdrawal would be added back to the cap for that fiscal year.
• H-1B amendments:  H-1B petition amendments would not be required in corporate restructures, successor-in-interest situations or where an H-1B employee changes work locations and the employer obtains a new LCA before the change.
• Increased H-1B fees:  The H-1B education and training fee would be increased to $4000, from the current $1500 fee (with lower fees for employers with 25 or fewer employees).  In years when the H-1B cap is increased due to high demand, the fee would increase by $1000-4000.  Fees would fund STEM training and education for U.S. workers and students.

H-1B spousal employment

• Expanded work authorization eligibility:  H-4 spouses would be eligible for work authorization if the H-1B principal has a pending or approved labor certification or I-140 immigrant worker petition.
• Wage requirements:  Employers would be required to pay H-4 spouses the higher of the actual or prevailing wage for the occupation.

H-1B dependency

• Higher thresholds for dependency exemptions:  Recruitment and non-displacement obligations would not apply if: (1) the employer pays the H-1B beneficiary at least $100,000 or 105% of the mean wage for the occupation, whichever is higher; or (2) the H-1B beneficiary has a U.S. doctoral degree in a field related to the intended employment.
• Exemption from dependency calculation for permanent residence sponsorees:  H-1B employees being sponsored for employment-based residence would not be counted in the H-1B dependency calculation if the employer files I-140 immigrant worker petitions for at least 90% of its labor certification beneficiaries. 

H-1B grace period

• The bill would codify a 60-day grace period for H-1B employees whose employment is terminated early.

Employment-based permanent residence reforms

• Elimination of per-country quotas:  Per-country limits on employment-based immigrant visas would be eliminated.
• Recapture of unused immigrant visas:  To reduce green card backlogs, approximately 200,000 unused immigrant visas from prior years would be made available to employment-based sponsorees.
• Expanded cap exemptions:  The following foreign nationals would be exempt from the employment-based immigrant visa quota:  (1) EB-1A extraordinary ability foreign nationals; (2) EB-1B outstanding professors and researchers; (3) holders of U.S. advanced degrees in designated STEM fields; and (4) spouses and children of employment-based immigrants.
• Eased restrictions on I-140 portability:  Beneficiaries of approved I-140 petitions would be eligible to change jobs in the same or a similar occupation after filing an application for adjustment of status, and would no longer be required to wait 180 days after adjustment filing.
• Adjustment filing prior to immigrant visa availability:  Foreign nationals with an approved I-140 petition would be able to file an application for adjustment of status before an immigrant visa became available, on payment of a $500 fee.

• New conditional permanent residence program: The bill would allow employers (other than H-1B dependent employers) to sponsor professional workers for conditional permanent residence using streamlined procedures if they agree to pay a fee of $10,000 per petition, participate in E-Verify, meet salary minimums, recruit U.S. workers for positions in the same or a similar occupation as foreign beneficiaries and fulfill other obligations.  Employers would be required to file a labor certification or I-140 petition within the first year of the employee’s conditional residence, and the I-140 would have to be approved by the third year absent a delay in labor certification processing.
• Dual intent for F-1 students:  The bill would eliminate the foreign residence requirement for foreign students, allowing them to pursue permanent residence in F-1 status.
• Schedule A study:  The bill would direct the Department of Labor to study whether to expand the list of occupations exempt from labor certification under Schedule A.

Prevailing wages

• Level I wage increase:  The bill would impose a new formula for calculating entry-level prevailing wages for purposes of the PERM and H-1B programs, which could raise wage minimums.
• Private wage surveys:  The bill would codify the acceptance of private surveys as acceptable wage sources for the H-1B and PERM programs.

Other provisions

• Deference to prior approvals:  DHS and DOS would be required to give deference to prior approvals of H-1B and L-1 petitions, visa applications and applications for admission except in cases of material error in the prior approval, a change in status rendering the beneficiary ineligible for the status, or new information that adversely affects the eligibility of the employer or beneficiary.
• Employer precertification:  To reduce duplicative submission of corporate and employment documentation, the bill would require DHS to establish a precertification process for employers who file multiple foreign worker petitions.

Prospects for passage

The I-Squared Act is being introduced as Congress is poised to renew immigration reform discussions.  Though the bill is expected to garner bipartisan support, legislative relief for DACA beneficiaries and White House demands for tougher border security measures are likely to dominate the debate, making prospects for high-skilled reform uncertain.  Nevertheless, the bill is likely to serve as a benchmark for future reform proposals.

This alert is for informational purposes only. If you have any questions, please contact the immigration professional with whom you work at Fragomen.