District Court of California ruled that the DOL and DHS promulgated regulations affecting H-1B workers without proper notice and comment procedure

In October 2020, the U.S. government promulgated two rules that would affect the H-1B visa program: one was proposed by the Department of Labor (“DOL”) and the second one was proposed by the Department of Homeland Security (“DHS”).

The Department of Labor and the Department of Homeland security issued both rules without notice and comment. Under the Administrative Procedure Act, federal agencies have to comply with the “notice and comment” requirement, meaning that they have to  provide notice of the proposed rule and allow public to participate in the rulemaking process by submitting comments.

One exception to this rule is if for a good case, the notice and comment procedure would be impracticable, unnecessary, or contrary to the public interest.  The DHS and DOL were arguing that due to Covid-19, they could issue the rules with the proper notice and comment.

The new rule proposed by the Department of Homeland Security

In October 2020, the Department of Homeland Security proposed a new rule that would amend regulations regarding the H-1B specialty occupation visa. This rule was supposed to go into effect on December 7, 2020. Some of the most important changes the government was suggesting to make were:

• Amending the definition of a “Specialty Occupation” – the DHS was suggesting that the H-1B sponsoring company will have to show a direct relationship between the degree in a specific specialty and the duties of the employee’s H-1B position. An H-1B position for which a degree in any field (or wide variety of fields) was sufficient would not be considered an H-1B specialty occupation.
• Clarifying the definition of Employer-Employee relationship (the new definition would make it more difficult for consulting firms to establish that they are in fact employees).
• Reducing the validity period for H-1B workers employed at third party job sites from three years to one year.

The new rule proposed by the Department of Labor

In October 2020, the Department of Labor amended ETA regulations regarding the H-1B prevailing wages and changed the way how the Department of Labor is calculating the prevailing wage. The new rule raised the minimum wages that had to be paid to H-1B workers to “artificially high levels.” (Case No. 20-CV-7331). The DOL rule would also impact Eb-2 and EB-3 green card applicants. The new DOL rule went into effect immediately.

Court decision

The District Court of California ruled that there was not a good cause to excuse the notice and comment requirement. The Court re-emphasized that the good cause exception has to be narrowly construed.

The court admitted that Covid-19 global pandemic is unprecedented in “its scope, its impact and qualifies as an emergency.” (Chamber of Commerce of the USA v. U.S. Department of Homeland Security).  However, the court indicated that its role is not to evaluate how emergent Covid-19 is, but its impact on domestic unemployment and whether it was justified not to give a proper notice and exclude public from the comments.

The court stated in its decision that the government unduly delayed taking action and therefore forfeited the ability to rely on the “good cause exception” and the government cannot rely on the good cause exception that is caused due to agency’s own delay. The court stated that the while the DHS and DOL “cited skyrocketing and widespread unemployment rate”, the government did not act for over 6 months, since the Covid-19 pandemic started, and therefore cannot rely on the good cause exception (Chamber of Commerce of the USA v. U.S. Department of Homeland Security).

With regards to the DOL and DHS’s argument that the ongoing Covid-19 global pandemic made it impracticable to follow the notice and comment procedure, the Court stated that the focus should be on how Covid-19 is affecting the unemployment for positions held by H-1B workers. The court ruled that the government promulgated significant changes to the H-1B program without the proper notice and comment procedure and the changes would affect significantly the U.S. employers and would create “uncertainty in their planning and budgeting.” (Id.). The Court ruled again that the government could not have relied on the Covid-19 global pandemic to invoke the good cause exception.

Lastly, the Court ruled that the DOL did not meet its burden to show that it would serve a public interest not to provide the notice and comment.

To summarize, the Court ruled that the government did not show that there was a good cause to promulgate the DOL and DHS regulations without the proper notice and comment.

Please click here to read more about the H-1B visa.