Lawsuit challenging H-1B wage increase filed in the US

ITServe Alliance, a non-profit trade organisation has filed a lawsuit in the New Jersey district court challenging the increase in the prevailing wage levels for H-1B visas. On October 6th the Department of Labor (DOL) issued an Interim Final Rule (IFR) to arbitrarily increase the ‘prevailing wages’ to hire H-1B employees. This new rule makes it significantly more expensive for companies to hire H-1B workers by raising wages by 40-50% on average.

ITServe’s complaint alleges that the DOL’s wage calculations in this IFR are severely flawed and it will cause irreparable harm to American employers as well the overall economy.

“There is no basis for this IFR to be issued. Not only the underlying argument is severely flawed but also the timing is obvious. This is merely a stunt to get political sounds bytes of the day at the expense of American businesses and the economy,” said an ITServe spokesperson.

The lawsuit was filed by Jonathan Wasden and Bradley Banias of Wasden Banias, representing ITServe Alliance and seven other member companies against US Secretary of Labor Eugene Scalia and Assistant Secretary of Labor John Pallasch.

“This IFR is going to drive hundreds of thousands of jobs to off-shore markets. DOL’s IFR raises the required prevailing wages to over 80% in some cases, overnight. This haphazard and baseless rulemaking will hurt thousands of small and medium IT businesses. Instead of helping with job creation and economic growth in the middle of pandemic and recession, these agencies are hurting the small businesses that are at the forefront of rebuilding the economy,” said the spokesperson.

ITServe has submitted research carried out by the National Foundation for American Policy (NFAP) on DOL wage data in support of its complaint. The new DOL wage rule appears designed to inflate the salaries of H-1B visa holders and employment-based immigrants to price their services out of the U.S. labor market. The Department of Labor has created a new wage system that compels employers to pay well above market wages if they wish to employ a foreign-born professional in H-1B status or sponsor an individual for permanent residence, found the NFAP. “By all appearances, the Department of Labor has exceeded its authority by making employers pay salaries that bear little resemblance to market wages or even the wages under the system the Department of Labor operated before publishing its new wage rule,” it said in a research paper.

Earlier this year, ITServe alliance had won a case in a DC Court where the judge ruled that the DHS violated the law by adjudicating H-1 applications based on internally created ‘memos’ rather than following legislative guidelines. While DHS had then rescinded that memo, the other IFR by the DHS has brought those restrictions back as a rule.

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