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IT services companies may have to pay more to employees placed at third-party locations in the US

3 min read
H-1B visas renewed

In a move that is probably going to hamper the ability of Indian IT firms to place employees at third-party locations in the US. The US Department of Homeland Security on Friday corrected its guidelines on how the agency will determine the employer-employee relationship’ for an H-1B non-immigrant visa applicant.

Under the new provisions, the primary and secondary employer (end client) should file a petition with the USCIS. And be responsible for the employee. The rule is effective July 14thand will not apply to exist filed, pending, and approved petitions. The guideline puts forth a set of eleven criteria that have to be met to prove an employer-employee relationship when the person is placed at a client location.

The new salary and compliance requirements could demonstrate very onerous for Indian IT companies. Additionally, the requirement for the end customer called the common law employee. To file a separate LCA and comply with wage obligations would be extremely difficult. These organizations are exceptionally hesitant to even post LCAs at the worksite where IT company employees are posted. The need for an independent LCA also requires posting it for public viewing. Said Poorvi Chothani, managing partner at LawQuest, an immigration law firm.

An LCA or labor condition application is a form filed by employers for work approval of non-immigrant employees. The DHS said that the changes were expected to ‘strengthen the H-1B program and to more effectively guarantee that only qualified petitioners are eligible to petition for H-1B workers‘. In line with the Buy America Hire American order passed in 2017.

Indian IT firms to place employees at third-party locations in the US

Under this rule, employees should be paid the higher of the prevailing wage at the primary employer or the end client. This could become very expensive and make projects unviable, said Chothani. For example, an H-1B visa holder is recruited at a salary that is higher than the prevailing wage rate. And placed with a secondary employer who pays its workers a higher salary. The organization is currently required to pay the H-1B worker at par with its existing employees, which was not the case before.

Likewise, if the primary employer doesn’t offer paid leave. However, the client where the individual is put does. Then the employee will be entitled to paid leave as per the secondary employer’s policies.

[New rule calls for higher wages for H-1B visa holders]

This Trump rule is intended to destroy the IT industry that hires H-1B workers. However by forcing their customers to also file H-1Bs as secondary employers. Corporate America will also get destroyed if it does not receive the services of skilled H-1B workers. Said immigration attorney Cyrus Mehta on Twitter.

This is the latest in a series of steps taken by the Trump government over the last few weeks to make changes to the H-1B program. By placing in higher wage requirements and getting rid of the random lottery selection process. While some of these changes will be challenged in court, it additionally remains to be seen. Whether President-elect Joe Biden who takes charge on 20th January 2021 will reverse any of these policy changes.

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