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US government agency pushes for the delay in H-1B wage hike implementation – here’s why it is relevant for India

4 min read
H-1B Cap Filing Season

The US Small Business Administration (SBA), which supports entrepreneurs and small businesses in America, has written to the DOL (Department of Labor) to delay the implementation of the h1b wage hike rule by 30 days.

The 30-day time period, the agency stated, will assist associations with share comments on the adverse effect. It would have on them and grow “less difficult administrative alternatives”, the letter, dated 9th November 2020, said.

This returns at the of the DOL’s implementation of H-1B wage hikes effective 8th October 2020. The rule increased the compensations for H-1B workers considerably, in some cases as much as 50%.

Immigration lawyers have stated that this would have a huge effect on the tech workforce. Also more on smaller organizations who won’t have the option to afford the talents with the surge in fees.

H1B Wage Hike | So how is this relevant to the Indian workforce there?

This is important given that Indians are by a wide margin the biggest beneficiaries of the H-1B visa. Of the more than 5 lakh H-1B workers in the US. Indians would account for a significant share and are employed across large and small firms and furthermore new companies.

Numerous Indian students seeking higher education in the US try to work in the Silicon Valley startup ecosystem. Such hikes will be a setback to those aspirants as relatively few new businesses. It will have deep pockets to hire expensive talent competing with tech majors.

But there is not much clarity on how many of these 5 lakh individuals are employed in new businesses and more modest firms. Almost certainly, a decent amount of Indians is probably going to be employed in smaller businesses.

What is the significance of SBA writing to DOL?

This move is critical since the US SBA is an American government agency that offers help to entrepreneurs and small businesses. The office offers different help including secure credits by offering a government-backed guarantee.

The agency is opposing the H1B wage hike rule announced by another government office. DOL, on grounds that it would make it excessively expensive for smaller businesses to attract talent.

What does the letter say?

As per the letter, small businesses have the agency that private companies will miss out on talented workers harming innovation and business development when they are attempting to develop at the back of COVID-19.

The letter submitted to the DOL by SBA additionally pointed out key concerns regarding the rule.

  1. DOL has not given enough legitimization for the immediate implementation of the h1b wage hike. Since its argument of ensuring American jobs does not have enough basis.
  2. It further points out to increasing job openings for a qualified workforce. As of October 2, there were 6.5 lakh job opportunities that necessary a bachelor’s degree and above, a 4.7 percent increase compared to May 2020.
  3. Rather than helping companies thrive, the report stated. The compliance cost for smaller businesses would increase by 3 percent of the total revenue in 2020-2021.

All these, the agency stated, would result in a decrease in small organizations’ participation in the H-1B program.

“Small businesses would be closed out of the H-1B visa program for new workers. Making it hard to improve and develop their operations,” the letter said.

“Small businesses are concerned because there is a lack of US workers in STEM (science, technology, engineering, and mathematics) fields… organizations may lose new projects and business to offshore organizations who have more access to qualified workers,” the office further added.

How much weight is it likely to have on blocking the rule?

There were three claims filed challenging the H1B wage hike and the Department of Homeland Security’s strengthening H-1B regulations. This comment could add weight to them.

[DHS Proposes to Restrict Work Permits for Aliens with Final Orders of Removal]

While the judgment in one of the claims is anticipated, a hearing for the claim filed by ITServe Alliance. An association of IT firms, against the Trump government, is coming up on November 16. Hearing for the claim filed by the US Chamber of Commerce and 12 different associations, supported by huge tech firms, for example, Amazon, Google, and Microsoft is set in the coming weeks as well.

What are the chances for this rule to be rolled back?

Going by the commentary of immigration lawyers, there are a lot of possibilities. For one, the DOL didn’t follow the notification and comment period needed for implementation making it vulnerable to lawsuits.

The wages have been increased substantially and as pointed out by multiple think tanks and organizations. It would make it extreme to employ skilled talent in the US affecting the smaller firms and more so clinical experts disproportionately. Rather than improving the financial situation, it would have a negative impact.

In case the court neglected to block, Biden can possibly move them back as a new guideline.

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