The Complexity of H-1B Employment in the United States

In light of recent restrictions and litigation, the status of H-1B workers in the United States remains uncertain for the immediate future.

A recent settlement between USCIS and a group called ITServe Alliance, which represents many multi-national corporations, brought positive news for H-1B workers by limiting the agency’s power to impose restrictions on H-1B visa holders. The settlement was a key decision that overturns 10 years’ worth of increasingly strict policies for H-1B visa holders and employers. The ITServe Alliance signaled a turning point for H-1B seekers and in response, USCIS issued new H-1B adjudication guidance on June 17, 2020.

However, on June 22, 2020, the Trump Administration issued a presidential proclamation that bans foreign nationals from obtaining a new H-1B, H-2B, or J visa to enter the United States, with several limited exceptions. The proclamation is scheduled to remain in effect through December 31, 2020, although it may extend beyond that date, bringing long-term and broad-reaching impacts to H-1B workers, their sponsoring companies, and the global and domestic economies.

A Decade of H-1B Denials

Between FY 2015 and the first quarter of FY 2020, denial rates for new H-1B petitions increased from 6% to 30%. Denial rates were highest for IT businesses or companies that provided business services to U.S. companies. A National Foundation for American Policy analysis shows that the denial rate for a dozen large companies providing consulting or IT services increased by at least 20 percentage points in FY 2020 compared to FY 2015.

For many employers, problems began with the Neufeld memo, issued in 2008, that gave USCIS the authority to deny H-1B petitions on its narrow definition of an “employer-employee” relationship that restricted employers and H-1B visa holders. In the past 10 years, USCIS has also been criticized for inconsistencies in implementing its policies without issuing new regulations and without Congress changing applicable laws. The agency has used different standards for adjudication, and it has failed to apply standards uniformly among companies.

Denial Rate for H-1B Petitions for Initial Employment  

Fiscal YearDenial Rate
FY 202030%
FY 201921%
FY 201824%
FY 201713%
FY 201610%
FY 20156%
FY 20148%
FY 20137%
FY 20125%
FY 20117%
FY 20108%
FY 200915%
Source: USCIS, National Foundation for American Policy. Data extracted and analyzed from USCIS H-1B Employer Data Hub.

Companies Affected by H-1B Restrictions

Many companies have been negatively impacted by the rise in H-1B denials. Amazon, Google, Microsoft, Facebook, and Apple are just a few major businesses that have been affected. In FY 2015, the denial rate for initial employment was 1% for Amazon. In FY 2020, Amazon had a 16% denial rate for H-1B petitions, resulting in a 15% change in denial rates between FY 2015 and FY 2020. Google and Microsoft both reported a 13% change in denial rates from FY 2015 to FY 2020, with a 1% denial rate in FY 2015 and a 14% denial rate in FY 2020. Facebook had a 0% denial rate in FY 2015 and an 8% denial rate in FY 2020, translating to an 8% increase in H-1B denials over the course of five years. Apple saw a 6% change in denial rate from FY 2020 to FY 2015. Apple had a 2% denial rate for initial employment in FY 2015 and an 8% denial rate in FY 2020.

Impact on Specialty Occupations

Specialty occupations have been particularly hard-hit by the H-1B petition denials. In recent cases, judges have ruled against USCIS and their restrictive interpretations of what qualifies as an H-1B specialty occupation. USCIS’s interpretation of a specialty occupation has led to an increase in H-1B denial rates, which in turn has led to more lawsuits. In one case brought by InspectionXpert Corporation (IXC), a judge rejected the agency’s assertion that it could deny an H-1B petition if the position could be filled by a worker with a degree in another discipline. Despite isolated victories against USCIS in court, the agency’s policies are still creating a chilling effect for US-based companies that continue to weigh the likelihood of a positive outcome when filing an H-1B visa on behalf of a qualified foreign national.

Economic Implications

The proclamation issued by the Trump Administration may have long-lasting impacts on the economy, especially if it is extended beyond the scheduled expiration date of December 31, 2020. USCIS has issued a statement regarding the president’s proclamation and its impact on H-1B workers. Although many prospective H-1B employees will not be allowed to enter the country through the end of 2020, USCIS notes that the restrictions do not apply to most H-1B employees who are currently in the United States.

In defense of its decision to suspend entry for H-1B workers, the Trump Administration has argued that denying entrance for foreign workers will save more jobs for American workers. The administration expects the temporary ban on H-1B foreign workers to open up approximately 525,000 new jobs in the U.S. economy for U.S. citizens. However, statistics show that H-1B holders have an important role in the country’s economy, and the absence of incoming talent may ultimately harm rather than help the economy. Statistics show that every H-1B creates 1.84 jobs in the U.S. Most jobs are created in the Science, Technology, Engineering, and Math (STEM) fields. Additionally, many high-level individuals who have been instrumental to job growth in the U.S., including Google CEO Sundar Pichai, have used the H-1B program to find employment in the United States. Google and other major tech companies have argued that the administration’s proclamation will weaken the talent pool in the tech industry, ultimately making the field less competitive and less diverse. If prospective H-1B workers cannot find employment in the United States, they will seek work elsewhere, experts warn. Several countries, including the U.K. and Canada, have already announced plans to attract workers who are not eligible for employment in the United States based on the Trump Administration’s proclamation.

The status of eligible H-1B employees seeking work in the United States remains uncertain at this point. However, experts predict more legal action from companies that are affected by the policy. Additionally, courts may step in to limit the authority of several agencies, including the Department of Labor if it exceeds its authority in implementing the new policy.