Summary of key provisions of the H-1B Visa Reform Act of 2004

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Congress is finalizing the Fiscal Year 2005 Omnibus Appropriations Bill (H.R. 4818), which is expected to be sent to President Bush to be signed into law in the first two weeks of December. This bill incorporates the "H-1B Visa Reform Act of 2004," which contains significant provisions affecting the H1¬B specialty worker category.

The final enrolled version of the bill will not be available until it is sent to the President for signature. This summary was prepared from a draft copy from the Senate Legislative Counsel. Highlights of the provisions that will take effect after the bill is signed into law include:

1. New $500 anti-fraud fee. A new $500 "fraud protection and detection fee" will have to be paid by all employers (including institutions of higher education) who file an H-1B petition: a) initially to grant an alien H-1B status, and b) to allow an H-1B nonimmigrant to change employers. Effective date: Based on the wording of the draft copy of the act, the underlying structural aspects of this fee would begin to be implemented immediately after the bill is signed into law, but the actual collection of the fee would not become effective until 90 days from the date the bill is signed into law. [Sec. 26].
2. 20,000 cap exemption for U.S. masters and higher. Up to 20,000 aliens with masters or higher level degrees from U.S. institutions of higher education will be exempt from the H-1B cap each year. Petitions for such individuals that are filed after the 20,000 exemptions are granted will be counted against the cap. Note: this does not impact the general exemption from the cap for individuals employed by institutions of higher education; that exemption remains. Effective date: 90 days from the date the bill is signed into law. [Sec. 25].
3. 5 per cent rule eliminated. The H-1B and permanent labor certification "prevailing wage 5 percent rule," which considered employers paying no less than 95 percent of the prevailing wage as meeting the prevailing wage requirements, will be eliminated; employers will now have to pay at least 100% of the prevailing wage to comply with that wage requirement. Effective date: 90 days from the date the bill is signed into law. [Sec. 23].
4. Wage survey wage levels increased from 2 to 4. Surveys used by the government to determine prevailing wages will have to provide at least 4 levels of wages commensurate with experience, education, and level of supervision. Currently, such surveys only provide 2 wage levels, which make it very difficult for employers of mid-level employees to meet the prevailing wage requirement. The provision also includes a formula for converting 2-level wage determinations to 4 levels. Effective date: 90 days from the date the bill is signed into law. [Sec. 23].
5. Training fee reinstituted and made permanent for non-exempt employers. The H-1B training fee that had sunset on October 1, 2003 will be reinstituted and made permanent. Previously, the training fee was set at $1,000. Now, it will be $750 for employers with 25 or fewer full-time employees, and $1,500 for employers with over 25 full-time employees. Reinstitution of this fee would begin on the date the bill is signed into law. Institutions of higher education and non-profit entities or teaching hospitals affiliated with them, as well as nonprofit or governmental research organizations, will continue to be exempt from this training fee, however. Effective date: Effective on the date the bill is signed into law. [Sec. 22].
6. H-1B dependency and special attestation requirements permanently reinstated. This law will permanently reinstate the requirement that employers determine whether they are "H-1B dependent" before filing a Labor Condition Application (LCA). It will also permanently reinstate the Recruitment and Hiring and Displacement and Secondary Displacement attestations that applied to “H-1B dependent” employers and to employers found to have committed a willful violation or misrepresentation of a material fact on the application. Both of those requirements had sunset on October 1, 2003. Effective date: 90 days from the date the bill is signed into law. [Sec. 22].
7. DOL investigative authority expanded. This law will permanently reinstate DOL's authority to investigate LCA fraud and abuse, and will expand that authority to allow DOL to initiate investigations on its own, in addition to investigations based on a specific complaint. Effective date: 90 days from the date the bill is signed into law. [Sec. 24].