H-1B Visa Reform Act of 2004

Last updated June 21, 2022

The H-1B Visa Reform Act of 2004 was a part of Title IV of the Consolidated Appropriations Act, 2005 (sometimes also called the Omnibus Appropriations Act of 2005) in the United States that focused on changes to regulations governing H-1B visas.^[1]^[2]^[3] It was a successor to previous legislative changes affecting the H-1B, namely: the Immigration Act of 1990, American Competitiveness and Workforce Improvement Act (ACWIA) of 1998, and the American Competitiveness in the 21st Century Act (AC21) of 2000.^[3]^[4] The Consolidated Appropriations Act was signed by George W. Bush, then President of the United States, in early December 2004.^[3]

Provisions
Addition of some cap-exempt slots for people with graduate degrees
Changes to fee structure
Renewal of LCA attestation requirements and expansion of DOL investigative authority
Elimination of the "95% rule" for the prevailing wage requirement
Changes to Department of Labor investigative authority
Formal lines of defense for employers
See also
References

Title IV of the Consolidated Appropriations Act had another component pertaining to immigration regulations, namely the L-1 Visa Reform Act of 2004, that pertained to L-1 visas.^[1]

Provisions

Addition of some cap-exempt slots for people with graduate degrees

Prior to this Act, there were 195,000 slots available under the annual H-1B cap. Nonprofit research institutions were exempt from the cap, and people who had been counted towards the cap already (such as if they were transferring jobs or extending a 3-year H-1B by another 3 years) could apply without being counted against the cap as long as they weren't going over their 6-year limit.

The H-1B Visa Reform Act of 2004 effectively reduced the cap from 195,000 to 65,000 visas, but declaring exemptions for the first 20,000 applicants each year with graduate degrees. Specifically:^[3]

The first 20,000 H-1B beneficiaries who have earned a master's degree or higher from a U.S. institution of higher education are not subject to the annual congressionally mandated H-1B visa cap of 65,000. After those 20,000 slots are filled, USCIS is required to count thosecases against the cap for the remainder of the fiscal year.^[5]
This would begin starting FY 2005 (October 1, 2004 - September 30, 2005) and applications for this could be submitted starting March 8, 2005. For FY 2006, this would apply right from the beginning of applications opening up (i.e., the first week of April 2005).
Nonimmigrants currently in the United States on a J-1 (exchange) visa who receive a waiver of the two-year residency requirement if requested by either a federal or state agency are now exempt from the H-1B cap. Qualifying employers of these beneficiaries may submit H-1B petitions, notwithstanding the fact that the H-1B cap was already met for FY 2005, after December 8, 2004.

Changes to fee structure

The fee structure was changed as follows:^[3]^[6]

There was no change to the rules governing the base filing fee, that had to be included with all applications (this fee would increase periodically due to inflation—as of 2015, the fee stands at $325).
The structure of the additional fee introduced by the American Competitiveness and Workforce Improvement Act (ACWIA) and modified by the American Competitiveness in the 21st Century Act (AC21) was changed from its original value ($500 at the time of the creation of the fee by the ACWIA, and $1000 after the passage of AC21) to the following payment structure:
- Companies employing 26 or more full-time employees were required to pay a fee of $1500.
- Companies employing 25 or fewer full-time employees were required to pay a fee of $750.
- Nonprofit research institutions applying for the uncapped H-1B continued to be exempt from this fee (this clause was present in ACWIA and AC21).
- The allocation of the money raised between various US agencies and programs was also changed.^[2]
An additional anti-fraud fee of $500 was also instituted, applicable to all except those applying for a three-year extension of an existing H-1B status.
Employers could optionally pay a $1000 fee for premium processing, so that they could get to know quickly if the application was approved.

Renewal of LCA attestation requirements and expansion of DOL investigative authority

The Labor Condition Application (LCA) attestations that were introduced for H-1B-dependent employers and those who had committed willful misrepresentations recently were renewed. These attestations continue to be required as of 2015.^[3]^[4]

Elimination of the "95% rule" for the prevailing wage requirement

The "95% rule" for prevailing wages, where employers needed to pay only 95% or more of the prevailing wage, was eliminated: employers were now required to pay at least 100% of the prevailing wage.^[3]^[4]

Changes to Department of Labor investigative authority

The DOL was given authority to investigate when the Secretary of Labor personally certifies that there is reasonable cause to believe that the employer is not in compliance and authorizes the investigation, or when a credible source provides information that includes allegations that within the past 12 months an employer has willfully failed to meet an LCA condition, has engaged in a pattern or practice of violations, or has committed a substantial failure to meet an LCA condition that affects multiple employees.^[3]^[4]

Formal lines of defense for employers

Employers were given two recognized, standard lines of defense they could use in case of any investigation or identification of problems with their applications:^[4]

Good Faith Compliance Defense: H-1B employers are considered to have complied in good faith with the program requirements notwithstanding a "technical or procedural failure" to meet such requirements, if the employer:
1. Made a good faith attempt to comply;
2. Voluntarily corrected the failure within 10 business days of having it explained by the DOL or another enforcement agency; and
3. Has not engaged in a pattern or practice of willful violations.
Recognized Industry Standards Defense: H-1B employers that have established that the prevailing wage used was calculated consistent with recognized industry standards and practices will not be assessed fines or penalties for prevailing wage violations.

Related Research Articles

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The H-1B is a visa in the United States under the Immigration and Nationality Act, section 101(a)(15)(H) that allows U.S. employers to temporarily employ foreign workers in specialty occupations. A specialty occupation requires the application of specialized knowledge and a bachelor's degree or the equivalent of work experience. The duration of stay is three years, extendable to six years; after which the visa holder may need to reapply. Laws limit the number of H-1B visas that are issued each year: 188,100 new and initial H-1B visas were issued in 2019. Employers must generally withhold Social Security and Medicare taxes from the wages paid to employees in H-1B status.

TN status or TN visa is a special non-immigrant classification in the United States that offers expedited work authorization to a citizen of Canada or a national of Mexico, created as a result of provisions of the North American Free Trade Agreement that mandate simplified entry and employment permission for certain professionals from each of the three NAFTA member states in the other member states.

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An H-2A visa allows a foreign national worker into the United States for temporary agricultural work. There are several requirements of the employer in regard to this visa. The H-2A temporary agricultural program establishes a means for agricultural employers who anticipate a shortage of domestic workers to bring non-immigrant foreign workers to the U.S. to perform agricultural labor or services of a temporary or seasonal nature. In 2015 there were approximately 140,000 total temporary agricultural workers under this visa program. Terms of work can be as short as a month or two or as long as 10 months in most cases, although there are some special procedures that allow workers to stay longer than 10 months. All of these workers are covered by U.S. wage laws, workers' compensation and other standards; additionally, temporary workers and their employers are subject to the employer and/or individual mandates under the Affordable Care Act. Because of concern that guest workers might be unfairly exploited the U.S. Department of Labor Wage and Hour Division is especially vigilant in auditing and inspecting H-2A employers. H-2A employers are the only group of employers who are required to pay inbound and outbound transportation, free housing, and provide meals for their workers. H-2A agricultural employers are among the most heavily regulated and monitored employers in the United States. Unlike other guest worker programs, there is no cap on the number of H-2A visas allocated each year.

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An H-4 visa is a United States visa issued to dependent family members of H-1B, H-1B1, H-2A, H-2B, and H-3 visa holders to allow them to travel to the United States to accompany or reunite with the principal visa holder. A dependent family member is a spouse or unmarried child under the age of 21. If a dependent of an H-1B, H-1B1, H-2A, H-2B, or H-3 worker is already in the United States, they can apply for H-4 immigration status by filing Form I-539 for change of status with United States Citizenship and Immigration Services (USCIS).

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The H-2B visa nonimmigrant program permits employers to hire foreign workers to come temporarily to the United States and perform temporary nonagricultural services or labor on a one-time, seasonal, peakload or intermittent basis.

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The American Competitiveness and Workforce Improvement Act (ACWIA) was an act passed by the government of the United States on October 21, 1998, pertaining to high-skilled immigration to the United States, particularly immigration through the H-1B visa, and helping improving the capabilities of the domestic workforce in the United States to reduce the need for foreign labor.

The L-1 Visa Reform Act of 2004, referred to more briefly as the L-1 Reform Act, was a part of Title IV of the Consolidated Appropriations Act, 2005 in the United States that focused on changes to regulations governing L-1 visas. The Consolidated Appropriations Act was signed by George W. Bush, then President of the United States, in early December 2004. Title IV of the Consolidated Appropriations Act also included the H-1B Visa Reform Act of 2004, that focused on H-1B visas.

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The term H-1B-dependent employer is used by the United States Department of Labor to describe an employer who meets a particular threshold in terms of the fraction of the workforce comprising workers in H-1B status. An employer classified as H-1B-dependent needs to include additional attestations in the Labor Condition Application used for the petition of any H-1B beneficiary being offered an annual compensation of less than $60,000 and without a master's degree. The notion was introduced by the American Competitiveness and Workforce Improvement Act (ACWIA) passed in 1998 and operationalized through the United States Department of Labor's Interim Final H-1B Rule of December 20, 2000. The regulation is found in 20 CFR 655.736 in the Code of Federal Regulations.

In the United States, the most common visa used for short-term trips is the B visa. This is a combination of the B-1 visa and the B-2 visa. People on B visas are generally not allowed to engage in productive work or study activities. However, in some cases, B visas can be issued that allow people to engage in some types of productive work and learning activity, in lieu of another visa. The three visa categories, for which a B visa could be issued instead, are the H-1B visa, H-3 visa, and J-1 visa. The U.S. Department of State recommends that consular officers clearly annotate such B visas to make the scope of the visa clear to the applicant and the U.S. Customs and Border Protection officer at the port of entry.

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Tenrec v. USCIS, colloquially known as the H-1B Lottery Lawsuit, was a class action lawsuit brought against United States Citizenship and Immigration Services, challenging the lottery process used to decide which cap-subject H-1B Form I-129 petitions to adjudicate in case more petitions were received than the cap for the fiscal year. The plaintiffs were two pairs of H-1B petitioner (employer) and beneficiary. The case was decided against the plaintiffs, and an appeal was withdrawn after both plaintiffs withdrew.

References

1 2 "Consolidated Appropriations Act, 2005". United States Government Publishing Office. December 8, 2004. Retrieved March 29, 2015.
1 2 Xie, Jeff (December 21, 2004). "H-1B Visa Reform Act of 2004 -- H.R.4818". uslawnet.com, Xie Law Offices, LLC. Retrieved March 29, 2015.
1 2 3 4 5 6 7 8 "USCIS TO IMPLEMENT H-1B VISA REFORM ACT OF 2004" (PDF). United States Citizenship and Immigration Services. December 9, 2004. Retrieved March 29, 2015.
1 2 3 4 5 "Fact Sheet #62A: Changes made by the H-1B Visa Reform Act of 2004" (PDF). United States Department of Labor. July 1, 2008. Retrieved March 29, 2015.
↑ Batalova, Jeanne (April 7, 2010). "H-1B Temporary Skilled Worker Program". Migration Policy Institute . Retrieved March 29, 2015.
↑ "H-1B Benefit Fraud & Compliance Assessment" (PDF). United States Citizenship and Immigration Services. September 1, 2008. Retrieved March 29, 2015.

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[caa05-1] 1 2 "Consolidated Appropriations Act, 2005". United States Government Publishing Office. December 8, 2004. Retrieved March 29, 2015.

[uslawnet-2] 1 2 Xie, Jeff (December 21, 2004). "H-1B Visa Reform Act of 2004 -- H.R.4818". uslawnet.com, Xie Law Offices, LLC. Retrieved March 29, 2015.

[uscis-press-release-3] 1 2 3 4 5 6 7 8 "USCIS TO IMPLEMENT H-1B VISA REFORM ACT OF 2004" (PDF). United States Citizenship and Immigration Services. December 9, 2004. Retrieved March 29, 2015.

[dol-4] 1 2 3 4 5 "Fact Sheet #62A: Changes made by the H-1B Visa Reform Act of 2004" (PDF). United States Department of Labor. July 1, 2008. Retrieved March 29, 2015.

[mpi-5] Batalova, Jeanne (April 7, 2010). "H-1B Temporary Skilled Worker Program". Migration Policy Institute . Retrieved March 29, 2015.

[h1b-bfca-6] "H-1B Benefit Fraud & Compliance Assessment" (PDF). United States Citizenship and Immigration Services. September 1, 2008. Retrieved March 29, 2015.

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