H-1B Visa Reform Act of 2004

Last updated July 05, 2024

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

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 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 can reapply. Laws limit the number of H-1B visas that are issued each year. There exist congressionally mandated caps limiting the number of H-1B visas that can be issued each fiscal year, which is 65,000 visas, and an additional 20,000 set aside for those graduating with master’s degrees or higher from a U.S. college or university. An employer must sponsor individuals for the visa. USCIS estimates there are 583,420 foreign nationals on H-1B visas as of September 30, 2019. The number of issued H-1B visas have quadrupled since the first year these visas were issued in 1991. There were 206,002 initial and continuing H-1B visas issued in 2022.

An L-1 visa is a visa document used to enter the United States for the purpose of work in L-1 status. It is a non-immigrant visa, and is valid for a relatively short amount of time, from three months to five years, based on a reciprocity schedule. With extensions, the maximum stay is seven years.

The E-3 visa is a United States visa for which only citizens of Australia are eligible. It was created by an Act of the United States Congress as a result of the Australia–United States Free Trade Agreement (AUSFTA), although it is not formally a part of the AUSFTA. The legislation creating the E-3 visa was signed into law by U.S. President George W. Bush on May 11, 2005. It is widely believed to have grown out of the negotiation of a trade deal between the US and Australia.

Permanent Labor Certification is a process step required by some categories of employment-based immigration to the United States of America. Its stated goal is to "protect U.S. workers and the U.S. labor market by ensuring that foreign workers seeking immigrant visa classifications are not displacing equally qualified U.S. workers". U.S. workers are U.S. citizens, nationals or U.S. lawful permanent residents.

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.

<span class="mw-page-title-main">Visa policy of the United States</span> Policy on permits required to enter the United States and its unincorporated territories

Visitors to the United States must obtain a visa from one of the U.S. diplomatic missions unless they are citizens of one of the visa-exempt or Visa Waiver Program countries.

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).

The Security Through Regularized Immigration and a Vibrant Economy Act of 2007 or STRIVE Act of 2007 is proposed United States legislation designed to address the problem of illegal immigration, introduced into the United States House of Representatives. Its supporters claim it would toughen border security, increase enforcement of and criminal penalties for illegal immigration, and establish an employment verification system to identify illegal aliens working in the United States. It would also establish new programs for both illegal aliens and new immigrant workers to achieve legal citizenship. Critics allege that the bill would turn law enforcement agencies into social welfare agencies as it would not allow CBP to detain illegal immigrants that are eligible for Z-visas and would grant amnesty to millions of illegal aliens with very few restrictions.

EB-2 is an immigrant visa preference category for United States employment-based permanent residency, created by the Immigration Act of 1990. The category includes "members of the professions holding advanced degrees or their equivalent", and "individuals who because of their exceptional ability in the sciences, arts, or business will substantially benefit prospectively the national economy, cultural or educational interests, or welfare of the United States, and whose services in the sciences, arts, professions, or business are sought by an employer in the United States". Applicants must generally have an approved Permanent Labor Certification, a job offer, and their employer must have filed an Immigrant Petition for Alien Worker with the USCIS.

The Labor Condition Application (LCA) is an application filed by prospective employers on behalf of workers applying for work authorization for the non-immigrant statuses H-1B, H-1B1 and E-3. The application is submitted to and needs to be approved by the United States Department of Labor Employment and Training Administration (DOLETA)'s Office of Foreign Labor Certification (OFLC). The form used to submit the application is ETA Form 9035.

The American Competitiveness in the 21st Century Act (AC21) was an act passed by the government of the United States in October 2000, pertaining to immigration to the United States. It was a complement to the American Competitiveness and Workforce Improvement Act that had been passed in 1998. The focus of AC21 was to change rules related to portability and caps for the H-1B visa to increase the effective number of visas available and make it easier for workers on those visas to switch jobs. Although the language of the Act references the Immigration and Naturalization Service (INS), the INS would soon be restructured and the functions of the INS referenced in AC21 would be handled by United States Citizenship and Immigration Services.

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 Employ American Workers Act (EAWA) was a component of the American Recovery and Reinvestment Act of 2009 passed by the 111th United States Congress and signed into law by Barack Obama, then President of the United States, on February 17, 2009. The Act had a validity period of two years and was set to expire on February 17, 2011. It was not renewed, hence it sunset on February 17, 2011 and is no longer applicable.

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.

Premium Processing Service is an optional premium service offered by the United States Citizenship and Immigration Services to employers filing Form I-129 or Form I-140. To avail of the service, the employer needs to file Form I-907 and include a fee that is $1,500 for the H-2B and R classifications and $2,500 for all others.

<i>Sold Out</i> (book) 2015 book by Michelle Malkin and John Miano

Sold Out: How High-Tech Billionaires & Bipartisan Beltway Crapweasels Are Screwing America's Best & Brightest Workers is a 2015 book authored by Michelle Malkin and John Miano, a displaced high-tech professional, author and attorney who specializes in business immigration law at the policy level.

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.

A public access file is a file that needs to be maintained by any United States employer hiring people in H-1B, H-1B1, or E-3 temporary nonimmigrant worker statuses. It is intended to include more background information related to the attestations made on the Labor Condition Application used for the Form I-129 and/or visa application that was used to acquire the nonimmigrant worker status. The file may be requested by any member of the public through telephone or email inquiries. Any member of the public requesting access to the documents must be allowed to capture the information through such means as transcription, scanning, or taking photographs, for example. It is distinguished from a private access file that contains more sensitive and confidential employee data that must be shared with the U.S. Department of Labor if they choose to investigate. Regulations governing the public access file can be found in the Code of Federal Regulations, Title 20, or more specifically, in 20 CFR 655.760.

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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