The Bay Area Council, Stanford University and a host of other business and educational groups scored a legal victory over the administration of President Donald Trump on Tuesday, with a federal judge tossing out new rules for the H-1B visa.
“This is a major win for our economy and for our ability to recover from the worst downturn in generations,” Bay Area Council CEO Jim Wunderman said in a statement. “H-1B workers fill an important need in our economy and provide immense benefits not only to the companies they work for but the communities where they live. Many of the leading and fastest-growing technology companies in the Bay Area have been founded by entrepreneurs from other countries who first came here on visas.”
The rules issued in October by the federal departments of Labor and Homeland Security had imposed a one-year limit on placement of H-1B workers at third-party firms, along with more-restrictive definitions of what jobs and employment relationships qualify for the visa, and increased minimum pay for foreign workers on the H-1B.
Homeland Security had said its rule would “combat the use of H-1B workers to serve as a low-cost replacement for otherwise qualified American workers.” The Labor Department had said the new pay requirements would “induce some employers to employ U.S. workers instead of foreign workers from the H-1B program.”
The agencies cited unemployment from the coronavirus pandemic as reason to invoke the rules without the standard public notice and comment periods. Neither immediately provided a response to the ruling or said whether they planned to appeal it.
The Bay Area Council, Stanford, the U.S. Chamber of Commerce, the National Association of Manufacturers and other groups sued the agencies later in October, with the council arguing the rules would gut the H-1B program and be disastrous for the economy and post-pandemic recovery.
Bay Area technology giants rely heavily on the H-1B program, with Google, Apple and Facebook last year together receiving approvals for more than 5,500 new H-1B workers, according to federal government data.
On Tuesday, Judge Jeffrey White in U.S. District Court in Oakland shot down the rules, saying that although the pandemic had created an emergency and “a fiscal calamity for many individuals,” the government had not shown good cause for imposing the rules without notice or opportunities for public comment. The rules contained statements that “corrective measures should have been taken long ago,” White said. “Although both agencies cited ‘skyrocketing’ and ‘widespread’ unemployment rates as a basis to find ‘immediate’ action was necessary, they did not do so for over six months.”
The H-1B program has become a flashpoint in America’s immigration debate. Major tech firms employ foreign workers directly through the program, and also through staffing companies and outsourcers. The tech industry has pushed to expand the annual 85,000 cap on new visas, while critics have pointed to reported abuses and argue that the H-1B is used to supplant U.S. workers, drive down wages and facilitate outsourcing.
Research by Daniel Costa, of the left-leaning Economic Policy Institute, and Howard University political science professor Ron Hira, found that 60% of H-1B workers receive lower-than-average wages for their job and region, and that major tech companies pay some H-1B workers less than local median wages.
The Trump administration has dramatically increased denials of the visa for staffing and outsourcing firms that place H-1B workers at third-party companies.
Hira, after the rules were passed, called the minimum-pay boost the first substantive reform in the visa’s 30-year history, and said it would cut “the incentive to hire people because they’re cheaper” and improve the H-1B workforce.
Members of the Bay Area Council, which represents Google, Facebook, Uber and other Silicon Valley firms, had been “really concerned” about the rules, Wunderman said in an interview. “Many of them are really dependent on having the talent that comes from other countries. We’re in a global economy. Countries like Canada have been really aggressive about saying, ‘Come to Canada, and come to our tech community,’” he said, adding that the council would like to see a “modest” expansion of the H-1B cap.