In another immigration loss for the Trump administration, a federal judge in New Jersey granted a business group a preliminary injunction to block the Department of Labor (DOL) from implementing its H-1B wage rule. An analysis found the wage rule, issued in October, would have required employers to boost H-1B visa holders’ wages by 40% to 50%, well above the market wage for similar U.S. workers. Analysts concluded the rule’s objective was to price out of the U.S. labor market existing H-1B visa holders and international students who graduate from U.S. universities. The complaint was filed by the Wasden Banias law firm, which has launched several successful lawsuits against the Trump administration’s H-1B policies, on behalf of ITServe Alliance, Dots Technologies and other companies.
U.S. District Judge Stanley R. Chesler did not rule on the substance of the DOL regulation, since he decided the plaintiffs were likely to succeed on their argument that the Department of Labor regulation violated the Administrative Procedure Act (APA) when it issued the rule “interim final” without going through the normal rulemaking process that allows for public comment. The Department of Labor claimed it had a “good cause” exception to bypass the normal process due to Covid-19-related unemployment. The judge disagreed.
Judge Chesler disputed the Trump administration’s contention that the economic facts and the cases it presented showed DOL was justified in publishing its H-1B wage rule without public comment and effective immediately. “Courts are hesitant to find that an emergency existed, or that a factual scenario posed a real risk of serious harm, and when they have, it has generally involved situations with imminent threats to national security, public safety, or the environment,” wrote the judge in an opinion issued on December 3, 2020. “Furthermore, not only is the present case distinguishable from the case law referenced by the Department, but the facts relied upon by the Department also do not support its conclusion that an economic crisis existed as to the H-1B program.”
The judge pointed out Covid-19-related unemployment has been concentrated in service occupations, not in the computer occupations that match up with H-1B professionals, citing research from the National Foundation for American Policy (NFAP).
“Specifically, computer-related occupations comprised over 66% of approved H-1B petitions in 2019. USCIS, Characteristics of H-1B Specialty Occupation Workers,” wrote Judge Chesler. “Those computer-related positions tend to have some of the lowest unemployment rates of all occupations. For example, in September 2020, the overall unemployment rate was approximately 7.9%, while the unemployment rate for those in computer-related positions was only 3.5%. U.S. Bureau of Labor Statistics, Civilian Unemployment Rate; U.S. Bureau of Labor Statistics, Unemployed Persons by Occupation and Sex. Further, this statistic indicates that the pandemic did not cause a significant increase in unemployment for those in computer occupations, as the unemployment rate for those fields was at 3% in January 2020, before the pandemic had any effect on the American economy. National Foundation for American Policy, Employment Data for Computer Occupations for January to September 2020.”
Judge Chesler noted that the same economic data from plaintiffs carried the day in the U.S. Chamber of Commerce victory on December 1, 2020. In that case, a federal judge set aside H-1B regulations from DOL and the Department of Homeland Security. “The Court’s conclusion is bolstered by the decision in Chamber of Commerce v. U.S. Dep’t of Homeland Security, which invalidated the same IFR [interim final rule] at issue in this case for failure to provide an opportunity for advance notice and comment, based on reasoning which, in many respects, is similar to this Court’s analysis.” Plaintiffs used similar data in a successful lawsuit for a preliminary injunction on October 1, 2020, against a June 2020 proclamation that suspended the entry of H-1B, L-1 and other visa holders, noted the judge.
“Plaintiffs are likely to succeed in showing that no emergency existed in the context of the H-1B program, and therefore, that the Department’s argument that it was impracticable to comply with the standard rulemaking procedure was insufficient,” wrote the judge.
Judge Chesler noted the Department of Labor’s rule was likely to make it more difficult for Americans to recover from the economic impacts of Covid-19 by driving up the cost of information technology (IT) services and making them less available. “Due to the social distancing measures put forth to battle the COVID-19 pandemic, the country has seen an increased demand for internet and computer services. Ortega Report. See also National Foundation for American Policy, Employment Data for Computer Occupations for January to September 2020 (explaining that there was an almost 5% increase in job vacancy postings in the most common computer occupations since May 2020),” wrote the judge. “As many Americans have personally experienced, videoconferences and remote work have become the new norm, making access to effective computer services and products paramount.”
“However, as Plaintiffs explain in their declarations, the Department’s increase to the prevailing wage rates for H-1B workers, which was done without giving affected employers any time to prepare for this change, will likely cause many IT and computer servicing companies to have to either raise their costs or close their businesses entirely,” he continued. “These issues may then be passed on to consumers, by making it more expensive and difficult to attain these vital computer services.”
Judge Chesler found it would be dangerous to permit the Trump administration’s argument to prevail that it could bypass normal rulemaking, in effect, whenever the unemployment rate increased or to prevent employers from filing for labor condition applications because the wage requirements would rise under a new regulation. “As such, according to the Department, any time it wishes to increase the prevailing wage rates for the H-1B program, it should be able to do so without complying with the APA’s [Administrative Procedure Act] notice and comment procedure. This type of argument is exactly what previous courts have cautioned against, when explaining that courts must ‘avoid the good cause exemption swallowing up notice and comment requirements . . .’”
The Trump administration’s legal defeats on its H-1B regulations mean it will remain feasible for companies to employ high-skilled foreign nationals, including international students, in the United States. The defeats will make it easier for a future administration to pursue policies that seek to assimilate and welcome, rather than repel, the contributions of individuals who were not born in the United States.