New H1B Provisions Included in Budget Bill Passed by Congress and Signed into Law
Posted Nov 16, 1998

Congress passed, and the President signed on October 21, 1998, a budget bill which also contained the H1B provisions that had previously been part of Bill H.R. 3736. The major provisions are summarized below:

Increase in H1B Numbers: The new law immediately increases the number of visas available, as follows: 115,000 cap for fiscal year (FY) 1999; 115,00 for FY 2000; 107,500 for FY 2001. The limit then reverts to 65,000 from FY 2002. Certain new requirements (full salary even during bench time, same benefit package as non-H1 employees, and prohibition on departure penalties) are also effective immediately.

New Attestations for H1B Dependent Employers: For so-called "H1B dependent employers" (defined below) there are additional promises or "attestations" that must be made on the LCA: that no U.S. workers have been or will be displaced within 90 days; that if the worker will be placed at another employer site, the petitioner has inquired of that other employer and found that no U.S. worker has been or will be displaced within 90 days (if this displacement does take place, the petitioning employer could be held liable); AND that they have recruited for a U.S. worker to fill the position and have offered the position to anyone they found who is as qualified as, or more qualified than, the H1 beneficiary. These will go into effect after regulations, and a new version of the LCA, have been published.

H1B Dependent Employer: An H1B dependent employer is defined as follows: if 1-25 full time employees and more than 7 are H1Bs; if 26-50 full time employees and more than 12 are H1Bs; or if over 50 full time employees and 15% or more are H1Bs. Exempt H1s, defined above, are not counted for their first six months after the law was enacted, or until regulations issued, whichever is longer.

Exempt from H1B count: Please note that if the beneficiary holds a Masters degree in a relevant field or will be paid $60,000 or more, then the person qualifies as "exempt" and these additional attestations are not required, even if the employer meets the definition of H1B dependent. Also, for a beneficiary that would appear to qualify in one of the "EB1" immigrant categories, the recruitment attestations would not apply. It is unclear what type of proof will be required that the beneficiary could qualify for that exception.

Enhanced Penalties for violations: Along with the new requirements, the law provides for enhanced enforcement mechanisms and new penalties with jail time and fines up to $35,000 for willful violations of the law.

Additional $500 Filing Fees from December 1, 1998: The new law also imposes an additional fee of $500 per petition which is effective from December 1, 1998, which will be used to fund scholarship and training programs for U.S. workers, as well as Department of Labor expenditures. Please note that the last day for filing the H1B Petition without the extra fee is the Monday after Thanksgiving, that is November 30, 1998.

Exceptions to the $500 Filing Fees: Colleges, universities and nonprofit organizations are not required to pay this $500 fee. The fee applies for new petitions, first petition for extension, and petitions for new or concurrent employment. It is not required for amendments that do not request extensions. Under the law, the employer should not seek reimbursement from the employee for this $500 fee.

The above is an overview of the highlights of the new law. The Law Office of Sheela Murthy is pleased that the law has been passed increasing the H1B numbers but we are concerned that the new filing fees and some of the other provisions like the attestations may deter U.S. employers from hiring the necessary specialty occupation workers thereby compounding the shortage of computer based and other professionals in the U.S. and ultimately adversely affecting the U.S. economy, even though the purpose of the attestations etc. is meant to benefit U.S. workers and the economy of the U.S.