The law provides for an additional 50,000 visas in each of FY1999 and FY2000 and an additional 42,500 visas in FY2001. The cap returns to 65,000 in FY2002 (beginning October 1, 2001).

The new visas became available as of October 1, 1998.

The INS had been approving H-1B petitions against this new cap since May. Thus, cases that were filed last year but that did not get approved before the cap was reached were approved with October 1 start dates, and were counted against this year’s cap, but INS has not released an exact figure. Estimates are that approximately 40,000 petitions already were approved against the current fiscal years’ cap. The INS has not stated whether, if the cap should be reached in future years, it will continue its practice of adjudicating cases against the next year’s quota. However, the law does not provide for any spillover of unused visas from one year to the next.

There are actually two new "displacement" attestations. The first requires the employer to attest that it did not displace and will not displace a U.S. worker employed by the employer within the period beginning 90 days before and ending 90 days after the filing of an H-1B petition based on the LCA. The second requires the employer to attest that it will not place the H-1B worker with another employer where: (1) the H-1B worker performs duties in whole or in part at one or more worksites owned, operated and controlled by the other employer and (2) there are indicia of an employment relationship with the other employer, UNLESS the petitioning employer has inquired of the other employer and has no knowledge that the other employer has displaced or intends to displace another U.S. worker. More details on this attestation are in the next section.

The employer must attest that it has taken good faith steps to recruit for the position in the United States using industry-wide standard practices, and has offered the job to any U.S. worker who applies and is equally or better qualified than the H-1B worker. More details about this attestation are below.

The new attestation provisions do not go into effect until after the Department of Labor, and the INS, have issued final regulations to implement them. The statute specifically provides that the agencies may reduce the comment period on proposed regulations to not less than 30 days. This seems to indicate that the Department cannot simply promulgate interim final regulations, but must first promulgate proposed regulations for comment.

H-1B "dependent" employers and employers that have been found to have committed willful violations (willful violators) must make the new attestation. These employers must include the new attestations on Labor Condition Applications filed between the date final regulations are promulgated and October 1, 2001 (The new attestations sunset on October 1, 2001.) H-1B dependent employers must make the new attestations as long as they are considered "dependent" (see the definition below), and before October 1, 2001. Willful violators must make the new attestations for a period of five years from the date of the willful violation, or until October 1, 2001, whichever is shorter.

The new attestations are NOT required, even from H-1B dependent employers and willful violators, if the only nonimmigrants for whom the LCA is filed have a master’s degree (or its foreign equivalent) in a field related to the position, or will receive wages and other compensation (including cash bonuses and similar compensation) at or above $60,000 annually.

Employers must calculate whether they are "H-1B dependent" each time they file an LCA. The calculation is based on the total number of full-time equivalent (FTE) employees of the employer, and the number of H-1B nonimmigrants employed by the employer at that time. A company will be considered to be dependent if it falls into one of these categories:

For the first six months after the date of enactment, or until final regulations are issued, whichever is longer, H-1B nonimmigrants who have master’s degrees or who earn $60,000 in wages and other compensation do not need to be counted toward either the number of FTE employees or the number of H-1B nonimmigrants. However, this provision has no real effect, since there is no consequence to being H-1B dependent until final regulations are issued on the new attestations.

The law says that companies that are treated as a single employer under certain sections of the Internal Revenue Code (Section 414(b), (c), (m), or (o)) are to consolidate their employees to determine whether the entire group is "H-1B dependent." Therefore, simply divesting a division may not render a company immune to being "H-1B dependent." The IRC must be consulted.

Any employer who has committed a willful violation of any requirement of the H-1B program within five years of the date of filing an LCA, for which violation the employer has received a final determination from the Department of Labor (or from a Federal Arbitrator, in the case of a decision regarding failure to offer employment to a U.S. worker as required under the recruitment attestation). The determination must be issued on or after the date of enactment of the H-1B law, but the actual violation must have occurred within the five years prior to the filing of the LCA, which means it could have occurred before the date of enactment.

"Displace" means laying off a U.S. worker from a job that is "essentially the equivalent" of the job for which the H-1B worker is being hired. To be considered "essentially equivalent," the job must have had essentially the same job responsibilities, and the U.S. worker holding it must have had substantially equivalent qualifications and experience to the H-1B worker. Also, the job must be within the same area of employment.

It’s easier to say what it does not mean. It does not mean a discharge for inadequate performance, violation of workplace rules, or cause. It does not mean a voluntary departure or voluntary retirement by the employee. It does not mean discharge following the expiration of a grant or contract unless the employment contract was entered into for the purpose of evading the recruitment or layoff provisions for dependent employers. If the employee is offered a similar job instead of being laid off, and the new job is at equivalent or higher compensation and benefits, it is not a lay-off, even if the employee declines the offer. If the employee is subject to layoff due to outsourcing or another contract arrangement, the alternate job offer can be with either the original employer or the contractor.

As described above, in order to be considered "displacement" the U.S. worker must have been laid off from a job in the same area of employment where the H-1B is working. "Area of employment" is still defined as the area within normal commuting distance of the actual work site. Therefore, a company with multiple locations within a given area of employment will have to examine all of its worksites before making this attestation. Further, because related but separately incorporated companies can be considered as a single employer for purposes of determining H-1B dependency, the DOL may determine that such a group of companies could be a single employer for purposes of determining whether a layoff was by the "same" employer.

Displacement is prohibited during the 180-day period beginning 90 days before the filing of an H-1B petition based on the LCA where the attestation appears, and ending 90 days after such filing.

An H-1B dependent employer who places an H-1B worker at a third-party worksite "where there are indicia of an employment relationship" (which would include many contracting situations) must inquire of the owner of the worksite whether it has displaced (as that term is defined above) a U.S. worker during the 90 days before the date the H-1B is placed there and whether it intends to displace a U.S. worker within 90 days after the date of placement. However, the new law provides for strict liability on the part of the petitioning employer if the operator of the worksite proceeds to displace a U.S. worker or has actually displaced a worker before the date of placement. In such a circumstance, the petitioning employer could still be fined for a violation, even though it has made the required inquiries. However, the INS cannot assess a debarment penalty unless the petitioning employer had knowledge of or had reason to know of the displacement. The petitioning employer also could be subject to the debarment if it had been previously sanctioned for a violation of this provision by placing H-1B workers at the same worksite.

The statute does not define this term. However, the statement in the Congressional Record made by the main author of the Act, Senator Spencer Abraham of Michigan, indicates in the record that this provision should allow employers to use normal recruiting practices that similar employers in their industry would use. It is not meant to require employers to comply with any specific recruiting regimen or practice. Nor should it be read to confer authority on DOL to establish such regimens by regulation or guideline.

As an attestation, the initial determination is up to the employer. However, any U.S worker who applied and was rejected can file a complaint with the Attorney General to allege that he or she was rejected in favor of a lesser-qualified foreign worker. The complaint must be filed within 12 months of the alleged violation. The Department of Labor does not have authority to investigate these types of violations.

If the complaint provides reasonable cause to believe a violation occurred, then the Attorney General must initiate a binding arbitration proceeding with an arbitrator from the Federal Mediation and Conciliation Service, with fees to be paid by the Attorney General. The complainant has the burden of proof in the arbitration proceeding to show by "clear and convincing evidence" that a violation occurred. If the arbitrator finds in favor of the complainant, the Attorney General may review and/or reverse the findings, and may impose a $1000 penalty and a one-year debarment from filing immigration petitions (immigrant and non-immigrant). If the violation is found to be willful, the penalty is $5,000 and a two-year debarment.

The DOL regulations are expected to offer some guidance on the requirements. At a minimum, employers who have to make this attestation should keep copies of their advertising for the position. In addition, if any U.S. workers apply, the employer may want to keep documents relating to those individuals’ qualifications and experience in case a complaint is filed. However, since a complaint must be filed within one year of the alleged violation, the employer may only need to keep such documents for a year from their date, unless an investigation is launched.

If the H-1B nonimmigrant would otherwise qualify for EB-1 preference (multinational manager or executive, outstanding professor or researcher, or person of extraordinary ability), the employer is not required to make the recruitment attestation. Also, as stated above, individuals with master’s degrees or who earn $60,000 are exempt from all of the new attestations.

The fee is effective December 1, 1998 and sunsets on October 1, 2001.

The fee must accompany the following types of H-1B petitions: (1) all petitions for "new employment" (whether initial, consecutive, or concurrent employment), and (2) the first extension petition filed by an employer for a particular H-1B employee.

Under the statute, the employer MUST pay this fee. The employer cannot require or accept reimbursement for the fee from the employee, or risk a $1000 fine.

Institutions of higher education and their related or affiliated non-profit entities, other nonprofit research institutions and government research institutions are not required to pay the fee.

The Clinton Administration promoted this fee on employers to fund education and training programs for U.S. workers. Since the purpose is to fund training programs that would help to eliminate U.S. employer’s reliance on foreign workers, it was felt that the employer should bear the burden.

The fee is paid at the time of filing the types of petitions described above.

The fee must accompany the following types of H-1B petitions: (1) all petitions for "new employment" (whether initial, consecutive, or concurrent employment), and (2) the first extension petition filed by an employer for a particular H-1B employee. Therefore, no single employer would have to pay the fee more than twice for any single H-1B worker.

The check is collected by the INS and should be made out to the INS.

Although the INS is indicating it should be able to accept "all-in-one" checks, because of the requirement that the training fee come only from the employer, we would recommend that attorneys obtain a check directly from the employer for the new fee, and attach it to the petition with a separate check for the filing fee.

The majority of the funds will be used by the Department of Labor for training programs for U.S. workers and the National Science Foundation for scholarships for low-income students in math, engineering and computer science. Six percent of the funds go to DOL for administration and enforcement of the H-1B program, although the Department cannot use any of the funds on enforcement until it has reduced LCA processing time to within the seven-day statutory requirement. Finally 1.5 percent of the funds will go to INS to reduce processing times for H-1B petitions.