USCIS has released its final rule on the modification of the H-1B cap selection process (“Modification Rule”) to prioritize petitions with the highest wage levels in the Federal Register.

Unless the Biden administration decides to delay or freeze the new rule, the rule will become effective on March 9, 2021 (60 days from publication), in time for this year’s H-1B Cap Registration process.

Since 2007, USCIS has conducted a lottery for the limited number of Cap H-1B available. The lottery selection was random, although skewed toward beneficiaries holding U.S. advanced degrees. The process allowed petitioners who held U.S. advanced degrees to compete first in the overall lottery and, if not selected, again in a special lottery only for those holding U.S. advanced degrees. While the Modification Rule will continue this dual lottery system, it will prioritize the selection of cases in each lottery based on the highest wage levels for the appropriate Standard Occupational Classification (SOC) code in the area of intended employment.

In 2020, the only substantive question that had to be answered as part of the electronic registration process was whether the beneficiary held a U.S. Master’s degree or higher. Now, if the rule goes into effect, there will be an additional question. The employer will have to determine and list the highest Occupational Employment Statistics (OES) prevailing wage level the proffered wage equals or exceeds for the relevant SOC code in the intended area of employment. The employer will not be asked to provide the SOC code or the proffered wage. The wage level alone will establish the ranking order – starting with Level IV and working down. Once a petition is selected for submission and is filed, USCIS will review the petition for possible inconsistencies.

Historically, based on the random lottery, about 31% of selected Cap H-1B petitions were Level I, 53% were Level II, 10% were Level III, and 4% were Level IV. Since no quotas will be set on wage levels, the new rule will increase the number of Level III and Level IV cases that are selected. This will make it more difficult for employers that wish to hire entry-level employees (such as talented recent U.S. college graduates), but it will provide more certainty to employers that hire employees at Level III and Level IV wages.

The Modification Rule was originally published in the Federal Register in November 2020. During the Comment Period, the Department of Homeland Security (DHS) received over 1,000 comments. There were many concerns, including about: the effects on universities, the economy in general, physician shortages (especially in rural areas), and off-shoring – not to mention questions about whether this new rule would be ultra vires or otherwise abused. DHS parried such criticisms and ultimately made no changes to the Modification Rule.