H-1B and L-1 Visa Reforms bill reintroduced in Senate

On Sept. 29, Senators Grassley (R-Iowa) and Durbin (D-Ill) reintroduced the bipartisan H-1B & L-1 Visa Reforms bill to the Senate, a version of which had been first introduced in 2007, on the eve of the 2007-2009 “Great Recession.” Seeking to protect American workers and prevent the exploitation of foreign labor, this new bill comes on the heels of the recent H-1B Presidential Proclamation that imposes a $100,000 entry fee on H-1B workers (Sept. 19), and of the publication of a proposed new Weighted H-1B Cap Lottery Selection Process (held annually in March) which would move away from a random selection to giving preference to those employees offered the highest salaries over entry-level positions (Sept. 24).

If enacted, the H-1B & L-1 Visa Reforms bill would introduce significant changes in the wage requirements, adjudication, and oversight of the two visa programs, with increased auditing/investigation authority to, and information-sharing between, immigration agencies.  New restrictions on third-party placement will also severely impact the ability of consulting firms (not just in tech industries, but also in accounting or management consultancy) to hire and place staff in the U.S., potentially closing a critical pipeline for hiring specialized technical and analytical talent, particularly in roles that are hard to fill through the domestic workforce.

Key H-1B provisions

Maximum H-1B time in the U.S. reduced from six years to three years: H-1B workers are currently limited to a total presence in the U.S. of six years, and may remain past this six-year period if they have received I-140 Immigrant Worker approval (towards achieving U.S. Permanent Residence). Due to increasing backlogs and processing times, the time to receive I-140 approval can often, today, exceed 2.5 years.

If enacted, the bill will reduce the maximum period of stay in H-1B status from six to three years, and H-1B workers would, to remain in the U.S. beyond that limit, have to receive I-140 approval in that three-year period. As DOL and USCIS processing times have continued to increase, it will also become increasingly difficult to complete the I-140 process within this three-year timeframe.

While the immediate effect will be for employers to initiate the green card sponsorship process, the sooner the better for their H-1B employees, employers may still face losing highly-skilled talent in the face of ever-increasing processing times.

Entry-level positions could no longer be sponsored: To prevent the exploitation of foreign labor and depressing local wages for U.S. workers, employers seeking to sponsor an H-1B worker are, already now, required to offer them a salary that is no less than the Prevailing Wage (PW) for the position/work location, with PW varying from Level I to IV (U.S. Dept. of Labor’s OFLC survey), allowing employers to sponsor talent from entry- to senior-most levels and thus addressing labor shortages they face.

If enacted, however, the bill will mandate that employers offer a salary of no less than PW Level II, effectively prohibiting sponsorship of entry-level (PW Level I) positions. This change would align with the new Weighted H-1B Cap Lottery Selection Process, proposed ostensibly to encourage the sponsorship of the highest-skilled foreign nationals, but which, in fact, may close the pipeline to recruit talented graduates, particularly in high-tech and STEM fields.

Re-define “Specialty Occupation” and the degree requirement: H-1B eligibility requires that foreign nationals hold or have completed a bachelor’s degree (U.S. or foreign equivalent), but they may also qualify based on their experience (e.g., if their foreign degree was awarded after a program shorter than the standard four years in the U.S.). The bill, however, would eliminate such experiential degree equivalencies, or the ability to qualify based on a completed degree program when the degree has not yet been awarded, a provision that many graduating students have thus far been able to avail to enter the annual H-1B Cap Lottery in March and file their petition, if selected, by end of June (i.e., before their actual degree award).

Labor Condition Application (LCA) updates: All H-1B petitions must be accompanied by an LCA, where the employer confirms the terms of employment (position/worksite), and attests that the salary offered to the H-1B worker will meet the PW requirement for the role/location. Certain employers, because they are H-1B dependent or because they have been found to have previously violated H-1B regulations, must also attest that they have conducted good faith recruitment, but failed to identify a qualified U.S. worker for the role.

While the bill, if enacted, will provide increased protection against the possible displacement of U.S. workers, it will also impose additional requirements on all employers before an LCA can be filed with DOL, to include:

• Imposing a “reasonable fee” for LCA filing, for H-1B administration, oversight, investigation, and enforcement operations (in line with DOL’s recent launch of Project Firewall)
• Internet posting of the position offered, on a new public DOL website (yet to be designed), including the process for job seekers to apply for the position
• Prohibition from filing LCAs (and therefore H-1B petitions) on certain H-1B dependent employers, when their workforce is comprised of at least 50 percent of H-1B/L-1 employees

Eliminate Cap-Exemption for H-1B workers employed “at” Cap-Exempt employers, e.g., contracted to certain nonprofit or research institutions. While this provision aligns with the bill’s prohibition on third-party placement, it will also close an essential pipeline for these nonprofit/research institutions to, at least temporarily, fill critical needs in shortage occupations, or in underserved areas, in such fields as healthcare, higher education, or research (including government research institutions).

New H-1B Cap Lottery Selection preference: Following the proposed regulations mandating a Weighted Wage-Based H-1B Cap selection process, the bill, if enacted, will not only base selection on proposed wages, but also on the sponsored foreign national’s status and place of education, in the following order:

1. F-1 students who earned a STEM advanced degree from a U.S. accredited Institution of Higher Education, earned while physically present in the U.S.
2. Petitions filed by U.S. Employers who will offer wage at least equal to Wage Level IV
3. F-1 students (in the U.S.) who earned any other (non-STEM) advanced degree from a U.S. accredited Institution of Higher Education, earned while physically present in the U.S.
4. Petitions filed by U.S. Employers who will offer wage at least equal to Wage Level III
5. F-1 students (in the U.S.) who earned a STEM Bachelor’s degree from a U.S. accredited Institution of Higher Education, earned while physically present in the U.S.
6. F-1 students (in the U.S.) who earned any other (non-STEM) Bachelor’s degree from a U.S. accredited Institution of Higher Education, earned while physically present in the U.S.
7. Petitions filed by U.S. Employers who will offer a Schedule A (Group I) shortage occupation (Physical Therapists, Professional Nurses)
8. Petitions filed by U.S. Employers who “meets … criteria of good corporate citizenship and compliance with immigration laws”
   • To be found of “good corporate citizenship and compliance with immigration laws,” employers must:
     • Be e-Verified
     • Not be under investigation by any federal agency for violation of immigration or labor laws
     • Not have been found, by a federal agency, to have violated immigration or labor laws, in the past 5 years
     • Have had at least 90% of its filed H-1B petitions approved, in each of the preceding 3 fiscal years, and
     • Have filed PERM-based I-140 petitions for at least 90% of its H-1B employees during the preceding 3 fiscal years.
9. All other petitions

Key L-1 provisions

Redefine “Specialized Knowledge:” The L-1B “Specialized Knowledge” visa has been key for multinational companies for relocating foreign talent and experts to the U.S. to drive business and technical innovation. Under the new and more restrictive definition of “Specialized Knowledge,” it will be insufficient for the foreign worker to hold knowledge of a “proprietary” product or process is insufficient to qualify. Instead, the foreign worker must be a “key person” with knowledge that is “critical” for performance of their duties and “protected from disclosure” (i.e., patented, copyrighted, or per company policy).

Wage requirement for L-1 workers: Although there will not be an LCA requirement for L-1 sponsorship, the bill, if enacted, will mandate that employers pay L-1 workers a salary of at least PW Level II for their position/worksite, if the L-1 employee works in the U.S. for a cumulative period of one year.

Expedited L-1 adjudication under the L-1 Blanket program: The Blanket L-1 program was specifically designed to facilitate the transfer of highly-skilled workers, experts, and managers/executives to the U.S. by multinational companies. Expedited review by USCIS would align with the program’s goal, although the bill does not provide the mechanism by which USCIS would expedite such a filing.

Miscellaneous

Expanded auditing, investigation, and enforcement authority in the H-1B and L-1 programs: DOL and USCIS already possess authority to audit or conduct site visits to employers to verify compliance with the H-1B and L-1 programs (including, but not limited to, USCIS’s Fraud Detection & National Security Directorate, or FDNS). If found in violation of their H-1B/L-1 obligations, employers already face penalties, including monetary fines (up to $35,000 per violation in the H-1B context).

If enacted, the bill will expand the agencies’ auditing and investigation authority, and:

• Provide an additional year, from the time of the alleged violation, to bring a complaint (from 12 months to two years),
• Increase penalties for violation (up to $25,000 per violation in the L-1 context; and up to $150,000 per violation in the H-1B context), and
• Impose on the employer a period of up to three years of ineligibility from H-1B/L-1 approval, as well as approval in other work programs (E-3, O, P, TN non-immigrant or I-140 immigrant).

Restrict third-party placement: Employers seeking to place their H-1B/L-1 employees at third-party worksites (under outsourcing, leasing, or other service agreements) will no longer be permitted to do so, unless they have previously received a waiver to do so from DOL. While such third-party placement had already come under scrutiny over the years, thus directly impacting the ability of consulting firms to sponsor H-1B or L-1 employees in the U.S.

The bill, however, would allow employers to seek a waiver for third-party placements, if the H-1B/L-1 Employer demonstrates the following:

• The end client where the foreign worker will provide services (1) has not, at any time, displaced a U.S. worker with an H-1B worker; and (2) has not, and will not displace a U.S. worker with H-1B workers, for a period of 180 days before and ending 180 days after, the H-1B/L-1 Worker’s placement
• The H-1B/L-1 worker, while at the end client, will remain principally controlled and supervised by the H-1B/L-1 employer, and
• The placement of the H-1B/L-1 worker is not a labor-for-hire agreement.

Restrict H-1B/L-1 sponsorship for companies that employ 50% or more of their workforce in H-1B/L-1 status

Increase protection against the displacement of U.S. workers, in both the H-1B and L-1 contexts, for a period of 180 days before and after the hiring/placement of the H-1B/L-1 worker (up from 90 days).

Eliminate B-1 (visitor visa) in lieu of H-1B, which, similar to the L-1B program, has allowed multinational companies to temporarily bring in experts and skilled employees, otherwise H-1B eligible, on a short-term basis, to fill critical gaps.

Enhance reporting requirements: Employers will be required to report the W-2 wages of their H-1B and L-1 employees to the Internal Revenue Service, presumably to monitor compliance with more stringent H-1B/L-1 wage requirements. DHS will also be required to provide annual reports to Congress on the usage of the H-1B/L-1 programs, identifying dependent employers (with an H-1B/L-1 workforce of more than 15% and more than 50%) and those employers that will have received a waiver for third-party placement of their H-1B/L-1 workers.

Provide whistleblower protection for H-1B/L-1 foreign nationals lodging complaints against the U.S. employer: The bill will grant such foreign workers up to 90 days’ grace period following termination of employment, to change employers or depart the U.S. Additionally, upon their request and for wage transparency, H-1B employees who make such request must be provided with copies of all petitions, notices and other “written communication” between their employer and the Deptartment of Labor, DHS or any other federal agency related to their non-immigrant and immigrant petitions filed for that employee.

What employers should do now

The Grassley-Durbin H-1B & L-1 Visa Reforms bill represents one of the most significant proposed overhauls to the H-1B and L-1 programs in years, with major implications for employers, foreign talent, and workforce planning, particularly for U.S. employers in high tech or healthcare industries that have availed of these programs to address the chronic shortage of high-skilled workers in the U.S. job market.

While prior proposals were unsuccessful, the bill imposes new and far more stringent requirements on the H-1B and L-1 programs, in line with the September H-1B Presidential Proclamation, proposed new Weighted H-1B Cap Lottery Selection Process and DOL’s Project Firewall, and in this environment of tougher restrictions and increased enforcement, it may have a higher chance of passing through Congress. If enacted, the bill will force U.S. employers to rely less on the H-1B/L-1 programs for future hiring, while also potentially increasing pressure on domestic talent. While larger and top-tier employers may be more likely to absorb the proposed additional costs and administrative burden of these changes, the impact will not be even across employers, and smaller companies may find themselves unable to access and retain the talent they need and fill critical skill gaps in the U.S. job market.

The ripple effect is also expected to reach U.S. universities and colleges, since many foreign students, facing increasing immigration restrictions impacting their ability to pursue a career in the U.S., may continue to look to other countries for higher education, as they have already done in 2025, following earlier restrictions and visa revocations for F-1 students.

Clark Hill will continue to monitor developments as the bill progresses through the legislative process.

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