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First lawsuit against H-1B pay raises filed in U.S. District Court



MUMBAI: ITServe Alliance, with a link of its member companies, has filed a lawsuit in a U.S. district court against a ‘temporary final rule’ recently issued by the U.S. Department of Labor (DOL). This rule has reset wages upwards for H-1B workers across all four levels or wage levels (representing the range of skills from entry level to highly experienced).
The plaintiffs point out that under the DOL rule, wages have been raised by 24 to fifty percent or more for computer operations where H-1B workers are typically employed by them. The wage percentage also depends on the geographical location of the employment.
ITServe’s members, made up of over 1
,400 member companies (many of them are founded by those of Indian origin), are not able to absorb the cost increase imposed on them under IFR without significantly interrupting their operations. Several of them have long-term contracts with their customers that cannot be renegotiated.
This lawsuit, filed Friday, is the first to challenge the DOL rule. Other lawsuits, including one led by the American Immigration Lawyers Association (AILA), are expected to be filed in the coming week.
As previously reported by the TOI, the Temporary Final Rule (IFR), issued without inviting public comment, entered into force on October 8, shortly after its publication in the Federal Register. All applications for labor (LCA) submitted on or after this date are subject to the new and higher minimum wage standards. According to the DOL, the purpose of the rules is to protect U.S. jobs by improving the accuracy of the wages paid to foreign workers.

At the same time, the U.S. Department of Homeland Security (DHS) had also issued its IFR, which narrowed the criteria for H-1B visas and reduced the visa period to one year in the case of third-party placements. However, this rule will not enter into force until early December.
The applicants claim that DOL lacks the necessary factual and legal justification to rely on the exception to the good cause in order to avoid the required notification and comment procedures. The agency’s claim that H-1B workers are paid less than U.S. workers is not supported by available economic data and empirical studies and is based on inadequate justification, the lawsuit adds.
The lawsuit challenges DOL’s decision to set dramatically higher pay rates without following the notice and comment procedures required by the Administrative Procedure Act. Complainants have also challenged DOL’s new wage rates as a violation of the law on immigration and nationality.
“This new rule is designed to make it much more expensive to hire H-1B holders as well as to ‘punish’ the employers who depend on H-1B talent. By issuing this IFR, the DOL circumvents not only the congressional legislative process but also their own normal rule-making process. It is no coincidence that DOL and DHS issued temporary final rules only four weeks away from the election, ”states ITServe in its press release.
A spokesman added, “This IFR will lead hundreds of thousands of jobs to offshore markets. DOL’s IFR raises the required applicable salaries to over 80% in some cases overnight. This random and unfounded set of rules will harm thousands of small and medium-sized IT companies. Instead of helping with job creation and economic growth in the midst of the pandemic and recession, these government agencies are harming the small businesses that are at the forefront of rebuilding the economy. ”


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