Federal District Court Vacates DHS Regulation to Replace H-1B Cap Lottery with Wage Level Selection Process

U.S. District Judge Jeffrey S. White granted the U.S. Chamber of Commerce’s motion for summary judgment in the Chamber’s lawsuit challenging a regulation that would replace the current H-1B cap lottery system with a wage level prioritization system. The new process would have allocated the annual cap according to the Department of Labor’s Occupational Employment Statistics (OES) four-level wage structure. It would have given top priority in the H-1B selection process to foreign nationals whose offered salary fell in the highest wage level for their occupation and geographic area.

A closer look

Judge White invalidated the regulation on the grounds that then-Acting DHS Secretary Chad Wolf was not lawfully serving in his role at the time the agency promulgated the cap selection regulation. He did not address the plaintiffs’ argument that DHS does not have the authority to allocate the H-1B quota according to wage level or other criteria. The case is U.S. Chamber of Commerce v. Department of Homeland Security, Case No. 20-cv-07331 (N.D. Ca., March 19, 2021). 

The H-1B cap allocation regulation was a priority of the Trump Administration and was originally set to take effect on March 9, 2021. The Department of Homeland Security delayed the effective date of the regulation to December 31, 2021, in response to a Biden Administration regulatory freeze. It is not yet known whether the Administration will appeal Judge White’s decision.  Unless the decision is overturned on appeal, it is likely that the H-1B cap lottery will be in place for the FY 2023 cap season, which begins in early 2022.

The regulation is also being challenged in a separate case, Humane Society of America v. Mayorkas, Case No. 1:21-cv-01349 (D.D.C., May 17, 2021), which is ongoing.