H-1B Visa Reform Act of 2004 summary

NAFSA Practice Advisory 2004-H

Summary of key provisions of the H-1B Visa Reform Act of 2004

Updated: March 9, 2005, with edits made October 27, 2005.

On December 8, 2004, President Bush signed the Fiscal Year 2005 Consolidated Appropriations Act (H.R. 4818) into law. This law incorporates the "H-1B Visa Reform Act of 2004," which contains significant provisions affecting the H1­B specialty worker category.

  • Effective date: The statute became effective "90 days after the date of enactment," which was March 8, 2005.

  • Highlights of the H-1B provisions include:

  1. $500 anti-fraud fee. A $500 "fraud protection and detection fee" must be paid by all employers (including institutions of higher education) who file an H-1B petition: a) initially to grant an alien H-1B status, and b) to allow an H-1B nonimmigrant to change employers. [Sec. 426].

  2. 20,000 cap exemption for U.S. masters and higher. Up to 20,000 aliens with masters or higher level degrees from U.S. institutions of higher education are exempt from the H-1B cap each year. Petitions for such individuals that are filed after the 20,000 exemptions are granted will be counted against the cap. Note: this does not impact the general exemption from the cap for individuals employed by institutions of higher education; that exemption remains. [Sec. 425].

  3. 5 per cent rule eliminated. The H-1B and permanent labor certification "prevailing wage 5 percent rule," which considered employers paying no less than 95 percent of the prevailing wage as meeting the prevailing wage requirements, has been eliminated; employers now have to pay at least 100% of the prevailing wage to comply with that wage requirement. [Sec. 423].

  4. Wage survey wage levels increased from 2 to 4. Surveys used by the government to determine prevailing wages must provide at least 4 levels of wages commensurate with experience, education, and level of supervision. Such surveys used to only provide 2 wage levels, which made it very difficult for employers of mid-level employees to meet the prevailing wage requirement. The provision also includes a formula for converting 2-level wage determinations to 4 levels. [Sec. 423].

  5. Training fee reinstituted and made permanent for non-exempt employers. The H-1B training fee that had sunset on October 1, 2003 was reinstituted and made permanent. Previously, the training fee was set at $1,000. Now, it is $750 for employers with 25 or fewer full-time employees, and $1,500 for employers with over 25 full-time employees. Reinstitution of this fee began on the date the bill was signed into law, December 8, 2004. Institutions of higher education and non-profit entities or teaching hospitals affiliated with them, as well as nonprofit or governmental research organizations, continue to be exempt from this training fee, however. [Sec. 422].

  6. H-1B dependency and special attestation requirements permanently reinstated. This law permanently reinstated the requirement that employers determine whether they are "H-1B dependent" before filing a Labor Condition Application (LCA). It also permanently reinstated the Recruitment and Hiring and Displacement and Secondary Displacement attestations that apply to “H-1B dependent” employers and to employers found to have committed a willful violation or misrepresentation of a material fact on the application. Both of those requirements had sunset on October 1, 2003. [Sec. 422].

  7. DOL investigative authority expanded. This law permanently reinstates DOL's authority to investigate LCA fraud and abuse, and expands that authority to allow DOL to initiate investigations on its own, in addition to investigations based on a specific complaint. [Sec. 424].