WASHINGTON : The new US fee on H-1B visa extensions is unlikely to discourage companies from retaining skilled foreign workers, as the cost of paying the additional charge could be lower than the cost of losing and replacing an employee, according to Danielle Goldman, Co-founder and CEO of Build.

The US Department of Homeland Security (DHS) has expanded an existing USD 4,000 fee on H-1B petitions and USD 4,500 fee on L-1 petitions to certain visa extension applications. The new rule will take effect on September 9.

The rule applies to companies with at least 50 employees in the United States, where more than 50 per cent of their US workforce collectively holds H-1B, L-1A or L-1B status.

Under the revised rule, these employers will have to pay the 9/11 Response and Biometric Entry-Exit Fee when they seek an extension of status for a covered worker, even when the employee continues working for the same company.

Goldman said the additional fee may not be enough to make companies give up skilled workers they already want to retain. The fee comes at the extension stage, after an employee has already worked for the company and demonstrated their value.

“While the administration may hope higher fees discourage employers from relying on foreign talent, this USD 4,000 is not due when someone is first hired. It comes at the extension stage, after the employee has had time to prove their value,” Goldman said.

She added that the cost of retaining an experienced employee could be more important for companies than the additional visa fee.

“For a skilled worker an employer already wants to keep, a future USD 4,000 additional fee is unlikely to outweigh the cost of losing and replacing that talent,” Goldman said.

Goldman said the biggest change for businesses is that the fee turns what was largely an upfront cost into a recurring expense for companies that rely heavily on foreign workers.

“The biggest impact of this rule is that it turns what was largely an upfront H-1B hiring cost into a recurring cost for employers that rely heavily on H-1B and L-1 workers,” Goldman said.

She also clarified that the rule does not apply to every company sponsoring H-1B workers.

“Importantly, this is not a USD 4,000 fee increase for every company that sponsors an H-1B. It applies to employers with at least 50 U.S. employees where more than half of their U.S. workforce is in H-1B or L-1 status,” she said.

From September 9, affected employers will have to pay the additional USD 4,000 not only for certain new H-1B workers or transfers but also when extending the status of an existing employee.

For companies with hundreds or thousands of H-1B workers, Goldman said the additional charge could become a significant recurring workforce expense.

“Beginning September 9, those employers will have to pay the additional USD 4,000 not only when bringing on certain new H-1B workers or transferring an H-1B employee, but also when extending an existing employee’s status. For employers with hundreds or thousands of H-1B workers, that can become a significant recurring workforce expense,” she said.

Goldman noted that employers usually file a 3-year H-1B, which is the maximum allowed, meaning the fee can recur every three years for employees.

She said the impact could be particularly significant for Indian professionals because many remain in H-1B status for years while waiting for employment-based green card availability.

The DHS rule does not change the existing fee rates. Instead, it expands the number of applications on which the fees will apply. Under the earlier system, extensions filed by an existing employer for the same employee were generally exempt if the separate fraud-prevention fee was not triggered.

DHS said the change corrects its earlier interpretation of the law and requires covered employers to pay the 9/11 Biometric Fee for all qualifying extension-of-status petitions, regardless of whether the fraud-prevention fee applies.

The financial responsibility will remain with employers. DHS said the statutes and existing regulations specify that the fee must be paid by the employer.

The change is expected to significantly increase the share of H-1B petitions covered by the fee.
Between fiscal years 2018 and 2025, around 27 per cent of H-1B filings by covered firms incurred the biometric levy. Under the new interpretation, about 75 per cent of their H-1B petitions would have been subject to the charge.

For companies heavily dependent on H-1B workers, the key business impact will therefore be the shift toward a recurring cost of retaining foreign skilled employees, rather than simply a higher upfront cost of hiring them. (ANI)