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Federal Register / Vol. 86, No. 5 / Friday, January 8, 2021 / Rules and Regulations
small entities during the development of their rules. Small entities are small businesses, not-for-profit organizations that are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. An individual is not considered a small entity, and costs to an individual from a rule are not considered for RFA
purposes. In addition, the courts have held that the RFA requires an agency to perform an initial regulatory flexibility analysis IRFA of small entity impacts only when a rule directly regulates small entities. Consequently, any indirect impacts from a rule to a small entity are not considered as costs for RFA purposes.
Although individuals, rather than small entities, submit the majority of immigration and naturalization benefit applications and petitions, this final rule will affect entities that file and pay fees for H1B non-immigrant benefit requests. The USCIS forms that are subject to an RFA analysis for this final rule are Form I129, Petition for a Nonimmigrant Worker and the Registration H1B Tool.
DHS does not believe that the changes in this final rule will have a significant economic impact on a substantial number of small entities that will file H1B petitions. A Final Regulatory Flexibility Analysis FRFA follows.

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1. A Statement of Need for, and Objectives of, This Final Rule DHSs objectives and legal authority for this final rule are discussed earlier in the preamble. DHS is amending its regulations governing H1B specialty occupation workers. The purpose of this final rule is to better ensure that H1B
classification is more likely to be awarded to petitioners seeking to employ relatively higher-skilled and higher-paid beneficiaries. DHS believes these changes will disincentivize use of the H1B program to fill relatively lower-paid, lower-skilled positions.
2. A Statement of Significant Issues Raised by the Public Comments in Response to the Initial Regulatory Flexibility Analysis, a Statement of Assessment of Any Changes Made in the Proposed Rule as a Result of Such Comments Comments: A professional association wrote that DHS claimed that no small entities would be significantly impacted by the proposed rule, but DHS also estimated that 80.1 percent of those that filed Form I129 were small entities. An individual commenter wrote that DHS
incorrectly concluded that the proposed rule would not have a significant impact on small entities because small
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businesses would be unlikely to have the legal expertise or institutional knowledge to navigate the H1B system.
Response: DHS estimates the economic impact for each small entity, based on the additional cost and time associated with the changes to the form, in percentages, is the sum of the impacts of the final rule divided by the entitys sales revenue.202 DHS constructed the distribution of economic impact of the final rule based on a sample of 312
small entities. Across all 312 small entities, the increase in cost to a small entity will range from 0.00000026
percent to 2.5 percent of that entitys FY
2020 revenue. Of the 312 small entities, 0 percent 0 small entities will experience a cost increase that is greater than 5 percent of revenues.
Comments: Some commenters generally stated that the proposed rule would harm small businesses. Multiple commenters, including a trade association, employer, and individuals, wrote that the proposed rule would harm small and emerging businesses who, often, could not offer higher salaries compared to larger firms. Other commenters said the proposed rule would favor larger firms at the expense of small and medium sized businesses.
An individual commenter wrote that the proposed rule would harm small technology companies and start-ups that are dependent on recruiting young talent, as they would be required to offer such employees level III and level IV
wages when level I and level II wages would be more appropriate. Another individual commenter said companies would suffer because many small information technology or financial companies could not provide as high of salaries to their foreign workers as big companies could. An individual commenter wrote that the proposed rule would harm small businesses that often could not find the appropriate talent domestically and would have a legitimate need to hire H1B workers, while another commenter argued the 202 The economic impact, in percent, for each small entity i = Cost of one petition for entity i
Number of petitions for entity i 100. The cost of one petition for entity i $75.60 is estimated by adding the two cost components per petition of this final rule $75.60 = $32.59 + $43.01. The first component $32.59 is the weighted average additional cost of filing a petition, and is calculated by dividing total cost by the number of petitions $32.59 = $3,457,401/106,100 from Table 13. The second component $43.01 is the weighted average cost of submitting information on the registration and is calculated by dividing total cost by the number of baseline petitions $43.01 = $11,795,997/
274,237 from Table 14. The number of petitions for entity i is taken from USCIS internal data on actual filings of I129 H1B petition. The entitys sales revenue is taken from ReferenceUSA, Manta, Cortera, and Guidestar databases.

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proposed rule would shrink the hiring talent pool for small businesses. An individual commenter wrote that, under the proposed rule, small businesses would not be able to operate due to an inability to find suitable employees.
Similarly, an individual commenter wrote that the proposed rule would ensure that H1B visas would go to the highest bidders and would discriminate against smaller businesses with a genuine need for H1B
employees. An individual commenter wrote that the proposed rule would encourage larger employers who could afford to pay higher wages to employees to artificially inflate their job requirements and increase their chance of selection through the ranked selection process. Another commenter asserted that smaller companies in nonmetropolitan areas, who might have difficulty finding domestic candidates for positions, would be negatively impacted by the proposed rule.
Response: DHS acknowledges that an employer offering a level I or below wage under the regular cap, and an employer offering a level II, I, or below wage under the advanced degree exemption, may have a lesser chance of selection than under the current random selection process. DHS does not believe that the changes in this final rule will have a significant economic impact on a substantial number of small businesses. As explained in the NPRM, DHS conducted an RFA and found that the changes in this rule would not have a significant economic impact on a substantial number of small entities.
Additionally, this rule does not treat people who work for small-sized entities differently than those who work for large companies. While DHS
recognizes that some small businesses may operate on smaller margins than larger companies, if an employer values a beneficiarys work and the unique qualities the beneficiary possesses, the employer can offer a higher wage than required by the prevailing wage level to reflect that value. If a small company is unable to pay an employee at wage level III or IV for a greater chance of selection, they could then try to find a substitute U.S. worker.
Comments: An individual commenter wrote that rural areas and smaller towns depend on entry-level H1B workers at a level I wage, but those communities would not be able to justify hiring such H1B workers at level III and level IV
wages. Another individual commenter said the rule would harm employers in rural areas where wages, often, would be lower. A professional association wrote that small and medium sized medical practices, often serving rural or
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