The new H-1B rules make finding talent a lot harder for startups

The new H-1B visa rules have raised the minimum salary for foreign employees. This will make it harder for startups to hire them.


November 4, 2020

In almost any other context, in any other month, we’d be spending a lot of time talking about H-1B visas.

But alas…

In the run-up to yesterday’s election, lost in the fray were new regulations that dramatically altered the hiring landscape for foreign workers by US companies.

Despite having the most innocuous name possible, the H-1B visa program enables US employers to hire foreigners, who have come to represent a critical part of their workforce.

What’s changed? Minimum salaries

For the thousands of jobs covered under the H-1B program, each comes with a minimum salary that stipulates what a foreign worker must be paid to qualify.

Rule changes announced in October will increase the minimum salaries to qualify:

  • For a junior programmer, the salary requirement will jump from $78k to $112k.
  • For a senior info security analyst, from ~150k to ~$200k.

In fact, a number of these positions require a salary of at least $208k.

The implications for hiring are huge

United States tech companies rely on the H-1B program to bring in coveted foreign workers, particularly engineers.

Supporters of the new rules say they protect American jobs from relatively cheap foreign labor.

Either way, startups will likely take a hit. These new businesses typically offer lower salaries but make up for it with equity incentives to recruit talent.

Under the new rules, however, only base compensation counts toward the salary requirements. Bottom line — hiring foreign workers will simply become too expensive for many companies.

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