On Monday, October 23, 2023, U.S. Citizenship & Immigration Services (USCIS) published a proposed rule (Notice of Proposed Rulemaking, or NPRM) in the Federal Register that would bring significant changes to H-1B visa processes, including changes to the H-1B cap selection. The NPRM (88 FR 72870, 10/23/23) has a 60-day public comment period ending on December 22, 2023, after which a Final Rule is expected.
USCIS is prioritizing the H-1B cap selection changes to take effect in time for the FY2025 cap selection, for which registration will open in early 2024. However, in its preamble to the NPRM, USCIS acknowledges that it is also possible, if there are technology or resource issues, that the new system may be postponed. In that case, USCIS says it will publish a notice in the Federal Register at least 30 days before the initial H-1B cap registration period.
Highlights of the NPRM follow.
1. Extended cap-gap for F-1 students
Under the NPRM, an F-1 student with OPT or STEM OPT work authorization who is the beneficiary of a change-of-status H-1B cap petition gets, upon timely filing of the petition, an automatic extension of their F-1 status and work authorization (“cap gap”) to April 1 of the fiscal year for which the H-1B is being sought. Under the current system, “cap gap” work authorization ends on September 30 of the year prior to the year for which H-1B status is sought and the individual’s F-1 status ends 60 days later. This proposal should go a long way toward minimizing F-1 work authorization gaps while awaiting H-1B status.
2. Making H-1B cap selection lottery “beneficiary-centric”
The NPRM proposes that the registration selection process be based on unique beneficiaries rather than unique registrations. It is hoped that this will reduce the incentive for employers and individuals to pursue registrations without the existence of a bona fide job offer. Multiple (non-related, non-coordinating) employers may still register the same beneficiary, assuming each has a bona fide job for them; but under the NPRM, the beneficiary will only be entered once in the H-1B cap lottery. If a beneficiary is selected, and has been registered by multiple employers, each employer will receive a selection notice, and the beneficiary may then choose to pursue an H-1B with any of the employers that filed a registration on their behalf, provided there are bona fide job offers that the beneficiary intends to accept.
To enforce the limit of one H-1B cap registration per beneficiary, beneficiaries will be identified not only by the same information used currently, but also by their passport data. Passport data will be required in all cases and, if the beneficiary is abroad, they must use the same passport in the registration that they will use to enter the U.S. (with limited exceptions).
3. Codifying the Simeio memo for H-1B petitions
According to the USCIS Administrative Appeals Office’s decision in Matter of Simeio Solutions, LLC (2015), and the 2015 USCIS Policy Memo to implement the decision, a new or amended H-1B petition involving material changes to an H-1B beneficiary’s job must be filed with USCIS before the changes take effect. In cases where H-1B portability rules apply, the changes may take effect upon filing of the new/amended petition instead of waiting for petition approval. Any change to a beneficiary’s job that requires a new Labor Condition Application from the U.S. Department of Labor is, by definition, a material change and requires an amended H-1B petition.
The NPRM would codify the Policy Memo, giving it the force of federal regulation, and give it teeth by adding a new ground for H-1B petition revocation to the existing revocation grounds. The new ground would allow USCIS to revoke an H-1B petition if the H-1B petitioner (employer) fails to timely file an amended petition notifying USCIS of a material change. Potentially softening the effect of this is an expansion of the circumstances in which USCIS may “forgive” and accept a late-filed petition: it would not only cover filings after I-94 expiration, as it does currently, but would also cover late-filed amended petitions, i.e., where the I-94 is not expired but circumstances requiring an amended filing took effect before the amendment was filed.
4. Codifying policy on USCIS H-1B site visits
The NPRM codifies current USCIS policy and practice regarding employer site visits to investigate the validity of H-1B and other nonimmigrant petitions. Per the NPRM, USCIS at any time after filing of the petition, including after petition approval, may conduct unannounced site visits, hold interviews of petitioners or beneficiaries without the presence of counsel, and perform investigations to verify that the information in the petition is/was true. Failure or refusal of the petitioner to cooperate in a site visit may result in denial or revocation of the H-1B petitions of any H-1B workers at the work site in question.
5. Revision to the regulatory definition and criteria for a “specialty occupation” including some helpful clarifications
The make-or-break issue in every H-1B petition is whether the job in question is in a “specialty occupation,” i.e., requires a bachelor’s or higher degree in a specific field. The NPRM would change the existing regulatory definition of “specialty occupation” to make it clear that any field of study stated as required for the job in the H-1B petition must be directly related to the job duties. The NPRM also would clarify that, if a range of academic fields satisfy the employer’s degree requirement, each such field must be established as directly relating to the position. The NPRM’s proposed definition of “specialty occupation” is (emphasis ours):
Specialty occupation means an occupation that requires theoretical and practical application of a body of highly specialized knowledge in fields of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts, and that requires the attainment of a bachelor’s degree or higher in a specific specialty, or its equivalent, as a minimum for entry into the occupation in the United States. The required specialized studies must be directly related to the position. A position is not a specialty occupation if attainment of a general degree, such as business administration or liberal arts, without further specialization, is sufficient to qualify for the position. A position may allow a range of degrees or apply multiple bodies of highly specialized knowledge, provided that each of those qualifying degree fields or each body of highly specialized knowledge is directly related to the position.
6. Revision to the regulatory definition of “U.S. employer,” allowing H-1B sponsorship by an entity majority-owned by the H-1B beneficiary
In a potential boon for early-stage startups, the NPRM proposes that a “U.S. employer” for H-1B sponsorship purposes may be an entity that is majority-owned by the sponsored H-1B beneficiary as long as the majority (over 50%) of the beneficiary’s time is spent on “specialty occupation” duties. In the majority owner-beneficiary scenario, the initial H-1B petition validity would be limited to 18 months, and the first extension (including an amended petition with a request for an extension of stay) would also be limited to 18 months. Any subsequent extension may be approved for up to three years, assuming the petition satisfies all other H-1B requirements.
7. To allow more H-1B petitions to qualify as “cap exempt,” a broadening of key definitions
H-1B petitions sponsored by certain types of organizations are exempt from the lottery for new H-1B visas each year. An H-1B beneficiary’s work for nonprofit research organizations, governmental research organizations, and nonprofit organizations affiliated with institutions of higher education is considered cap-exempt, but proving cap-exemption has been a challenge due to USCIS’ strict interpretation of the criteria, and the difficulty of proving the degree of closeness of the H-1B beneficiary’s work to the cap-exempt organization’s mission or purpose. Key liberalizing changes in the NPRM include:
“Nonprofit research organization” – The H-1B sponsoring entity will need an IRS determination letter confirming tax-exempt status, but the IRS letter need not necessarily specify that the organization’s purpose is “research.” “Research” may be shown in other documentation.
“Research” – Research (basic or applied) need not necessarily be the organization’s main purpose; it may be just one part of what the organization does.
A nonprofit’s affiliation with an institution of higher education – The nonprofit’s main purpose need not necessarily be to contribute to the research or education mission of the institution; doing so may merely be a purpose, or even merely a fundamental activity, of the nonprofit.
An H-1B petition may be cap-exempt if beneficiary’s job duties support or advance a (not necessarily the) fundamental purpose, function, mission, or objective of the cap-exempt entity.
In an H-1B petition that is cap-exempt for a beneficiary not directly employed by the exempt entity but working “at” the exempt entity, the word “at” can mean working remotely as versus physically onsite, and work for the exempt entity may be as little as 50% of the beneficiary’s time.
The NPRM’s liberalizations in the cap-exempt area would significantly increase the number of H-1B petitions exempt from the cap, thus taking pressure off the annual demand for cap-subject H-1Bs.
Jewell Stewart & Pratt will watch developments related to the NPRM closely, including the publishing of the Final Rule, and post updates here as they occur.
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