DHS Issues Proposed Rule to Modernize H-1B Program, including the H-1B Lottery and Cap-Gap

The H-1B visa program permits U.S. employers to employ foreign professionals in specialty occupations requiring specialized knowledge as well as a related bachelor’s degree or higher or its equivalent. The program is capped annually at 65,000 visas, with an additional 20,000 visas allocated to foreign nationals who have a U.S. master’s degree or higher. Exemptions apply for those at higher education institutions or affiliated nonprofit entities and nonprofit or governmental research organizations.

Summary of the Proposed Rule

On October 23, 2023, the United States Citizenship and Immigration Services (USCIS) issued a notice of proposed rulemaking to modernize and improve the regulations relating to the H-1B program, and to address the current challenges with the H-1B lottery. Following a surge in demand for H-1B visas for fiscal year 2024 that saw a record 758,994 registrations, with over half of the candidates being entered multiple times, serious concerns were raised over the potential for exploitation to skew selection chances. USCIS has proposed this rule in direct response to strengthen the registration process and prevent fraud in the H-1B lottery.

In addition to addressing lottery concerns, the proposal makes critical revisions to underlying H-1B regulation, formalizing policies that are currently in place through guidance and adjusting specific regulatory aspects.

Updates to the H-1B Cap Registration Selection Process

The Department of Homeland Security, through USCIS, saw a record increase in the number of beneficiaries registered for the FY2023 H-1B Cap Registration, with a substantial increase in the number of beneficiaries with multiple registrations submitted on their behalf by multiple petitioners. In an effort to ensure the fair allocation of the limited H-1B cap numbers to employers and individuals that are complying with the regulations and have bona fide, legitimate job offers, this rule proposes to shift the selection process for the lottery from making selections based on registration, to making selections based on unique beneficiaries. The aim is to give every individual entered into the lottery the same chance of being selected, regardless of how many registrations are submitted on their behalf. If multiple registrations are submitted for the same beneficiary, and that beneficiary is selected in the lottery, then each petitioner who submitted a registration on that beneficiary’s behalf will be notified of the beneficiary’s selection and would be eligible to file a petition on that beneficiary’s behalf. An additional benefit to this proposed change would be giving beneficiaries greater autonomy regarding their H-1B employment.

Furthermore, USCIS proposes to prohibit related entities from submitting multiple registrations for the same individual, once again to strengthen the registration process and prevent fraud. USCIS aims to significantly reduce or remove an incentive for related employers and individuals to submit multiple registrations without the existence of a bona fide job offer only to improve their chance of selection, let alone intent to employ the individual for whom the registration is submitted.

Revising the Regulatory Definition and Criteria For a “Specialty Occupation”

A “specialty occupation” is currently defined as an occupation that requires theoretical and practical application of a body of highly specialized knowledge in select fields like architecture, engineering, mathematics, medicine, education, business specialties, law, etc., and which requires a bachelor’s degree or higher in a specifical specialty, or its equivalent, as a minimum for entry into the role.

In the notice of proposed rulemaking, USCIS claims to seek to codify an existing USCIS practice, further defining a “specialty occupation” as one where the required “degree field” is “directly related” to the “position”. The proposal specifies that positions may allow a range of degrees, provided that each field directly relates to the job duties, but that general degrees without further specialization would not meet the criteria. However, stakeholders have aptly criticized the language of the proposed rule for not only adding an additional “directly relatedness” element to the H-1B standard, but also inappropriately focusing on degree fields and positions rather than courses of study and job duties, as has been USCIS’s preexisting agency practice.

Amending the Criteria for Specialty Occupation Positions

There are four criteria used to qualify a position as a specialty occupation position. One of the criteria is that a bachelor’s degree or higher is normally the minimum for entry into the particular position. USCIS is proposing a clarification of the term “normally” in this context. USCIS proposes to clarify that for a specialty occupation where a bachelor’s degree is “normally” required, this should mean that a bachelor’s degree is typically, but not always, necessary for the profession. USCIS is aiming to standardize this term, reinforcing past court decisions holding that the term “normally” does not equate to “always.”

Extending F-1 Cap-Gap Protection 

USCIS is proposing to revise the rule that grants an automatic extension of work authorization for F-1 students whose OPT expires while their H-1B cap-subject petitions remain pending with USCIS. Commonly known as “Cap-Gap,” current regulations allow an automatic extension of an F-1 student’s employment authorization during the period between the end of their Optional Practical Training (OPT) and September 30^th (i.e., end of the fiscal year). These students would otherwise have a gap in lawful status or employment authorization in the U.S.

The new proposal seeks to extend this period until April 1 of the fiscal year for which the H-1B petition is filed, or until the petition is approved, whichever is earlier. For example, if an F-1 student’s STEM OPT expires in May 2024, and an H-1B Cap Change of Status petition is filed on the student’s behalf before the STEM OPT expiration date, this rule (if implemented) would automatically extend the student’s work authorization until April 2025, or until the H-1B Cap petition is approved, whichever is earlier. In essence, this proposed rule change would lengthen the Cap-Gap eligibility period and would better address processing delays and reduce the risk of employment authorization interruption, which has become more common in recent years when multiple rounds of the lottery have been conducted closer to the October 1 date. To be eligible, the H-1B Change of Status petition must be legitimate and filed on time. This change is intended to allow more flexibility for students and USCIS, while also avoiding disruption to U.S. employers that are lawfully employing F-1 students who have a qualifying H-1B cap-subject petition pending.

Cap-Exempt Organizations

USCIS is proposing to redefine which employers are exempt from the H-1B visa cap, by revising the definition of “nonprofit research organization” and “governmental research organization” from being “primarily engaged” in research to conducting research as a “fundamental activity.” This proposed change would enable organizations that might not focus primarily on research, but still fundamentally engage in such activities, to qualify for the exemption. USCIS also aims to accommodate beneficiaries not directly employed by a qualifying organization but who still perform essential, mission-critical work.

Additionally, the new proposed changes seek to give H-1B workers at cap-exempt organizations a bit more flexibility to work concurrently at a non-cap-exempt entity (i.e., private company). Current regulations require an H-1B beneficiary who wants to qualify for cap exemption but work for both a cap-exempt entity and a non-cap-exempt entity, to spend “the majority of” their time working for the qualifying, cap-exempt organization. However, USCIS proposes to change the phrase “the majority of” to “at least half”, so that a beneficiary could spend exactly 50% of their time performing job duties at the qualifying, cap-exempt entity, and the other 50% of their time performing job duties at the non-cap-exempt entity.

Deference

USCIS is proposing to codify a policy of deference to prior adjudications of Form I-129 petitions, in an effort to promote consistency and efficiency. This policy would require officers to give precedence to prior approvals and decisions when the same parties and material facts recur, unless there was a material error in the prior approval, there has been a material change in circumstances or eligibility requirements, or there is new, material information that adversely impacts eligibility.

Questions?

While this summary captures key elements of the proposed changes that may impact our clients, kindly note that the proposed rule contains various other important provisions that could also significantly impact the H-1B visa program and its beneficiaries. The public comment period concluded on December 22, 2023. At this point all comments are under review and adjustments may be made before the final rule is published.

 

If you have any questions, please reach out to your McCown & Evans attorney for more information.