Analysis of USCIS Proposal to Improve and Expand the H-1B Program

USCIS has released a proposed rule which seeks to change the H-1B visa program regulations.    The changes are generally positive and seek to allow greater flexibility for petitioners and to strengthen the H-1B cap lottery program.  Also, the proposed rule seeks to expand the availability of H-1B to owner-beneficiaries which will be great news for many entrepreneurs.

It is important to underscore that these are proposed changes that are subject to review and comment period; we do not know when the changes will become effective and whether there will be substantial revisions.   Please stay tuned and subscribe to our newsletter for updates.

Summary of Proposed Changes

Specialty Occupation Definition Updates

The proposed rule seeks to put into a rule what generally has been a recent practice (some of which was part of USCIS litigation).   Specifically, USCIS seeks to clarify that when it comes to the specialty occupation definition, a direct relationship must exist between the nature of the position and the required field(s) of study.  Also, the rule clarifies that the specialty occupation position must “normally” require a bachelor’s degree (in a specific field), and not always (as it had sometimes been interpreted in the past).  For third-party placement petitions, the proposed rule clarifies that it is the third-party end client position requirements that will determine whether a position is specialty occupation; not the H-1B petitioner employer’s requirements.

H-1B Amendments

The proposed rule generally codifies the recent USCIS practice and guidance as to when an H-1B amendment is required.  We have written extensively on this topic and the proposed rule essentially puts these practices into rules.

Specifically, the proposed rule confirms that an H-1B amendment is required any time there is a new LCA.  And a new LCA is generally required any time when there is material change to the terms of the position, and specifically that if there is a change in the worksite to somewhere outside of the same metropolitan statistical area or normal commuting distance.

Removing Itinerary Requirement from Third-Party Placement Petitions

A more significant proposed change is to remove the requirement to include an itinerary with H-1B petitions on the basis that this information is a duplication of the information normally required on the LCA and the I-129 form.  H-1B petitions would still be expected to document placement at third-party worksites and the employer-employee relationship.

Non-Profit Research Cap-Exempt Employer Definition Expansion

USCIS seeks to change and expand the definition of cap-exempt non-profit research employers.  The new rule would allow more non-profit organizations to meet the “research” definition while expanding the nature of the position held and its connection to the non-profit purpose.

F-1 Cap-Gap Period Extended to April 1

USCIS seeks to extend the period for automatic F-1 cap-gap work authorization based on a pending H-1B cap petition from October 1 to April 1 of the fiscal year.   This will solve a problem with EAD expiration for many F-1 students who file a “late” H-1B cap petition.    See our alert on the current F-1 cap-gap terms.

H-1B Cap Lottery Switch to Individual-Based Selection

Under the proposed rule, the H-1B cap lottery selection will be based on an individual candidate even if there are multiple job offers and multiple H-1 cap registrations by multiple (eligible) employers.   This rule seeks to prevent individuals from (unfairly) increasing their selection chances by obtaining multiple job offers by multiple employers and submitting multiple H-1B cap lottery registrations.    See our alert on the current prohibition on multiple H-1B cap registrations.  According to date from this last cap year, there were more than 125,000 multiple registrations for candidates which will be eliminated under the proposed rule.

The proposed rule will conduct the lottery based on individual candidate. USCIS will identify all unique candidates and will conduct the lottery based on individual candidate without regard of how many H-1B cap registrations may have been submitted for the same candidate.  Under this proposal, each candidate will have equal chance of selection regardless of number of H-1B cap registrations submitted.   If a candidate is selected and they have multiple H-1B cap registrations, they will be able to submit an H-1B cap petition with one or more of their H-1B cap employer registrants.

Significant Expansion of H-1B Petitions by Entrepreneurs/Company Owners

USCIS seeks to clarify and remind the public that entrepreneurs are eligible to obtain H-1B petitions for their benefit based on employer in which they have ownership interest.  Prior to 2020, USCIS used to apply the common law rule for employer-employee relationship which made it very challenging to show that an employer in which its owner has significant interest can exercise employer rights over its owner beneficiary.   However, this has not been applied since 2020 but there has not been a significant increase in entrepreneur H-1B petitions.

USCIS seeks to encourage entrepreneurs to file H-1Bs by changing the rule to explicitly confirm that beneficiary-owners are eligible for H-1B petitions even when they have majority or controlling interest in the H-1B petitioner company as long as they can show that they will perform specialty occupation work (as opposed to just managing the company) majority of the time.  The H-1B term will be limited to 18 months, with the first extension also being limited to 18 months (second and subsequent extensions will  have the default 3-year term).

Conclusion

We welcome USCIS’s publication of the proposed rule.  While most of the changes are not ground-breaking, it is clear that USCIS is trying to clarify certain of its current practices and to make the program more efficient and transparent.  We also welcome their clarity and expansion with respect to H-1Bs by entrepreneurs which has been subject to a lot of uncertainty.   We would like to caution that these are only the proposed (and not the final) rules.     Our office will monitor this process over the next weeks and provide additional updates, including estimates and actual dates of when the changes will take place.

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