H-1B Rule Changes: New Options for Immigrant Entrepreneurs in the U.S.

Many of our readers recall that on December 18, 2024 USCIS released a final rule “Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Nonimmigrant Workers” (also see our analysis) which sought to “modernize” the H-1B program by introducing some improvements to the process and allowing certain flexibilities.     The rule has been in effect since January 17, 2025.

While this rule introduced a range of updates across the H-1B program, a particularly noteworthy aspect is its new provisions for H-1B beneficiary-owners, which aim to foster entrepreneurship and innovation within the U.S. by creating new H-1B visa options for entrepreneurs and founders.

Previously, immigrant entrepreneurs often faced significant hurdles in obtaining H-1B status for businesses in which they held a controlling interest, primarily due to the “employer-employee relationship” requirement. The rule change directly addresses this challenge, opening up new avenues for founders and worker-owners.

Elimination of the Employer-Employee Relationship Requirement

The main change is the removal of the “employer-employee relationship” requirement from the definition of a U.S. employer in situations of owner-workers — in effect removing the major barrier that often prevented individuals with a controlling interest in a company from qualifying for H-1B status.

USCIS recognizes that a corporation is a separate legal entity from its owners, meaning that even a sole owner of a business can now have that business file an H-1B petition on their behalf, provided all other criteria are met.     Previously, H-1B workers with significant or controlling interest had to create complex independent board of directors or similar structures to show the company’s right of control.   This is no longer the case.

A “controlling interest” is now clearly defined in the regulations as when the beneficiary owns more than 50% of the petitioner or has majority voting rights in the petitioner.  This provides much-needed clarity for entrepreneurs and start-up business owners regarding their eligibility.

Duties of the H-1B Beneficiary-Owner:  Specialty Occupation and Prevailing Wage Rules Still Apply

The rule change clarifies that beneficiary-owners are allowed to perform duties that are directly related to owning and directing the petitioner’s business.   This is a critical flexibility, as entrepreneurs often wear multiple “hats” beyond their specialty occupation tasks.

Examples of such non-specialty occupation duties include signing leases, finding investors, negotiating contracts, developing business plans, and talent acquisition. Incidental duties like making copies are also permitted.

However, a crucial requirement remains in place: the beneficiary must perform specialty occupation duties a majority of the time.  This ensures that the individual primarily “is coming temporarily to the United States to perform services in a specialty occupation” as statutorily required for H-1B visas (see our alert relating to Specialty Occupation).

As a result, the government would expect to see that the beneficiary-owner works spends majority of the time on duties that are sufficiently complex to require a bachelor’s degree and that the beneficiary has a degree in a field related to the duties.

It is also crucial for beneficiary-owners to understand that these new provisions do not alter the Department of Labor’s (DOL) prevailing wage requirements that are part of the H-1B visa. Beneficiary-owners must still be paid the required wage for their position and for the area of employment, consistent with current DOL requirements, even if performing a combination of specialty and non-specialty occupations.    Startups and founders should ensure that they evaluate the salary requirements (position, duties, worksite area, prevailing wage and number of hours per week to be worked) in order to budget adequately.    Failure to pay the offered wage based on the terms of the H-1B petition to the beneficiary owner may be considered non-compliance and possibly a violation of status.

Validity Periods Limited to 18 Months For the First Two Petitions

In an attempt to prevent potential abuse or fraud, the initial H-1B petition and the first extension (including an amended petition with an extension request) for beneficiary-owned entities will be limited to a validity period of up to 18 months each which is half of the standard 3-year H-1B term.

Second and subsequent extensions after the first two 18-month terms may be approved for up to 3 years, consistent with other H-1B workers, up to the maximum total of 6 years (unless eligible for an exception based on an approved or pending for 365+ days PERM or I-140 petition).

Practical Real-World Recent Example

Our office has been handling an increasing number of these petitions and so far we are seeing excellent results and treatment by USCIS.   Here’s a recent success story:

Mr. Smith holds a bachelor’s degree in Computer Animation and Design and after several years working for his H-1B employer, he establishes a startup in which he is 100% owner.  He seeks to obtain a concurrent H-1B through his company in order to work on projects that are outside of his “main” H-1B employment.  His job title is “Founder/Creative Director” and while his job duties are related to running the company, including marketing, fundraising, etc., the majority of his duties are related to directing and creating computer animation — tasks which are related to his education.   In order to ensure that his self-funded startup can afford his salary, we carefully evaluated different SOC job categories to find the  most suitable combination between position match and prevailing wage requirements.  We also ensured that the H-1B petition is for a part-time concurrent employment with a range of hours to be worked per week in order to allow fiscal flexibility based on the time commitment needed.

Our office prepared and submitted a premium processing request and we obtained a quick approval with 18-month validity term and without a request for evidence by USCIS.  With the approval Mr. Smith was not only able to work for his company but he was also able to reach out to investors and venture capital firms for funding with the assurance that he is able to continue to run and work for the company for the foreseeable future.

Rule Opens Wide Range of Possibilities and Visa Alternatives

The rule changes allow for a wide range of possibilities that were not recently available.   In addition to concurrent employment, as highlighted above, the new H-1B beneficiary-owner flexibility allows for transfers, extensions, and even for first time H-1B for “cap lottery” candidates (who may be in the US on another status such as F-1 OPT/CPT or even being outside of the U.S.).

Attorney Assistance with H-1B Preparation and Submission

The new rule signifies a progressive move by USCIS (which, so far, is alive and well during the Second Trump administration) to adapt the H-1B program to modern employment realities and foster innovation.  Our office will be happy to provide consultations or assistance with preparing and submitting H-1B petitions.

We offer flat fees to handle the entire application and you can contact us or request a flat fee quote.  Alternatively, if you would like to schedule a consultation with an attorney to discuss a specific case (but perhaps without engaging us to help with the actual filing ), we offer phone consultations.  We invite you to subscribe to our free weekly newsletter to obtain further news and developments on this topic.