Will This Be the Last H-1B Visa Cap Craze?

By John Gallini and Grant Godfrey

It has been open season for attacks on the H-1B program and the Department of Homeland Security (DHS) under the Trump Administration is aiming to make U.S. employer sponsorship of foreign worker visas more difficult and less appealing. In the meantime, demand remains high for talent in highly-skilled positions, particularly in the IT, Telecom and life sciences fields where well-educated and experienced qualified workers remain in short supply. The H-1B “specialty worker” visa has become the standard working visa that U.S. employers utilize to employ foreign nationals to fill these positions. However, securing an H-1B visa is the challenge.

There are less than 85,000 H-1B visas made available each year and the supply of these visas is typically exhausted well before the date that a foreign national can commence employment under the H-1B; that is because new H-1B visas are made available annually at the beginning of the federal government’s fiscal year — which is October 1 — and employers are allowed to file for one of these visas up to 6 months in advance of the intended employment date (April 1st). With a steadily improving economy over the past several years, and increased hiring, the demand for H-1B visas has vastly outstripped the supply. Given this trend, and to ensure all potential employers an equal shot, the DHS designated the first five (5) business days of April as the filing window for H-1B cap subject petitions. H-1B cap subject petitions must be filed with one of two designated Service Centers of the United States Citizenship & Immigration Services (USCIS). These Service Centers then tally up the number of petitions received and the USCIS announces whether a sufficient number of petitions has been received to meet the quota. If at the end of the five-day period USCIS has received more petitions than there are available visas, it will announce that it is not accepting further H-1B petitions under that fiscal year quota, and that it will hold random lotteries (as is explained further below) to determine which petitions will be selected for processing.

As has been the case in past several years, we anticipate that demand for the limited number of H-1B visas will vastly exceed this year’s supply. Last April USCIS received approximately 200,000 cap subject H-1B petitions in the first week of April for selection under its fiscal year quota. We are projecting that this year the cap will again be reached within the first week of April and that USCIS will once again hold its lotteries. As a result, we are advising all employers who expect to sponsor an employee for a new H-1B visa to file within the first five (5) days of April (i.e. so that the petition is received no earlier than April 2, 2018 and no later than April 6, 2018).

H-1B visas are given out each year in two primary tranches – there are 20,000 visas reserved for foreign nationals with a U.S. earned Master’s (or higher) degree – i.e. the “U.S. Master’s degree tranche” – and an additional 58,200 visas under the general tranche for foreign nationals who qualify generally for the H-1B (by having a U.S. or foreign Bachelor’s degree or a combination of education and experience that is equivalent to a Bachelor’s degree or higher). Finally, the USCIS reserves 6,800 visas in that tranche to citizens of Singapore (5,400) and Chile (1,400) for H-1B1 visas. These visas have historically been under-utilized and remain available throughout the fiscal year. Unused numbers reserved for H-1B1s are added back to the next year’s quota.

Under the current system, the USCIS will receive and sort all H-1B cap-subject petitions filed during the first five (5) business days of April. Incomplete petitions (e.g. lacking required forms or unsigned or incomplete) or petitions lacking the correct filing fees will be sorted for immediate rejection. Those that clear the initial quality check will be sorted into two batches, one for petitions on behalf of individuals holding a U.S. earned Master’s (or higher) degree and the other, the general tranche. All petitions are then assigned a random number. Assuming that USCIS receives more petitions than there are available under the 20,000 U.S. earned Master’s degree tranche, it will first run a lottery to select winners under that tranche. Any cases not selected in the U.S. earned Master’s degree tranche will then be added to the general tranche, and USCIS will run a second lottery. USCIS will cash the checks and issue receipts for all petitions selected in the lotteries. In prior years, receipts for cases selected in the lotteries are received by the middle of May. Petitions that are not selected will be rejected and returned together with the filing fee checks. It typically takes the USCIS two or three months to mail back petitions that were not selected in the lottery. If USCIS receives more than one H-1B cap petition by an employer for the same foreign national beneficiary under the H-1B cap in the same fiscal year, USCIS will disqualify the petition if selected.

The H-1B visa is available only to foreign nationals who have a job offer in a position that customarily requires someone with at least a Bachelor’s degree in a specific specialty. A foreign degree that is deemed the equivalent of a U.S Bachelor’s degree will satisfy this requirement. Foreign nationals who cannot qualify based on their education alone may also qualify based on work experience, or a combination of work experience and education that is determined to be equivalent to a U.S. Bachelor’s degree. Employers may request H-1B work authorized status for an initial period of up to three years. After this initial period, the Employer may thereafter request an additional period of up to three years, for a total of six years. Generally, a foreign national who has completed six years of time in the United States in H-1B status will be required to leave the United States for at least a year before again becoming eligible to be sponsored for an H-1B visa for a fresh six years. Exceptions to this rule allow foreign nationals to receive extensions beyond their normal six-year limit in H-1B status where a PERM labor certification has been filed on their behalf at least a year prior to their 6th year limit on H-1B stay or where the foreign national is the beneficiary of an approved employment-based immigrant visa petition but is unable to adjust status to permanent residence in the U.S. due to the backlog of per country quotas on immigrant visas.

Employees who are subject to the H-1B cap are those who have not previously held H-1B status and who have not been counted against the H-1B cap within the past six years. Within this group typically are:

• individuals who hold F-1 student status and are either graduating this spring or summer, or who will be reaching the end of their OPT employment authorization in the next year;
• individuals in J-1 scholar or researcher status who are completing their programs this spring or summer;
• individuals who are currently outside of the U.S.; and
• individuals who have been employed in H-1B status but only with “exempt” institutions or organizations, such as universities, related or affiliated non-profit entities, nonprofit research organizations, and governmental research organizations.

Note that the H-1B cap does not apply to a foreign national who is currently in the U.S. in H-1B status and has already been counted against the cap.

A few important points to note:

1. USCIS takes the position that the foreign national’s eligibility for H-1B status must be established at the time of filing. Thus, if the foreign national is hoping to apply in the U.S. Master’s degree tranche but has not completed all program requirements for the U.S. Master’s degree on or before April 1st, the foreign national is not qualified for consideration under the U.S. Master’s degree tranche. This person would have to file for an H-1B in the general tranche based on possession of a foreign or U.S. Bachelor’s degree or its equivalent.
2. Most commonly, F-1 students have a period of Optional Practical Training (“OPT”) granted as part of their F-1 student status that runs no later than 60 days from their program completion date and is valid for up to one year. Current F-1 student employees who are on OPT will commonly have OPT that expires between May and August. Employees in F-1 status whose OPT will expire before October 1 can be granted a “Cap Gap” extension of their OPT if the H-1B visa petition filed on their behalf is selected for processing. To be eligible for a “Cap Gap” extension, their OPT must also have been valid on the date the H-1B petition was filed. An F-1 student employee whose OPT employment authorization will expire before October 1 must inform their school of their H-1B selection and obtain an endorsement for Cap Gap extension. Only H-1B petitions that are filed with a request for change of status from F-1 to H-1B are eligible under this rule.
3. F-1 students who have graduated in a Sciences, Technology, Engineering or Mathematics (“STEM”) designated program field and who will be working with a U.S. employer that is registered with the e-Verify system are eligible for a 24-month extension of their OPT after the initial 12-month period has run. Thus, F-1 students in certain STEM designated degree programs may be able to take advantage of up to 36 months of employment authorization after graduation pursuant to F-1 OPT and will have several opportunities to apply for and secure an H-1B visa.
4. During last year’s H-1B cap filing period, USCIS suspended premium processing for all H-1B petitions (including for non-cap cases) for approximately five months. Premium processing is a service offered by USCIS whereby employers can pay an extra $1,225 filing fee for guaranteed review of their petition within 15 calendar days of its receipt. USCIS has stated that it does not anticipate suspending premium processing of non-cap H-1B filings, though it may impose a short suspension of this option for H-1B cap petitions.
5. As noted at the beginning of this article, the current Administration has signaled a desire to reduce legal, skilled immigration generally. This potentially puts at risk the current employment authorized status of several categories of foreign nationals working in the United States. As an example, in its annual regulatory agenda for 2018, DHS has indicated that it plans to propose regulations to eliminate the ability of certain foreign nationals holding an H-4 derivative visa to obtain employment authorization. Regulations on this issue have not yet been proposed, but it is likely that they will be at some point this year. Similarly, the Trump Administration has repeatedly threatened to terminate or renegotiate the North American Free Trade Agreement (NAFTA), which includes provisions for employment in the U.S. of Canadian and Mexican nationals in TN status. Finally, there have been reports that U.S. Consulates have been more readily denying E-2 visa for “essential employee” workers, a status that allows foreign nationals who have special skills to work for certain foreign-owned businesses in the U.S. where the U.S. has signed a special treaty with the foreign country. Accordingly, when thinking about which of your employees to sponsor for an H-1B this season, it may make sense to take a broader look at the employment visa status of others of your employees to see if an H-1B visa petition could provide greater stability for them in the long-term.

The H-1B filing window is just two months away and the window for filing is fleeting —  just five days. It is vital that employers determine which of their foreign employees or prospective employees to whom they have made offers will require an H-1B this year. The rules (as outlined briefly above) are complex and every case requires its own analysis. It is thus important that you collect the necessary data about possible H-1B candidates and begin a discussion with your immigration legal counsel as early as possible so that appropriate plans can be made to increase the chances of your foreign national employees being able to secure and/ maintain legal status and work authorization.

Please contact any of the member of the legal team at Parker Gallini LLP if you have any questions about the new H-1B visas that are becoming available.