Proposed Rule on the H-1B Program

On October 20, 2023, DHS published a Notice of Proposed Rulemaking that would modernize the H-1B program. The proposed rule would improve the H-1B program by: (1) streamlining the requirements of the H-1B program and improving program efficiency; (2) providing greater benefits and flexibilities for petitioners and beneficiaries; and (3) improving integrity measures.

What is an H-1B program?

The H-1B program allows U.S. employers to temporarily employ foreign workers in specialty occupations. Current statute defines the specialty occupations as occupations that require highly specialized knowledge and a bachelor’s or higher degree in the specific specialty (or its equivalent).

What is the Proposed Rule to Modernize the H-1B Program?

Among additional provisions, the proposed rule would improve the H-1B program as follows:

A. Modernization and Efficiencies

1. Amending the Definition of a “Specialty Occupation”

Currently, the statute defines a “specialty occupation” as an occupation which requires:

(A) 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

(B) 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.

This proposed rule would add the following language to this definition:

There must be a direct relationship between the required degree field(s) and the duties of the position: A position for which a bachelor’s degree in any field is sufficient to qualify for the position, or for which a bachelor’s degree in a wide variety of fields unrelated to the position is sufficient to qualify, would not be considered a specialty occupation as it would not require the application of a body of highly specialized knowledge.

There may be more than one acceptable degree field for a specialty occupation: The requirement of a direct relationship between a degree in a specific specialty, or its equivalent, and the position, should not be construed as requiring a singular field of study. A minimum entry requirement of a bachelor’s or higher degree, or its equivalent, in multiple disparate fields of study would not automatically disqualify a position from being a specialty occupation.[1]

A general degree is insufficient: The amended definition clarifies that a position would not qualify as a specialty occupation if attainment of a general degree, without further specialization, is sufficient to qualify for the position. For example, 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.

Under this proposed rule, the petitioner would continue to have the burden of demonstrating that there is a direct relationship between the required degree in a specific specialty and the duties of the position.

2. Amending the Criteria for Specialty Occupation Positions

As mentioned, “specialty occupation” requires attainment of a bachelor’s or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States. DHS proposes to amend the criteria for the “specialty occupation” as follows:

A bachelor’s degree is normally (but not always) required: The current regulation states that a bachelor’s degree is “normally” required. To provide additional guidance, DHS is proposing to state that “normally” means “conforming to a type, standard, or regular pattern” and is “characterized by that which is considered usual, typical, common, or routine.” The proposed regulation also clarifies that “[n]ormally does not mean always.”

Meeting one of the criteria for the specialty occupation is necessary but not always sufficient to qualify as a specialty occupationis: This proposed change would clarify that meeting one of the regulatory criteria is a necessary part of—but not always sufficient for—demonstrating that a position qualifies as a specialty occupation.

A baccalaureate degree must be a U.S. degree (or its foreign equivalent): The proposed change would clarify that a baccalaureate degree must be a U.S. degree (or its foreign equivalent). It clarifies that a foreign baccalaureate is not necessarily an equivalent.

If the beneficiary will be staffed to a third party, the third party’s requirement matters most: The proposed rule clarifies that when a beneficiary is staffed to a third party, it is the requirements of that third party, and not the petitioner, that are most relevant when determining whether the position is a specialty occupation.

3. Amended Petitions

DHS proposes to clarify when petitioners must file an amended or new H-1B petition due to a change in an H-1B worker’s place of employment.

Any change that requires a new LCA requires an amended or new petition with USCIS: This rule proposes to clarify that USCIS considers any change of work location that requires a new LCA a material change and therefore requires the petitioning employer to file an amended or new petition with USCIS. Such employer must file the petition before the H-1B worker may perform work under the changed conditions.[2]

When a change to the place of employment would not require an amended petition (limited circumstances): DHS proposes to clarify guidance on when petitioners do not have to file an amended or new petition, assuming there are no other material changes, as follows:
- Moving a beneficiary to a new job location within the same area of intended employment as listed on the LCA[3]
- Short-term placements for the specific durations set forth in the proposed rule[4]
- When a beneficiary is going to a non-worksite location to participate in employee development, will be spending little time at any one location, or will perform a peripatetic job[5]

4. Deference[6]

DHS seeks to codify the existing deference policy to create predictability for petitioners and beneficiaries and lead to fairer and more reliable outcomes as follows:

Deference to prior determinations: The deference policy instructs officers to consider prior determinations involving the same parties and facts, when there is no material error with the prior determination, no material change in circumstances or in eligibility, and no new material information adversely impacting the petitioner’s, applicant’s, or beneficiary’s eligibility.

5. Evidence of Maintenance of Status

DHS seeks to clarify and codify current practices concerning evidence of maintenance of status as follows:

Requirement to submit evidence of maintenance of status: DHS seeks to clarify that evidence of maintenance of status is required for petitions where there is a request to extend or amend the beneficiary’s stay. The proposed regulation would further provide examples of the evidence of maintenance of status that petitioners should submit to USCIS.[7]

Late filing of an amendment of stay request: This change would also clarify that USCIS can excuse the late filing of an amendment of stay request under the circumstances described at proposed regulations.[8] If USCIS excuses the late filing of an amendment of stay request, it would do so without requiring the filing of a separate application or petition and would grant the amendment of stay, if otherwise eligible, from the date the petitioner filed the petition.

6. Eliminating the Itinerary Requirement for H Programs

DHS is proposing to eliminate the H programs’ itinerary requirement:[9]

Eliminating the itinerary requirement: DHS is proposing to eliminate the H programs’ itinerary requirement. This is because the information provided in an itinerary is largely duplicative of information already provided in the LCA for H-1B petitions and the temporary labor certification for H-2 petitions. To eliminate the unnecessary duplication of work, DHS also proposes to eliminate the itinerary requirement for agents acting as petitioners.

7. Validity Expires Before Adjudication

Currently, if USCIS adjudicates and deems H-1B petitions approvable after the initially requested validity period, or the last day for which eligibility has been established, has elapsed, the petition must be denied. DHS proposes the following as to these types of petitions:

H-1B petitions can be approved or their validity period can be extended when validity expires before adjudication: DHS proposes to allow H-1B petitions to be approved or have their requested validity period dates extended if USCIS adjudicates and deems the petition approvable after the initially requested validity period end-date, or the period for which eligibility has been established, has passed.[10]

B. Benefits and Flexibilities

1. H-1B Cap Exemptions

The current annual regular cap for the H-1B visa category is 65,000. However, not all H-1B visas (or grants of H-1B status) are subject to this annual cap.

Currently, DHS regulations state that an H-1B nonimmigrant worker is exempt from the cap if employed by:

an institution of higher education;
a nonprofit entity related to or affiliated with such an institution;
a nonprofit research organization; or
a governmental research organization.

Revision to the definition of a “non profit research organization” and “governmental research organization”

DHS proposes to revise the current regulation, which states that a nonprofit research organization is an entity that is “primarily engaged in basic research and/or applied research,” and a governmental research organization is a Federal, State, or local entity “whose primary mission is the performance or promotion of basic research and/or applied research,” as follows:

Change to the definition of a nonprofit research organization and governmental research organization: The proposal replaces “primarily engaged” and “primary mission” in the definitions above with “a fundamental activity of” to permit a nonprofit entity or governmental research organization that conducts research as a fundamental activity, but is not primarily engaged in research, or where research is not the primary mission, to meet the definition of a nonprofit research entity or governmental research organization.

Revision to the requirements for the H-1B worker to be exempt from the cap

Current regulations also state that an H-1B worker may be exempt from the cap when they are not “directly employed” by a qualifying institution, organization, or entity, if they are employed at a qualifying institution, organization, or entity so long as:

(a) The majority of the worker’s work time will be spent performing job duties at a qualifying institution, organization, or entity; and

(b) The worker’s job duties will directly and predominately further the essential purpose, mission, objectives or functions of the qualifying institution, organization or entity.

DHS proposes to revise the above definitions as follows:

Change to the requirement of the beneficiary’s work time at a qualifying institution, organization, or entity: DHS proposed to change the phrase “the majority of” mentioned in (a) above to “at least half” to clarify that H-1B beneficiaries who are not directly employed by a qualifying institution, organization, or entity, and who equally split their work time between a cap-exempt entity and a non-cap-exempt entity, may be eligible for cap exemption.

Change to the requirement of the beneficiary’s job duties at a qualifying institution, organization, or entity: DHS proposed to remove the requirement that a beneficiary’s duties “directly and predominately further the essential purpose, mission, objectives or functions” of the qualifying institution, organization, or entity” mentioned in (b) above and replace it with the requirement that the beneficiary’s duties “directly further an activity that supports or advances one of the fundamental purposes, missions, objectives, or functions” of the qualifying institution, organization, or entity.”

Elimination of the burden to establish the nexus: DHS’ proposed regulation would also eliminate the sentence stating that the H-1B petitioner has the burden to establish that there is a nexus between the beneficiary’s duties and the essential purpose, mission, objectives or functions of the qualifying institution, organization, or entity.

2. Automatic Extension of Authorized Employment (Cap-Gap)

Currently, the automatic extension of authorized employment (cap-gap) is valid only until October 1 of the fiscal year for which the petitioner requests the H-1B status. However, USCIS has, in some years, been unable to complete the adjudication of all H-1B cap-subject petitions by October 1.

Accordingly, DHS proposes the following automatic extension of authorized employment to help to avoid disruption to U.S. employers that are lawfully employing F-1 students while a qualifying H-1B cap-subject petition is pending:

Automatic extension of authorized employment (cap-gap) until April 1 of the fiscal year for which the petitioner files the H-1B petition, or until the validity start date of the approved H-1B petition, whichever is earlier: DHS proposes to revise a regulation to provide an automatic extension of duration of status and post-completion OPT or 24-month extension of post-completion OPT, as applicable, until April 1 of the relevant fiscal year for which the petitioner requested the H–1B petition, or until the validity start date of the approved H-1B petition, whichever is earlier. DHS proposes to specify that the H-1B petition must be “nonfrivolous” for the student to benefit from the cap-gap extension.

3. Start Date Flexibility for Certain H-1B Cap-Subject Petitions

DHS proposes to eliminate all the text which relates to a limitation on the requested start date, because the current regulatory language is ambiguous.

Petitioners can file H-1B cap-subject petitions with requested start dates that are after October 1 of the relevant fiscal year: The proposed changes would eliminate the language relating to a limitation on the requested start date. This would clarify for petitioners that they may file H-1B cap subject petitions with requested start dates that are after October 1 of the relevant fiscal year. While the requested start date may be later than October 1, it must be 6 months or less from the date the petitioner files the petition. If the requested start date is more than 6 months after the petitioner files the petition, USCIS will deny or reject the petition.

C. Program Integrity

1. The H-1B Registration System

Starting 2020, prospective petitioners seeking to file H-1B cap-subject petitions must first electronically register and pay the associated H-1B registration fee for each prospective beneficiary. DHS proposes the following rule to limit the potential for abuse of the registration process:

(a) Beneficiary Centric Selection

Selection by unique beneficiary, not by registration submitted: If USCIS determines that a random selection process should be conducted, DHS proposes to shift from selecting by registration, to selecting by unique beneficiary. Under the new proposal, each unique individual who has a registration submitted on their behalf would be entered into the selection process once, regardless of the number of registrations filed on their behalf. By selecting by a unique beneficiary, DHS would better ensure that each individual has the same chance of being selected, regardless of how many registrations were submitted on their behalf.

Giving beneficiaries greater autonomy regarding their H-1B employment: The proposed change would potentially benefit beneficiaries by giving them greater autonomy to choose the employer for whom they ultimately work. If a beneficiary were selected, each registrant that submitted a registration on that beneficiary’s behalf would be notified of selection and would be eligible to file a petition on that beneficiary’s behalf. If multiple unrelated companies submitted registrations for a beneficiary and the beneficiary were selected, then the beneficiary could have greater bargaining power to determine which company or companies could submit an H-1B petition for the beneficiary.

Requirement to submit valid passport information: Because the integrity of the new selection process would rely on USCIS’s ability to accurately identify each individual beneficiary, DHS proposes to require the submission of valid passport information in addition to the currently required information. This would include the passport number, country of issuance, and expiration date.

(b) Bar on Multiple Registrations Submitted by Related Entities

Bar on multiple registrations submitted by related entities: DHS regulations already preclude the filing of multiple H-1B cap-subject petitions by related entities for the same beneficiary, unless the related petitioners can establish a legitimate business need for filing such multiple cap-subject petitions. DHS proposes to extend the existing prohibition by also prohibiting related entities from submitting multiple registrations for the same individual absent a legitimate business need.

(c) Registrations with False Information or That are otherwise Invalid

USCIS’ ability to deny an H-1B petition or revoke an H-1B petition’s approval for false or invalid registrations: DHS proposes to codify USCIS’s ability to deny an H-1B petition or revoke an H-1B petition’s approval when the petition is based on a registration where the statement of facts (including the attestations) was not true and correct, inaccurate, fraudulent, or misrepresented a material fact.

2. Provisions to Ensure Bona Fide Job Offer for a Specialty Occupation Position

(a) Contracts

USCIS may request evidence to establish the terms and conditions of the beneficiary’s work and the minimum educational requirements to perform the duties: Through proposed regulation, DHS seeks to put stakeholders on notice of the kinds of evidence that USCIS could request to establish the terms and conditions of the beneficiary’s work and the minimum educational requirements to perform the duties. For example, the submitted contracts should include both the master services agreement and accompanying statement(s) of work (or similar legally binding agreements under different titles) signed by an authorized official of any party in the contractual chain, including the petitioner, the end-client company for which the beneficiary will perform work, and any intermediary or vendor company.

(b) Non-Speculative Employment

Speculative employment is not permitted in the H-1B program: DHS proposes to codify its requirement that the petitioner must establish, at the time of filing, that it has a non-speculative position in a specialty occupation available for the beneficiary as of the start date of the validity period as requested on the petition.

(c) LCA Corresponds with the Petition

LCA must correspond with the H-1B petition: DHS is proposing to update the regulations to expressly include DHS’s existing authority to ensure that the LCA properly supports and corresponds with the accompanying H-1B petition. DHS notes that the LCA, H-1B petition, and supporting documentation must be for the same position. So long as the supplemental information does not materially change the position described in the original H-1B petition, DHS would consider the position to be the same.

(d) Revising the Definition of U.S. Employer

Employer-employee relationship: DHS proposes to remove from the definition of U.S. employer the reference to an employer-employee relationship. This relationship was interpreted using common law principles and was a significant barrier to the H-1B program for certain petitioners, including beneficiary-owned petitioners.[11]

Bona fide job offer must exist: As an additional integrity measure, DHS is proposing to codify the existing requirement that the petitioner have a bona fide job offer for the beneficiary to work within the United States. DHS proposes to codify the bona fide job offer requirement in place of the current requirement that the petitioner “[e]ngages a person to work within the United States.”

Legal presence and amenable to service of process: In the second prong of the definition of U.S. employer, DHS proposes to add a new requirement that the petitioner has a legal presence in the United States and is amenable to service of process in the United States. Legal presence, in this context, means that the petitioner is legally formed and authorized to conduct business in the United States. “Amenable to service of process” means that the petitioner may be sued in a court in the United States.

Beneficiary-owners: In the fourth prong of the definition of U.S. employer, DHS proposes to codify a petitioner’s ability to qualify as a U.S. employer even when the beneficiary possesses a controlling interest in that petitioner. Controlling interest means that the beneficiary owns more than 50 percent of the petitioner or when the beneficiary has majority voting rights in that petitioner. In this proposed change, DHS seeks to clarify its current policy and encourage more beneficiary-owned businesses to participate in the H-1B program. This provision is to promote access to H-1Bs for entrepreneurs, start-up entities, and other beneficiary-owned businesses.

Proposed conditions for beneficiary-owned entities: One of the proposed conditions is that the beneficiary may perform duties that are directly related to owning and directing the petitioner’s business if the beneficiary will perform specialty occupation duties authorized under the petition a majority (more than 50%) of the time. DHS is also proposing to limit the validity period for the initial petition and first extension (including an amended petition with a request for an extension of stay) of such a petition to 18 months each. USCIS would not limit any subsequent extension and may approve it for up to 3 years, assuming the petition satisfies all other H-1B requirements.

3. Site Visits

USCIS conducts inspections, evaluations, verifications, and compliance reviews, to ensure that a petitioner and beneficiary are eligible for the benefit sought and that they have complied with all laws before and after approval of such benefits. USCIS may conduct them telephonically or electronically, as well as through physical on-site inspections (site visits).

Site visits specific to the H-1B program: DHS is proposing to add regulations specific to the H-1B program to codify its existing authority and clarify the scope of inspections and the consequences of a petitioner’s or third party’s refusal or failure to fully cooperate with these inspections. If USCIS is unable to verify facts related to an H-1B petition, including due to the failure or refusal of the petitioner or third party to cooperate in an inspection or other compliance review, then the lack of verification of pertinent facts may result in denial or revocation of the approval of any petition for workers who are or will be performing services at the location or locations that are a subject of inspection or compliance review, including any third-party worksites.

4. Third-Party Placement (Codifying Defensor)

Specialty occupation requirement at the third-party work: This proposal would ensure that petitioners are not circumventing specialty occupation requirements by imposing token requirements or requirements that are not normal to the third party. Specifically, under the proposed regulation, if the beneficiary will be contracted to fill a position in a third party’s organization, the actual work to be performed by the beneficiary must be in a specialty occupation. Therefore, it is the requirements of that third party, and not the petitioner, that are most relevant when determining whether the position is a specialty occupation.

Future Rulemaking Actions

DHS may move to finalize certain provisions through one or more final rules after carefully considering all public comments and may possibly do so in time for the FY 2025 cap season, depending on agency resources. DHS may need to delay the effective date if it determines that USCIS does not have sufficient time to ensure proper functionality of the beneficiary-centric selection process or for any other reasons.

For the DHS’ announcement on this proposed rule, please visit here.

Disclaimer

[1] For example, a requirement of a general business degree for a marketing position would not satisfy the specific specialty requirement. In this case, the petitioner would not satisfactorily demonstrate how a required general business degree provides a body of highly specialized knowledge that is directly related to the duties and responsibilities of a marketing position. Similarly, a petition with a requirement of any engineering degree in any field of engineering for a position of software developer would generally not satisfy the statutory requirement, as it is unlikely the petitioner could establish how the fields of study within any engineering degree provide a body of highly specialized knowledge directly relating to the duties and responsibilities of the software developer position.

[2] For example, a change in location may impact eligibility if the new location is in a metropolitan statistical area (MSA) with a higher wage.

[3] The rule would be consistent with INA section 212(n)(4), which provides that a change in the worksite location within the same MSA of the existing LCA would generally be deemed to be within the area of employment.

[4] This would be consistent with DOL regulations at 20 CFR 655.735 in which short-term placements of less than 30 days, or in some cases 60 days, do not require a new LCA or an amended or new petition, provided there are no material changes.

[5] This would be consistent with DOL regulations at 20 CFR 655.715, which sets forth several criteria for what would not constitute a “place of employment” or “worksite,” as well as what would constitute an “employee developmental activity,” for purposes of requiring a new LCA.

[6] The proposed rule would apply to all nonimmigrants using Form I-129, Petition for a Nonimmigrant Worker, and would include a request on Form I-129 involving the same parties and same material facts.

[7] These changes would impact the population of E-1, E-2, E-3, H-1B, H-1B1, H-2A, H-2B, H-3, L-1, O-1, O-2, P-1, P-2, P-3, Q-1, R-1, and TN nonimmigrants.

[8] “Late filing” in this context would include certain extension of stay requests filed after the expiration date on the Form I-94. A “late filing” would also encompass a request for an amendment of stay that a petitioner filed after the beneficiary temporarily stopped working due to extraordinary circumstances beyond their control.

[9] Current regulation states that “A petition that requires services to be performed or training to be received in more than one location must include an itinerary with the dates and locations of the services or training and must be filed with USCIS as provided in the form instructions.”

[10] However, regulations would not allow a petitioner to reduce the proffered wage, even if the prevailing wage decreased due to the passage of time. If the petitioner intends to reduce the proffered wage or make any other material change to the proposed employment, it would have to file an amended or new petition.

[11] This proposed change reflects USCIS’s current practices since June 2020. USCIS’s June 2020 policy memorandum “Rescission of Policy Memoranda” explains that, when assessing whether an employer and a beneficiary have an employer-employee relationship, the petitioner need only establish that it meets at least one of the “hire, pay, fire, supervise, or otherwise control the work of” factors with respect to the beneficiary.