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H-1B Rule A Positive Step Forward, But Potential for Greater Uncertainty Remains

Updated January 31, 2019: This post has been updated to reflect changes in the final rule. You can read our official statement on the final rule here.

On January 31, 2019 the Department of Homeland Security published a Final Rule titled Registration Requirement for Petitioners Seeking To File H-1B Petitions on Behalf of Cap-Subject Aliens. The rule establishes a new digital “pre-registration” system for H-1B applications and changes the order in which H-1B petitions are selected. In the Final Rule, DHS announces a delay in implementation of the pre-registration system until at least next year so it can be tested and employers can best prepare. DHS also committed to announcing registration periods 30 days in advance, extended the filing window to 90 days and decided to not use staggered filing windows. These changes will significantly improve the predictability and efficiency for employers filing under the new system. DHS will move forward with the modified selection process this year.

Ultimately, the stated goals of the rule – to recruit and retain more H-1B recipients with advanced degrees – are positive, but could be done at the expense of other needed, qualified applicants. These goals can be achieved more effectively and fairly through legislative changes. Further, rushing to implement this process for the FY2020 cap season (beginning April 1, 2019) would have forced significant costs on employers who have already prepared to apply under the current system. DHS has rightly chosen to delay implementation until at least next year so the program can be properly tested.

Stick with us and read on for more information about the rule.

Background on the H-1B visa

The H-1B visa is a nonimmigrant visa for temporary workers in specialty occupations. It is often used to hire high-skilled temporary workers in Science, Technology, Engineering and Math (STEM) fields. Employers file petitions for each individual H-1B recipient to work in the specific job for which they are needed. In order to be sponsored under the H-1B program, the foreign national must have a bachelor’s degree or equivalent in their field of expertise, and the employer must file a Labor Certification Application (LCA) with the Department of Labor documenting the need for the worker. H-1B status is valid for three years and can be renewed once, for a total duration of six years; however, many H-1B holders are further sponsored for green cards, and may extend their H-1B status annually until the green card number becomes available (which, in certain cases, can take decades).

Each year, 85,000 H-1B visas are available – this ceiling was set by Congress in 2004. 65,000 of the visas are available to all applicants, while an additional 20,000 are set aside for those who have an advanced degree (Master’s or higher) from a U.S. college or university. Some applicants (e.g. those employed by non-profit organizations) are exempt from all caps.

Employers may not begin petitioning for prospective H-1B employees until six months before the beginning of the fiscal year– October 1– when H-1B status may begin, so the application period for H-1B visas opens on April 1st of the same year. When the U.S. Citizenship and Immigration Services (USCIS) receives enough applications to fully satisfy the 85,000 limit, it will not accept further H-1B petitions. Since 2014, USCIS has received far above the requisite amount of petitions within the first week, meaning no cap-subject H-1B petitions are accepted beyond that first week. When this happens, a random lottery is conducted to select the H-1B petitions that will be adjudicated. The first 20,000 petitions received by USCIS filed on behalf of foreign nationals with advanced degrees are exempted from the cap, and the remaining petitions, regardless of education levels, compete for the remaining 65,000 slots.

In Fiscal Year 2019, just over 190,000 petitions were received in the first week petitions could be filed for the 85,000 available visas. Of these, half were eligible for the advanced degree exemption.

Overview of the Proposed Rule

DHS’ proposed rule would make two significant changes to the H-1B petition process:

1. Establish a digital “pre-registration” system for H-1B petitions

2. Switch the order petitions are selected to be adjudicated, with the 65,000 “cap-subject” petitions being selected first, followed by the advanced degree exempted filings

In order to be eligible to receive an H-1B visa, employers would pre-register at least two weeks before the opening of the application window (April 1) with basic information like employer’s name and contact info, the beneficiary’s name and contact information, and their education level. If USCIS receives more than enough petitions to fill the 65,000 cap, they would randomly select from this set of pre-registrations a sufficient number to meet the caps. Those selected here would then be invited to submit full petitions, including an approved Labor Condition Application (LCA). If there were fewer registrations, all would be invited to file.

USCIS claims the pre-registration system will support its effort to digitize the agency, move its processes online, and reduce the amount of paper petitions it has to review. The agency believes the pre-registration will save employers time and money by allowing them to wait until they find out if they have been selected before preparing a full petition.

The second major change is to the sequence in which petitions are selected. Currently, the 20,000 petitions eligible for the advanced degree exemption are selected first, followed by the 65,000 cap-subject petitions (beneficiaries with a Master’s or above from a U.S. institution who are not selected in the first round are eligible to be selected in the second round as well). Existing law, found in 8 U.S.C. 1184(g)(5)(C), says that the cap will not apply to any foreign national who “has earned a master’s or higher degree from a United States institution of higher education (as defined in section 1001(a) of title 20), until the number of aliens who are exempted from such numerical limitation during such year exceeds 20,000” (emphasis added). The “until” language has traditionally been interpreted to mean the 20,000 additional must be filled before eligible applicants are subject to the general cap. USCIS does not provide any rationale for changing the process, which some already argue would be a new interpretation of the statute.

USCIS argues that changing the order of the lotteries will increase the likelihood that H-1B beneficiaries will be those who hold an advanced degree, as the full population of U.S. Master’s degree holders would be included in the cap-subject selections before any are set aside for the exemption. This follows from the the President’s Executive Order “Buy American, Hire American,” which directed agencies to find ways to ensure “H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.”  

Analysis of the Proposed Rule and Potential Problems

The effort to digitize immigration services has been a focus for this Administration and is desperately needed to move our immigration system into the 21st Century. The proposed pre-registration system could go a long way to reduce the cost of filing petitions and save time, money, and resources, particularly for smaller employers hoping to hire qualified workers.

However, there are significant problems not addressed in the rule, and while the goal of increasing the number of advanced-degree holders graduating from US schools who are able to stay and work in the country is laudable, it is not clear this change to the selection process is the best way to achieve it, as it could come at the expense of other qualified applicants and could have other unintended consequences.

Timing
In response to comments from organizations like FWD.us, DHS has chosen to delay implementation of the pre-registration system until at least next year, so that employers can best prepare and the system can be tested. If the new system were implemented this year, employers would not have had final clarity on the new process until a matter of weeks before the filing period opened. The vast majority of employers filing a thorough and strongly evidenced petition would have already begun to prepare their petitions under the old process anyway, undermining DHS’ basis for the proposed rule to save time, resources, and paperwork.

Furthermore, especially in light of USCIS’ recent Issuance of Certain RFEs and NOIDs memo, which permits USCIS adjudicators to more readily deny an H-1B filing if it lacks certain information, employers would most likely err on the side of caution to provide a comprehensive filing, which takes time, just in case USCIS did not have the program running by April 1.  DHS recognized the challenge to administer the proposed program in time for 2020 filings, and included language allowing the agency to suspend the process for FY2020 if needed, which they agreed to do in the final rule.

DHS also acknowledged concerns around inherent timing issues if the agency implemented “staggered” application windows and only allowed 60 days for employers to prepare petitions after hearing back from the agency. Under the current system, delays across the process (including in approving an LCA from DOL or receiving a decision on a petition from USCIS) cause difficulties for workers hoping to begin work on October 1st who do not hear back in time – the staggered application windows would have exacerbate these issues. Accordingly, DHS agreed to extend the filing period to 90 days, and to abandon the “staggered” filing window proposal.

Potential for False Demand
Because the requirements for registering under the new process require very little information from an employer, there is a risk of employers flooding the system with registrations that are not ultimately followed by legitimate, well-evidenced applications. DHS acknowledged this risk in their initial proposal and suggested some ways they will work to mitigate the threat, but even the agency admits “DHS does not currently have a solution for the registration process, or any of its filing processes, that guarantees prevention of all non-meritorious registrations or filings prior to adjudication.” The final rule states that “DHS does not anticipate a significant increase in overall petitions due to the registration requirement,” but did not add much additional detail.

Changes in Selection Sequence
While few would argue with the goal of recruiting and retaining more advanced degree-holders, particularly those who graduated from U.S. colleges and universities, there could be harmful consequences of DHS’ proposal here. For one, the reversed process could disadvantage qualified applicants educated outside of the U.S., including those with PhDs and specializations in crucial fields, such as doctors educated abroad who finish their training here. This could also disadvantage employers seeking to hire qualified and needed lower-level bachelor’s degree-holders, as the cap-subject pool would be crowded by those who are eligible for the exemption.

More concerning is the potential for DHS to use the new lottery process to avoid issuing the full 85,000 available visas. David Bier of the Cato Institute explains:

Suppose 20,000 master’s degree holders apply during a year, while 65,000 bachelor’s degree holders apply. There should be enough visas for everyone under Congress’s scheme. But under DHS’s regulation, the 20,000 master’s degree holders would be counting against the 65,000 cap throughout the year. Once that’s hit, then there’s maybe 5,000 master’s degree holders left and 15,000 bachelor’s degree holders. But only the 5,000 can get visas under the master’s exemption, resulting in a 15,000 visa cut to the H-1B program.

Congress created the advanced degree exemption because they did not intend the program to be solely for those advanced degrees holders – they recognized a need for workers with different educational backgrounds. This rule could be used to go around Congress’ intent and further restrict not only who is likely to receive H-1B status, but how many. Despite these concerns, DHS has chosen to move forward with modifying the selection order.

Legal Justification
Some have questioned whether it is lawful for DHS to change a process that Congress seemed to already structure, via legislation, simply through rulemaking. As noted above, the current process seems to follow from federal statute establishing that advanced degree holders are not counted against the cap until the 20,000 advanced degree exemption H-1B spots are granted. DHS argues their interpretation of that language allows them to change the order, but experts have called that interpretation into question.

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