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In late April, U.S. Citizenship and Immigration Services released data showing what the U.S. immigration law community already knew: The H-1B registration system is broken.
This year, USCIS received 780,884 total registrations for just 85,000 visas available under congressionally mandated caps. The data also revealed that more than half of the registrations were submitted on behalf of beneficiaries with multiple registrations — i.e., multiple companies submitted registrations for the same individual. In April, the Wall Street Journal reported that roughly 408,000 registrations were submitted on behalf of just 96,000 individuals.
Employers are required to state that they actually intend to hire individuals they put in the lottery. USCIS raised allegations of abuse of the registration process, saying the large number of individuals with multiple registrations “raised serious concerns that some may have tried to gain an unfair advantage by working together to submit multiple registrations on behalf of the same beneficiary.”
Many of the problems were predicted when the registration system was implemented in 2020 and, if anything, it is surprising that the system wasn’t flooded to this extent sooner.
Before 2020, employers had to file full H-1B petitions the first week of April for H-1B-elgible foreign workers they hoped to hire. USCIS would then conduct a lottery to determine which petitions it would adjudicate.
USCIS designed the new registration system to reduce costs for employers and the administrative burden on the agency. Under the system, employers submit registrations in March on behalf of individuals they intend to sponsor, and then are invited to submit full petitions for those who are selected.
The problem is the registration system created a low barrier to entry. The registration fee of just $10 and minimal required information provide little incentive not to place foreign workers in the lottery. When it proposed the registration system, USCIS mentioned the risk of companies “flooding the system with non-meritorious registrations.”
This problem now appears to be a reality. So how can it be fixed?
Let’s start by giving USCIS some credit. The agency’s decision to release more detailed data than in the past has given stakeholders a peek behind the curtain and provided them a better opportunity to suggest solutions. In its April announcement, USCIS also said it had “already undertaken extensive fraud investigations.”
Furthermore, as the agency works on a proposed regulation to modernize the H-1B program, it has committed to “bolstering the H-1B registration process to reduce the possibility of misuse and fraud in the H-1B registration system.” USCIS has not yet indicated what specific measures it will propose, but these actions show the agency recognizes the gravity of the problem and is working on solutions.
However, the rulemaking process takes time, and according to the most recent regulatory agenda, the proposed H-1B rule is not expected until the end of the year. USCIS has also proposed increasing the registration fee from $10 to $215 as part of a broader proposal to dramatically increase fees to cover costs. The final increase could be smaller, but even a $215 fee might have a limited impact on the number of registrations companies submit.
In addition, uncertain timetables and the possibility of litigation for both the not-yet- proposed H-1B modernization rule and the fee rule — which has been proposed but not targeted to be finalized until March 2024 — make it impossible to know whether changes could be implemented before next March’s registration window.
The future of the H-1B registration process is of paramount concern. In the near term, USCIS should continue to provide as much transparency as possible to the public, including regarding the number of petitions it receives and its actions to address potential misuse of the system. Additional information about whether the agency plans to conduct a second registration lottery would enable employers to plan and set expectations with their employees.
While there is no silver bullet, some possibilities the agency could consider include selecting registrations by unique beneficiary, such that eligibility for H-1B sponsorship does not hinge on the number of registrations filed on a beneficiary’s behalf, and transitioning to online filing in conjunction with a “Known Employer” program.
The agency should continue to seek input from stakeholders and approach this issue thoughtfully but with urgency.
Employers can ill afford another lottery like this year’s, where just 14.6% of registrations were selected. In the absence of congressional action to raise the H-1B cap, which has remained at 85,000 since 2006, more transparency and a well-crafted regulation could help ensure this in-demand resource remains viable.
For all its limitations, the H-1B program remains the primary pathway for high-skilled foreign nationals to remain in or come to the U.S. to pursue a career. The program is crucial to helping large and small employers hire and retain needed talent in industries ranging from tech to health care to engineering. The importance of getting the registration system right cannot be understated.
The government is open—for now. The Supreme Court declines to hear a case challenging Optional Practical Training. And employers turn an eye toward the upcoming H-1B cap season.
Get this news and more in the new episode of BAL’s podcast, the BAL Immigration Report, available on Apple, Spotify and Google Podcasts or on the BAL news site.
This alert has been provided by the BAL U.S. Practice group.
Copyright ©2023 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries, please contact copyright@bal.com.
Lawmakers introduce a Name, Image and Likeness bill with new provisions for F-1 student athletes. The U.S. curtails consular services in Niger. And a closer look at USCIS’ second H-1B lottery.
U.S. Citizenship and Immigration Services completes a second H-1B registration lottery. The U.S. limits Hungarian citizens’ access to the visa waiver program. And a look at J-1 visa opportunities for STEM researchers and specialists — and how they could help keep the U.S. competitive in the global economy.
The Department of Homeland Security publishes a much-anticipated Form I-9 rule. USCIS announces it will conduct a second H-1B registration lottery. And a closer look at two recent Supreme Court cases and their impact on DACA litigation.
Maggie Murphy is a Partner with BAL and leads the Austin office. She specializes in complex, creative business immigration solutions. She has over 20 years of technical experience in immigration law and is an industry leader in PERM, I-9 and E-Verify compliance and business visa case types. We sat down with Maggie to discuss this year’s H-1B season.
Q: What are some of the challenges with the H-1B visa program you are seeing so far this year?
A: The cap season was drastically bad for most employers who had registered cases. We didn’t realize that the national average was so low, although we knew that our internal average was falling right into those percentages. But to have less than 20% of registrations selected was unprecedented.
Q: What are the implications for employers?
A: The H-1B cap and the lottery process itself has become unreliable because of these low selection numbers compared to registrations. It is forcing employers to plan so much more ahead, and then if they get good candidates who only have one or two chances at the lottery, they are reconsidering whether they should even hire those candidates, which is really a shame. In our economy, and for our U.S. businesses that are trying to attract foreign talent, they are hitting a lot of dead ends.
Many of our clients are doing contingency planning for their valuable foreign talent who have submitted up to three times and still haven’t been selected in the H-1B lottery. This involves developing training programs for these individuals or finding roles for them in overseas offices. But some are starting to reconsider continuing to recruit from certain foreign programs, such as foreign engineering programs, for example. Particularly, U.S. employers that don’t have international offices and can’t send someone to work in an overseas office, they are considering the E-Verify program so that they can participate in STEM Optional Practical Training (OPT). And they are also starting the permanent residence process early so the individual will have a green card-based work option by the time their OPT expires.
Q: What do you recommend employers do?
A: Start planning as early as you can. Unless Congress makes some change, the chances are this cycle of very low selection percentages will continue. It seems to get much lower every year.
Q: What other options do employers have?
For employers willing to hire students, there is OPT, which is for temporary employment directly related to a student’s major area of study who is here on an F-1 visa. F-1 visas allow students to work part time while school is in session and full time when school is not in session. Students can stay in the U.S. for one year, and up to three years if they are eligible for an extension.
Another similar option is Curricular Practical Training (CPT), also for F-1 visa students, which allows students to come to the U.S. for training and to work in paid internship positions. CPT allows for full-time or part-time work.
The main difference between OPT and CPT is OPT can be completed before or after a student graduates. CPT must be completed before graduation.
J-1 visas are for students specifically in the U.S. for educational or cultural exchange programs. Students in J-1 status are allowed to work only part time, not more than 20 hours per week, during an academic year and full time only during summer and official university breaks.
H-3 nonimmigrant visas allow foreign nationals to come to the U.S. as trainees in any field that is not available in their home country and stay for up to two years.
Q: What are the options for employers who are not hiring students?
A: Employers can consider hiring foreign nationals from countries the U.S. has immigration or trade-related treaties with, such as Canada and Mexico (eligible for TN visas), Australia (eligible for E-3 visas), and Chile and Singapore (eligible for H-1B1 visas).
Q: Are you seeing any of the alternatives become more common? Are employers turning toward L-1s for intracompany transferees or O-1s for those with extraordinary abilities, for example?
A: An emerging trend among larger companies is to establish a contingency plan specifically for their foreign population.
What I have seen in the last five years among larger clients that have international offices is some activity in developing rotation programs and using the H-3 trainee visa category for that, especially in the manufacturing and engineering industries. Employers tend to have already established training programs that often are at least three to six months of rigorous training before employees really get into their manufacturing or engineering role. So H-3 has been popular, although it is highly regulated and scrutinized by USCIS.
Others have started contingency planning for L-1s, developing an international rotation program so they can eventually send a talented person they want to retain in the U.S. to work in a foreign location for a couple of years and then bring them back to the U.S.
Both the L-1 and the H-3 visas require that the U.S. employer have an affiliated office overseas to either transfer employees to or send them to after their training rotation.
Q: If employers have questions about any of these alternatives or want to learn more about a specific option we have discussed, how can they reach you?
A: They are welcome to email me directly at mmurphy@bal.com.
H-1B is a nonimmigrant classification for temporary employment in the United States. There are three types of foreign nationals (also known as “beneficiaries”) who may have petitions filed on their behalf under the H-1B classification:
The main requirements to be eligible for the H-1B classification are:
The foreign national must have an “employer-employee” relationship with the petitioning U.S. employer (also known as the “petitioner”). This means the petitioner must generally have the right to hire, pay, fire, supervise, or otherwise control the work of the beneficiary.
The foreign national must be coming to the U.S. to perform services in a “specialty occupation.” This means an occupation that requires:
The employer must pay the foreign national at least the “actual wage” or “prevailing wage” for the occupation, whichever is higher. These are:
The foreign national must meet the minimum educational and/or experience requirements for the specialty occupation position. This means the employer must demonstrate that the foreign national holds the required bachelor’s degree (or higher degree), or has sufficient relevant experience equivalent to the minimum educational requirements for the specialty occupation position, and is otherwise qualified for the specialty occupation position.
The H-1B classification is limited to an annual cap of 85,000 new visas in each fiscal year. This includes 20,000 H-1B visas set aside for foreign nationals who obtained a master’s degree from a U.S. university. New H-1B visas become available each year on October 1, which is the start of the government’s fiscal year. Because the demand for new H-1B visas is often higher than the available 85,000, U.S. Citizenship and Immigration Services (USCIS) conducts a lottery in March of each year to select which U.S. employers may petition for one of the new H-1B visas that will be available the following October.
Check out BAL’s analysis of the FY 2024 H-1B cap registration and selection numbers for fiscal years 2021-2024.
Check out BAL’s latest H-1B Cap Post-Lottery podcast episode!
H-1B classification may be granted in increments of up to three years at a time and extended in increments of up to three years at a time. Extensions can be initiated up to six months prior to the expiration of H-1B status.
In general, a foreign national may hold the H-1B classification for a maximum of six years. Time spent in H-1B, L-1A, and L-1B classifications are counted together toward the applicable maximum.
After reaching six years in H-1B classification, the foreign national may:
There are exceptions that allow extension of a foreign national’s H-1B classification beyond the six-year maximum, but the foreign national must:
Obtaining H-1B classification requires a number of steps:
Premium processing is an optional service offered by U.S. Citizenship and Immigration Services (USCIS) that provides expedited processing for certain Forms I-129 (Petition for a Nonimmigrant Worker) and Forms I-140 (Immigrant Petition for Alien Worker). In most cases, premium processing for Form I-129 petitions for the H-1B classification guarantees processing by USCIS within 15 calendar days for an additional fee. If USCIS does not take action on the Form I-129 within the 15 calendar days after it receives the request for premium processing, USCIS will refund the additional fee and will continue with expedited processing.
If a registration is selected in the lottery, there are two options for filing the H-1B petition during the 90-day filing window, depending on where the foreign national is when the petition is filed and how the foreign national plans to activate the H-1B status after the petition is approved.
Change of Status: If currently in the U.S. and in another valid status (e.g., F-1, L-1) at least until October 1, we can file the H-1B cap petition as a “change of status” petition, meaning that the H-1B status will automatically take effect on October 1, or on the date the petition is approved, whichever date is later. If the foreign national is currently in the U.S. in F-1 status — including an Optional Practical Training (OPT) or STEM extension — but their status will expire before October 1, they may be eligible for a cap gap extension of their F-1 status to that date.
Consular Notification: However, if the foreign national is not in the U.S. at the time the H-1B petition is filed, does not have another status valid until October 1, or if other situations (explained below) apply, the H-1B petition is filed as a “consular notification” petition. In this situation, in order to activate H-1B status after the H-1B petition is approved, the foreign national will need to enter the U.S. with the H-1B approval notice from USCIS and a valid H-1B visa stamp in their passport. The foreign national will need to obtain an H-1B visa at a U.S. embassy or consulate while outside the U.S. H-1B status will take effect after the foreign national obtains the H-1B visa and uses it and the H-1B approval notice to enter the U.S. If in the U.S. when the H-1B petition is approved, the foreign national will need to leave the U.S. and re-enter with their H-1B approval notice after receiving their H-1B visa from the U.S. embassy or consulate. Note that Canadian citizens are exempt from the visa requirement and can activate their H-1B status by entering the U.S. with the H-1B approval notice. The earliest the foreign national can enter the U.S. to activate H-1B status is ten days before the starting validity date on the H-1B approval notice.
If a foreign national’s case is filed as a change of status, H-1B status will automatically take effect on October 1, 2023, or on the date the petition is approved, whichever date is later. If the case is filed as a consular notification, H- 1B status will take effect after the foreign national activates H-1B status by entering the U.S. with their H-1B visa and H-1B approval notice. As a reminder, Canadians are visa exempt and do not have to apply for a visa at a U.S. embassy or consulate. To activate their H-1B status, they can show their H-1B approval notice to a Customs and Border Protection officer when entering the U.S.
If a foreign national’s H-1B petition is a change of status, he or she does not have to travel to activate H-1B status. If the H-1B petition is a consular notification, the foreign national must obtain an H-1B visa at a U.S. embassy or consulate (unless Canadian) and then travel to the U.S. to be admitted to the U.S. in H-1B status.
Foreign nationals will need to bring the original H-1B approval notice and a copy of the H-1B petition. In addition, foreign nationals will need to review the U.S. embassy or consulate’s website to learn what specific documentation is required, as every U.S. embassy or consulate has different application procedures and requirements.
Spouses and unmarried children under the age of 21 may obtain H-4 classification based on their family relationship to the H-1B workers.
Do you need BAL to file H-1Bs for your employees/organization? Click here to to contact us so we can help.
This alert has been provided by the BAL U.S. Practice Group.