Ways to Avoid the H1-B Cap

The latest figures from the US Citizenship and Immigration Services (USCIS) indicate that cap-subject H-1B cases filed for Fiscal Year 2008 reached more than 119,000, or about twice the available H-1B numbers for FY 2008. The H-1B numbers will be available when FY 2008 begins on October 1, 2007, but the filing period opened six months prior on April 1, 2007.

This unprecedented H-1B “cap-out” has fueled calls for a major overhaul of the nonimmigrant worker system, particularly, the issue of setting numerical limits.

Proposals ranged from removing the numerical limit for H-1Bs altogether (as suggested by Microsoft chief Bill Gates), or a market-driven limit adjusted on a yearly basis. Whichever way the H-1B reform goes, the 65,000 annual cap is definitely unrealistic.

Background

Ever since the annual H-1B cap reverted to 65,000 in FY 2004, the demand for H-1B numbers has only grown progressively worse over the years. For FY 2007, the H-1B numbers were exhausted by May or in less than two months into the H-1B filing period.

Out of the 65,000 annual cap, 6,800 have been carved out for Chilean and Singaporean nationals who are seeking H-1Bs pursuant to the US-Chile and US-Singapore Free Trade Agreements. In effect, there are only about 58,200 H-1B numbers under the regular cap.

Since the 6,800 carve-out for Chilean and Singaporean nationals are rarely used up, some H-1B relief is obtained when these unused numbers are recaptured and used to process cap-subject H-1B cases.

Cap Procedure

Cap-subject petitions that have been received on April 2 and 3, 2007 will undergo a computer-generated random selection process. Those petitions that have not been selected as well as petitions that were received by the USCIS on or after April 4, 2007 will be returned together with the filing fee.

With respect to H-1B petitions that my office has filed, it is interesting to note the caveat on the Receipt Notices from the USCIS which essentially read that such Notices are not even evidence that (the) case/s are still pending.

Clearly, the unrealistic numerical limit on H-1Bs per year is adversely affecting US businesses which need to stay globally competitive by attracting top professionals and skilled workers. The “random selection process” demonstrates how the ability of US business to be competitive is already a question of chance rather than a matter for rational and responsive policy-making on the part of the US Congress.

What must a US employer do to improve its access to professional and skilled labor resources?

Advanced Degree Cap

One way to avoid the “cap-out” is tapping on the so-called Advanced Degree Cap.

The latest USCIS figures indicate that it has received 12,989 advanced degree H-1B cases  so far. This means the Advanced Degree Cap is still open and prospective employers of qualified foreign workers may still submit their H-1B petitions.

Although the Advanced Degree Cap is by no means the solution to the chronic lack of H-1B numbers, the Advanced Degree Cap has eased the severe demand for H-1Bs and enabled thousands of US employers to hire first-rate foreign workers.

Under the H-1B Visa Reform Act of 2004, Congress mandated the addition of 20,000 H-1B numbers for foreign workers who have obtained their advanced degrees from US colleges and universities.

Thus, foreign workers who have master’s degrees or Ph.Ds from US colleges and universities need not rely on the regular H-1B visa cap. On the other hand, US employers need not even prove that the job requires an advanced degree as the statute and regulation simply specifies that the 20,000 additional visa numbers should go to advanced degree holders.

It is worth noting that based on USCIS reports, the Advanced Degree Exemption Cap for FY 2007 was exhausted by July 2006 or about three (3) months even before the fiscal year began on October 1, 2007. This underscores the need for F-1s on optional practical training to plan ahead as the Advanced Degree Cap runs out relatively fast as well.

US Employer is Cap-Exempt

US businesses may also utilize barely-noticed provisions in the rules that could exempt them from the H-1B cap.

Two factors come into play in determining whether an H-1B petition is cap exempt or not: first, the nature of the employer and second, where the H-1B beneficiary will render his/ her services.

Under H-1B regulations the numerical cap does not apply if the employer is either of the following: (a) an institution of higher learning; (b) a nonprofit entity related or affiliated with an institution of higher learning; (c) nonprofit research organization; or (d) governmental research organization.

An “institution of higher learning” is an educational institution that meets the following requirements: first, it admits high school graduates only; second, it is legally authorized to provide a program of education beyond high school; third, it provides a bachelor’s degree program or at least a 2-year program that can be credited toward a bachelor’s degree; fourth it is a public or other nonprofit institution and lastly, it is accredited or pre-accredited by a nationally-recognized accrediting agency.

To prove that it is an “affiliated entity” a prospective US employer must present proof of “shared ownership or control by the same board or federation operated by an institution of higher education.” Such employer may also present evidence of its attachment to the institution of higher education as a “member, branch, cooperative or subsidiary.”

A nonprofit research organization must be “primarily engaged in basic research and / or applied research.” In a similar vein a governmental research organization is a “United States Government entity whose primary mission is the performance or promotion of basic research and/or applied research.”

The second factor that comes to play is whether the beneficiary will be “employed (or has received an offer of employment) at” the entities described above. Many employers question whether this casts a wider net of qualification than if the alien was to be “employed by” such entities.

According to a USCIS memo, Congress intended to extend cap-exemption to aliens who are to be employed “at” a qualifying institution from the cap. In other words, the qualifying institution need not be the direct employer of the alien beneficiary. But the duties of the foreign worker must “directly and predominately further” the primary purpose of the qualifying institution.

Foreign Worker Not Covered by Cap

Certain foreign workers are no longer counted towards the H-1B cap so that petitions on their behalf  may be processed by the USCIS.

These petitions include those filed for an extension of H-1B status; those that change the terms of employment of an existing foreign worker with the same US employer; those filed for H-1B workers who are transferring to another US employer; and finally those filed for current H-1B workers for a second H-1B position.