It’s That Time of the Year Again – Start Preparing for the H-1B Cap!

Seyfarth Synopsis: Employers should identify as soon as possible any current employees and employment candidates who may require H-1B work permit sponsorship before October 1, 2021, given that it is anticipated USCIS will again receive H-1B registrations far in excess of the annual quota, resulting in a random lottery-type selection process.

This Legal Update is intended to enable employers to identify any current employees and employment candidates who may require H-1B work permit sponsorship before October 1, 2021. We recommend that employers identify any such candidates as soon as possible.

In last year’s H-1B cap (FY 2021), USCIS implemented an electronic registration system for all cap-subject H-1B petitions. The initial registration period ran run from March 1, 2020 until March 20, 2020, followed by a lottery, and then a 90-day filing window for selected registrants. It is expected that USCIS will implement the electronic registration period for this year’s cap (FY 2022). Employers should be prepared to submit critical data points associated with each H-1B petition during this 20-day electronic registration period.

Background

There is an annual limit on the number of H-1B petitions that USCIS can approve during the government's 2022 fiscal year (beginning October 1, 2021 and ending September 30, 2022). The H-1B cap for fiscal year 2022 is 65,000 (of which about 6,800 are reserved for nationals of Chile and Singapore under Free Trade Agreements with those countries). It is anticipated that USCIS may begin accepting petitions for FY 2022 as early as April 1, 2021.

There is an additional quota of 20,000 H-1Bs reserved for persons holding a master's degree (or higher) awarded by an accredited college or university in the United States. To be eligible for the "master's cap," the employee must have completed a master's degree (or higher) awarded by a public or not-for-profit U.S. institution prior to the filing date. Both the regular cap and the master's cap were exhausted last year during the electronic registration.

If USCIS receives more than 65,000 registrations to meet the standard cap and 20,000 H-1B registrations towards the so-called master's cap, the Service will conduct two separate lotteries to identify the cap registration winners. USCIS will first apply the random selection process to all cap registrations received to identify the initial 65,000 winners. Any master's cap registrations not selected in the first lottery will be eligible for selection in a separate H-1B master’s cap lottery, effectively being granted two opportunities at H-1B status.

Anticipated Unavailability of H-1B Work Permits Means Preparing Early

USCIS received approximately 275,000 electronic cap registrations last year resulting in a 31% chance of selection overall,   with materially higher mathematical odds for U.S. advanced degree holders. We do not know how quickly the H-1B numbers will be exhausted this year, but the most conservative strategy is to assume that the H-1B numbers will be unavailable after the initial registration period. Once the H-1B numbers are exhausted, new H-1B work permits will not be available until October 1, 2022.

Electronic Registration Process

USCIS changed how it implemented the H-1B lottery process last year, requiring employers to register cap cases electronically. The electronic registration period ran from March 1, 2020 to March 20, 2020.  USCIS notified employers confirming which cap cases were selected by March 31, 2020.  Employers then filed H-1B petitions for the selected cap registrations between April 1, 2020 and June 30, 2020. Prior to the electronic registration, employers prepared entire H-1B petitions to file on April 1st of each year and then awaited confirmation from USCIS to determine if the H-1B petition was selected, frequently taking several months to receive confirmation.

Although USCIS has not confirmed if it will implement the electronic registration for the upcoming H-1B cap filing season, it is expected that the electronic registration process will continue this year. However, USCIS has the discretion to suspend the registration process at any time if it determines that the registration process is inoperable for any reason.

Presuming the electronic registration will operate this year, the process should closely mirror last year’s process. If so, employers will be required to electronically submit critical data points related to the employer and the beneficiary. This electronic registration process is expected to be in effect from March 1, 2021 until March 20, 2021 for a fee of $10.00 per registered beneficiary. USCIS will run all electronic registrations through a randomized electronic lottery system and certify which petitions may be filed with USCIS.

Deferred registrations may remain pending in the system for the rest of the applicable fiscal year in case USCIS needs to select additional registrations, as it did last year. Upon electronic certification, an employer will have 90 days to file a cap-subject H-1B petition for the specified beneficiary.

Persons Affected

Employers should consider filing H-1B petitions for any current employees who hold F-1 student status and who will thus need H-1B status to continue working once their F-1 Employment Authorization (known as Optional Practical Training or "OPT") expires. In addition, any pending hires should be assessed to determine whether an H-1B will be required for eventual continued employment, including those in J-1 academic programs with limited practical training time as well as those who currently reside outside the United States without any other employment authorization options. Further, any current employees who hold TN, E-3, or L-1 status and who are beginning the green card process may need to convert to H-1B status.

Exceptions

With some exceptions, current H-1B workers are not subject to the annual cap. Non-cap cases include H-1B workers extending their status, changing from one H-1B employer to another, changing the terms of existing H-1B employment, or filing for a second (concurrent) H-1B position.  In addition, foreign nationals seeking to work for an institution of higher education, for a related or affiliated nonprofit entity, or for a nonprofit research organization or a government research organization are not subject to the H-1B cap.

Alternatives to the H-1B Work Permit

In some cases, there may be alternatives to the H-1B work permit. If an affected employee falls into one of the following categories, that employee may not need to file for an H-1B work permit pursuant to the cap:

• Citizens of Canada or Mexico who are eligible for a TN visa. Please note, however, that not all H-1B-eligible Canadian or Mexican employees will qualify for TN status. 
• Citizens of Australia, Chile, or Singapore.
• The spouse of an L, E, or H-1B work permit holder, who is eligible for spousal employment authorization (EAD).
• J-1 nonimmigrants who have at least 18 months of academic training available as of April 1, 2021.
• With limited exceptions, H-1B employees who have held H-1B status at any time with a cap-subject employer.
• A foreign national who is married to a U.S. citizen and has received or will receive an Employment Authorization Document in connection with the pending green card process.
• Certain other foreign nationals who may qualify for O, E, or L visas.

Although an employee may fall into one of the aforementioned categories, there may be reasons why employers should file a cap-subject petition on an employee’s behalf. As such, please contact your Seyfarth representative to determine if you should register an individual listed in one of these categories.

Conclusion

Employers should act now to identify and begin H-1B processing for candidates or current employees who require H-1B sponsorship. If an employer misses the registration period or filing deadline for an employee who requires H-1B sponsorship, the employee can lose legal status in the United States, including permission to work. Seyfarth is continuing to monitor for announcements and updates related to the H-1B electronic registration process and will publish updates to this alert accordingly.