Proposed Rulemaking on H-1B Modernization

On October 23, 2023, the Department of Homeland Security (DHS) issued its long-anticipated notice of proposed rulemaking on modernizing the H-1B program. The purpose is to amend regulations governing H–1B specialty occupation workers to modernize and improve the efficiency of the H–1B program, add benefits and flexibilities, and improve integrity measures. 

In terms of next steps, DHS will accept comments to the proposed rule until December 19, 2023. After this period, DHS will then issue one or more final rules before any of these proposed changes can be implemented. We expect DHS to first focus on proposed changes to the H-1B cap registration process, which might be accomplished in a separate final rule in advance of the fiscal year 2025 H-1B cap season.

Seyfarth will have more information and analysis once the final rules are published in the upcoming months. For now, the below provides a high-level summary of the proposed regulations:

Modernization and Efficiencies

• Amending the Definition of a “Specialty Occupation”
  DHS proposes to amend the definition of a “specialty occupation.” The proposal is to add language to the specialty occupation definition that would codify existing USCIS practice that there must be a direct relationship between the required degree field(s) and the duties of the position; there may be more than one acceptable degree field for a specialty occupation; and that a general degree without specialization (e.g., liberal arts and some business administration programs) is insufficient for a specialty occupation.  

• Amending the Criteria for Specialty Occupation Positions
  For the first criterion on whether a bachelor’s degree is normally required for the position, DHS proposes to clarify that “normally” does not mean “always.”
  
  The proposed rule would also add requirements for the placement of H-1B workers at third-party worksites.  In a departure from current USCIS practice, the proposed rule would require USCIS to determine whether the role qualifies as a specialty occupation based on the requirements of the third-party employer’s requirements, rather than the H-1B petitioner’s requirements.  

• Amended Petitions
  DHS proposes to clarify when an amended or new petition must be filed due to a change in an H-1B worker’s place of employment. In short, DHS proposes to formally codify the existing policy guidance where a change to a new job location within the same area of intended employment does not require an H-1B amendment, assuming there are no other material changes. However, a change in worksite location outside the area of intended employment will require an H-1B amendment to be filed prior to the relocation.

• Deference
  DHS proposes to codify its current practice of deferring to previously approved petitions, unless there are material changes or the previous approval was clearly erroneous.
• Evidence of Maintenance of Status
  DHS proposes to update the regulations to require evidence of maintenance of status if a beneficiary is seeking an extension or amendment of stay. This would apply to all nonimmigrants filing Form I-129, and not only H-1B petitions.
• Eliminating the Itinerary Requirement for H Programs
  DHS proposes to eliminate the itinerary requirement for H-1B petitions with more than one work location.
• Validity Expires Before Adjudication
  DHS proposes to allow H-1B petitions to be approved or have their requested validity dates extended if USCIS approves the petition after the initially requested validity period end-date, or the period for which eligibility has been established has passed. This would most likely happen in the context of a motion to reopen, reconsider, or an appeal.

Benefits and Flexibilities

• H-1B Cap Exemptions 
  DHS proposes to modernize the definition of a nonprofit research entity for cap exempt H-1B petitions. The goal is to permit a nonprofit entity or governmental research organization that conducts research as a “fundamental activity” to meet the definition of a nonprofit research entity.  The current standard requires a nonprofit or government research organization to demonstrate that the entity is “primarily engaged” in research or where research is a “primary mission.”
  
  DHS also proposes to revise certain requirements to qualify for H–1B cap exemption when a beneficiary is not directly employed by a cap exempt employer but provides services to a cap exempt organization.

• Automatic Extension of Cap-Gap Authorized Employment
  DHS proposes to expand the cap-gap protections until April 1^stof the fiscal year for which H-1B status is being requested. Currently, the cap-gap automatic extension is only valid until October 1st of the fiscal year. This will benefit more F-1 students and provide greater protections, especially for those selected in later rounds of the cap H-1B lottery.

• Start Date Flexibility for Certain H-1B Cap-Subject Petitions. 
  DHS proposes to codify the current USCIS practice of permitting a cap petition start date of October 1st or later, if the requested petition start date does not exceed six months beyond the filing date of the cap subject petition.

Program Integrity 

The H-1B Cap Registration System

• Beneficiary-Centric Registration
  DHS proposes to shift the process from selecting cap lottery winners by each unique registration, to selecting by unique beneficiary. Each individual who has a registration submitted on their behalf by a company would be entered into the selection process once, regardless of the number of registrations filed on their behalf from multiple employers. DHS hopes to implement this change by the next cap lottery.

• Bar on Multiple Registrations Submitted by Related Entities
  DHS proposes to prohibit “related entities” from submitting multiple registrations for the same individual.
• Registrations with False Information or That are Otherwise Invalid 
  DHS proposes to codify USCIS’s ability to deny an H-1B or revoke the approval when the petition is based on a registration containing untrue, inaccurate, fraudulent, or materially misrepresented facts. The goal is to eliminate loopholes certain companies have used to game the system. 

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

• Contracts
  DHS proposes to codify its authority to request contracts, work orders, or similar evidence for H-1B petitions. DHS clarifies that it does not intend to limit validity periods based on end-dates of contracts or work orders.
• LCA Corresponds with the Petition
  DHS proposes to update the regulations to permit USCIS to evaluate whether the information on the LCA such as SOC Code, wage level, and location of employment aligns with the position and the H-1B petition. 
• Employer-employee relationship
  DHS proposes to remove from the definition of U.S. employer the reference to an employer-employee relationship, which, in the past, was interpreted using common law principles and was a barrier for beneficiary-owned petitioners.
• Bona fide Job Offer
  DHS proposes to codify the existing requirement that the petitioner have a bona fide job offer for the beneficiary to work within the United States. The bona fide job offer may include “telework, remote work, or other off-site work within the United States.”
• Site Visits
  DHS proposes to codify USCIS’s authority to conduct site visits for H-1B workers and to clarify that refusal to comply with site visits may result in denial or revocation of the petition.