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In the final days of the Biden Administration, the U.S. Department of Homeland Security (“DHS”) introduced a new Final Rule that revises certain eligibility requirements for the H-1B visa program, while providing clearer guidelines on which foreign workers may qualify for the highly sought-after H-1B specialty occupations in the United States. This Final Rule will go into effect on January 17, 2025, just before the incoming administration takes office on January 20.
While many of the “updates” in the Final Rule are nothing more than codifying existing best practices and adjudicative policies into law (likely in an effort to safeguard these practices and policies from future abuse), this Client Alert will address the most salient changes to the H-1B regulations, and provide direction on what actions can be taken by employers to take advantage of such changes going forward.
The following is an overview of the changes to the H-1B regulations:
1. A New Version Of Form I-129, Petition For Nonimmigrant Worker, For All Petitions Submitted On Or After January 17, 2025: Employers use the Form I-129 to file petitions seeking a variety of employment-based visa classifications, including H-1B, H-3, L-1, TN, O-1, O-2, E-1, and E-2, among others. While the new Form I-129 has not yet been released, it will become mandatory for petitions filed on or after January 17, 2025.
2. Majority Owners Of Businesses Are Now Eligible For H-1B Classification: While the USCIS has historically permitted flexibility to H-1B sponsored employees with a minority, non-controlling equity interest in a sponsoring entity, the Final Rule codifies the ability of business owners who possess a majority, controlling interest in the petitioning entity (a stake of 50% or more) to petition for themselves for H-1B classification. While the validity of the initial petition, and the first extension (including amendments), will be limited to 18 months. This is a major beneficial change in H-1B policy, which could ignite a spate of investment in startup and middle market companies in the United States, especially for countries like India and China, who do not have the E-2 Treaty Investor treaty with the United States.
3. F-1 to H-1B “Cap Gap” Extension Has Been Slightly Improved: The H-1B “Cap Gap” extension generally allows qualifying F-1 students who are selected in the H-1B lottery to extend their F-1 status and authorized period of post-completion OPT until the cap-subject H-1B becomes effective on October 1 of each fiscal year, so long as the sponsoring employer has timely filed the H-1B cap-subject petition and the student’s OPT is valid beyond the previous April 1 . This allows international students to continue working in the U.S. without interruption while waiting for their H-1B to be adjudicated. Under the Final Rule, the Cap Gap is now being extended through to the following April 1st, instead of October 1st which marks the beginning of the new fiscal year. This change will serve to eliminate the need for converting cap-subject cases filed with standard processing to premium processing (an additional USCIS filing fee of $2,805), if H-1B cap petition remains pending with standard processing beyond the previous end of the cap gap period of October 1.
4. Expansion of Eligibility For Employers To Qualify For H-1B Cap-Exempt Status: The language of the Final Rule may broaden the opportunities for more nonprofit and government research organizations to sponsor employees for cap-exempt H-1B classifications (thus not subject to the H-1B lottery). Specifically, the Final Rule revises the regulatory language by replacing the word “primary” with “fundamental” when describing the role of research within these organizations. It’s too early to tell, but this change could expand the reach of cap exempt H-1B workers to more nonprofit and government entities which conduct research as a core activity, even if research is not the main mission. Furthermore, the rule extends cap-exempt employment eligibility to beneficiaries who are not directly employed by a qualifying organization but instead spend at least half of their time supporting the objectives of a qualifying cap exempt organization, which includes arrangements where work can be hybrid or entirely remote.
5. Revising the Definition of Specialty Occupation: The new rules clarify that an employer may accept a range of qualifying degree fields for the H-1B position, but that the fields must logically connect to the duties of the position. A general degree, without further specialization, is insufficient.
The following adjudicative customs and existing best practices have been codified into law, so USCIS would be in violation of the regulation should the Service ignore such rules:
1. “Deference To Prior Determinations of Eligibility” Policy: On April 27, 2021, USCIS confirmed that it would again give deference to prior determinations of eligibility by an officer when adjudicating a request for an extension of petition validity for petitions filed on Form I-129. Under this policy, USCIS gave deference to prior determinations (approvals) when adjudicating extension requests involving the same parties and facts unless there was a material error, material change in circumstances or in eligibility, or new material information that adversely impacts the petitioner’s, applicant’s, or beneficiary’s eligibility. The Final Rule has codified this deference into the regulation, which should allow USCIS to process petitions for individuals who have previously been approved for not only an H-1B classification but also or for any other non-immigrant classification more quickly.
2. Unannounced USCIS FDNS Site Visits: The new Final Rule codifies USCIS authority to perform both in-person and electronic inspections to verify the accuracy of representations contained in any H-1B petition filed by a sponsoring employer. This authority includes the ability to inspect the work location of the sponsoring employer, as well as any third-party locations where an H-1B beneficiary may be assigned. Such authorization allows USCIS to conduct inspections at any point in the H-1B process, including for both pending and approved petitions. Additionally, the Final Rule clarifies that if USCIS is unable to verify the information in the petition, USCIS has the authority to deny or revoke the petition, as well as any other similar H-1B petitions submitted by the same employer or by multiple employers at specific worksites found to be in violation.
3. H-1B Third Party Placements: The Final Rule codifies the ability of USCIS to request contracts, work orders, or similar evidence to demonstrate the bona fide nature of offer of employment to the H-1B worker, and that the position offered at the third party location meets the H-1B definition of a specialty occupation. This language differs from that of the initial draft of the rule from 2023, which draft proposed to grant USCIS authority to request documentation on the terms and conditions of the beneficiary’s employment. If the H-1B worker will be staffed to a third party, the requirements of the third party’s role must meet the definition of specialty occupation.
While we do anticipate litigation over the subject matter and overall implementation of this new Final Rule, we will continue to monitor these issues and will provide you with more details on new changes as they become more definitive, and how these changes may impact sponsoring employers and foreign nationals in practice as these new changes go into effect.
For further information, please contact:
Anthony F. Siliato | Scott R. Malyk | Lin R. Walker | Stacey A. Simon
Meyner and Landis LLP
One Gateway Center, Suite 2500, Newark, New Jersey 07102
Asiliato@meyner.com | Smalyk@meyner.com | Lwalker@meyner.com | Ssimon@meyner.com
Disclaimer: The information contained herein is intended only for informational purposes and is not a substitute for legal advice. Further, reading this Client Alert in no way establishes an attorney/client relationship between you and Meyner and Landis LLP. Readers should consult legal counsel for definitive advice regarding the current law and regulations and how those apply to your unique situation within your organization.
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