After The Cap: Exploring Alternatives To The H-1B

Wednesday, March 19, 2014 - 13:01

Welcome to H-1B cap season. On April 1, 2014, United States Citizenship and Immigration Services (USCIS) will begin accepting new H-1B petitions for employment of foreign professionals in fiscal year 2015, which begins October 1, 2014. The H-1B – one of the principal temporary work visas for foreign nationals with a bachelor’s degree or higher – is subject to an annual limit of 85,000, including 20,000 quota numbers reserved for holders of U.S. master’s degrees. Last year, the cap was reached within a few days after the opening of the filing period, when USCIS received approximately 124,000 petitions for the 85,000 available slots. This year, the number of filings is expected to be even higher (maybe even double the 85,000), which means that USCIS will conduct a random lottery to determine which petitions will be adjudicated and which will be rejected. In addition to highlighting a glaring deficiency in U.S. immigration law, the stringent limits of the cap create problems for many U.S. employers seeking to bring top foreign nationals on board. Unfortunately, rejection based on the oversubscribed cap will be the end of the line for some, at least for the next fiscal year, but for others there may be alternative pathways to work visa status. This article lays out several options for U.S. employers caught on the wrong side of the cap.

Cap-Exempt H-1Bs

As a preliminary matter, before an employer commits to filing a cap-subject petition, it should first explore whether a foreign job candidate may be exempt from the cap. The annual cap applies only to new H-1B petitions. Consequently, employers are free to make lateral hires of foreign nationals who currently hold H-1B status through other employers as such people are considered “cap-exempt.” Similarly, current H-1B employees can extend their status for up to six years (or more in some cases) without the need to win a cap number. Additionally, beneficiaries who are not currently employed in the U.S. but have previously held H-1B status for less than the statutory maximum are also cap-exempt, and may be re-admitted upon approval of a new H-1B petition for the remainder of their six-year period.

Another distinct class of cap-exempt H-1Bs is for foreign nationals to be employed at an institution of higher education or an affiliated nonprofit organization, a nonprofit research organization, or a governmental research organization. Although this exemption will generally not apply to for-profit companies, there is a provision that affords cap-exempt H-1Bs to researchers employed by for-profit companies but detailed to nonprofits or other qualifying entities. Under this provision, an H-1B employee of a for-profit company can achieve cap-exempt status if the employee’s work also directly benefits a qualifying cap-exempt institution. For example, a for-profit company and a university may enter into a research partnership where the company hires a cap-exempt H-1B researcher to work onsite at the university for the mutual benefit of both entities.          

Intracompany Transferees And Individuals Of Extraordinary Ability

The L-1 category, which allows multinational companies to transfer employees who have been working abroad at affiliated entities for over a year to offices in the United States, may be available to qualified foreign nationals who are foreclosed by the cap. The L-1A visa provides for the transfer of managerial or executive employees, while the L-1B is for employees with specialized knowledge. As there is no cap limitation for the L category, this is often the best option for employers seeking to hire foreign nationals that are currently employed abroad. However, employers must be prepared for government scrutiny of these cases, as the denial rate has recently reached new heights. Once the cap is reached for the fiscal year, USCIS and the State Department are on high alert for cases that don’t meet the stringent L-1 standards. 

If an employee is especially accomplished in business or another field, as evinced by special awards or acclaim, the uncapped O-1 category for individuals of extraordinary ability or achievement may also be an option. While the O-1 is often used by entertainers and professional athletes, it is equally available to engineers, business people, and other professionals who have been recognized for their extraordinary accomplishments in their field.   

Free Trade Visas

Certain visa categories are available only to foreign nationals of specific countries based on international trade treaties. The TN, E3, and H-1B1 are among the free trade visas that carry requirements and privileges similar to the H-1B. The TN category is for degreed professionals from either Canada or Mexico, and is not subject to the cap. There is also the H-1B1 category, for specialty occupation workers from Chile and Singapore, capped at 6,800 per fiscal year, and the E-3 for professionals from Australia, capped at 10,500.

Separately, if the employer is a national of a country that maintains a treaty of commerce with the United States, and has invested a substantial amount of capital in a U.S. company, the E-1 or E-2 treaty investor and trader categories may be available to foreign employees of the same nationality.

Foreign Graduates Of U.S. Universities

If the desired employee is a current or recent F-1 student at a U.S. institution, another possible alternative is to seek employment for him or her pursuant to the built-in Optional Practical Training (OPT) period. OPT allows an F-1 visa holder to work for up to one year, including post-graduation, in a job related to his or her field of study. A 17-month extension of OPT is available to foreign nationals whose most recent degree is in a science, technology, engineering, or math field designated by the government. To benefit from this extension, an F-1 STEM OPT employer must be registered in E-Verify, the federal government’s employment eligibility verification system.

Conclusion

While this list is by no means exhaustive, it should serve as a broad depiction of the many visa options available to U.S. employers after the H-1B cap is reached. If your organization’s H-1B hiring needs can’t be met because of the cap, do not throw in the towel until all alternatives are explored.

Michael D. Patrick is a Partner at Fragomen, Del Rey, Bernsen & Loewy, LLP, resident in its New York office. He may be contacted via email at mpatrick@fragomen.com. Alexander O’Sullivan-Pierce, a Law Clerk, and Nancy Morowitz, Counsel at the firm, assisted in the preparation of this column. To learn more about Fragomen, please visit http://www.fragomen.com.