March 31, 2011

Preparing for the New Fiscal Year and the H-1B CAP- Changing Trends

Members of the business community and immigration practitioners know that in the past if you wanted an H-1B cap-subject filing accepted while numbers remain available, the petition needed to be received by USCIS on April 1st.  This limit applies only to new H-1B visa numbers for foreign nationals who have not held H-1B status.  It also applies to foreign nationals who are in H-1B status but whose H-1B sponsor is currently an exempt organization (university, nonprofit research organization, etc.).  Since the available numbers dropped to 65,000 in 2003, each year there was a mad rush to mail the case on March 31st and then a "wait and see" calm after the storm during which time USCIS issues a receipt notice to those lucky petitions chosen after a computer-generated random selection or "lottery" process has been completed.   This scenario is changing with the changes in the economy, increased scrutiny of the program and increased costs of using the program.

Due to the economic downturn in 2008, H-1B numbers have generally remained available well beyond April.  Use of the H-1B program by U.S. employers is dictated by the true demand in the marketplace.  A look back to the final date the cap has been reached since 2006 supports this notion.  In addition, the cost of filing an H-1B petition with USCIS  is increasing.  The government agency filing fees can easily exceed $2000  for regular processing  which does not include the $1225 fee for an optional USCIS premium processing service nor a $2000 fee if your company is subject to Public Law 111-230 which requires this additional fee if the employer employees more than 50 workers in the U.S. with more than 50%  of their employees in the U.S. in H-1B, L-1A or L-1B status USCIS - USCIS Implements H-1B and L-1 Fee Increase According to Public Law 111-230 . As depicted in the chart below, the number of new H-1B petitions filed over the preceding five fiscal years reflects  a trend - U.S. employers are not using the H-1B program to the extent we saw a decade ago. 

Where does this leave us for FY2012 now that the economy is technically out of a recession with a sluggish recovery? Most agree there should not be any significant changes to what occurred last year. It is expected that there should be a healthy number of filings this year with the cap being exhausted slightly earlier as reflection of improvements in the U.S. and global economy.  In 2005, USCIS instituted a lottery system  where all petitions USCIS receives on the "final receipt" date are subject to a computer-generated random selection. Those not selected are returned. It is also helpful to keep in mind that pursuant to an Interim Rule published in 2008 if the cap is exhausted within the first five business days, the lottery is run for all petitions received during that five-day period as opposed to the previous rule which included only the first two days USCIS - USCIS Announces Interim Rule on H-1B Visas: Rule Modifies Selection Process and Prohibits Multiple Filings.

USCIS's efforts to streamline the process and cap filings continues. On March 2, 2011 the Agency  announced a Proposed H-1B Electronic Registration System USCIS - USCIS Announces Proposed H-1B Electronic Registration System to Reduce Costs for U.S. Businesses to take effect FY2013. This system would require the U.S. employer to first complete an electronic registration process and only once selected the employer would then be able to file the petition. This period of registration and selection would end once the cap is reached. USCIS projects this change in filing procedure will save in excess of $23 million over the next 10 years and will make the H-1B cap season more efficient and cost-effective. Issues of how this new system will impact smaller employers, lack of clarity regarding the system itself as well as the negative implication of adding another bureaucratic layer to a program that most U.S. employers already struggle to navigate are being raised during the comment period available through May 2, 2011. 

As a reminder, the H-1B cap provides 65,000 numbers each fiscal year of which the first 20,000 H-1B petitions filed for beneficiaries who possess a U.S. Master's degree or higher are exempt. Other H-1B filings that are exempt from the cap include beneficiaries who will work at: Institutions of higher education or related or affiliated nonprofit entities USCIS - H-1B Cap Exemptions Based on Relation or Affiliation; Nonprofit research organizations; or Governmental research organizations. In addition, beneficiaries who will work only in  Guam or the Commonwealth of the Northern Mariana Islands are also exempt through December 31, 2014.   H-1B workers who have already been counted against the cap who seek concurrent employment, amendments or extensions of stay to their status are also not counted.

For those who are in the U.S. as students in F-1 status, some existing provisions provide additional benefits.  Specifically, the "cap gap" provisions continue to provide temporary employment authorization to certain F-1 students who are in an approved period of post-completion Optional Practical Training (OPT) as well as STEM OPT Extensions USCIS - Extension of Post-Completion Optional Practical Training (OPT) and F-1 Status for Eligible Students under the H-1B Cap-Gap Regulations[.

GTLAW will continue to monitor the H-1B program and provide updates as the new cap season begins.