The H-1B visa program is one of the most popular ways for U.S. employers to hire foreign professionals in specialty occupations. However, every year, the program is limited by an annual “cap” that restricts the number of new H-1B visas available. This cap has created uncertainty and fierce competition for employers and workers alike.

Fortunately, there is an important exception: H-1B cap-exempt employers. These employers are not subject to the annual lottery and can file H-1B petitions year-round. For many foreign nationals, securing a job with a cap-exempt employer can mean the difference between being stuck in the lottery system and having a stable pathway to live and work in the United States.

In this article, we will break down what H-1B cap-exempt employers are, which organizations qualify, how beneficiaries can take advantage of this category, and the practical steps to demonstrate eligibility.

What Does “Cap-Exempt” Mean?

Under U.S. immigration law, the H-1B visa is capped at 85,000 new approvals each fiscal year (65,000 under the “regular cap” and 20,000 under the “master’s cap” for U.S. advanced degree holders). Because the demand is much higher than the supply, U.S. Citizenship and Immigration Services (USCIS) runs a lottery to determine who may even file an H-1B petition.

However, some employers are considered cap-exempt. This means that petitions they file do not count against the annual quota. These employers can hire foreign nationals without being subject to the lottery, and they can file petitions at any time during the year.

Which Employers Are Cap-Exempt?

The Immigration and Nationality Act (INA) and regulations carve out certain categories of employers as exempt from the H-1B cap. Generally, these include:

1. Institutions of Higher Education

• These are accredited U.S. colleges and universities that award bachelor’s, master’s, or doctoral degrees.
• Examples: Harvard University, University of Texas, or a local community college offering accredited degree programs.

2. Nonprofit Entities Related to or Affiliated with Institutions of Higher Education

• Nonprofit organizations that are closely connected to universities qualify.
• The relationship may be through ownership, control, or formal affiliation agreements.
• Example: A nonprofit medical research foundation operated by and affiliated with a university medical school.

3. Nonprofit Research Organizations

• These are nonprofits that primarily conduct scientific or medical research.
• They do not need to be tied to a university, but their primary purpose must be research.
• Example: A nonprofit laboratory focused on cancer research.

4. Governmental Research Organizations

• U.S. government agencies or units that conduct research also qualify.
• This can include federal, state, or local government research labs.
• Example: A state government’s agricultural research center.

What Counts as a “Nonprofit” for H-1B Purposes?

Not every nonprofit is automatically cap-exempt. To qualify, the nonprofit organization must usually:

• Be tax-exempt under section 501(c)(3) of the Internal Revenue Code; and
• Demonstrate its connection to higher education or research activities.

This distinction is important. For instance, a nonprofit that provides social services or advocacy may not qualify unless it is formally affiliated with a university.

How Beneficiaries Can Qualify for Cap-Exempt H-1B

Simply working for an organization that is cap-exempt is not always enough. USCIS requires that the beneficiary’s job duties directly further the mission or activities of the cap-exempt employer.

Here are the main pathways:

1. Direct Employment with a Cap-Exempt Employer

• If the beneficiary is hired directly by a university, nonprofit research entity, or governmental research organization, the petition is cap-exempt.
• Example: A postdoctoral researcher employed by a university’s engineering department.

2. Employment at a Cap-Exempt Location through a Third-Party

• In some cases, a beneficiary may be employed by a private (cap-subject) company but perform the majority of their work at a cap-exempt institution in a way that directly supports the institution’s mission.
• USCIS requires proof of this arrangement, such as contracts, letters of support, and documentation of job duties.
• Example: A data analyst employed by a private vendor but stationed full-time at a university research lab to support federally funded studies.

3. “Concurrent” Employment

• A beneficiary may hold two H-1B jobs: one with a cap-exempt employer and another with a cap-subject employer.
• If the cap-exempt petition is approved first, the concurrent employment with the private employer may also qualify without going through the lottery.
• Example: A professor works part-time at a university (cap-exempt) and also part-time at a private educational technology startup (cap-subject).

Evidence Required to Show Cap-Exemption

USCIS expects clear documentation proving both the employer’s status and the beneficiary’s role. Common supporting documents include:

• IRS tax-exempt determination letters (for nonprofits).
• Proof of accreditation (for universities).
• Organizational charts or bylaws showing the affiliation with higher education institutions.
• Employer support letters describing how the position directly furthers the organization’s mission.
• Contracts or agreements if the beneficiary works at a cap-exempt site but is paid by another employer.

Without strong evidence, USCIS may issue a Request for Evidence (RFE) or deny the petition.

Advantages of Cap-Exempt H-1B Employment

For beneficiaries, working with a cap-exempt employer offers several important advantages:

• No lottery risk: Petitions can be filed at any time.
• Year-round availability: No need to wait until April to file.
• Flexibility for career paths in academia or research.
• Pathway to permanent residency: Many cap-exempt employers are supportive of green card sponsorship.
• Concurrent employment option: Ability to combine work at both exempt and non-exempt organizations.

Common Pitfalls and Misunderstandings

While cap-exemption offers major benefits, there are common issues that lead to denials:

• Assuming all nonprofits qualify: Only those related to higher education or research generally count.
• Insufficient documentation of affiliation: A simple memorandum of understanding with a university may not be enough.
• Job duties not tied to mission: If the beneficiary’s work does not clearly support the exempt entity’s educational or research mission, USCIS may reject the claim.
• Changing jobs: Moving from a cap-exempt employer to a cap-subject employer may place the beneficiary back in the lottery unless the concurrent employment pathway is used.

Practical Example

Imagine Maria, a software engineer from Spain. She was not selected in the H-1B lottery with her private tech employer. Later, she receives an offer from a nonprofit medical research hospital affiliated with a university. Because the hospital is cap-exempt, the employer can file an H-1B petition for her at any time, bypassing the lottery.

Maria begins working at the hospital and, after one year, also receives a part-time offer from a health-tech company. Since she already has an approved H-1B with the cap-exempt hospital, her new concurrent H-1B for the tech company is also cap-exempt. This gives Maria the best of both worlds: stable employment at the hospital and industry experience at a private firm.

Conclusion

The H-1B cap-exempt category provides a critical opportunity for both employers and foreign professionals who want to avoid the uncertainty of the lottery. By understanding which employers qualify, how to structure employment, and what evidence is required, beneficiaries can strategically pursue career opportunities in the United States without being bound by the cap.

For foreign nationals who are serious about working in academia, research, or affiliated organizations, cap-exempt H-1B employment can be a reliable pathway to not only enter the U.S. workforce but also build long-term immigration options.

By: Felipe Jimenez

Felipe Jimenez is an Associate Attorney at Reddy Neumann Brown PC. He works in the Non-Immigrant Visa (NIV) Department where he assists clients through all phases of the non-immigrant visa process.

Reddy Neumann Brown PC has been serving the business community for over 20 years and is Houston’s largest immigration law firm focused solely on US. Employment-based immigration. We work with both employers and their employees, helping them navigate the immigration process quickly and cost-effectively.