Skip to Content
News

New Proposed Regulation: Modernizing H-1B Requirements, Providing Flexibility In The F-1 Program, And Program Improvements Affecting Other Nonimmigrant Workers

Today The Department of Homeland Security (DHS) and USCIS have proposed a new regulation to make changes to the H-1B program. It is important to note that this regulation is only proposed and is not effective until a comment period is over, DHS reviews and responds to the comments, and issues a final regulation. Comments for this regulation will be due by December 19 and can be made on the Federal Register and citing DHS Docket No. USCIS-2023-0005. The entire proposal is nearly 277 pages long, so this article seeks to provide a summary of what DHS is proposing, however, some of the data in the entire proposal is worth looking at. DHS notes that the purpose of this rule making is to modernize the H-1B program by streamlining the requirements of the H-1B program and improving program efficiency, providing greater benefits and flexibilities for petitioners and beneficiaries, and improving integrity measures. Again keep in mind, the final regulation may be very different from what we see proposed today. The bolded headers are to direct language from the proposed regulation so that individuals can do a document search for more details.  

A. Modernization and Efficiencies

1.Amending the Definition of a “Specialty Occupation”
USCIS notes it is proposing to revise the regulatory definition and standards for a “specialty occupation” top better align with the statutory definition of the term. Many of these changes are already USCIS policy, but they seek to codify it in regulation. First off, DHS is proposing that a position for which bachelor’s degree in a wide field of study or any field of study would be insufficient to be a specialty occupation. Petitioners will have to show that the degree field requirement is directly related to the position. 

However, DHS goes on to add that the direct relationship requirement should not be construed as requiring a “singular field of study.” For example, an electrical engineer could have a degree or electrical engineering or electronics engineering, and USCIS is codifying that multiple degrees could be required. However, if multiple degrees are presented, the petitioner has the burden of establishing how they each related to the position. 

As has long been USCIS practice, USCIS is seeking to create regulations that a position requiring a general degree, such as liberal arts or business administration, without further specialization, would not be satisfactory for a position to be a specialty occupation. This comes up a lot when company’s list “engineering” without any specialization as USCIS finds it is too broad. 

 2. Amending the Criteria for Specialty Occupation Positions
USCIS notes that the regulatory criteria currently require that a bachelor’s degree is “normally” required for the position. The proposed regulation seeks to define what “normally” means.” There have been past instances where adjudicators interpret “normally,” “common,” and “usually” to mean “always” and this regulation seeks to avoid the use of “always” in adjudication. 

USCIS is also proposing in this section that it would be replacing “entry into the position” with “entry into the occupation.” This would allow for some better analysis because if the occupation requires a bachelor’s degree for entry, then it follows that the position requires a degree into entry. This is a nuanced changed that could be allow more flexibility in analysis. For example, if the position doesn’t require a specific degree, but the occupation does, it could still be a specialty occupation. 

DHS also seeks to amend 8 C.F.R. 214.2(h)(4)(iii)(A)(2) by consolidating the second print into the fourth prong. This would be a streamlining of the analysis for specialty occupation. 

DHS also seeks to provide more clarity to the third prong about the employer requirement. They seek to amend it to say that the employer normally requires a “U.S. baccalaureate or higher degree in a directly related specific specialty, or its equivalent, for the position.” DHS says the additional phrase would enforce that the position must require a related specialty degree to perform the duties. Employers would not be able to meet this requirement with degrees as a proxy for generic set of skills or listing degrees that would not meet the standard. Petitioners would have to submit evidence of an established recruiting and hiring practice to establish this requirement.

Interestingly, USCIS seeks to add “or a third party of the beneficiary will be staffed to that third party” to the employer’s normal requirement criterion. This is an interesting proposal as it would allow petitioners that place employees at third parties to use the third-party’s typical requirements to prove specialty occupation. 

 3. Amended Petitions
DHS seeks to clarify when an amended petition must be filed due to a change in an H-1B worker’s place of employment. This rule would clarify that if a new LCA is required because there is a material change, there must also be an emended petition submitted to USCIS. This seems to be in line with USCIS’ current guidance from Simeio Solutions. Additionally, DHS seeks to clarify guidance on short-term placement of H-B workers. DHS proposes to essentially codify Simeio into regulation, so that if there are changes to a geographical area of employment, a new LCA and a new H-1B petition will be required, and these must be filed prior to the changes taking place. 

DHS also seeks to clarify when a change in the place of employment would not require an amendment. This would include a change to a new job location within the same area of intended employment, assuming no other material changes are made. 

4. Deference
 Currently, DHS policy is to defer to previously approved petitions, unless there are material changes, the previous approval was erroneous, or new facts are available. DHS seeks to codify this policy into regulation.

5. Evidence of Maintenance of Status
DHS seeks to add regulations requiring that the petitioner seeking an extension must submit supporting evidence to establish that the applicant or beneficiary maintained the previously accorded nonimmigrant status before the request to amend or extend was filed. While this has been happening in practice due to the form instructions, this will now be regulatorily required. DHS seeks to add additional evidence options such as quarterly wage reports, tax returns, contracts, and work orders that the company could use to show the beneficiary is maintaining their status. This proposal would impact other nonimmigrant visa categories as well. 

6. Eliminating the Itinerary Requirement for H Programs
DHS is proposing to eliminate the H programs’ itinerary requirement. Currently, an itinerary is required when there is more than one work location. DHS realizes that this is largely duplicative information on what is already on the LCA. 

7. Validity Expires Before Adjudication
DHS proposed to allow H-1B petitions to be approved or have their requested validity dates extended if USCIS adjudicates and deems the petition approvable after the initially requested validity period end-date, or the period for which eligibility has been established, has passed. This mostly happens when there is a motion to reopen, reconsider, or an appeal. In these scenarios, USCIS would issue an RFE for the motion or appeal and allow the petitioner to update the dates and submit a different LCA even if the LCA was certified after the H-1B was filed. Employers would also be able to show the increase in wages to conform to the new prevailing wages. So, this would add more benefit to the possibility of a motion to reopen, reconsider, or an appeal that tend to take a long time to adjudicate. Instead of the case being denied as moot, USCIS would issue the RFE and the company can submit a new RFE. 

B. Benefits and Flexibilities

1.H-1B Cap Exemptions 
DHS is seeking to revise requirements to qualify for H-1B cap exemption (cap-exempt employer) when a beneficiary is not directly employed by a qualifying institution, organization, or entity. DHS also proposes to revise the definitions under 8 C.F.R. § 214.2(h)(19)(iii)(C). The current analysis of cap-exempt entities can be found here

 DHS seeks to change the phrase “the majority of” in the regulation to “at least half” to clarify that H-1B beneficiaries who are not directly employed by qualifying institutions, organization, or entities, who equally split their time between a cap-exempt entity and a non-cap-exempt entity, may be eligible for cap exemption. So, the example given is a beneficiary who works for a for-profit hospital and a research center would have to spend “at least half” of their time performing the job duties at the research center, whereas in the past they would have to spend “a majority of their time” at the research center. 

DHS also seeks to remove the requirement that the duties “directly and predominately further the essential purpose, mission, objectives, or functions of the cap-exempt entity and replace it with a requirement that the duties “directly further an activity that supports or advances one of the fundamental purposes, missions, objectives or functions” of the entity. The change is intended to expand cap-exempt availability when a beneficiary does work that contributes to but does not necessarily predominately further, the purpose. This will allow some more flexibility in this area. 

DHS also proposes to clarify that the requirement that the beneficiary spend at least half of their work time performing job duties “at” a qualifying institution does not require a physical presence when work can be performed remotely. 

There are also some nuanced changes that DHS proposes to the verbiage of the regulation. DHS seeks to emphasis that the focus will be on the “fundamental activity of” the entity to permit a nonprofit entity that conducts research as a fundamental activity, but is not primarily engaged in research, or where research is not the primary mission. This will allow more entities to potentially qualify as entities may have research as a fundamental activity, but not the primary mission. The example DHS gives is an organization with a mission to eradicate malaria that engages in lobbying, public awareness, funding medical research, and performing its own research. This entity may qualify even if it is not primarily engaged in research, but research is a “fundamental activity” of the entity. 

2. Automatic Extension of Authorized Employment under 8 CFR 214.2(f)(5)(vi) (Cap-Gap)
DHS is proposing to expand cap-gap from ending on October 1 to ending on April 1 of the current fiscal year. Meaning, if one applies for the FY 2025 H-1B lottery with a petition filed on June 15, 2024, they can get cap-gap until April 1, 2025. DHS is recognizing that the H-1B lottery has been met with delays in adjudications that may create gaps in employment if it ends on October 1, so the proposal would seek to lessen those gaps in employment. USCIS notes that for FY 2016-FY2022 approximately 99% of changes of status petitions from F-1 to H-1B were adjudicated by April 1. Keep in mind, that if the H-1B is denied, the cap-gap period would not continue and would end as soon as the denial is made. 

3. Start Date Flexibility for Certain H-1B Cap-Subject Petitions. 
DHS is proposing to eliminate all the text found at 8 C.F.R. § 214.2(h)(8)(iii)(A)(4) which relates to a limitation on the requested start date.  The current regulation requires new H-1B petitions to request a start date of the first day of the fiscal year (October 1). This proposal would allow for companies to submit H-1Bs beyond October 1, but they still must have a start date in the particular fiscal year. 

C. Program Integrity 

1. The H-1B Registration System
This section looks to make changes to the 2019 Registration Rule. In this section prospective petitioners is referred to, as has been since 2019, as “registrants” in the registration system. For what it is worth, this section has a ton of data on the registration system that is worth looking at, but will not be addressed here. 

It is important to note that “DHS is not proposing to limit the number of registrations hat may be submitted on behalf of a unique individual by different registrants” as long as the registrant is not working with others to game the system. However, DHS has noticed trends indicating abuse of the system and registrations not being done for bona fide offers of employment. 

First, DHS proposes to shift from selecting by registration, to selecting by unique beneficiary. Under this, each unique individual who has a registration submitted on their behalf by their company would be entered into the selection process once, regardless of the number of registrations filed on behalf. Second, DHS proposes to extend the existing prohibition on related entities filing multiple petitions by also prohibiting related entities from submitting multiple registrations for the same individual. Third, DHS proposes to codify USCIS’s ability to deny an H-1B or revoke the approval when the petition is based on a registration where the statements of facts were not true. 

2. Beneficiary Centric Selection
Under this proposal, registrations can continue to submit registrations on behalf of beneficiary and beneficiaries would continue to be able to have more than one registration submitted on their behalf, as allowed by applicable regulations. From there, the selection would be based on each unique beneficiary rather than each registration. So each beneficiary would go into the lottery once regardless of how many registrations were made. If a beneficiary were to be selected, each registrant (company) that registered for that beneficiary would be notified of selection and would be eligible to file a petition on that beneficiary’s behalf. This would shift to reducing the benefit of having multiple registrations in the lottery as each individual is only entered once. This also gives beneficiaries some autonomy of choosing their employer if they are selected and have multiple job offers. 

DHS recognizes that some bad actors are selecting that an individual “does not have a passport” or entering improper information. USCIS notes that beneficiaries would have to provide a valid passport that matches the biographic information submitted with the petition and that UCSIS can review for the validity of the registration. DHS would require proof of the passport used at the time of registration and could deny if it does not meet the proposal. DHS notes that a very small fraction of actual registrations were truly stateless or did not have a passport, so this would not have much of an impact. 

DHS notes that this system would grant beneficiaries more bargaining power. If they have multiple legitimate job offers, all employers would be notified of the selection of the beneficiary. Instead of the current system where a beneficiary’s registration with a specific company is selected, the beneficiary could negotiate with all registrants that filed for him or her and seek the best employment offer. 

DHS notes that it believes these changes can be implemented by the FY 2025 cap which is in set to begin in March 2024; however, there is no guarantee it will be. 

3. Bar on Multiple Registrations Submitted by Related Entities
DHS seeks to provide clarity to the bar on related entities filing multiple registrations for the same beneficiary. Current DHS regulations prevent the filing of multiple petitions. The bar on multiple registrations is only on the DHS website, so DHS is seeking to add a regulatory bar on multiple registrations. 

4. Registrations with False Information or That are Otherwise Invalid 
DHS is seeking to clarify that the information in a registration and the attestations must be valid. Current regulations states false information in petitions is grounds for denial, and DHS seeks to codify these requirement and extend it to information provided in registrations can also be grounds for denial and a finding of fraud or misrepresentation. 

DHS is also seeking to propose that if a petitioner submits more than one registration per beneficiary in the same fiscal year, all registrations submitted by that petitioner relating to that fiscal year may be considered not only invalid, but that USCIS may deny or revoke the approval filed for the beneficiary based on these registrations. This is seeking to get rid of loopholes companies have found to game the system. 

5. Alternatives Considered
USCIS is not intending to get rid of the pre-registration system.

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

a. Contracts
DHS seeks to codify it’s authority to request contracts, work orders, or similar evidence. Evidence submitted should show the contractual relationship between all parties, terms and conditions of the beneficiary’s work, and the education required to perform the duties. Uncorroborated statements about a claimed in-house project for a company with no history of developing projects in-house would generally be insufficient to claim that the work exists. 

DHS notes that the submitted contracts should include both the master services agreement and accompanying statements of work (or similar documents). USCIS also notes that companies may also submitted end-client or intermediary vendor letters showing the work is there. Other documentation would be acceptable, but must show a comprehensive view of the position being offered to the beneficiary and terms and conditions under which the work would be performed. Importantly, DHS also notes that the minimum education requirements to perform the duties should be included. “Documentation that merely sets forth the general obligations of the parties to the agreement, or that does not provide specific information pertaining to the actual work to be performed, would generally be insufficient.” 

b. Non-Speculating Employment
DHS proposes to codify its requirement that the petitioner must establish, at the time of filing, that it has a non-speculative position in a specialty occupation available for the beneficiary as of the start date of the validity period as requested in the petition. DHS claims that if the work is speculative it cannot determine if the position or occupation is a specialty occupation, and it undermines the integrity of the H-1B program. 

DHS notes that this does not mean that employers must show non-speculative daily work assignments or specific assignments for every day. But rather, they must demonstrate availability of non-speculative employment at the time of filing the petition. DHS further clarifies that, unlike 2018, they do not intend to limit validity periods based on end-dates of contracts or work orders. Additionally, DHS clarifies in the proposal that the employment may be contingent on petition approval, visa issuance, or the granting of H-1B status. 

c. LCA Corresponds with the Petition
DHS is proposing to update the regulations to expressly include DHS’s existing authority to ensure that the LCA properly supports and corresponds to the petition. DHS seeks to align its regulations with existing DOL regulations. In this regulation, DHS proposes that USCIS would 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. 

d. Revising the Definition of U.S. Employer
DHS is proposing to revise the definition of “United States employer.” DHS seeks to modify 8 C.F.R. § 214.2(h)(4)(ii) to codify the requirement that the petitioner has a bona fide job offer for the beneficiary to work within the US. Further, DHS intends to replace the requirement that the petitioner “engages a person to work within the United States” with the requirement that the petitioner have a legal presence and is amenable to service of process in the United States.  

e. Employer-employee relationship
DHS proposes to remove from the definition of U.E. employer the reference to an employer-employee relationship, which, in the past, was interpreted using common law principles (Nuefield Memo) and was a significant barrier to the H-1B program for certain petitioners, including beneficiary-owned petitioners. H-1B petitioners generally will meet the employer-employee relationship under 8 C.F.R. 214.2(h)(4)(ii) simply by submitting the required LCA and the employment agreement with the I-129. The focus here seems to be on flexibility for beneficiary-owner petitioners which are addressed later.

f. Bona fide Job Offer
DHS proposes that a petitioner have a bona fide job offer to the beneficiary to work within the US and that a bona fide job offer must exist at the time of filing. DHS notes that this may include telework, remote work, or other offsite work as long as they are consistent with LCA regulations. 

g. Legal Presence and Amenable to Service of Process
In the context of H-1B, DHS is proposing that the employer must be legally formed and authorized to conduct business in the US. Further, the petitioner must be able to receive service for any lawsuits in the US. 

7. Beneficiary Owners
DHS proposes to codify a petitioner’s ability to qualify as a US employer even when the beneficiary possesses a controlling interest in the petitioner. DHS is seeking to clarify and encourage more beneficiary-owned businesses to participate in the H-1B program. In order to promote access to H-1Bs for start-ups, entrepreneurs, and other beneficiary-owned businesses, DHS is proposing to add provisions to specifically address situations where a potential H-1B beneficiary owns a controlling interest in the petitioning entity. The hope is that this increases the United States job creation and new industries. 

At the same time, DHS is proposing regulations to set conditions on these entities when the beneficiary owns a controlling interest in the petitioning entity to ensure integrity. These would apply when the beneficiary owns 50% or more of the petitioner or when the beneficiary has majority voting rights. One of the proposed conditions is that the beneficiary may perform duties that are directly related to owning and directing the petitioner’s business as long as the beneficiary will perform specialty occupation under the petition a majority of the time, meaning more than 50%. The non-specialty occupation job duties are allowed as long as these duties are directly related to owning and directing the business. 

To ensure that the “majority of the time” framework for non-specialty occupation duties is being followed, DHS is proposing to limit the validity of initial and first extension petitions for beneficiary-owned entities to 18 months each. Any subsequent extension would not be limited and can be approved for up to three years as long as the H-1B requirements are still met. 

8. Site Visits
Currently participation in USCIS site visits is voluntary. DHS is seeking to add regulations codifying its authority and clarify the scope of these inspections and the consequences of a party’s refusal or failure to fully cooperate with these inspections. The proposed rule would provide a clear disincentive for petitioners that do not cooperate with compliance reviews and inspections while giving USCIS a greater ability to access and confirm information about employers and works as well as identify fraud. 

The proposed regulations would make clear that these site visits include on-site visits, interview with the petitioner, review of records, and interviews with any other individuals or review of records that USCIS may lawfully obtain and that USCIS finds pertinent. The proposed regulations make clear that H-1B petitioners and employers must allow access to all sites where labor will be performed to determine compliance, including third-party locations and home work sites. 

While the proposal would include USCIS’ authority to revoke or deny a petition if an entity is uncooperative, USCIS would provide the petitioner an opportunity to rebut adverse information. 

9. Third-Party Placement
This proposal would ensure that petitioners are not circumventing specialty occupation requirements by imposing token requirements or requirements that are not normal to the third-party. The work done at any third-party must be a specialty occupation, and therefore it is the requirements of the third-party, not the petitioner, that will determine whether the position is a specialty occupation. The focus on which entity’s requirements govern will depend on whether the employee is “staffed” at a third-party, or if the petitioner is doing work for a third party.

D. Requests for Preliminary Public Input Related to Future Actions/Proposals

In this section, DHS is seeking comments about future proposed actions to be taken. These are not proposals, but just potential actions.

1. Use or Lose
DHS is considering regulations to prevent petitions from receiving approval for speculative H-1B employment and to curtail the practice of delaying H-1B employment in the US until a bona fide job opportunity arises. DHS has two options they are considering, but is open to public comment on proposals. 

2. Beneficiary Notifications
In the current framework, H-1B beneficiaries do not get notified of actions taken on their case. DHS is exploring options on how to add this notification for employees. 

Conclusion

Keep in mind this is only a proposed rule. Members of the public are encouraged to put in comments as they see fit and comments can be accepted for the next 60 days. The Reddy & Neumann, P.C. team will provide updates as more information comes about.

Reddy & Neumann, P.C., located in Houston, Texas, has been serving the business community for over 25 years and is Houston’s largest immigration law firm focused solely on U.S. Employment-based immigration. We work with both employers and their employees, helping them navigate the immigration process quickly and cost-effectively.

By: Steven Brown

Steven Brown is a Partner at Reddy & Neumann, P.C. where he works in the Non-immigrant visa department and leads the Litigation Team. His practice covers all phases of the non-immigration visa process including filing H-1B, L-1, E-3, H-4, and H-4 EAD petitions. In the last two years, Steven has successfully handled over 1,000 non-immigrant visa petitions including filing petitions, responding to any necessary Requests for Evidence, and drafting motions and appeals. He has also become a key resource for F-1 students that seek guidance on properly complying with the F-1 visa regulations and any OPT or CPT issues they may have. Additionally, Steven holds a weekly conference call for companies that are part of one of the largest organizations for IT Services companies in America.