DHS Issues Modernization Proposal that Could Positively Change the H-1B Lottery System

On October 23, 2023, DHS and USCIS jointly announced the publication of a Notice of Proposed Rulemaking aimed at transforming the H-1B program. The modernization plan would improve the specialty occupation worker program and H-1B lottery system through the streamlining of eligibility requirements; improvement of program efficiency; provision of greater benefits and flexibilities for employers and workers; and strengthening of integrity measures.

The decision to reform and strengthen the H-1B program in this manner is largely due to some concerning trends in the H-1B system since the implementation of the electronic registration process in FY2021. Specifically, USCIS has noticed that the number of beneficiaries with multiple registrations has increased exponentially year after year, with a significant jump experienced in the 2024 cap fiscal year. Meanwhile, other figures, such as the number of eligible registrations for beneficiaries with only one eligible registration and the number of petitions filed, have grown at a more consistent or reasonable rate each year.

The data USCIS has relied on is publicly available and displayed in the chart below. This information is regularly updated and is current as of July 31, 2023.

 

Because the number of eligible registrations for beneficiaries with multiple registrations was quite excessive, it appeared that some individuals and companies were working together to “game the system” and obtain an unfair advantage in the lottery. This collusion may have improperly increased those individuals’ chances of selection and impacted the integrity of the entire program. To combat this activity, USCIS pursued fraud investigations, issued denials, revoked prior approvals, and even referred some cases to law enforcement for criminal prosecution. These actions have certainly had an impact, but a long-term, preventative solution was also needed. Hence, the H-1B modernization rule to improve the H-1B program and reduce misuse and fraud in the system.

In commenting on the proposed rule, Secretary of Homeland Security Alejandro N. Mayorkas expressed the optimistic intentions of the Administration. He stated:

DHS continues to develop and implement regulations that increase efficiency and improve processes for employers and workers navigating the immigration system. The Biden-Harris Administration’s priority is to attract global talent, reduce undue burdens on employers, and prevent fraud and abuse in the immigration system.

By signaling the government’s commitment to balancing the needs of a global economy and labor market with the desire to maintain a strong and secure immigration system, this modernization plan is a welcome move towards progress. We are hopeful that once the new rules are implemented, the H-1B program will more effectively fulfill its underlying purpose: To enhance the U.S. economy with the services of qualified foreign nationals who possess in-demand skills and highly specialized knowledge.

Now we would like to take you through the key provisions of the proposed regulatory action and how they may impact your company, existing employees, and prospective employees.

 

#1 Modernization and Efficiencies

Summary: The proposed changes aim to simplify the H-1B program’s eligibility criteria, aligning them with the statutory definition that requires a direct relationship between the required degree field(s) and the position’s duties. Also, DHS envisions a more efficient process, starting with the modification of the regulatory definition and criteria for “specialty occupation” to better reflect the needs of the 21^st century labor environment.

Key Actions:

• Modify the regulatory definition and criteria for “specialty occupation” to align with the statutory definition by:
  • Prioritizing a direct relationship between the required degree field(s) and the position’s duties over a strict requirement of a degree in a singular or typical academic discipline.
  • Disallowing the inclusion of general degree fields (e.g., business administration or liberal arts without a specialization or concentration). A degree in specific specialty must be indicated.
• Clarify the meaning of terms within the specialty occupation criteria found at 8 CFR 214.2(h)(4)(iii)(A).
  • “Normally” will no longer equate to “always.” It will now mean “conforming to a type, standard, or regular pattern” and is “characterized by that which is considered usual, typical, common, or routine.”
  • Evidence that demonstrates something occurs most often or is usual, typical, common, routine, or frequent will be accepted.
• Promote a “skills-first” culture, when appropriate, to reflect the realities of the current labor environment and help employers handle talent shortages.
• Clarify when an amendment or new petition is required.
  • If a change in worksite requires a new LCA (this does not refer to a new worksite within the same MSA), then that is a material change that necessitates the filing of a new or amended petition before the worker may begin working under the new terms/conditions.
  • No new/amended filings will be needed for short term placements.
• Codify deference rule that allows adjudicators to defer to a prior judgement when the parties and underlying facts are unchanged.
• Eliminate itinerary requirement.
• Permit petitioners to amend requested validity periods when the validity period expires before adjudication and the petition is otherwise approvable.
• Update regulations to explicitly require maintenance of status evidence for extensions and amendments.
  • NOTE: This change will impact all employment-based nonimmigrant petitions using Form I-129 and not just H-1B filings.

 

#2 Benefits and Flexibilities

Summary: The proposed amendments include expanding the definition of cap-exempt employers, allowing employers to request an employment start date after October 1, and enhancing cap-gap protections for F-1 students awaiting a change of status to H-1B.

Key Actions:

• Expand the definition of cap-exempt employers to allow more nonprofits and governmental research organizations to qualify for the exemption.
  • The definition found at 8 CFR 214.2(h)(19)(iii)(C) will substitute “primarily engaged” and “primary mission” with “fundamental activity.”
• Allow beneficiaries who provide essential work to a qualifying organization “at least half” of the time, but are not directly employed by that qualifying organization, to benefit.
• Automatically extend the duration of F-1 status and work authorization granted under post-completion OPT or STEM OPT extension until April 1 of relevant fiscal year or the validity start date of the H-1B approval, whichever is earlier, instead of October 1 of the same fiscal year.
  • For example, for FY2024 filings this would refer to April 1, 2024 rather than October 1, 2023.
• Affirm an employer’s ability to request an employment start date after October 1.
  • NOTE: Start dates beyond October 1 cannot be more than 6 months from the petition’s filing date.

 

#3 Program Integrity

Summary: To prevent misuse and fraud, the proposed rule would change how USCIS conducts the H-1B registration selection process. Through the implementation of a unique beneficiary identification method, USCIS aims to reduce the advantage of submitting multiple registrations for the same individual and enhance the overall integrity of the selection process.

Key Actions:

• Permit USCIS to select registrations according to a unique beneficiary identification (e.g., passport number) rather than by the registration to ensure each individual in the lottery has the same chance of being selected irrespective of the number of registrations submitted on their behalf.
  • NOTE: The same number of registrations can be submitted for an individual. This rule change will not restrict that process. The change impacts how the lottery works, not the registrations or filings. If selected, every petitioner who submitted a registration will be notified and they all may file non-frivolous petitions. The individual may then select who they wish to work for. But the person’s name will only be entered into the lottery one time, so their chances of being selected are not artificially inflated because of the multiple registrations.
• Require registrations to submit valid passport information at the time of registration to disallow the bypassing of the passport requirement/data fields.
• Codify USCIS’s power to deny petitions or revoke approvals that are based on fraudulent or invalid registrations.
• Allow beneficiary-owners to be eligible for H-1B status. Beneficiary-owners with a controlling interest in the petitioning company may also be eligible for H-1B status under certain conditions.
• Codify USCIS's power to conduct site visits and potentially deny or revoke a petition if the site visit is refused.
• Clarify authority to review positions that involve staffing at a third-party site or contracts to fill positions at third-party organizations.
  • Petitions with these facts may trigger review of the third-party’s job requirements and not the petitioner’s when determining whether the specialty occupation criteria has been met.
  • NOTE: This rule would not apply in cases where a beneficiary is employed by a large technology company, accounting firm, or law office that requires providing services to various third-party clients.

Additional provisions within the proposed rule that are worth noting include:

• Bar on the submission of multiple registrations by related entities unless a legitimate business need exists. This is an extension of the pre-existing rule against multiple filings by related entities absent a legitimate business need.
• Codification of USCIS’s authority to request contracts.
• Requiring petitioners to establish that an actual, non-speculative position in a specialty occupation will exist as of the start date.
• Ensuring the LCA supports and corresponds to the petition.
• Revision of the definition of “United States employer” by codifying existing requirement that petitioner has a bona fide, non-speculative job offer for work in the U.S. as of the start date requested in the petition. Removal of references to “employer-employee relationship” from the definition. This is current DHS policy and is consistent with current USCIS policy guidance.
• Addition of requirement that petitioner have a legal presence and be amendable to service of process in the U.S. 

Ultimately, the proposed modernization of the H-1B program reflects a commitment to efficiency, fairness, and integrity. The envisioned changes also offer a more transparent and responsive system that aligns with the evolving needs of the global workforce. At ILG, we believe that the prospect of a stronger and more effective H-1B program is truly on the horizon, and the results will be a great benefit to corporations and skilled professionals.

Please take note that the proposed rule is currently available for notice and comment in the Federal Register until December 22, 2023. Click here to review the full proposal or submit a formal comment.

Depending on the number and nature of comments and how quickly USCIS can implement these new proposals, the modernization plan may be finalized through one or more rules. But, USCIS does intend to prioritize certain provisions, most likely the anti-fraud proposals, and may implement them in time for the FY2025 cap season. We will continue to monitor this area for developments and will update this blog as new information is made available.

 

 

This blog article is the opinion of Immigration Law Group LLP and should not be interpreted as legal advice. Should you require legal advice or a more thorough assessment of a specific situation, please contact our office for an appointment or consultation.

Immigration Law Group has served Silicon Valley and the greater San Francisco Bay Area since 2001. Corporations retain us to manage complex corporate immigration matters facing their employees around the world. Whether you require immigrant or non-immigrant services for a small startup or a large, multi-national enterprise, our team leverages decades of experience as well as innovative case management technology to ensure your company is positioned for success in an ever-changing global marketplace. If you would like to know more, please contact us today at (408) 432-9200.