DHS Proposes Rule to Modernize H-1B Program

“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.” – Secretary of Homeland Security Alejandro N. Mayorkas.

The Department of Homeland Security has published a Notice of Proposed Rule Making (NPRM or the Rule) entitled “Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Nonimmigrant Workers.” The NPRM seeks to streamline the requirements of the H-1B program, provide greater benefits and flexibilities for employers and workers, and improve H-1B integrity measures. In its rule, DHS states that it “may move to finalize the proposed provisions through one or more final rules, and may possibly do so in time for the fiscal year (FY) 2025 cap season.” The public comment period for the Rule will end on December 22, 2023. 

Among its ninety-three pages in the Federal Register, the Rule provides for a significant number of both additions to and codifications of current DHS policies related to the H-1B program.

1. Updating “Specialty Occupation” Definition, Amending H-1B Eligibility. DHS proposes to streamline the H-1B program by redefining the term “specialty occupation.” If passed, the Rule would clarify that “normally”—as in, the specialty occupation normally requires a bachelor’s or higher degree in a specific specialty—does not mean “always.”
   
   The Rule also would clarify that a range of degrees may be acceptable for a job opportunity to constitute a specialty occupation. However, the Rule incorporates restrictive language from a proposed rule under the Trump Administration, indicating that a beneficiary would qualify for the specialty occupation if the beneficiary had attained a bachelor’s degree or higher in a “specific specialty.” The new rule would require employers to establish a direct relationship between the required degree(s) and the job duties for the position. This proposed change may raise concerns for many employers, particularly where a variety of degrees could be used to qualify a beneficiary for a position or if “a generalized degree” such as business administration may qualify a beneficiary for H-1B specialty occupation classification.
2. Eliminating Itineraries. The Rule would eliminate the need for employers to provide itineraries in H-1B petitions. In a contemporary, post-COVID-19 workplace where employees work in hybrid and remote settings, this change reflects USCIS’s acknowledgment that H-1B beneficiaries should have some flexibility as to where and when they work for an employer as long as their worksites are properly listed on a Labor Condition Application and the associated H-1B petition.
   
   USCIS also reaffirms that H-1B amendment petitions are required when an H-1B beneficiary moves to a metropolitan statistical area (MSA) not contemplated in an H-1B petition (and the associated LCA), and that H-1B amendment petitions are not required when an H-1B beneficiary moves locations within the same MSA. Governing DOL policy relating to reposting LCAs and updating public access files remain unchanged.
3. Codifying Deference to Prior USCIS Approvals. The Rule would instruct USCIS’s adjudicators to defer to prior USCIS approvals in petitions with the same underlying facts (i.e., the same position with the same employer). This provision largely codifies DHS’s current policy and is welcome news for employers looking for predictability in H-1B adjudications.
   
   In addition, the Rule would require the submission of evidence that the H-1B beneficiary has maintained valid nonimmigrant status for all petitions seeking amendments to their approved H-1B petition and requests extensions of stay. The Rule makes clear that deference to prior approvals and submission of maintenance-of-status evidence would apply to all nonimmigrant (temporary work) visa petitions filed on Form I-129, which is the form used by employers to file H-1B petitions.
4. Expanding “Cap-Gap” for F-1 Students, Eligible H-1B Cap-Exempt Organizations, & Owner-Founder Eligibility for H-1B Status. DHS proposes to expand some of the benefits and flexibilities afforded by the H-1B program. The Rule would extend the duration of F-1 Cap Gap work authorization from expiring on October 1 to expiring the following April 1—six additional months of work authorization for F-1 students seeking to change status to H-1B. This is a welcome change as well as a commonsense provision given the possible need for more than one H-1B lottery registration in a fiscal year.
   
   In addition, the Rule would broaden the scope of organizations that are eligible for H-1B cap-exempt status, including nonprofit research organizations where research is “a fundamental activity.” Moreover, the Rule seeks to ease the requirements of beneficiaries to qualify for H-1B cap exemption when they are not directly employed by a qualifying organization.
   
   In welcome news to the startup community, USCIS is proposing a short, initial period of 18 months of H-1B status for founders/owners, who previously were precluded from seeking H-1B status because of their financial stake in a company.
5. Focusing on Fraud and Abuse and Changes for Employers Leveraging Third-Party Worksites. DHS proposes to reduce fraud and abuse of the H-1B program by restructuring the H-1B cap lottery and heightening the evidentiary requirements for H-1B petitions. The Rule would re-organize the lottery registration selection process by selecting unique beneficiaries from the pool of registrants. The beneficiary may have multiple employers submit their registrations in the H-1B cap lottery, and if selected, all employers who submitted a registration for the beneficiary would receive notification about the employee’s selection. The beneficiary, however, would then be able to influence which singular employer should submit an H-1B petition on their behalf.
   
   Additionally, USCIS outlines how the agency can request evidence of a bona fide job opportunity for any H-1B petition—whether it be an H-1B cap, change of employer, amendment to reflect a material change in the terms and conditions of employment, and/or where the employer is seeking to place their employee at a third-party client site. Specifically, the Rule would (1) codify DHS’s authority to request employment contracts; (2) require evidence of the availability of an actual, non-speculative position as of the proposed start date; (3) ensure that that the labor condition application properly supports and corresponds with the petition; (4) re-define “United States employer” by requiring evidence of a bona fide job offer; and (5) require the petition establish a legal presence and be amenable to service of process in the United States.
   
   The Rule also would codify DHS’s authority to conduct site visits, requiring employers to comply with requests from DHS that they may have otherwise challenged in the past. This includes third-party compelled compliance at third party worksites. As such, the site visits may be conducted at the petitioning employer’s headquarters, satellite offices, or the worker’s worksite location, including at third-party worksites and home offices. Refusal to comply with these inspections may result in USCIS denying or revoking petition approvals for any workers at the relevant inspection location. As such, employers should consider reviewing their worksite arrangement protocols and educating their workforce on the potential for at-home inspection. The Rule, notably, does not include a description of procedures that would be followed during these inspections.
   
   Furthering the expansion of the term “employer” to third parties, USCIS is imposing an additional requirement on H-1B employers that place their employee at a third-party client site. Specifically, USCIS will evaluate the work performed and normal degree requirements of the third-party client—not only the H-1B petitioning company—when considering whether to grant an H-1B petition involving these types of work arrangements. How that provision may affect employer-employee relationship rules remains to be seen.

In summary, the proposed changes to the H-1B classification are far-reaching. Whether all the substantive provisions of the NPRM will be included in the Final Rule will depend in part on the public comments received during the comment period. Any interested party seeking to comment has until December 22, 2023, to have comments considered. We will monitor how these proposed changes evolve and provide further updates in the coming months.

If you are seeking further guidance or if you have any specific inquiries, please contact your local Quarles attorney, or:

• Timothy D’Arduini: (202) 780-2641 / timothy.darduini@quarles.com
• Lynn O’Brien: (202) 372-9530 / lynn.obrien@quarles.com
• Nicholas Lowrey: (202) 372-9526 / nicholas.lowrey@quarles.com