Oh' Snap H-1B CAP! All You Need To Know

Colleen F. Molner, Esq., Associate Attorney
[email protected]

In the United States, April 1st is commonly known as April Fool's Day. In the U.S. immigration world, April 1st has another connotation: it's "H-1B Cap Day", the day that the government begins accepting petitions for cap-subject H-1B employment for the next fiscal year (FY).

About the H-1B Visa, Cap, and Lottery

On Friday, April 1, 2016, the U.S. Citizenship & Immigration Services (USCIS) will begin to accept H-1B cap-subject petitions for candidates requesting an employment start date of October 1, 2016. The H-1B visa is a temporary visa for employers seeking to fill a specialty occupation with a qualified foreign national. A specialty occupation is one which, by prevailing practice in the U.S., generally requires the possession of at least a baccalaureate degree or its equivalent as a minimum, entry-level credential. The H-1B petition may be approved for a maximum initial period of 3 years and may be extended for an additional 3 years and longer under certain circumstances.

An annual cap, as set by Congress, limits approval of new H-1B petitions in a fiscal year. The H-1B cap is currently set at 65,000, with an additional 20,000 H-1B visas allotted for individuals with an advanced degree from a U.S. accredited institution. Demand for the H-1B visa is currently high and the demand does not seem to decrease, as USCIS received approximately 172,500 total H-1B petitions for FY2015 and 233,000 total H-1B petitions for FY2016. In these most recent filing periods, USCIS reached the statutory H-1B caps within the first week of the filing periods.

As a result of the high volume of petitions that are received beyond the allotted cap, USCIS uses a computer-generated random selection process (commonly known as a "lottery") to select a sufficient number of petitions needed to meet the caps. For those H-1B petitions not randomly selected in the lottery, USCIS rejects and returns the petition with filing fees, leaving many employers trying to find visa alternatives for their candidate(s).

H-1B Cap Exemptions

Not all H-1B petitions are subject to the congressionally mandated cap. A foreign national who has already been counted against the H-1B cap within the past 6 years and applies for an H-1B with a new employer is not subject to the cap. Additionally, petitions involving a change in employer from one cap-subject employer to another employer, an amendment, or an extension of stay are not subject to the H-1B cap. However, an H-1B petition for change in employer filed by a foreign national previously employed by an H-1B cap-exempt employer is not exempt from the H-1B cap. Several types of organizations are eligible for H-1B cap exemption, including institutions of higher education or a related or affiliated nonprofit entity; nonprofit research organizations; and governmental research organizations.

My Candidate Needs an H-1B Visa - Now What?

Once it's been determined that an H-1B visa is the appropriate visa classification for a candidate, the first step is for the employer to gather and provide pertinent information to prepare the H-1B petition, including but not limited to: worksite location(s); job title and detailed description with minimum requirements; offered salary and salary range; and a professional evaluation of the candidate's education and/or work experience equating to at least a U.S. baccalaureate degree.

At the beginning of the H-1B petition process, the H-1B employer must also confirm that it will pay the candidate the required wage for the position. The regulations require H-1B employers to pay the H-1B employee the higher of the prevailing wage level for the occupational classification in the area of intended employment or the actual wage rate paid to its other employees with similar experience and qualifications for the specific employment in question. Typically, the prevailing wage is determined by consulting with the Department of Labor's (DOL) Occupational Employment Statistics (OES) program, which produces annual employment and wage estimates for occupations. The OES wage estimates are based on the arithmetic mean of the wages of workers similarly employed in the area of intended employment. Each position listed in the OES also has four levels with corresponding wages - higher minimum requirements for a position correlate to a higher wage.

Once determined that the prevailing wage requirement is satisfied, the next step is for the H-1B employer to comply with the DOL's notification requirements and to electronically file a Labor Condition Application (LCA), attesting to compliance with the requirements of the H-1B program. The LCA can be filed with the DOL after the employer satisfies the notification requirement, and the LCA must be certified by the DOL (which currently takes about 5 to 7 business days) in order to be filed with the H-1B petition with USCIS. The employer must give notice to U.S. workers on or within 30 days before the date of filing the LCA by posting a Notice of Filing at the candidate's worksite in 2 separate conspicuous locations (other means of providing notice are also permitted depending on certain circumstances). The notice must include specific information per regulations, including the number of H-1B nonimmigrants the employer is seeking to employ; the occupational classification in which the H-1B nonimmigrant will be employed; the wage offered; the period of employment; and the location(s)s at which the H-1B nonimmigrant will be employed.

When all necessary forms are completed and the LCA and notice requirements have been satisfied, the H-1B employer can file the petition with the applicable government filing fees for receipt by USCIS on April 1st or until USCIS has received enough petitions to reach the current cap and stops accepting H-1B petitions.

Common Issues: Third-Party Worksites & the "Cap Gap"

Third-Party Worksites

Pursuant to H-1B regulations, an H-1B employer is required to establish a valid employer-employee relationship, meaning that the employer has the right to control the means and manner in which the work is performed. A valid employer-employee relationship can be easily established when the H-1B employee will work on the employer's premises. However, if the H-1B employee will be working at a third-party worksite, the employer should be prepared to provide additional documentation and information to establish the employer's right to control the employee, such as the employment agreement; purchase agreements; itinerary; employee evaluation(s); contractor agreement with the third-party company, etc. Third-party worksites are common in occupations that require the employee to visit client sites as part of their job duties, such as home health physical therapists.

The "Cap Gap"

Many F-1 students seek to switch nonimmigrant classification and file an H-1B cap petition to change from F-1 student status to H-1B status. However, many of these students also encounter the "cap gap", which is the period between the end of the student's F-1 status and post-completion OPT work authorization (if applicable) and the beginning of the individual's H-1B status (October 1st). The cap gap occurs because regulations prohibit employers from filing the H-1B petition until six months before the date of actual need of the employee (hence April 1st), and many F-1 students complete their program of study and/or have OPT work authorization that expires in mid-spring or summer. Because the change to H-1B status does not occur until October 1st, an F-1 student may have 2 or more months with no legal status. However, the regulations provide for an automatic cap-gap extension, which allows these students with timely-filed pending or approved H-1B petitions to remain in F-1 status during the cap-gap period. The cap-gap extension also provides the student with an automatic authorized period of post-completion OPT. While the automatic cap-gap extension continues through September 30th, if the student's H-1B petition is denied, withdrawn, revoked, or not selected in the lottery, the student will have the standard 60-day grace period from the date of the rejection notice or their program end date, whichever is later, to prepare for and depart the U.S.

It is important to note that in the recent case of Washington Alliance of Technology Workers vs. U.S. Department of Homeland Security, the U.S. District Court invalidated the automatic H-1B cap-gap protection because the Department of Homeland Security (DHS) failed to carry out the notice and comment requirement when the rule was published in 2008. Unless DHS issues a new rule before February 12, 2016, the cap gap will no longer be automatic, and DHS must formally announce that the H-1B cap is met and then publish a notice in the federal register.

Best Practices

Timing is key. Due to the high demand and sensitive nature of timing for H-1B cap-subject petitions, employers should consult with an immigration attorney as soon as it is determined that H-1B sponsorship may be required for their candidate(s). Getting the petition filed in time is just part of the game, as there are many procedures, requirements, and deadlines that must be followed and satisfied in the weeks leading up to April 1st.

Maintaining documentation at the worksite or principal place of business is required. Employers are also required to maintain Labor Condition Application files for each H-1B worker, and it is best to maintain 2 separate files to meet all legal requirements. The first file that should be maintained is a "public inspection file", which must be available for public inspection at the worksite or the employer's principal place of business within one working day after the LCA is filed with the DOL. This file should include a copy of the LCA; a statement of the Wage Rate; explanation of the Actual Wage; Prevailing Wage Determination or OES Wage Survey; notification documents; and documentation of the benefits provided to the H-1B worker. The second file that should be maintained is the DOL Investigation File, which should include documentation of the wage rate paid to all other workers in the same job at the place of employment; data used to establish the actual wage rate for the H-1B worker(s); documentation supporting the employer's Prevailing Wage Determination; and documentation of working conditions.

Be prepared for worksite inspections. Employers should also be aware that the Office of Fraud Detection and National Security (FDNS) contracts with multiple private investigation firms to conduct worksite visits at U.S. companies and other entities that employ foreign workers through the H-1B program. Many FDNS H-1B site visits are unannounced, and they may occur at the H-1B employer's principal place of business and/or at the H-1B nonimmigrant's work location as indicated on the Form I-129. Employers should alert reception, security, and corporate counsel that such visits may occur and designate a company representative to respond to FDNS inquiries. Employers should conduct internal reviews of all H-1B workers to ensure the job duties, work site, and salaries are consistent with the information provided in the previously filed H-1B petition.