On December 3, 2018, the Department of Homeland Security (DHS) published a notice of proposed rulemaking (NPRM) that would make changes to the way cap-subject H-1B petitions are processed. There are two proposed changes: first, petitioners seeking to file petitions will have to register electronically with U.S. Citizenship and Immigration Services (USCIS) during a designated registration period; and second, the order in which cap-subject petitions are selected in years when demand exceeds supply has been reversed. These changes are made pursuant to President Trump’s Buy American and Hire American Executive Order, issued in 2017.
Current system
Under the current system, approved cap-subject H-1B visa petitions become effective on the first day of the government’s fiscal year – October 1. A visa petition cannot be submitted to USCIS more than six months prior to the effective date, and so the first date that a petition can be submitted is April 1. Companies seeking to sponsor a foreign worker for an H-1B visa must therefore submit a completely prepared H-1B petition and supporting documentation to USCIS no earlier than April 1.
In years when demand for H-1B visas exceeds supply within the first five business days in April – a phenomenon that has occurred in each of the last six annual H-1B cap seasons (2013 through 2018 inclusive) – the petitions received in those five days are subject to the H-1B cap “lottery.” Congress has set the annual H-1B limit at 65,000, with an exemption of 20,000 additional H-1Bs where the sponsored worker has a graduate degree from a U.S. institution. This 20,000 exemption is informally referred to as the “master’s degree cap.” In the current system, a lottery is held to select the 20,000 “master’s degree” cap petitions first; any of those petitions not selected are returned to the general petition pool, and the remaining 65,000 petitions are selected by a second lottery. All petitions not selected in the lotteries are returned to the petitioners or their legal counsel.
Proposed electronic registration – Overview
The proposed rule would change the petition submission and selection processes. Fully-prepared petitions would no longer be submitted on April 1. Instead, any company wishing to submit a petition would register their intent to file an H-1B petition for a particular individual and job with USCIS. Under the NPRM, USCIS will announce the registration period on its website at least 30 days before the registration period opens. The registration period will begin at least 14 days before April 1. There will be no fee to register; information required to register will include the sponsoring company’s name, FEIN, and address, and the beneficiary’s name, date of birth, and other personal and background information. An employer may submit only one registration per beneficiary; no substitutions will be allowed.
Proposed electronic registration – Commentary
USCIS expects electronic registration to create a more efficient and cost-effective H-1B cap petition process, by (1) alleviating massive administrative burdens on USCIS caused by physically handling hundreds of thousands of H-1B petitions, and (2) reducing burdens on petitioners who would not have to assemble a petition that may not even be selected in the lottery.
It is unclear, however, just how much of the burden on petitioners will be alleviated by this change. The NPRM preamble suggests what information about the H-1B candidate (beneficiary) and the job might be required for registration, but the proposed regulation itself is silent on these details. In practice, registration may require details about the sponsored role — not just the job title, but perhaps also the salary, location, degree requirement, and more. The NPRM is clear that if a registered case is selected, the subsequently-filed petition may not deviate from the details provided in the registration. The result is that in order to register, petitioners may have to perform a substantial amount of case preparation – possibly including the Labor Condition Application, evaluation of foreign degree equivalency, etc. – to ensure an approvable case underlies each registration.
The NPRM also includes a provision that would enable USCIS to temporarily suspend the registration process during any fiscal year in which USCIS may experience technical challenges with the electronic registration system. Therefore, if the rule is finalized as proposed, but there is insufficient time to implement the electronic registration system in time for the April 1, 2019 opening of the H-1B filing window (for Fiscal Year 2020 H-1Bs), USCIS may suspend the registration requirement for the FY 2020 cap season. The current system for submitting and receiving cap-subject H-1B petitions would then be used instead.
It is notable that the NPRM does not set any minimum or maximum time limits on reinstating the old system in the event a suspension of the new electronic registration system is announced. Theoretically, if the new system crashes and is declared inoperable in late March, hundreds of thousands of petitioners could find themselves preparing petitions at very short notice, in order to get completed H-1B petitions prepared and filed in the first days of April.
Proposed new petition selection process
The NPRM proposes that, once the electronic registration period closes, a lottery will be performed to select the number of registrations needed to meet each cap (regular cap and “master’s” cap exemption). Currently, in years when the H-1B regular cap and the U.S. advanced degree exemption are both reached within the first five business days of April, the 20,000 petitions for the “advanced degree exemption” are selected first, and the 65,000 petitions for the “regular” cap are selected afterwards. The NPRM would reverse this selection order: registrations needed to reach the regular H-1B cap would be selected first, and then the registrations for the advanced degree exemption would be selected after.
UCSIS predicts that this change will lead to an increase in the number of beneficiaries with a U.S. master’s or higher degree selected. Once the selection process is completed, UCSIS will begin sending out selection notices. The notices will give selectees a 60-day window in which to file their petition.
Effect of NPRM on 2019 cap season and beyond
Public comments about the NPRM may be submitted starting today, Monday, December 3, and must be received on or before January 2, 2019. The NPRM indicates that USCIS wants the rule to apply to the upcoming cap season. That means that there is little time between comments closing in January 2019, and the February 15, 2019 date by which a registration period must be announced. That could be an insufficient time period for USCIS to consider the comments received and then undergo the administrative steps necessary to publish a final version of this rule no later than February 15. If a Final Rule is not published in that time, it appears that the old system of H-1B cap petition submission would continue for the upcoming 2019 (FY 2020) H-1B cap season.
For these reasons, cautious petitioners and legal practitioners may decide to prepare their H-1B cap cases fully, as in prior years, in case the proposed changes do not take effect in 2019.
We will post further updates as they become available.
© Jewell Stewart & Pratt PC 2018