Summary: On December 18, 2024, U.S. Citizenship & Immigration Services (USCIS) published a Final Rule in the Federal Register (89 FR 103054, 12/18/24) that will bring changes to H-1B eligibility requirements and definitions (including the definition of “specialty occupation”); clarify and expand the criteria for H-1B cap-exempt employment; increase the duration of F-1 cap-gap work authorization; and clarify, update, and codify USCIS policies on H-1B amended petitions, deference to prior H-1B approvals, and H-1B investigations and site visits. The new rule also codifies a requirement for maintenance-of-status evidence for all employment-based nonimmigrant classifications that use Form I-129 for status extensions or amendments.
Effective date: The Final Rule takes effect on January 17, 2025. To implement the Final Rule, USCIS must publish a new version of Form I-129. USCIS announced on December 18 that it will publish a preview version of the new form shortly.
Background: The Final Rule is based on a Notice of Proposed Rule Making (NPRM) for H-1B modernization published on October 23, 2023 (88 FR 72870, 10/23/23). On February 2, 2024, USCIS finalized portions of the NPRM relating to the annual H-1B cap registration process in a separate final rule (89 FR 7456), which has governed H-1B cap registration since then (covered in our 2/2/2024 blog post). The other proposals in the NPRM are part of the new Final Rule.
Highlights of the new Final Rule follow.
1. Revision to the regulatory definition and criteria for a “specialty occupation”; requirement of “bona fide” position
The make-or-break issue in every H-1B petition is whether the job in question is in a “specialty occupation,” i.e., whether it normally requires a bachelor’s or higher degree in a specific field. The Final Rule states that “normally” does not mean “always,” and changes the existing regulatory definition of “specialty occupation” to make it clear that any field of study stated as required for the job in the H-1B petition must be directly related to the job duties. The Final Rule clarifies that “directly related” means there is a logical connection between the degree and the duties of the position. The regulatory definition also clarifies that, although the position may allow for a range of academic fields that satisfy the employer’s degree requirement, each such field must be directly related to the duties of the position. The Final Rule’s definition of “specialty occupation” reads:
Specialty occupation means an occupation which requires theoretical and practical application of a body of highly specialized knowledge in fields of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts, and which requires the attainment of a bachelor’s degree or higher in a directly related specific specialty, or its equivalent, as a minimum for entry into the occupation in the United States. A position is not a specialty occupation if attainment of a general degree, without further specialization, is sufficient to qualify for the position. A position may allow for a range of qualifying degree fields, provided that each of those fields is directly related to the duties of the position. Directly related means there is a logical connection between the required degree, or its equivalent, and the duties of the position.
The Final Rule addresses “specialty occupation” in relation to H-1B beneficiaries placed at third-party worksites. If a beneficiary will be contracted to fill a position in a third party’s organization and becomes part of that third party’s organizational hierarchy (as opposed to merely providing services to the third party), the requirements of the third party, and not the H-1B petitioner/employer, will be the most relevant in determining “specialty occupation.”
In all H-1B petitions, the position offered must be “bona fide.” The Final Rule allows USCIS to request contracts or similar evidence to show the bona fide, i.e., non-speculative, nature of the position.
2. Revision to the regulatory definition of “U.S. employer,” allowing H-1B sponsorship by an entity majority-owned by the H-1B beneficiary
In a potential boon for early-stage startups, the Final Rule says that a “U.S. employer” for H-1B sponsorship purposes may be an entity in which the sponsored H-1B beneficiary has a “controlling interest,” provided that the majority of the beneficiary’s time (over 50%) is spent on “specialty occupation” duties. “Controlling interest” is defined as either having more than 50% ownership or having majority voting rights in the entity. The initial H-1B petition validity for a beneficiary-owner will be limited to 18 months, and the first extension (including an amended petition with a request for an extension of stay) would also be limited to 18 months. Any subsequent extension may be approved for up to three years, assuming the petition satisfies all other H-1B requirements.
3. To allow more H-1B petitions to qualify as “cap exempt,” a broadening of key definitions
H-1B petitions sponsored by certain types of organizations are exempt from the lottery for new H-1B visas each year. An H-1B beneficiary’s work for nonprofit research organizations, governmental research organizations, and nonprofit organizations affiliated with institutions of higher education is considered cap-exempt, but proving cap-exemption has been a challenge due to USCIS’ strict interpretation of the criteria, and the difficulty of proving the degree of closeness of the H-1B beneficiary’s work to the cap-exempt organization’s mission or purpose. Key liberalizing changes in the Final Rule include:
“Nonprofit research organization”: The H-1B sponsoring entity will need an IRS determination letter confirming tax-exempt status, but the IRS letter need not necessarily specify that the organization’s purpose is “research.” “Research” may be shown in other documentation.
“Research”: Research (basic or applied) need not necessarily be the organization’s main purpose; it may be just one part of what the organization does.
A nonprofit research organization’s affiliation with an institution of higher education: The nonprofit research organization’s main purpose need not necessarily be to contribute to the research or education mission of the institution of higher education; doing so may merely be a purpose, or a fundamental activity, of the nonprofit research organization.
An H-1B petition may be cap-exempt if beneficiary’s job duties support or advance a (not necessarily the) fundamental purpose, function, mission, or objective of the cap-exempt entity.
In an H-1B petition that is cap-exempt for a beneficiary not directly employed by the exempt entity but working “at” the exempt entity, the word “at” can mean working remotely within the U.S. as versus physically onsite, and work for the exempt entity may be as little as 50% of the beneficiary’s time.
The Final Rule’s liberalizations in the cap-exempt area should increase the number of H-1B petitions exempt from the cap, thus taking pressure off the annual demand for cap-subject H-1Bs.
4. Extended cap-gap for F-1 students and flexibility in H-1B cap employment start dates
According to the Final Rule, an F-1 student with OPT or STEM OPT work authorization who is the beneficiary of a change-of-status H-1B cap petition will automatically, upon timely filing of the petition, have an automatic extension of their F-1 status and work authorization (“cap gap”) to April 1 of the fiscal year for which the H-1B is being sought. Until now, “cap gap” work authorization has ended on September 30 of the fiscal year prior to the year for which H-1B status was sought and the individual’s F-1 status ended 60 days later.
Also, according to the Final Rule, an H-1B cap-subject petition need not state a start date of October 1 of the fiscal year for which H-1B status is sought; a start date later than October 1 may be requested, provided it is not more than 6 months later than the date of petition filing. (And, as always, the entire period of requested employment must be covered by a valid Labor Condition Application.)
These provisions in the Final Rule will minimize F-1 work authorization gaps while awaiting H-1B status and will allow optimization of F-1 OPT work authorization.
5. Codifying the Simeio memo for H-1B petitions; expanding forgiveness of timely filing requirement for amendments and extensions
According to the USCIS Administrative Appeals Office’s decision in Matter of Simeio Solutions, LLC (2015), and the 2015 USCIS Policy Memo to implement the decision, a new or amended H-1B petition involving material changes to an H-1B beneficiary’s job must be filed with USCIS before the changes take effect. In cases where H-1B portability rules apply, the changes may take effect upon filing of the new/amended petition instead of waiting for petition approval. Any change to a beneficiary’s job that requires a new Labor Condition Application from the U.S. Department of Labor is, by definition, a material change and requires an amended H-1B petition.
The Final Rule codifies the Policy Memo, giving it the force of federal regulation, and gives it teeth by adding a new ground for H-1B petition revocation to the existing revocation grounds. The Final Rule states that an H-1B petition is automatically revoked if the H-1B petitioner (employer) fails to timely file an amended petition notifying USCIS of a material change.
Potentially softening the effect of the “automatic revocation” in the Final Rule is an expansion of the circumstances in which USCIS may and accept a late-filed petition: it would not only cover filings after I-94 expiration, as has been the case under existing regulations, but would also cover late-filed amended petitions, i.e., where the I-94 is not expired but circumstances requiring an amended filing took effect before the amendment was filed.
6. Maintenance-of-status evidence required for amendments and extensions of employment-based nonimmigrant status
The Final Rule codifies a requirement for maintenance-of-status evidence for all employment-based nonimmigrant classifications that use Form I-129 for status extensions or amendments (E-1, E-2, E-3, H-1B, H-1B1, H-2A, H-2B, H-3, L-1, O-1, O-2, P-1, P-2, P-3, P-1S, P-2S, P-3S, Q-1, R-1, TN). To establish that the beneficiary maintained the previously accorded nonimmigrant status prior to the filing of the extension or amendment, evidence may include, but is not limited to paystubs, W-2 forms, tax returns, contracts, work orders, and the employer’s quarterly employment tax filings.
7. Clarifying and codifying USCIS policy on deference to prior petition approvals
The Final Rule clarifies and codifies USCIS’s policy on deferring to prior H-1B petition approvals. Specifically, if a petition involves the same parties and the same underlying facts as a prior approved petition, USCIS will give deference to the prior approval unless it involved a material error, or there is new, material information or changed circumstances affecting H-1B eligibility.
8. Codifying policy on USCIS H-1B site visits
The Final Rule codifies current USCIS policy and practice regarding employer site visits to investigate the validity of H-1B and other nonimmigrant petitions. Per the Final Rule, USCIS at any time after filing of the petition, including after petition approval, may conduct unannounced site visits, hold interviews of petitioners or beneficiaries without the presence of counsel, and perform investigations to verify that the information in the petition is/was true. Failure or refusal of the petitioner to cooperate in a site visit may result in denial or revocation of the H-1B petitions of any H-1B workers at the work site in question.
9. Other miscellaneous provisions
The Final Rule codifies or revises existing policies on diverse subjects including: agents as petitioners; USCIS process for when adjudication occurs after the end of the requested petition period; use and tracking of multiple-beneficiary Labor Condition Applications; protection of working beneficiaries of a suspended Labor Condition Application; and extension requirements for certain L-1 and O-1 petitions.
Finally, it is worth noting that a proposal to bar “related entities” from submitting H-1B registrations for the same individual, that was included in the October 23, 2023 NPRM, was not included in this Final Rule. In its preamble, USCIS noted that the recent implementation of the “beneficiary-centric” H-1B cap registration process has already significantly decreased the number of registrations submitted on behalf of beneficiaries with multiple registrations, and further measures are not needed at this time.
Jewell Stewart Pratt Beckerson & Carr will watch developments related to the implementation of this Final Rule and will post updates as needed.
© Jewell Stewart Pratt Beckerson & Carr PC 2024
