Sophie Alcorn, attorney, author and founder of Alcorn Immigration Law in Silicon Valley, California, is an award-winning Certified Specialist Attorney in Immigration and Nationality Law by the State Bar Board of Legal Specialization. Sophie is passionate about transcending borders, expanding opportunity, and connecting the world by practicing compassionate, visionary, and expert immigration law. Connect with Sophie on LinkedIn and Twitter.
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I heard that the USCIS released proposed H-1B regulations that make it easier for founders to get H-1Bs. What are the details?
— Fortunate Founder
I’m thrilled by the new proposed rule issued by the U.S. Department of Homeland Security (DHS) earlier this week that makes it easier — and more appealing — for rising entrepreneurs to pursue an H-1B specialty occupation visa.
While the proposal does not make more H-1B specialty occupation visas available each year — that’s something only Congress can do — it recognizes the significant benefits of retaining startup founders in the U.S.
“If more entrepreneurs are able to obtain H-1B status to develop their business enterprise, the United States could benefit from the creation of jobs, new industries, and new opportunities,” the proposed rule states.
No longer will innovative entrepreneurs be tethered to their day jobs or be forced to relinquish equity and control to board members or co-founders. And the cherry on top is that many of these advantages are already available right now, regardless of the final fate of this proposed rule. That’s because the U.S. Citizenship and Immigration Services (USCIS) has addressed some of the changes that impact founders in recent policy memos.
Let me dive into the most significant provisions in the DHS proposed rule — those that make it easier for founders to qualify for an H-1B and those that improve the H-1B visa program overall.
Greater flexibility for founders
The proposed rule’s preamble confirms the current interpretation of the existing regulatory framework, focusing on the regulations that require employer sponsors to demonstrate an employer-employee relationship between a startup and a founder for the H-1B visa. It also seeks to provide more flexibility for founders.
The two things that historically challenged most startup founders in seeking an H-1B are these factors related to demonstrating an employer-employee relationship:
- The requirement that the startup founder be supervised by someone at the company — either a co-founder or a board — who supervises the founder and can fire them.
- This often led to founders being forced to reduce their equity stake in their startup to 50% or give up control of their companies to present a strong H-1B case, which compromised their ability to run their startups and forced them to give away valuable shares.
The proposed rule confirms that currently, even without future regulatory change, founders who hold more than half of the equity in their startup can still qualify for an H-1B or transfer their H-1B to their startup without relinquishing control of their startup to a co-founder or board. All founders need to prove an employer-employee relationship is to submit the required Labor Condition Application approved by the U.S. Department of Labor and an employment agreement or offer letter from their startup.
Another portion of the proposed rule that might be implemented in the future would clarify that an H-1B specialty occupation position may allow a range of degree fields. However, there must be a direct relationship between the required degree field or fields and the duties of the position.
Also, a plus for startup founders is the proposed rule would make it so that an H-1B beneficiary can perform nonspecialty occupation duties commonly associated with their work, such as negotiating contracts and meeting investors.
Greater flexibility for students
International students on F-1 visas who are working for a company under optional practical training (OPT) or STEM OPT work authorization can continue living and working in the U.S. under a cap-gap extension if they are selected in the H-1B lottery.
Currently, cap gap bridges an F-1 student’s work authorization between when the OPT or STEM OPT work authorization is set to expire and October 1, when they can officially start working under H-1B status.
The proposed rule would provide a cap-gap extension through April 1, adding six months to avoid a disruption in employment authorization. This would enable employers to avoid paying for premium processing when filing an H-1B petition on behalf of an F-1 student.
During the Trump administration, the USCIS no longer deferred to prior decisions when evaluating applications for extension of status, which resulted in a significant increase in denied H-1B visa renewals.
That policy was overturned by the USCIS under the Biden administration. The proposed rule codifies the existing policy of deferring to prior determinations “when no underlying facts have changed.”
In addition, the USCIS under the prior administration determined that an occupation was not a specialty occupation if it didn’t “always” require at least a bachelor’s degree, even though USCIS policy had been that a specialty occupation “normally” requires at least a bachelor’s degree. The proposed rule clarifies that “normally does not mean always.”
More cap-exempt employers
The proposed rule would enable more organizations to qualify for exemption from the annual H-1B cap and lottery. Each year, the number of H-1B visas issued is capped at 85,000: 65,000 for individuals with a bachelor’s or higher degree and 20,000 for individuals with a master’s or higher degree from a U.S. institution.
Some employers qualify to petition for an H-1B visa at any time without going through the lottery. These “cap-exempt employers” include institutions of higher education, nonprofits tied to institutions of higher education, nonprofit research organizations and governmental research organizations.
Under the proposed rule, the USCIS would expand the definition of a nonprofit research and governmental research organizations that “would likely increase the population of petitioners who are now eligible for the cap exemption and, by extension, would likely increase the number of petitions that may be cap-exempt.”
Leveled playing field
The USCIS received a whopping 758,994 eligible registrations in this year’s H-1B lottery in March. For the first time, more than half — nearly 408,900 — of the registrations were H-1B candidates who had more than one employer that registered them in the lottery.
While multiple registrations from the same employer for the same H-1B candidate are automatically disqualified from the lottery, multiple registrations from different employers for an H-1B candidate are allowed and improve a candidate’s chances of being selected.
The proposed rule seeks to level the lottery playing field, particularly for startups, and give H-1B candidates the power to choose if they have job offers from different companies. Under the proposed rule change, H-1B candidates would continue to be registered by different employers. However, each unique H-1B candidate would be entered into the lottery once regardless of how many times they were registered for the lottery. If an H-1B candidate is selected in the lottery, each employer that registered the candidate would be eligible to file a petition on the candidate’s behalf, which effectively means the individual can choose which employer to work for.
One potential downside of the proposed rule is what can be construed as a narrower definition of what qualifies as an H-1B specialty occupation. Currently, a specialty occupation is one that requires “a bachelor’s or higher degree in the specific specialty (or its equivalent) as a minimum.”
The proposed rule defines a specialty occupation as one that requires “a U.S. baccalaureate or higher degree in a directly related specific specialty or its equivalent.” However, the intention of the regulation is to bring H-1B requirements into line with the skills-based hiring approach of most modern employers.
Another downside would be for founders: The proposed regulation would limit the initial H-1B approval and the first renewal period to 18 months each for startup founders. After that, a founder’s H-1B would be renewable for another three years. Currently, the H-1B visa is valid for an initial three-year period and can be renewed for another three years regardless of whether the H-1B visa holder is a startup founder.
The comment period for the proposed rule closes on December 22, 2023. I urge you and all founders and employers to provide feedback — both positive and negative — on the proposed changes. Comments must be in English, but business owners and non-citizens are eligible to comment; you can even file anonymously!
After reviewing the comments and possibly making revisions, the DHS will issue a final rule. I am hopeful that the rule will go into effect in time for the H-1B lottery in March, which will determine the H-1B beneficiaries who can start in fiscal year 2025, which begins on October 1, 2024.
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