As we reported in our Alert of March 27, 2023, United States Citizenship and Immigration Services (USCIS) has completed its Fiscal Year (FY) 2024 H-1B cap registration process. USCIS completed the two lotteries mandated under this process (one for the 65,000 regular quota and one for the 20,000 U.S. advanced degree set-aside) and notified entities whose registrations were chosen in the lotteries. If such a notification has not been received by now, the registration was not selected. Entities can now file H-1B petitions for the beneficiaries named in the selected registrations any time until June 30, 2023. In this Alert, we will take a look back at last month’s registration process, describe what happened under this process, especially with respect to the historically low percentage of registrations selected, and attempt to offer some explanations of why the selection percentage was so low. We will then review options that may be available to entities whose registrations were not selected to continue employing the persons for whom they filed registrations.
What Happened in the FY2024 H-1B Cap Registration Process?
Although the USCIS has not yet published official statistics on the volume of H-1B cap registrations it received this year, the selection percentages experienced by our clients, as well as information we’ve received regarding the selection percentages experienced by clients of other immigration practitioners nationwide, suggest that the overall selection rate this year was approximately 15%, with the selection rate for individuals without a U.S. Master’s degree possibly being as low as 10%. Last year, the USCIS received 483,927 registrations and chose 127,600, resulting in an overall selection percentage of 26.4%. The relatively low selection rate for FY2024 suggests a significant increase in the number of registrations submitted this year, but it is impossible to know exactly how many more were submitted until USCIS shares additional information (i.e., the number of cases selected, or the total number of registrations submitted).
Why Was the Volume of Registrations Submitted so High this Year?
The high volume of H-1B cap registration filings and the corresponding low selection percentage of H-1B cap registrations came as a surprise to some observers of the immigration process, many of whom thought that current economic uncertainties, the possibilities of an impending recession, and recent large reductions in force by technology companies signaled a decreased need for H-1B workers this year. The fact that this turned out not to be the case may be explained by the fact that many companies look ahead six months or more in their hiring practices, and may expect the currently uncertain outlook to improve by October 1, 2023, when the beneficiaries of their registrations and H-1B petitions will first be eligible to work. Another contributing factor may have been that this is the last year when the filing fee of H-1B cap registration will be negligible, at $10 per registration (this fee is anticipated to increase to $215 next year). Another plausible contributing factor is that certain large IT outsourcing companies may have filed a large number of registrations for workers who are not currently in the United States.
Will there be Additional Lotteries?
For the FY2022 H-1B cap lottery (held in March 2021), USCIS received 308,613 H-1B registrations and initially selected 87,500 registrations. Following this selection, USCIS received insufficient H-1B petitions to fill the FY2022 numerical allocations, so the agency conducted a second lottery in July 2021 and selected 27,717 additional registrations, and then a third lottery in November 2021 that resulted in 16,753 additional selections. For FY2023 (held in March 2022), USCIS’ initial selection of 127,600 registrations resulted in the filings necessary to fill the numerical allocations and no further lotteries were held. This year, the expectation is that USCIS selected more registrations than the number initially selected in 2021, but fewer than the number selected last year. Since the USCIS is now more familiar with how the H-1B cap selection and H-1B petition filing process works in practice, it is probable that the number of initial selections made will be enough to avoid a second set of lotteries. Of course, if the number of H-1B petition filings falls below a level that is anticipated, a second lottery may become necessary.
What Can a Company Whose Registrations Were Not Selected Do?
Whatever the explanation is for the fact that the percentage of registrations selected this year is lower than in previous years, many companies now find themselves in the situation of having to develop an alternative strategy to employ a foreign national worker for whom they had hoped to obtain H-1B status. The following is an examination of the options that may be available to employ such a person in a status other than H-1B.
Continue Employing the Worker in His or Her Current Status
If the prospective H-1B beneficiary currently holds a status (such as L-1, E-3, O-1 or TN) that authorizes employment, he or she may continue to hold this status, and the unsuccessful H-1B registration will have no bearing on his or her ability to maintain this status. Employers should be mindful, however, that L-1 status has a statutory limit of five or seven years of time physically present in the U.S., and unlike H-1B status, there is no mechanism to extend this time beyond the statutory limits. E-3, O-1, and TN status do not have such specific limits, but an extended presence in the United States in these statuses may be problematic. Please note that the unsuccessful H-1B cap registration will not be considered evidence of immigrant intent.
Continue Employing the F-1 Worker Under Optional Practical Training
A large community of H-1B cap registration beneficiaries are students in F-1 status who are currently working under a grant of Optional Practical Training (OPT). If the F-1 worker is in his or her first year of OPT, a two-year extension of the OPT period may be secured if (1) the student holds a degree in a Science, Technology, Engineering or Mathematics (STEM) field and (2) the employer participates in the eVerify employment eligibility verification system. A list of eligible STEM degree fields may be accessed here. If a student is currently participating in OPT based on an advanced degree in a non-STEM field but previously received a Bachelor’s degree in a STEM field, he/she may be able to apply for a STEM OPT extension based on the Bachelor’s degree, provided it was awarded by an accredited United States college or university. Any work performed under the grant of OPT must be directly related to the F-1 worker’s academic field and employers of such workers under the two-year STEM OPT extension must implement a formal training plan for the student and must document this through the completion and maintenance of Form I-983.
Seek O-1 Extraordinary Ability Nonimmigrant Status
O-1 status is reserved for individuals who have extraordinary ability in the sciences, arts, education, business, or athletics, with a lower level of achievement required for persons working in the motion picture or television industry. The current presidential administration has voiced its commitment to attract STEM talent from overseas (https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/21/fact-sheet-biden-harris-administration-actions-to-attract-stem-talent-and-strengthen-our-economy-and-competitiveness/) and O-1 status was expressly mentioned as a vehicle to bring such talent to the United States by the administration. This larger political context makes this an opportune time to pursue an O-1 for potentially qualified individuals, and we feel that this is an option that should be pursued aggressively by employers of foreign nationals with STEM expertise. Although the threshold of achievement required is dauntingly high (requiring, for example, evidence of the receipt of prizes, memberships in associations that require outstanding achievement, authorship of scholarly articles, original contributions of major significance, and high compensation), USCIS, in view of the presidential initiatives, may be especially amenable to O-1 petitions filed on behalf of persons with proven STEM expertise and a track record of significant accomplishments in their fields.
Have the Student Enroll in a University Course of Study and Obtain Curricular Practical Training
Curricular Practical Training (CPT) is a program that allows F-1 students to engage in employment while enrolled in a course of study. The employment offered must involve training received by the student and this training must relate directly to the student’s major area of study. The employer’s training must also be an integral part of the school’s established curriculum. Many universities will require the prospective employer to engage in a work/study or similar cooperative agreement with the university. Most universities require that a student have completed a full year of a degree course before becoming eligible for CPT, but some institutions do allow students to engage in full-time CPT employment immediately upon enrolling. The CPT programs offered by these schools are commonly referred to as “day one” CPT programs. Participation in such programs has become very popular with persons whose H-1B cap registrations were not selected, and, as long as all of the requirements for a legitimate CPT program are met (including attending classes), these programs provide a viable employment option for unsuccessful registrants. Some caution should be exercised with respect to the student’s choice of school, however, since a number of schools offering “day one” CPT programs have attracted the attention of Immigration and Customs Enforcement (ICE), the agency responsible for punishing violations of immigration law.
Seek a Nonimmigrant Status that is Available to Certain Nationalities
There are several nonimmigrant statuses whose requirements are similar to those of H-1B status, but which may be held only by nationals of certain countries. These statuses include Trade NAFTA (TN) status, which is available only to Canadian and Mexican nationals, E-3 status, which is available only to Australian nationals, and H-1B1 status, which is available only to Chilean and Singaporean nationals. If a person for whom an unsuccessful registration is a citizen of one of these countries, we recommend evaluating whether the appropriate free trade visa is a good option.
Seek a Spousal Status that Authorizes Employment
If the non-selected worker is married to a foreign national who holds E-1, E-2, E-3 or L-1 status, he or she may seek dependent E or L-2 status. These statuses allow employment authorization incident to status, which means that an EAD is not required. Spouses of persons in H-1B status may also seek employment authorization if the H-1B principal has reached a certain stage in the green card process. In this case, H-4 status must be sought and an EAD obtained.
If the spouse of the non-selected worker is a United States citizen, the worker may apply for permanent residence and employment authorization as an immediate relative through a relatively streamlined process. If the spouse is a permanent resident, permanent residence may also be sought by the worker, but the process can be lengthier and more complicated.
Start the Green Card or Permanent Residence Process
It is also possible to start the green card or permanent residence process immediately for an employee whose H-1B cap registration was not selected. Although most employers typically only embark upon this process for employees who have been employed for a certain amount of time and for whom the employer envisages long-term employment, there is also no legal prohibition on starting this process for a recently hired employee that the company envisages employing long-term. The objective of this strategy would be to reach a stage where the employee has obtained employment authorization (for example, after having filed an adjustment of status (AOS) application and having received an Employment Authorization Document (EAD)) before the employee’s nonimmigrant status expires.
An employer starting the green card process under these circumstances should be mindful of certain caveats. This strategy will be generally viable only for employees of certain nationalities who can be expected to obtain work authorization before their current nonimmigrant status is no longer an option. Because of immigrant visa backlogs, most Indian and Chinese nationals (unless they are in the First Preference EB-1 category, as discussed below) will simply not be able to file AOS applications before their nonimmigrant statuses expire. In addition, if the employee for whom the green card process is started holds a status (such as F-1 or J-1) that prohibits immigrant intent, considerable caution should be exercised to ensure that the ongoing green card process does not work to the detriment of the employee’s nonimmigrant status. For example, disclosure of this process by an F-1 student to United States Customs and Border Protection when reentering the United States could lead to a denial of admission. Similarly, a university’s F-1 Designated Student Officer or a J-1 trainee’s program sponsor could void an F-1 student’s SEVIS record or J-1 program participation upon learning of the pending green card process.
The best candidate for the green card process in this situation will be a person eligible for the EB-1 immigrant category (which is reserved for Aliens of Extraordinary Ability, Outstanding Professors and Researchers, and Multinational Executives and Managers) whose priority date is current. An immigrant petition and AOS application could be filed concurrently for such a person and an EAD obtained within a reasonable time frame. An EB-2 National Interest Waiver petition is a less attractive option, since the EB-2 category is at present backlogged for all countries.
Have the Employee Continue to Work Remotely from Overseas
A possible strategy to continue employing a worker whose H-1B cap registration was not selected is to have that person move to a different country and work there through a remote telecommuting arrangement. An employer considering such an arrangement should consider carefully a number of problems that may arise, however. First, it should be determined if the employee has authorization to work in the relevant country. This will not be necessary for a worker working in a country whose citizenship he or she holds, but will be an issue for any other worker. Second, the taxation implications of having a worker work in a given jurisdiction should be assessed. For example, having a person provide services to a United States entity from a certain location overseas (even from a home office) could result in the establishment of a business that would be subject to certain regulations and forms of taxation. Countries that offer Digital Nomad visas, such as the Bahamas, Costa Rica and Mexico may be attractive destinations, but the tax implications should still be assessed.
Once the USCIS provides the precise number of H-1B cap registrations submitted for FY2024, we will be in a better position to understand why this year’s registration filing process turned out the way it did and will provide a further analysis. In the meantime, our attorneys are ready to discuss the availability of any of the options outlined above and to offer a strategic analysis of how best to address and counteract the non-selection of a worker in the H-1B cap selection system.