Congress has imposed an annual limit on the number of new H-1B petitions that can be approved in each fiscal year. The cap is set at 65,000.

Congress has imposed an annual limit on the number of new H-1B petitions that can be approved in each fiscal year. The cap is set at 65,000. There is an additional “Master's Cap” of 20,000 petitions that can be approved each year on behalf of individuals who earned a U.S. Masters Degree. These limitations are set forth in section 214(g) of the Immigration and Nationality Act. Because the limitations are set forth in a statute, changing them would require an act of Congress.

How is the Cap Administered?

The government's fiscal year runs from October 1 to September 30 each year. Those individuals accepted into the H-1B cap may therefore begin working on October 1 each year. However, because the I-129 Form, on which H-1B petitions are filed, permits the filing of petitions up to 6 months in advance of the employment start date, cap petitions may be filed starting April 1 of each year, for an employment start date of October 1st.

USCIS' longstanding practice for administering the cap has been to require H-1B petitioners (i.e., U.S. employers) to file cap-subject petitions each year on April 1st, and then to conduct a random lottery to select the 65,000 regular cap and 20,000 Masters Cap cases. USCIS issues receipt notices on all accepted petitions, while returning the H-1B petitions rejected in the lottery to the petitioner, without cashing the checks.

The H-1B regulations at 8 C.F.R. 214.2(h)(8)(ii)(B) require USCIS to accept H-1B cap cases for, at a minimum, the first five business days starting on, or immediately following, April 1st. If USCIS receives enough petitions to meet the 65,000 and 20,000 caps within those 5 days, they make an announcement that the cap has been reached. They then subject all petitions received during those five days to the random selection process. Even if the cap is reached on the first, second, third or fourth day of filings, USCIS must still collect all petitions received within those first five business days and subject them all to the selection process. In some years, typically when the U.S. job market is doing poorly and hiring is down, USCIS does not receive enough H-1B petitions within the first week of filing to hit the cap, and they will continue to accept petitions toward the cap throughout the year until they receive enough to hit the cap. Sometimes they hit the regular cap of 65,000 prior to hitting the 20,000 Masters Cap, sometimes vice-versa, but typically USCIS receives enough filings during the first five business days of April to hit both caps. Whenever the Masters Cap is hit first, and whenever the Masters and Regular cap are hit at the same time during the first five business days of April, the Masters Cap filers are subject to a distinct advantage in the lottery process. This is because USCIS selects the 20,000 Masters Cap cases first. Any eligible cases not accepted into that lottery are then placed back into the pool for possible selection in the regular lottery for the additional 65,000 regular cap cases. I will leave it to my smart IT professional clients to figure out the math on this, but that second bite at the apple significantly increases the odds of being selected in the lottery.

I am often asked what one's odds are of being selected. Apart from the information outlined above, it is impossible to predict even what the odds are in advance of April 1st, because it depends entirely on how many cases are filed during those first five days. In some years, the volume of filings is far greater than others and can significantly reduce one's chances of being selected. For example, this year (FY2016, starting 10/1/15), one's odds turned out to be somewhere between 1 in 3 and 1 in 4, which is the worst I've ever seen. In other years, when the cap is not reached during the first week of April, those filing during that week have a 100% chance of selection, and I've seen that happen too.

The H-1B lottery system is a rather outdated and clunky process which costs U.S. employers, their H-1B candidates, and the U.S. government, a lot of money unnecessarily. Most companies hire a lawyer to prepare and file their H-1B petitions. Lawyers' fees are earned when they prepare and file the case, whether or not it is accepted into the lottery. For cases rejected in the lottery, those costs cannot be recovered (even though the filing fee checks are not cashed). In addition, the government pays hundreds of thousands of dollars in labor and postage costs to process and return rejected petitions. A few years ago, USCIS proposed changing the administration of the H-1B lottery to avoid these unnecessary expenditures, but the changes were never implemented. It would be difficult to administer the pre-selection of cap cases as well, however, because there would be no guarantee that those granted a number would proceed to file a petition, and that process could become messy as well. So for the moment, this is the system we're stuck with.

Who Is Not Subject to the Cap?

Some foreign nationals are statutorily exempted from having any of their H-1B filings counted against they cap. They include foreign nationals employed at:

• Institutions of higher education, as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))
• A nonprofit entity that is related to, or formally affiliated with, an institution of higher education
• Nonprofit research organizations
• Federal government research organizations

In addition, section 214(g)(7) of the Immigration and Nationality Act provides that:

Any alien who has already been counted, within the 6 years prior to the approval of a[n] [H-1B] petition … toward the numerical limitations of paragraph (1)(A) shall not again be counted toward those limitations unless the alien would be eligible for a full 6 years of authorized admission at the time the petition is filed. Where multiple petitions are approved for 1 alien, that alien shall be counted only once.

The question often arises as to whether someone who has previously been counted against the cap remains subject to the cap for future filings. This section of the statute directly addresses this question. On the one hand, it would appear that only individuals on whose behalf an H-1B petition has previously been approved within the last 6 years is not subject to the H-1B cap upon a future filing. However, this interpretation is modified by the last line of the section above: “Where multiple petitions are approved for 1 alien, that alien shall be counted only once.” The statute does not specify the time period during which those multiple petitions may have been filed. So take, for example, someone on whose behalf an H-1B petition was approved in 2007. Assume he never entered the U.S. to take up employment in the United States. In all likelihood his H-1B petition was subsequently revoked because H-1B petitioners are required to notify USCIS when an H-1B worker does not report to work, and USCIS' practice is to revoke these petitions. Nevertheless, the foreign national was counted against the cap and the subsequent revocation of the petition does not change that fact. Then, in 2015, well over 6 years later, the H-1B cap has already been met, yet a U.S. company wishes to transfer him to the U.S. to start working immediately. Is the petition subject to the cap?

I would argue that it is not subject to the cap because “multiple petitions are approved for one alien” in this case and, per the statute, that alien shall be counted only once. Does it matter that one petition was filed in 2007 and the other in 2015? I say no, because the statute doesn't specify any timeframe on when the multiple petitions can be filed.

In addition to this statutory argument, USCIS published a guidance memo in 2006 outlining the “Remainder Option” for H-1B cap beneficiaries. According to the memo, those who have previously been counted against the H-1B cap, and have since remained outside the United States for at least 365 days, have two options:

1. They can either be counted against the cap in a fresh filing and receive another full 6 years of H-1B status; or
2. They can be considered not subject to the cap and use up whatever time is remaining of the initial 6 year grant of H-1B status.

While the memo assumes that someone claiming the “remainder option” will have previously entered the United States in H-1B status, there same logic would apply to a case for someone never previously admitted to the United States in H-1B status despite having been counted against the cap based on an approved but never used H-1B petition.

Finally, the I-129 Form's H-1B Supplement contains a checklist for H-1B cap exemption which contains the following language:

The beneficiary of this petition has been counted against the cap and: (1) was previously granted status as an H-1B nonimmigrant in the past 6 years, (2) is applying from abroad to reclaim the remaining portion of the 6 years, or (3) is seeking an extension beyond the 6-year limitation based upon sections 104(c) or 106(a) of the American Competitiveness in the Twenty-First Century Act (AC21).

According to this language, #2 would apply to an alien never previously admitted to the United States but previously counted against the H-1B cap based on an approved petition.

While there is some legal ambiguity surrounding whether someone previously counted against the cap more than 6 years ago would be considered subject to the cap if they were never previously admitted to the United States, based upon the language in INA § 214(g)(7) stating that an alien is only considered “not subject” to he cap if he was counted within the last 6 years, there is substantial legal authority for arguing that such a person would be considered not subject to the cap. In fact, our office has filed multiple H-1B petitions using this legal argument, and we have never had one rejected or denied because USCIS determined that the person was, in fact, subject to the cap. That is not to say it's impossible that USCIS will not adopt a different interpretation at some point. However, at the present time, USCIS' interpretation is favorable to beneficiaries in this regard.