by Adam J. Kneeland

On October 20th, the Department of Homeland Security announced a list of proposed changes to current H-1B rules intended to improve the efficiency and integrity of the H-1B program. 
The most relevant/significant changes include the following:

H-1B petition changes

• Revising the regulatory definition of a specialty occupation to require that such positions must require a degree/s with a direct relationship to the duties of the position;
• Clarifying when an amendment or new petition must be filed due to a change of employment;
• Codifying deference to previous approvals in cases where there has been no material change; and
• Prioritizing third party, aka, “end client,” position requirements when evaluating whether a position qualifies as a specialty occupation rather than prioritizing the petitioner's requirements.

Cap-specific changes

• Selecting cap registrations by an individual's name rather than petitioner's registration (i.e., a “one name, one entry” system);
• Disallowing related entities from submitting registrations for the same beneficiary;
• Allowing H-1B cap petitions to request start dates later than October 1 of the relevant fiscal year; and
• Granting auto-extensions to F-1s waiting for H-1B change of status approvals through April 1 of the relevant fiscal year (currently granted through October 1 of the same fiscal year).

Assorted changes

• Requiring evidence of maintenance of status with H-1B extensions;
• Changing the definition of “nonprofit research organization” and “governmental research organization” by replacing “primarily engaged” and “primary mission” with “fundamental activity”; and
• Clarifying that beneficiary-owners may be eligible for H-1B status, while setting reasonable conditions for when the beneficiary owns a controlling interest in the petitioning entity

Potential impact

It's important to note that even if each change is eventually implemented we can't know exactly how they'll be applied and the impact is difficult to anticipate. Several of the proposed changes, including some not noted in detail here, simply seek to codify USCIS's current practice, which may indicate that this is less of an attempt to dramatically overhaul the adjudication of H-1B petitions and more an attempt to affirm many of USCIS's current best practices. Others could result in significant changes in the requirements and strategy of some H-1Bs.

Here are some possible effects of the most significant changes: 

Deference to prior approvals 

This can only be an overall good impact; extensions with the same employer will be given more benefit of the doubt. 

Changes to cap selection process

In the Fiscal Year (FY) 2024 cap, USCIS saw a significant jump in the number of total registrations submitted. According to USCIS, this was the result of related entities registering potential employees multiple times in order to increase the odds of selection, agreeing to contract an employee to the preferred entity regardless of which company's registration was chosen. 

In response, USCIS now wants to select registrations by employee name rather than by petitioner's registration. This would make the cap essentially a “one name, one entry” system, evening the odds. Any employer wishing to submit a petition on behalf of a new H-1B employee would need to submit a registration, but per USCIS, “each unique individual who has a registration submitted on their behalf would be entered into the selection process once, regardless of the number of registrations filed on their behalf.” 

Moreover, USCIS seeks to explicitly forbid related entities from submitting duplicate registrations “absent a legitimate business need.” 

Seeing as our office saw our overall selection rate dramatically drop in the FY 2024 registration when compared to previous years, this would be an overall net good for smaller businesses seeking to petition for a new H-1B employee. 

Changes to the definition of Specialty Occupation 

Requiring that any offered position's required degree be directly related to the position is something that our office already keeps in mind when submitting H-1B petitions. This change, however, may signal greater scrutiny from USCIS. It's possible that USCIS could issue more Requests For Evidence (RFEs) regarding a proffered position's specialty occupation qualification. We saw many, many RFEs for this pre-2020, and while not always difficult to address, they did delay the eventually approval.  

Third Party (“End Client”) Requirements

Of all the changes proposed, this is the one that looks like it would have the most visible practical effect on the H-1B process if implemented. USCIS would look primarily at a third party's qualification requirements when evaluating whether a job is a specialty occupation and not at the requirements set by the employer/petitioner. 

This would only apply to employees who are staffed to a third client and not those who are simply providing services as a byproduct of their work (i.e., if there's a purchase/work order, the employee is most likely staffed at a third party, and otherwise is probably just providing services). This itself could result in more RFEs seeking to clarify whether the employee is staffed even when they aren't or even RFEs assuming an employee is being staffed when they aren't.

More than this, prioritizing a third party's position requirements would require an end client to provide documentation of those requirements, either in the form of a letter or position description. In the past, end clients were often reluctant to provide any documentation; this could mean more RFEs for materials that end clients refused to provide up front, delaying H-1B processing. If the end client's requirements did not list a degree directly related to the position, USCIS could choose to deny a petition even after getting end client materials. 

Here's an example of a worst-case scenario that could potentially result: 

Employer A wishes to employ a software developer and contract them out to work at end client Z. End client Z refuses to provide any additional materials up front; petitioner A's petition is issued an RFE requesting more documentation regarding the end client's job requirements. After three weeks, end client Z eventually provides a letter and a job posting that state the requirements of the position are simply a degree in an engineering field. USCIS receives the requested documentation, but denies the petition, saying that the job requirements aren't directly related to the position because a degree in engineering is too broad. After all, USCIS says, electrical engineering is an engineering degree that is not directly related to software development. 

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These are just tentative speculation as to the changes we might see if these rules are implemented. We encourage a review of the proposed changes at the link provided here and here

Readers are encouraged to submit comments to DHS within 60 days of October 23, 2023.

Our office is also happy to discuss any questions or concerns.