New DHS Rule Tightens H-1B Program Criteria

The issue

The Department of Homeland Security (DHS) has released a long-planned regulation to tighten H-1B eligibility criteria and impose new obligations on H-1B employers after pushing the rule through a fast track regulatory review. The rule will be published in the Federal Register on October 8 and take effect 60 days later. It will apply to all H-1B petitions, including extensions and amendments, filed on or after the effective date of the rule.

The agency issued the regulation as an interim final rule, citing the economic impact of COVID as a justification for the truncated rulemaking procedure. Employers and other members of the public will have the opportunity to provide feedback for 60 days after publication, but DHS will not consider the feedback before the rule takes effect.

President Trump made H-1B reform a priority in his June proclamation restricting the entry of H-1B, L-1 and certain J-1 nonimmigrants. The new DHS regulation, along with a companion Department of Labor regulation affecting wage minimums for the H-1B and PERM programs, are the result of that proclamation. 

The following are some key changes to the H-1B program included in the rule.

Tougher H-1B specialty occupation criteria

An H-1B specialty occupation is one that normally requires a bachelor’s degree or equivalent as a minimum requirement. The new regulation tightens the regulatory definition of a specialty occupation to mandate that the bachelor’s degree requirement be more directly related to the specific H-1B specialty. The rule explicitly states that a position is not a specialty occupation if a general degree – such as business administration or liberal arts – is sufficient to qualify, without any further specialization.

The new regulation also removes an option that permitted a petitioning employer to establish that the required degree is common in the industry for the specialty occupation. The revised version requires the petitioner to establish that the required degree is the minimum requirement for entry into parallel positions at similar organizations.

Other key H-1B definitions

The new regulation adds definitions that distinguish a “worksite” from a “third-party worksite.” Under the rule, a worksite is the physical location where the work is actually performed by the H-1B worker and must conform to the U.S. Department of Labor LCA rules. A third-party worksite is a place “other than the beneficiary’s residence in the United States” that is not owned, leased or operated by the petitioner.

The rule also clarifies how USCIS will determine whether an employer-employee relationship exists between the H-1B petitioner and the beneficiary. The regulation draws from longstanding common-law factors and adds new elements such as whether the beneficiary produces an end-product that is directly linked to the petitioner’s line of business. It also includes commonly used elements such as right to control, supervise, hire and fire. USCIS’s former policy memorandum on the employer-employee relationship was invalidated by a federal court earlier this year.

Evidentiary requirements and validity periods for H-1B offsite placements

Where a beneficiary will be placed at third-party worksites, the regulation reinstates and codifies a requirement that the H-1B petitioner submit evidence such as contracts, work orders, or other similar evidence to establish that the petitioner will have an employer-employee relationship with the beneficiary, and that the beneficiary will perform services in a specialty occupation at the third-party worksite(s). The rule also reinstates a requirement to provide an itinerary for H-1B employees who will work at multiple worksites. USCIS’s prior itinerary and end-client documentation policy memoranda were invalidated by a federal court earlier this year.

USCIS will also limit the H-1B approval validity period for third-party placement petitions to a maximum of one year (from a current maximum of three years). 

Notably, the rule does not require end-clients to obtain certified Labor Condition Applications (LCAs) for H-1B workers placed at their worksite, as had been anticipated. Such a requirement could have created de facto joint employer liability for compliance with obligations concerning H-1B wages and working conditions. 

Codification of USCIS site visit program

For more than a decade, USCIS’s Fraud Detection and National Security Directorate has conducted site visits to H-1B work locations to verify compliance with the terms of the H-1B petition. The new regulation codifies USCIS’ H-1B site visit authority, including:

• the ability to conduct site visits before or after the approval of an H-1B petition
• the authority to conduct visits at third-party worksites
• the authority to deny or revoke a petition as a result of a petitioner’s or third party’s refusal to cooperate with or permit a site visit

What’s next for the regulation

Before the rule takes effect, employers will have 60 days to offer feedback to DHS on the practical impact of the rule on their business and operations. The regulation is expected to be challenged in court.

If your organization wishes to comment, please contact your designated Fragomen professional or the firm’s Government Strategies and Compliance Group.

This alert is for informational purposes only. If you have any questions, please contact the immigration professional with whom you work at Fragomen.