United States: Final H-1B Modernization Rule Advances to Federal Review

The Biden Administration proposed a broad-based modernization of the H-1B program and related programs in 2023. The first phase of the regulation – addressing the H-1B cap registration system and lottery – took effect in March of this year. The second phase of the regulation could implement a number of substantive changes to H-1B eligibility criteria, as well as introduce new and updated employer obligations, expand USCIS’s authority to verify employers’ nonimmigrant petitions, and codify the agency’s longstanding policy of deference to its prior approvals.

Though the contents of the final regulation will remain confidential until it is released for publication, it may contain one or more of the following elements of the proposed regulation:

• Qualifying H-1B occupations. As proposed, the rule would substantially revise the definition of an H-1B specialty occupation. Some of the revisions would introduce greater flexibility to the definition, and some could narrow eligibility. In particular, the rule could clarify that an occupation “normally” requiring a bachelor’s degree doesn’t mean that it must “always” require a bachelor’s degree. It could also clarify that a position may qualify as a specialty occupation even if the employer accepts a wide range of fields for a qualifying bachelor’s degree. However, the proposed rule would also mandate that the required degree field must be “directly related” to the position and would prevent positions from qualifying as an H-1B specialty occupation if the employer accepts degrees in a general field, including Business Administration. The proposal also sought a new regulation for off-site placements, which would provide that when a beneficiary is staffed to a third party, the requirements of that third party, and not the petitioner, would be considered most relevant when determining whether the position is a qualifying specialty occupation.
• H-1B location changes and petition amendments. The rule could codify the agency’s longstanding requirement that an employer must amend a nonimmigrant petition due to material changes in an H-1B worker’s place of employment, and would require the amendment to be filed before the change takes place. The rule could also clarify the circumstances under which a location change would not require an amendment, including location changes within the area of intended employment listed in the DOL labor condition application (LCA) supporting the existing petition.
• Business owners’ H-1B eligibility. The regulation could clarify that H-1B beneficiaries who are owners of a petitioning entity may be eligible for H-1B status, subject to some conditions where the beneficiary owns a controlling interest in the petitioner.
• Bona fide H-1B employment. The rule could codify the agency’s longstanding practice of requesting contracts and other evidence that a bona fide, non-speculative job offer exists for each H-1B beneficiary but may eliminate the itinerary requirement for H-1B petitions. As proposed, the rule would also add a requirement that the H-1B petitioner have a legal presence in the United States and be amenable to service of process here.
• Deference to prior nonimmigrant adjudications. The proposed rule sought to codify USCIS’s current policy of deference to its prior adjudications, which would give employers greater predictability when seeking the extension of a nonimmigrant employee’s stay where there has been no material change in the facts underlying the case. The deference policy was rescinded during the first Trump Administration, resulting in a significant surge in requests for evidence (RFEs) and case denials. The Biden Administration reinstated the policy. If codified, the policy would be less vulnerable to rescission.

• Greater F-1 cap-gap protections. The final rule could provide a longer cap-gap protection period (extending the period from October 1 to potentially as late as April 1 of the following calendar year) for F-1 students who are beneficiaries of timely petitions to change status to H-1B. As proposed, the rule sought to provide up to an additional six months of status and employment authorization to help qualifying F-1 status holders avoid lapses in status and work authorization while awaiting a change to H-1B status.

• Mitigation of the impact of lengthy petition adjudications. The rule as proposed would allow employers to amend the requested nonimmigrant employment validity period in a petition if the petition’s requested validity period has already passed by the time the petition is adjudicated.

• Codification of the site visit program. The forthcoming final rule could codify USCIS’s long-established Fraud Detection and National Security (FDNS) unit’s site visit program and clarify that refusal to comply with a site visit could result in the denial or revocation of a petition.

If the rule clears OMB review, it would be published in the Federal Register with an implementation date. Though the timing of the regulation is not yet known, an implementation date of 30 days after publication is possible. Because the regulation is being finalized in the last months of the Biden Administration, it could be subject to suspension or withdrawal by the incoming Trump Administration.

Fragomen is closely tracking the progress of the regulation and will provide an update when the regulation clears federal review.