H-1B Work Permit Filings: Will You Beat the Cap?

Seyfarth Synopsis: Employers should identify as soon as possible any current employees and employment candidates who may require H-1B work permit sponsorship before October 1, 2021, given that it is anticipated USCIS will again receive H-1B requests far in excess of the annual quota resulting in a random lottery-type selection process. This year, USCIS has announced the implementation of electronic registration for all cap-subject petitions.

This Legal Update is intended to enable employers to identify any current employees and employment candidates who may require H-1B work permit sponsorship before October 1, 2021. We recommend that employers identify any such candidates as soon as possible.

On December 6, 2019, USCIS announced the implementation of an electronic registration system for all cap-subject H-1B petitions. The initial registration period will run from March 1, 2020 until March 20, 2020 to be followed by a lottery and then a 90-day filing window for certified registrants. Employers must be prepared to submit critical data points associated with each H-1B petition during this 20-day electronic registration period.

Background

There is an annual limit on the number of H-1B petitions that USCIS can approve during the government's 2021 fiscal year (beginning October 1, 2020 and ending September 30, 2021). The H-1B cap for fiscal year 2021 is 65,000 (of which about 6,800 are reserved for nationals of Chile and Singapore under Free Trade Agreements with those countries). It is anticipated that USCIS may begin accepting petitions for FY 2021 as early as April 1, 2020.

There is an additional quota of 20,000 H-1Bs reserved for persons holding a master's degree or higher awarded by an accredited college or university in the United States. To be eligible for the "master's cap," the employee must have completed the master's degree program prior to the filing date. Both the regular cap and the master's cap were exhausted last year during the first week of availability.

If USCIS receives more than 65,000 registrations to meet the standard cap and 20,000 H-1B registrations towards the so-called master's cap, the Service will conduct two separate lotteries to identify the cap registration winners.  USCIS will first apply the random selection process to all cap registrations received to identify the initial 65,000 winners.  Any master's cap registrations not selected in the first lottery will be eligible for selection in  a separate H-1B master’s cap lottery, effectively being granted two opportunities at H-1B status.

Anticipated Unavailability of H-1B Work Permits Means Filing Early

For FY 2020, USCIS confirmed receipt of 201,011 H-1B petitions during the filing period (up from 190,098 in FY 2019), resulting in a 42% chance of selection overall, with materially higher mathematical odds for U.S. advanced degree holders. We do not know how quickly the H-1B numbers will be exhausted this year, but the most conservative strategy is to assume that the H-1B numbers will be unavailable after the initial registration period. Once the H-1B numbers are exhausted, new H-1B work permits will not be available until October 1, 2021.

Changes to Process

In January 2019, USCIS published a Final Rule amending the regulations to create a new process requiring employers to electronically register for the H-1B cap selection system prior to filing a cap-subject H-1B petition. USCIS was unable to implement the registration in time for the FY 2020 H-1B filing season. On December 6, 2019, USCIS announced the implementation of registration for the FY 2021 H-1B filing season.

Under the electronic registration system, employers will be required to submit critical data points related to the employer and the beneficiary through USCIS’ electronic registration system from March 1, 2020 until March 20, 2020 for a fee of $10.00 per registration.

Presuming the annual quota is exceeded during the initial registration period, USCIS will run all electronic registrations through a randomized electronic lottery system and certify which petitions may be filed with USCIS. Deferred registrations may remain pending in the system for the rest of the applicable fiscal year in case USCIS needs to select additional registrations. Upon electronic certification, an employer will have 90 days to file a cap-subject H-1B petition for the specified beneficiary. Under the Final Rule, USCIS has the discretion to suspend the registration process at any time if it determines that the registration process is inoperable for any reason.

Persons Affected

Employers should consider filing H-1B petitions for any current employees who hold F-1 student status and who will thus need H-1B status to continue working once their F-1 Employment Authorization (known as Optional Practical Training or "OPT") expires. In addition, any pending hires should be assessed to determine whether an H-1B will be required for eventual continued employment, including those in J-1 academic programs with limited practical training time as well as those who currently reside outside the United States. Further, any current employees who hold TN, E-3, or L-1 status and who are beginning the green card process may need to convert to H-1B status.

Exceptions

With some exceptions, current H-1B workers are not subject to the annual cap. Non-cap cases include H-1B workers extending their status, changing from one H-1B employer to another, changing the terms of existing H-1B employment, or filing for a second (concurrent) H-1B position. In addition, foreign nationals seeking to work for an institution of higher education, for a related or affiliated nonprofit entity, or for a nonprofit research organization or a government research organization are not subject to the H-1B cap.

Alternatives to the H-1B Work Permit

In some cases, there may be alternatives to the H-1B work permit. If an affected employee falls into one of the following categories, that employee may not need to file for an H-1B work permit in April:

• Citizens of Canada or Mexico who are eligible for a TN visa. Please note, however, that not all H-1B eligible Canadian or Mexican employees will qualify for TN status.  In addition, TN visa classification falls under the North American Free Trade Agreement (NAFTA) which continues to be closely examined by the current administration.
• Citizens of Australia, Chile, or Singapore.
• The spouse of an L, E or H-1B work permit holder, who is eligible for spousal employment authorization (EAD).
• J-1 nonimmigrants who have at least 18 months of academic training available as of April 1, 2017.
• With limited exceptions, H-1B employees who have held H-1B status at any time during the last six years with a cap-subject employer.
• A foreign national who is married to a U.S. citizen and has received or will receive an Employment Authorization Document in connection with the pending green card process.
• Certain other foreign nationals who may qualify for O, E, or L visas.

Conclusion

Employers should act now to identify and begin H-1B processing for candidates or current employees who require sponsorship and who do not meet one of the above exceptions. If an employer misses the registration period or filing deadline for an employee who requires H-1B sponsorship, the employee can lose legal status in the United States, including permission to work. Seyfarth is continuing to monitor for announcements and updates related to the H-1B electronic registration process and will publish updates to this alert accordingly.