The U.S. Department of Homeland Security (DHS) has published a notice of proposed rulemaking (NPRM) that would modernize and improve the regulations for the H-1B specialty occupation worker program. Written comments are due on or before December 22, 2023.
Though the 94-page long proposed rule has many components, the focus of this post is to highlight how it may impact the FY2025 H-1B Cap registration and selection process; H-1B petition filings; and associated compliance.
Through issuance of a final rule in 2019, DHS developed a new way to administer the H-1B cap selection process to streamline processing and provide overall cost savings to employers seeking to file H–1B cap- subject petitions. In 2020, USCIS implemented the first electronic registration process for the FY 2021 H-1B cap.
During the course of past few years, DHS has seen an increase in the number of beneficiaries with multiple registrations submitted on their behalf, an increase in the number and percentage of registrations submitted for beneficiaries with multiple registrations, an increase in the number of beneficiaries having five or more registrations submitted on their behalf, and a substantial increase in the total number of registrations submitted for a unique individual.
Under current regulations, there is no limit on the number of registrations that may be submitted on behalf of one unique individual by different.
DHS is not proposing to limit the number of registrations that may be submitted on behalf of a unique individual by different registrants, provided that the registrants are not working with (or have not agreed to work with) another registrant, petitioner, agent, or other individual or entity to submit a registration to unfairly increase the chances of selection for a beneficiary.
However, the DHS data show that multiple registrations on behalf of the same individual are increasing. DHS is concerned that this increase in multiple registrations may indicate strategic behavior by registrants (and beneficiaries working with registrants) to submit increasing numbers of registrations, which may be frivolous, to greatly increase a beneficiary’s chance of selection. This negatively affects the integrity of the registration system and selection process.
DHS is worried that individuals with large numbers of registrations submitted on their behalf are potentially misusing the registration system to increase their chances of selection and that the registrations submitted may not represent legitimate job offers.
Accordingly, the aim of the new rule is to limit the potential for abuse of the registration process in three ways.
First, if United States Citizenship and Immigration Services (USCIS) determines that a random selection process should be conducted, DHS is proposing to shift from electing by registration, to selecting by unique beneficiary. Under the new proposal, 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. By selecting a unique beneficiary, DHS would better ensure that each individual has the same chance of being selected, regardless of how many registrations were submitted on their behalf.
Second, DHS is proposing to extend the existing prohibition on related entities filing multiple petitions by also prohibiting related entities from submitting multiple registrations for the same individual. Prohibiting related employers from submitting multiple registrations, absent a legitimate business need, would prevent employers from submitting registrations when they would not in fact be eligible to file a petition based on that registration, if selected.
Third, DHS is proposing to codify USCIS’s ability to deny an H–1B petition or revoke an H-1B petition’s approval when the petition is based on a registration where the statement of facts (including the attestations) was not true and correct, inaccurate, fraudulent, or misrepresented a material fact
#1. Beneficiary Centric Selection
Under the proposed update to the random selection process, registrants would continue to submit registrations on behalf of beneficiaries and beneficiaries would continue to be able to have more than one registration submitted on their behalf, as allowed by applicable regulations. If a random selection were necessary, then the selection would be based on each unique beneficiary identified in the registration pool, rather than each registration. Each unique beneficiary would be entered in the selection process once, regardless of how many registrations were submitted on their behalf.
If a beneficiary were selected, each registrant that submitted a registration on that beneficiary’s behalf would be notified of selection and would be eligible to file a petition on that beneficiary’s behalf. DHS believes that changing how USCIS conducts the selection process to select by unique beneficiaries instead of registrations would significantly reduce or eliminate the advantage of submitting multiple registrations for the same beneficiary solely to increase the chances of selection and should give all beneficiaries an equal chance at selection. Per DHS, It could also result in other benefits, such as giving beneficiaries greater autonomy regarding their H-1B employment and improving the chances of selection for legitimate registrations.
Because the integrity of the new selection process would rely on USCIS’ ability to accurately identify each individual beneficiary, DHS is proposing to require the submission of valid passport information, including the passport number, country of issuance, and expiration date, in addition to the currently required information.
Beneficiaries would be required to supply the same identifying information and passport information to all registrants submitting registrations on their behalf. Even if a beneficiary had more than one valid passport, such as a beneficiary with dual citizenship, a beneficiary would only be able to be registered under one of those passports.
#2. Time-line for Implementing Beneficiary Centric Selection
DHS expects USCIS to have sufficient time to develop, thoroughly test, and implement the modifications to the registration system and selection process and give stakeholders sufficient time to adjust to these new procedures by the time the rule finalizing this proposed rule would publish and become effective.
Note that USCIS has already begun planning the development work of the new selection process in the electronic H-1B registration tool.
To prevent further abuse of the H-1B registration system, DHS may move to finalize certain provisions through one or more final rules after carefully considering all public comments and may possibly do so in time for the FY 2025 cap season, depending on agency resources. In particular, DHS may seek to finalize the provisions relating to the beneficiary centric registration selection process before moving to finalize the other proposed provisions in a separate rule.
#3. Bar on Multiple Registrations Submitted by Related Entities
DHS regulations already preclude the filing of multiple H-1B cap-subject petitions by related entities for the same beneficiary, unless the related petitioners can establish a legitimate business need for filing multiple cap- subject petitions for the same beneficiary. DHS is not proposing to change that, but, rather, is proposing to extend a similar limitation to the submission of registrations.
#4. Registrations With False Information or That Are Otherwise Invalid
Currently, the regulations state that it is grounds for denial or revocation if the statements of facts contained in the petition are not true and correct, inaccurate, fraudulent, or misrepresented a material fact. In this rule, DHS is proposing to codify that those requirements extend to the information provided in the registration and to make clear that this includes if attestations on the registration are determined to be false.
DHS is also proposing changes to the regulations governing registration that would provide USCIS with clearer authority to deny or revoke the approval of a petition based on a registration that was not properly submitted or was otherwise invalid.
DHS is also proposing a new provision that adds an invalid registration as a ground for revocation. Through these provisions, DHS aims to bolster the integrity of the registration system
#5. Provisions To Ensure Bona Fide Job Offer for a Specialty Occupation Position
DHS is proposing to codify USCIS’ authority to request contracts, work orders, or similar evidence. Such evidence may take the form of contracts or legal agreements, if available, or other evidence including technical documentation, milestone tables, or statements of work. Evidence submitted should show the contractual relationship between all parties, the terms and conditions of the beneficiary’s work, and the minimum educational requirements to perform the duties. Uncorroborated statements about a claimed in-house project for a company with no history of developing projects in-house, standing alone, would generally be insufficient to establish that the claimed in-house work exists.
Through the proposed rule, DHS is seeking to put stakeholders on notice of the kinds of evidence that could be requested to establish the terms and conditions of the beneficiary’s work and the minimum educational requirements to perform the duties. This evidence, in turn, could establish that the petitioner has a bona fide job offer for a specialty occupation position for the beneficiary.
- Non-Speculative Employment
DHS is proposing to codify its requirement that the petitioner must establish, at the time of filing, that it has a non-speculative position in a specialty occupation available for the beneficiary as of the start date of the validity period as requested on the petition.
The proposed rule further clarifies that establishing non-speculative employment does not mean demonstrating non-speculative daily work assignments through the duration of the requested validity period.
Note that the rule states that speculative employment should not be confused with employment that is contingent on petition approval, visa issuance (when applicable), or the grant of H–1B status. DHS recognizes that employment may be actual, but contingent on petition approval, visa.
- LCA Corresponds With the Petition
DHS is proposing to update the regulations to expressly include DHS’ existing authority to ensure that the Labor Condition Application (LCA) properly supports and corresponds with the accompanying H–1B petition.
While DHS already has the authority to determine whether the LCA supports and corresponds with the H–1B petition, this authority currently is only stated in DOL’s regulations and not in DHS’ regulations. By adding it to DHS regulations, DHS aims to align its regulations with existing DOL regulations, which would add clarity and provide transparency to stakeholders.
DHS is proposing to amend existing regulations to state clearly that, although the Secretary of Labor certifies the LCA, DHS has the authority and obligation to determine whether the certified LCA properly supports and corresponds with the H–1B petition.
When determining whether the submitted certified LCA properly corresponds with the petition, consistent with current practice, USCIS would consider all the information on the LCA, including, but not limited to, the standard occupational classification (SOC) code, wage level (or an independent authoritative source equivalent), and location(s) of employment.
USCIS would not, however, supplant DOL’s responsibility with respect to wage determinations. DHS formally stated in the proposed rule that wage level is not solely determinative of whether the position is a specialty occupation.
- Revising the Definition of U.S. Employer
DHS is proposing to revise the definition of ‘‘United States employer. DHS is proposing several changes to the ‘‘United States employer’’ definition at 8 CFR 214.2(h)(4)(ii) to bring it in line with our current practice.
First, in place of the employer-employee relationship requirement, DHS is proposing to codify the existing requirement that the petitioner has a bona fide job offer for the beneficiary to work within the United States. DHS is also proposing to replace the requirement that the petitioner ‘‘[e]ngages a person to work within the United States’’ with the requirement that the petitioner has a legal presence and is amenable to service of process in the United States.
- Employer-Employee Relationship
DHS is proposing to remove from the definition of U.S. employer the reference to an employer-employee relationship, which, in the past, was interpreted using common law principles and was a significant barrier to the H–1B program for certain petitioners, including beneficiary- owned petitioners.
- Bona Fide Job Offer
DHS is proposing to codify the existing requirement that the petitioner has a bona fide job offer for the beneficiary to work within the United States. While this requirement is not currently expressly stated in the regulations, it is reflected in current USCIS policy guidance, which states that the petitioner must establish that ‘‘[a] bona fide job offer . . . exist[s] at the time of filing.’’
DHS believes that this proposed change would also be consistent with the current H-1B Registration Tool, where the petitioner must attest at the time of registration that each registration for an H-1B cap- subject beneficiary reflects a legitimate job offer. DHS’s proposal to codify the requirement for a bona fide job offer requirement would complement DHS’ proposal to codify the requirement to demonstrate a non-speculative position in a specialty occupation for the beneficiary.
Furthermore, DHS is proposing to add clarification that the bona fide job offer may include ‘‘telework, remote work, or other off-site work within the United States.’’ While USCIS currently allows these types of work arrangements (provided they are consistent with the certified LCA and other regulatory requirements), the regulations do not state this expressly. DHS believes this clarification is helpful as more businesses allow and more workers choose telework, remote work, or other types of work arrangements.
- Legal Presence and Amenable to Service of Process
DHS is proposing to add a new requirement that the petitioner has a legal presence in the United States and is amenable to service of process in the United States. Legal presence, in this context, means that the petitioner is legally formed and authorized to conduct business in the United States.
‘‘Amenable to service of process’’ means that the petitioner may be sued in a court in the United States. Since the petitioner undertakes legal obligations to employ the beneficiary according to the terms and conditions on the petition and LCA, the petitioner should not be able to avoid liability for not complying with these obligations by later claiming that it is not the employer or is not amenable to service of process.
#6. Site Visits
USCIS conducts inspections, evaluations, verifications, and compliance reviews, to ensure that a petitioner and beneficiary are eligible for the benefit sought and that all laws have been complied with before and after approval of such benefits.
In this rule, DHS is proposing to add regulations specific to the H–1B program to codify its existing authority and clarify the scope of inspections and the consequences of a petitioner’s or third party’s refusal or failure to fully cooperate with these inspections.
The site visits conducted by USCIS through its compliance review program have uncovered a significant amount of noncompliance in the H–1B program. For instance, during FYs 2019–22, USCIS conducted a total of 27,062 H–1B compliance reviews and found 5,037 of them, equal to 18.6 percent, to be noncompliant or indicative of fraud
The proposed regulations would make clear that inspections may include, but are not limited to, an on-site visit of the petitioning organization’s facilities, interviews with its officials, review of its records related to compliance with immigration laws and regulations, and interviews with any other individuals or review of any other records that USCIS may lawfully obtain and that it considers pertinent to verify facts related to the adjudication of the petition, such as facts relating to the petitioner’s and beneficiary’s eligibility and continued compliance with the requirements of the H–1B program.
The proposed regulation would also clarify that an inspection may take place at the petitioning organization’s headquarters, satellite locations, or the location where the beneficiary works or will work, including the beneficiary’s home, or third-party worksites, as applicable. The proposed provisions would make clear that an H–1B petitioner or any employer must allow access to all sites where the labor will be performed for the purpose of determining compliance with applicable H–1B requirements.
The proposed regulation also states that if USCIS is unable to verify facts related to an H–1B petition, including due to the failure or refusal of the petitioner or third party to cooperate in an inspection or other compliance review, then the lack of verification of pertinent facts, including from failure or refusal to cooperate, may result in denial or revocation of the approval of any petition for workers who are or will be performing services at the location or locations that are a subject of inspection or compliance review, including any third-party worksites.
#7. Third-Party Placement
In certain circumstances where an H-1B worker provides services for a third party, per proposed rule USCIS would look to that third party’s requirements for the beneficiary’s position, rather than the petitioner’s stated requirements, in assessing whether the proffered position qualifies as a specialty occupation.
Specifically, under the proposed rule if the beneficiary will be “staffed” to a third party, meaning they will be contracted to fill a position in a third party’s organization, the actual work to be performed by the beneficiary must be in a specialty occupation. Therefore, it is the requirements of that third party, and not the petitioner, that are most relevant when determining whether the position is a specialty occupation. If the beneficiary will work for a third party and perform work that is part of the third party’s regular operations, the actual work to be performed by the beneficiary must be in a specialty occupation based on the requirements for the position imposed by that third party.
As stated in proposed regulation ‘‘staffed’’ means that the beneficiary ‘‘will be contracted to fill a position in a third party’s organization and becomes part of that third party’s organizational hierarchy by filling a position in that hierarchy (and not merely providing services to the third party.’’
Per DHS, there is a difference between a beneficiary who is ‘‘staffed’’ to a third party and a beneficiary who provides services to a third party (whether or not at a third-party location). A beneficiary who is ‘‘staffed’’ to a third party becomes part of that third party’s organizational hierarchy by filling a position in that hierarchy, even when the beneficiary technically remains an employee of the petitioner.
For example, a beneficiary may provide software development services to a third party as part of the petitioner’s team of software developers on a discrete project, or a beneficiary employed by a large accounting firm may provide accounting services to various third-party clients. In these examples, the proposed rule would not apply, because it would not be reasonable to assume that the third party would be better positioned than the petitioner to know the actual degree requirements for the beneficiary’s work.
In closing, the proposed rule would have significant impacts on the H-1B cap registration and selection process, and H-1B cap petition filings, including compliance. DHS/USCIS has indicated that it may seek to finalize provisions related to cap registrations separately from other provisions in the proposed rule. HSD Immigration Lawyer will continue to review the proposed rule and will share additional updates.