As part of our Spotlight series, we invited Shannon Donnelly, a partner in our Washington, DC office who works with clients on a wide range of complex global immigration and mobility issues, to discuss the proposed H1B Modernization Rule, which is detailed in a recent LawFlash, and how this might impact the technology sector. Shannon is the co-head of our global immigration and mobility practice and a leader on global immigration issues.

What is the H-1B Modernization rule?

On October 23, 2023, the US Department of Homeland Security (DHS) released a notice of proposed rulemaking (NPRM) with respect to the regulations governing the H-1B nonimmigrant visa classification. The proposed rule seeks to improve the H-1B program by streamlining eligibility requirements, enhancing program efficiency, providing greater benefits and flexibilities for employers and workers, and strengthening integrity measures. Upon publication of the NPRM in the Federal Register, a 60-day public comment period began, which will end on December 22, 2023. The finalized H-1B regulations will likely take effect in early to mid-2024.

Why is DHS focused on the H-1B classification at this time?

The H-1B nonimmigrant visa classification is typically used for workers performing services in specialty occupations, inclusive of many occupations in the tech sector. Due to its breadth, the H-1B classification is the most commonly sought classification for many employers petitioning to hire international talent. With a congressionally mandated annual cap of 65,000 for H-1B visas and an additional 20,000 for foreign nationals holding a master’s or advanced degree, the overwhelming demand for H-1B visas created the need for an annual “lottery” system, which has continuously been in place in some form since fiscal year 2014.

After the US Citizenship and Immigration Services (USCIS) received a record-high 483,927 registrations during the fiscal year 2023 H-1B cap registration process, with 36.5% of beneficiaries receiving more than one registration, DHS was prompted to consider ways to “limit the potential for bad actors to game the system.” DHS seeks to “strengthen integrity” in the H-1B registration process through the proposed changes. The proposed rule also seeks to amend certain areas of the H-1B regulations in an attempt to clarify and codify existing rules that are currently established through case law and USCIS policy guidance.

Can the proposed changes have a negative impact on H-1B sponsors?

The NPRM revises the regulatory definition of “specialty occupation” and clarifies that a position may allow a range of degrees; however, there must be a direct relationship between the required degree field(s) and the duties of the position.

The added element of proof that there must be a “direct relationship” between the studies and the offered position is a new regulatory requirement and may a prove a negative impact to H-1B employers. As the tech sector continues to morph and grow, employers operating in industries involving critical and emerging science and technologies (including artificial intelligence) are frequent sponsors of H-1B visas for their international talent. Many of these employers may accept candidates from a relatively broad range of fields, including business administration, computer science, engineering, mathematics, and statistics.

The proposed regulatory language mandates that the degree is “directly related” to the job duties. If implemented as drafted, H-1B sponsors may not be able to hire H-1B workers who have complementary degrees and therefore, limit H-1B sponsor’s ability to build the required interdisciplinary teams.

What are the benefits and flexibilities of these changes for H-1B sponsors?

The proposed rule provides an automatic extension of duration of status and post-completion optional practical training (OPT) or 24-month extension of post-completion OPT, as applicable, until April 1 of the relevant fiscal year for which the H-1B petition is requested. Currently, the automatic extension is valid only until October 1 of the fiscal year for which H-1B status is being requested. This change aims to provide flexibility and help avoid disruption to US employers that lawfully employ F-1 students while a qualifying H-1B cap-subject petition is pending.

Are there any proposed updates to the H-1B lottery registration system?

Beneficiary-centric Selection

Due to concerns related to potential fraudulent and frivolous registrations, the NPRM looks to modify the H-1B selection process so that selection would be based on each unique beneficiary identified in the registration pool as opposed to each registration. While employer registrants may continue to register as per the current process, the new process will mandate that certain identifying information be submitted with each registration—i.e., including submission of valid passport information which has been optional to date.

Having collected the identifying information, DHS will enter each beneficiary in the lottery selection process once, regardless of how many employer registrations were submitted on their behalf. Data analysis of past registrations has shown that some unique beneficiaries may have been entered into the lottery up to 81 times. The new process would avoid a unique beneficiary from being entered into the lottery more than once, thereby giving all beneficiaries an equal chance at selection in the lottery regardless of how many registrations were submitted on their behalf.

If a beneficiary is selected, each employer 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. The beneficiary would then be able to work for one of the registrants that has filed a petition based upon a final private employment decision between the beneficiary and the registrant.

Bar on Multiple Registrations Submitted by Related Entities

The NPRM extends the existing prohibition on related entities filing multiple petitions by also prohibiting related entities from submitting multiple registrations for the same individual.

Registrations with False Information or That Are Otherwise Invalid

Additionally, if approved as written, the new rule will 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, or fraudulent, or misrepresented a material fact.

There are a variety of efforts in play to provide notice and comment to DHS prior to the comment period expiring on December 22, 2023. The Morgan Lewis immigration team is positioned to guide and advise on potential impacts of the NPRM and coordinate efforts to provide comments to clarify our clients’ interests, including the interests of companies that commonly want to hire H-1B workers who have complementary degrees to add to interdisciplinary teams.