The H-1B visa is one of the principal ways in which graduating foreign students stay in the U.S. to work after completing their studies. Predictions for another “lottery” for FY 2016-2017 H-1B visas came true. In the first five business days, close to 200,000 applications were received against a total annual quota of 85,000. This resulted in a lottery drawing, with (for the typical, newly minted bachelor’s degree student) about a 1/3 chance of success. One of our clients got lucky, but what about those that were not so fortunate?

There are a variety of possible approaches for the unlucky student who was left out in the cold by the H-1B visa lottery to get work authorization. These options depend on the student’s field of study, whether they have money to invest, and/or their country of origin. Changes are going into effect on May 10, 2016 for one of the most common options, the STEM (Science, Technology, Engineering and Mathematics) OPT (Optional Practical Training) program, and these will significantly increase the burden on the companies that employ the students.

What is STEM OPT? The STEM OPT program allows foreign students with designated STEM degrees, with the approval of their university, to take extended, paid post-graduate internships in their field with willing U.S. employers. Many fields of study are eligible for a 12-month OPT program, following completion of degree requirements. Previously 17 months, now STEM degree students can get a further extension of up to 24 months. Thus, a foreign graduate with a degree in mechanical engineering could get a paid internship with a local manufacturing company for up to 3 years, with the approval of their university. However, with this extra 7 months of potential work authorization come a host of new and/or more stringently enforced rules for the employer.

The Four Basic Rules: There are four basic requirements for a STEM student to obtain a 24-month work authorization extension:

  • an appropriate STEM degree from a USCIS certified university;
  • an employer who is willing to sponsor them and is enrolled in USCIS’ E-Verify employment eligibility background check program;
  • a minimum of 20 hours of work per week; and
  • (new) “formal training and learning objectives” with accompanying paperwork.

“Accompanying paperwork”? Effective May 10, 2016, employers and students are subject to an expanded range of recordkeeping and reporting requirements. USCIS is pledging a new inspection program—including employer site visits—to enforce these new or expanded requirements. They include:

  1. A “whistleblower” requirement, requiring the employer to “blow the whistle” to the student’s school if the intern quits or is fired, within five business days of termination.
  2. A “six month check-in” requirement, requiring the student to report to their school and verify their current status every six months.
  3. An “annual report card”, requiring the student to self-evaluate in writing and submit the self-evaluation to their school for inclusion in his records.
  4. The requirement of a formal, written training plan, with goals, objectives and milestones, covering the entirety of the student’s internship. Employers will need to demonstrate that the plan is appropriately resourced to meet stated training goals (e.g., designating appropriately skilled trainers). It is no longer sufficient for the student to show up, work, and do a good job; the STEM OPT program is now more of a formalized training program. This training program requirement is met by completing a new USCIS form, I-983, accompanied by a written plan. Any material changes to an initiated training program must be reported via an updated I-983. The I-983 must be submitted to the student’s school, after being certified by the employer. The employer must designate a responsible party (e.g., human resources manager) to be the employer’s signatory and point of contact.
  5. Part of the I-983 form requires the employer to certify that the student is being treated the same (for wage and working condition purposes) as similarly situated U.S. workers.
  6. Site visits from enforcement officers are possible and being promised. Although generally, 48 hours advance notice will be given to the employer, no advance notice is required if the visit is in response to a complaint or “other evidence of noncompliance.”

The 24-month extension is available to students beginning a new STEM OPT extension on or after May 10, 2016. It is also available to students on a current 17-month STEM OPT extension, but only if they apply for the additional 7 months between May 10, 2016 and August 8, 2016, and have at least 150 days left on their current work authorization when they do so. Transitional cases must also get approval for the additional 7 months from their school, and apply within 60 days of the time the school grants its authorization.

Students with pending but unadjudicated 17-month STEM OPT extension applications may receive 24 months if their cases are adjudicated on or after May 10, 2016, but should expect to receive a Request For additional Evidence (RFE) aimed at making sure that the student’s school is willing to provide them with the full 24 months.

In addition, so-called “cap gap” relief remains available, whereby a student can get a further, coinciding extension of their STEM OPT work authorization until October 1st of a given year, if they have a receipted H-1B scheduled to begin on that date. (October 1st is the new fiscal year, and one can apply for an H-1B on April 1st of each year to begin the following October 1st. So many people do, in an effort to get a quota slot, that as a practical matter in recent years you have to apply that early to stand any chance at getting one, barring certain “cap-exempt” non-profit jobs).

What does this do for the unsuccessful H-1B applicant? Potentially, it gives them extra bites at the H-1B apple in future years. Although the government filing fees for an H-1B can be steep (typically over $2,000), they do send the checks back to your sponsoring employer if you do not get picked in a quota “lottery.” For many STEM degree holders, they will now get an additional chance to apply for an H-1B.

Finally, the new regulations were accompanied by some helpful guidance: STEM OPT workers can be entrepreneurs within their degree field, as long as they have a distinct employer who can sign the training plan for them.

My next bulletin will discuss an option for the true entrepreneur, available to those from a list of favored treaty countries with comparatively modest funds to invest: the E-1 and E-2 visas.