USCIS Proposes Changes to Modernize and Improve the H-1B Program

On October 23, 2023, USCIS published a notice of proposed changes to the H-1B program. If implemented, these changes would modernize the H-1B program by streamlining its eligibility requirements, providing greater benefits and flexibilities for employers and workers alike, and improving the program’s efficiency and integrity. Some of these changes would also have some impact on other nonimmigrant employment classifications as well as F-1 students applying for a change of status to H-1B.

Startups and Entrepreneurs

USCIS seeks to clarify its current policy and encourage more beneficiary-owned businesses to participate in the H-1B program. Some of the proposed changes include:

• Change the definition of employer-employee relationship such that a startup can qualify as a U.S. employer even when the founder possesses a controlling interest in that startup.
• The founder is still required to perform specialty occupation duties for a majority (i.e., more than 50%) of their time. This also applies to concurrent employment with another entity where the beneficiary is also an owner with a controlling interest.
• As a safeguard against possible fraudulent petitions, the validity period for H1B approvals for founders working at their startups would be limited to 18 months for the initial petition and another 18 months for the first extension. Any subsequent extension would not be limited and could be approved for up to 3 years.

Cap-Exempt Employment

The proposed rules would expand the definition of “nonprofit research organization” and “government research organization” for H-1B cap exemption purposes. Research would have to be an organization’s “fundamental activity” but not its “primary mission.” Beneficiaries who are not directly employed by a qualifying entity but who equally split their work between a cap-exempt and a non-cap-exempt entity may be eligible for cap exemption.

Cap-Gap Provisions

USCIS proposes the automatic extension of F-1 status and any related employment authorization until April 1 of the relevant fiscal year, or until the validity start date of the approved H-1B petition, whichever is earlier. This should help avoid the current disruptions in lawful status and employment authorization for F-1 students changing their status to H-1B.

Beneficiary-Centric Registration Process

The proposed rule changes would address H-1B cap registration abuse by changing the way USCIS selects registrations during the annual lottery:

• Shift from selecting by registration to selecting by unique beneficiary.
• Extend the existing prohibition on related entities filing multiple H-1B petitions by also prohibiting related entities from submitting multiple registrations for the same individual.
• Codify USCIS’s ability to deny an H-1B petition or revoke approval when the petition is based on a false or fraudulent registration.
• Require the submission of valid passport information, including the beneficiary’s passport number.

Other Notable Changes Proposed by USCIS

• Revise the definition of “specialty occupation” to clarify that, if a position “normally” requires a certain degree, it does not mean the occupation “always” requires that degree.
• Support skills-based hiring by clarifying that there may be more than one acceptable degree field for a specialty occupation, if there is a direct relationship between the required degree field and the duties of the position. General degrees (e.g., liberal arts or business administration without further specialization) are insufficient.
• Eliminate the itinerary requirement for H-1B petitions where services are to be performed or training to be received in more than one location.
• Allow petitioners to amend requested validity periods where the validity expires before adjudication (which typically happens when USCIS deems a petition approvable after the petitioner appealed a decision).
• Codify USCIS’s authority to request contracts to ensure the existence of a bona fide job offer.
• Clarify that the bona fide job offer may include telework, remote work, or other off-site work within the United States.
• Codify USCIS’s authority to conduct site visits and clarify that a refusal to comply may result in denial or revocation of the petition.
• Clarify that when H-1B workers are contracted out to a third party, the third party’s requirements are most relevant when determining whether the position is a specialty position, rather than the petitioner’s stated requirements.

Changes Also Affecting Other Nonimmigrant Classifications

Some of the proposed H-1B changes would also apply to other I-129 nonimmigrant worker petitions:

• Deference to prior approvals of nonimmigrant worker petitions if there has been no material change in the underlying facts.
• Requiring evidence of maintenance of status for all nonimmigrant worker petitions where there is a request to extend or amend the beneficiary’s stay.

The full text of the proposed rule can be found here. The 60-day public comment period will end on December 22, 2023. After it reviews all comments, DHS will publish and implement the final rule potentially as early as in time for the fiscal year 2025 cap season, depending on agency resources.

What Does This Mean For You as a Founder?

These changes if implemented, represent great advantages for founders.

• Founders will be able to be sponsored by their startups even if they hold a majority interest in their company.
• If the Founder is in F-1 status with OPT or STEM work authorization when registering in the H-1B lottery, and they make it into the lottery, their work authorization will be extended for another 7 months while their Cap H-1B is being adjudicated. This means they won’t have to stop work by October 1st if their case is still pending adjudication. Any additional time gained for a start-up Founder is an opportunity for raising funds, focusing on hiring talent, and investing time into moving the company forward. Every minute counts in a Founder’s life.
• Founders may be able to utilize the H-1B Cap exempt option if they don’t make it into the lottery by connecting with private companies that are research-based or have some strong research activities that are fundamental to their business as opposed to being the ‘primary mission’ of their business. If a Founder has connections with another start-up or company that is utilizing an internal research team or a research-based affiliate to build its product, its research may be considered fundamental to its operations, and it may be classified as a Cap-Exempt. You never know, this can be your company some time in the future.

Disclaimer: Unshackled Ventures is not a law firm and anything written here should not be viewed as legal advice or applicable to any individual’s specific case. We recommend working with an immigration attorney prior to taking any legal action.

About Unshackled Ventures: Unshackled Ventures is the only early-stage venture capital fund that enables unrecognized and excluded immigrant founders to start companies in the U.S. Since its founding in 2014, Unshackled has proven its thesis that investing and supporting this population drives strong investment returns across key industries, including American infrastructure, generative AI, healthcare, space, and enterprise SaaS. To date, the firm has invested in 80 companies and over 200 entrepreneurs.

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About Serotte Law: Serotte Law is the proud legal partner of Unshackled. Serotte Law immigration attorneys provide services in a variety of U.S. immigration cases, including business, family or career-based immigration.