Modernizing the H-1B Program: Strengthening the U.S. Economy and Workforce

The H-1B nonimmigrant visa program allows U.S. employers to temporarily employ foreign workers in specialty occupations, defined by statute as occupations that require the theoretical and practical application of a body of highly specialized knowledge and a bachelor's or higher degree in the specific specialty, or its equivalent. On January 17, 2025, the U.S. Department of Homeland Security (DHS) introduced the H-1B final rule aimed at modernizing the H-1B program by streamlining the approval process, increasing its flexibility to better allow employers to retain talented workers, and strengthening the integrity and oversight of the program.

Key Highlights of the Regulation

The new rule introduces several critical updates designed to offer greater flexibility and efficiency for both employers and workers, while reinforcing program integrity. These changes align with ongoing efforts to ensure the program supports the U.S. economy and adapts to evolving workforce needs.

1. Modernizing the Definition of Speciality Occupations

The definition of a “specialty occupation” has been updated to clarify that the required degrees must be "directly related" to the job duties. This removes reliance on specific degree titles and acknowledges the growing range of interdisciplinary fields. It allows more flexibility in how beneficiaries can qualify for a position, moving away from rigid degree titles and recognizing the diversity of skills necessary for emerging industries.

2. Enhancing Flexibility for Employers and Workers

Key updates also include allowing the U.S. Citizenship and Immigration Services (USCIS) to expedite the approval process for individuals with prior H-1B approvals and offering extended validity periods in some cases. Employers will no longer need to submit itineraries for workers with multiple job sites, simplifying the process for those in dynamic roles that span multiple locations.

3. Beneficiary-Owners

Codifies a petitioner’s ability to qualify as a U.S. employer even when the beneficiary possesses a controlling interest in that petitioner. Controlling interest in the petitioning organization or entity means the beneficiary owns more than 50 percent of the petitioner or has majority voting rights. Provides new guardrails for beneficiary-owned entities, including limiting the validity period for beneficiary-owned entities’ initial petition and first extension (including an amended petition with a request for an extension of stay) of such a petition to 18 months. Any subsequent extension will not be limited and may be approved for up to 3 years, assuming the petition satisfies all other H-1B requirements. Clarifies that a beneficiary-owner may perform duties that are directly related to owning and directing the petitioner’s business as long as the beneficiary will perform specialty occupation duties a majority of the time, consistent with the terms of the H-1B petition. This encourages entrepreneurs, start-up entities, and other beneficiary-owned businesses to apply for the H-1B program.

4. Supporting F-1 Students Transitioning to H-1B Status

One of the most notable changes is the expansion of the "cap-gap" provision for F-1 students. Previously, students transitioning to H-1B status would face potential gaps in employment authorization during the changeover. The new rule extends this cap-gap coverage to April 1, ensuring students maintain lawful status and can continue working during the transition.

5. Strengthening Program Integrity

DHS has introduced measures to ensure that the H-1B program is not exploited by employers or petitioners. This includes requirements for employers to provide documentation that establishes a bona fide job offer and that the position is in a specialty occupation. Employers must now establish that a bona fide specialty occupation position exists at the requested start date, impacting IT consulting and staffing companies. Employers must also demonstrate that the duties of the position are in line with the specified job requirements.

Additionally, the rule codifies the agency’s authority to conduct site visits to verify that the petitioner and beneficiary meet the program’s requirements. Non-compliance or failure to cooperate with these inspections could lead to the denial or revocation of H-1B petitions.

6. Deference Policy Restored

Another important update is the reinstatement of the deference policy for certain petitions. Under the new rule, USCIS adjudicators will generally defer to prior determinations when reviewing petitions involving the same parties and the same underlying facts. This policy, which was previously rescinded, aims to reduce unnecessary delays and burdens on employers by simplifying the process for subsequent filings.

7. H-1B Cap Exemptions

The new rule updates the criteria for government and nonprofit research groups that are excluded from the annual cap on H-1B visas. It expands the definition of “nonprofit research organizations” to include those where research is a fundamental, though not necessarily primary, activity. The changes to the H-1B cap exemption provisions will likely increase the population of petitioners who are now eligible for the cap exemption and, by extension, will likely increase the number of petitions that may be cap-exempt.

8.      Third-Party Placements

When placing an H-1B beneficiary at a third-party worksite, USCIS will 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.

9.      Eliminating the Itinerary Requirement

Employers are no longer required to submit itineraries for workers at multiple job sites, streamlining the petition process and reducing unnecessary burdens and duplication of work for both petitioners and USCIS.

Implications for U.S. Employers and Foreign Workers

The final rule aims to improve the functioning of the H-1B visa program by enhancing flexibility, streamlining the approval process, and reinforcing oversight. For employers, this could mean more efficient hiring processes and a greater ability to retain skilled foreign workers, particularly in critical fields such as technology, engineering, and healthcare. Moreover, these changes could help U.S. companies remain competitive globally by ensuring access to a skilled workforce that can drive innovation and growth.

These changes may provide more opportunities and greater job security for foreign workers, particularly those in fields that require specialized knowledge and education. F-1 students transitioning to H-1B status will benefit from reduced uncertainty regarding work authorization, which is a welcome shift for international students eager to contribute to the U.S. workforce after their studies.

Challenges and Concerns

While the modernization of the H-1B program is generally seen as a step in the right direction, there are concerns about the potential for increased scrutiny and more stringent documentation requirements. For example, the focus on ensuring that employers have a "bona fide" job offer could make it harder for companies to navigate the complex requirements, potentially leading to more denials or delays.

Additionally, the authority for USCIS to conduct site visits may raise concerns among employers, particularly those who use third-party placements or have employees working in various locations. Misunderstandings during these inspections could lead to complications for legitimate H-1B workers and their employers.

Conclusion

USCIS outlines most of these regulations to formalize longstanding agency policies. Moving forward, it is crucial for both employers and foreign workers to stay informed about these changes to maintain compliance and fully leverage the benefits of the H-1B program. Ultimately, these updates reinforce the commitment to keeping the U.S. at the forefront of innovation and skilled talent, fostering economic growth in key industries for the future.

Although the regulation was finalized in the last weeks of the Biden Administration, its fate under the Trump Administration remains uncertain. Although President Trump has previously supported the H-1B program, his administration may attempt to repeal the rule through the Congressional Review Act or other means.

Hari Subhash, Esq.