Living Under the H-1B Cap – Alternative Visa Options and Strategies for Employing Foreign Nationals in the U.S. 

March 1, 2012

By Loan T. Huynh

The H-1B visa is commonly known as the “workhorse” of U.S. work visas as U.S. companies rely on it more than any other visa to employ foreign workers in the U.S. The H-1B visa is available to employers who want to hire a professional foreign national worker with at least a bachelor’s degree in a relevant field (or its equivalent in work experience) for a job which requires a degree in that field (also known as a specialty occupation) and the employer can demonstrate that it will be paying at least the prevailing wage to the foreign employee. From 2000-2003, U.S. companies filed an average of 140,000 new H-1B petitions per year. This did not include petitions to extend, amend, or change employment for current H-1B workers. Employers faced a shock in fiscal year 2004 (the U.S. federal government’s fiscal year runs from October 1-September 30) when the congressionally mandated cap on the number of H-1B visas decreased from 195,000 to 65,000 visas per year. Less than five months later, on February 17, 2004, the U.S. Citizenship and Immigration Service (“USCIS”) announced that it had received enough new H-1B petitions to reach the cap for fiscal year 2004. Every year since, the H-1B quota has been reached before the end of the fiscal year, leaving employers with a “blackout period” when no H1B numbers are available. During this time, Employers were not able to file new cap subject H-1B petitions. During the H-1B cap blackout period, employers need to be innovative and rely on other available work visas to meet their hiring goals.

H-1B Petitions Not Subjected to the Cap

The H-1B cap applies to new H1B petitions filed for foreign workers that have not been counted against the H-1B cap within the past six years (the worker has not been in H1B status in the last 6 years). Certain H-1B petitions are not subject to the H1B cap, and can be filed anytime. These include:

  • Any petitions, including amended petitions, extensions, or change of employer, filed for current H-1B workers or individuals who have been in H1B status during the last six years. If the H1B employee is transferring from a cap –exempt employer to a cap subject employer, then the cap applies.

  • New H1B petitions filed for employment at institutions of higher education or related or affiliated nonprofit entities, or nonprofit research organizations or government research organizations. This may include, for example, a nonprofit hospital that has a residency program in affiliation with a medical school.

In addition, the USCIS reserves 6,800 H-1B1 visas out of the 65,000 for use only by nationals of Singapore and Chile as part the US-Chile and US-Singapore Free Trade Agreements. As such the H-1B annual quota is really 58,200 and not 65,000. The requirements for the H-1B1 are very similar to the requirements for the H-1B visa in that it can only be used to employ foreign nationals coming to the U.S. to fill professional positions, which require a bachelor’s degree or equivalent in a related field

As we will face the blackout period every year on H1Bs, U.S. employers should not be deterred from hiring foreign workers during this period. In addition to the ability to file H1B petitions for workers exempt from the cap as described above, U.S. employers have other temporary work visa options for employing foreign workers.

Alternative Visa Options for Employing Foreign Workers

There are many other temporary work visas besides the H1B. Alternatives include the TN classification, E-3, H1B1, STEM OPT, L-1 intra-company transferee visa, J-1 trainee visa, H-3 trainee visa, O-1 extraordinary ability worker visa and E visa treaty trader/treaty investor visas.

For example, U.S. companies may look at employing professional citizens of Mexico and Canada through the TN category. The TN was created specifically under the provisions of the North American Free Trade Agreement (“NAFTA”) to facilitate movement of business professionals between Canada, Mexico, and the U.S. There are no numerical limitations on TN classification and no minimum wage requirement for TN classification. The TN is limited only in that it is available for specific professional occupations listed under NAFTA. In addition, employers can request TN classification for a three year period and it can be renewed indefinitely in three-year increments.

For U.S. entities with foreign offices, the most popular option is the L-1 visa for intracompany transferees. To qualify for the L-1, a foreign worker must have been continuously employed abroad for at least one of the past three years by a qualifying foreign entity, such as a subsidiary, affiliate, branch, or joint venture, of a U.S. company. The L-1 visa is available for executives, managers, or employees with specialized knowledge. Similar to the TN, it has no prevailing wage requirements, and can be approved in 2-3 year increments, through there is a maximum of 7 years for executives/managers and 5 years for specialized knowledge workers.

Employers may also consider participating in J-1 trainee programs. A J-1 trainee is eligible to work for a U.S. employer and be compensated for training purposes as long as the terms of the training program are approved through a J-1 program sponsor. Most J-1 trainee programs can be granted up to 18 months. The trainee must be sponsored by a USIA-approved Exchange Visitor Program.

Another training visa that employers have increasingly relied on in recent years is the H-3 trainee visa. The H-3 nonimmigrant trainee visa is available for individuals who are coming temporarily to the U.S. for the purpose of receiving training in any field of endeavor. The H-3 trainee visa is only available if the following requirements are met: the proposed training is not available in the foreign national’s home country; the trainee will not be placed in a position which is in the normal operation of the business and in which citizens and resident workers are regularly employed; the trainee cannot engage in productive employment unless such employment is incidental and necessary to the training; and the training will benefit the trainee in pursuing a career outside the United States. The H-3 visa is limited to two years. If the H-3 trainee has been in the US for two years, they are not permitted to then change status to an H or L visa category, until they have left the United States for 6 months.

The O-1 visa is used for individuals with extraordinary ability in science, sports, and business and for individuals with distinguished ability in the arts. Employers or agents can file O-1 petitions on behalf of a foreign national, by establishing the individual’s sustained national or international acclaim.

The E-1/E-2 visa is available for executives, supervisors, and essential employees of E-1/E- 2 employers. This visa is available to foreign nationals entering the U.S. solely to carry on substantial trade or develop and direct the operations of an enterprise in which he or she has invested (or the foreign parent company has invested in) or is actively in the process of investing a substantial amount. Once the E-1/E-2 company has been established, key employees from the treaty country can also enter under these visas. Those key executives, supervisors, and essential employees must have the same nationality as the treaty employer.

Employers may consider the H-2B non-agricultural temporary visas if the position is temporary in nature and the need is for one year or less. The employer’s need cannot be ongoing or continuous. While the H-2B visa has been mostly been filed for nonprofessional positions, there is no prohibition against the use of the H-2B visa for professionals. The employer has the burden of establishing the facts necessary to support a finding that the need is either a one-time occurrence, seasonal, peakload or intermittent need and there are no qualified US workers to fill the position. An H-2B employer must first obtain a labor certification for the worker before the employer can file a H-2B petition with the USCIS. It is also limited to foreign workers of certain countries, and the list of countries changes yearly.

Other Strategic Considerations

When possible, plan ahead, be proactive and be strategic in setting out the company’s hiring goals. Some strategies to consider include:

  1. Start the recruiting and hiring process early enough in order to be able to file new H1-B petitions on April 1st even though the employment start date will not be until October 1 of the fiscal year.

  2. File H-1B petitions as soon as allowed for employees whose F-1 or J-1 practical training will expire before April 1. The H-1B cap gap provision for F-1 students enables continued employment authorization during the pendency of the H1B petition. As long as the H1B is filed before the student’s OPT employment authorization expires, the student may request to extend their OPT up to the October 1st start date.

  3. Determine whether the worker is eligible for employment under OPT-STEM. Foreign students working under OPT with a degree in Science Technology Engineering or Math, are eligible for an additional 17 months of OPT employment

    authorization when working for an employer signed up for E-verify.

  4. Start the permanent immigration (“green card”) process for certain employees. This process can be started through the labor certification process or the filing of an I-140 immigrant petition. This strategy is optimal in cases when the I-485 Application for Adjustment of Status can be filed concurrently with the immigrant petition since the applicant can also file an application for work authorization pursuant to the I-485 application.

Until Congress passes legislation that creates work visas that meet changing needs of our growing global economy, U.S. employers may need to seek alternative visa options to the H1B program. The strategies and visa options discussed should be analyzed on a case by case basis, to determine the best fit for the employer and employee.