H-1B Modernization Rule Provides Some Comfort But Also Raises Concerns

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U.S. Citizenship and Immigration Services (USCIS) recently issued its long-awaited H-1B modernization rule. The final rule takes effect on January 17, 2025. USCIS describes several of the regulations as codifying policies the agency has followed for years. The agency also emphasized that several of the regulations were enacted to strengthen “program integrity.” The final rule also includes a helpful change for F-1 academic students. Some of the changes apply to several temporary work categories in addition to the H-1B as they affect the filing with USCIS of a petition for a nonimmigrant worker (Form I-129). This blog addresses some of the topics.

The H-1B visa category is for jobs in “specialty occupations,” meaning jobs that require a worker to apply a body of highly specialized knowledge acquired through a bachelor’s or higher degree in a “specific specialty” or equivalent at the entry level. U.S. employers are prohibited from hiring an H-1B worker at a wage or under working conditions less favorable than similarly-situated U.S. workers.  A U.S. employer must pay an H-1B worker the higher of either the prevailing wage for the occupational classification in the area of intended employment as determined by a wage source acceptable to the Department of Labor (DOL) or the actual wage the employer pays to its workers with “similar experience and qualifications.”

By issuing a final rule, the Biden administration has made it more difficult for the Trump administration to reverse some agency practices with which it disagrees. For example, in 2004 an agency official issued a deference memorandum, which the Trump administration rescinded in 2017. The rescission slowed down processing as adjudicators took longer to review petitions, including more requests for additional information. In 2021, the Biden administration reinstated the deference policy by including it in the USCIS Policy Manual.

The Biden administration has now included the deference provisions from the Policy Manual as a regulation. To eliminate the deference regulation, the Trump administration would have to publish notice in the Federal Register of the intent to rescind and provide an opportunity to comment on the proposal. To amend or eliminate other regulations included in the final rule similarly would require advance notice to the public and an opportunity to comment. Following notice and comment requirements is more time consuming and labor intensive than issuing a change to the agency’s Policy Manual. Under the Congressional Review Act (CRA), Congress has 60 legislative days after receipt of the final rule or Federal Register publication, whichever is later, to vote by simple majority resolution to vacate the rule. It is unclear if Congress would be willing or able to use the CRA to eliminate the new rule given other competing priorities.

Specialty Occupation Definition

USCIS’ interpretation of “specialty occupation” has been a major concern. USCIS had proposed a requirement that to be considered a “specialty occupation,” the “required specialized studies must be directly related to the position.” Concerns were raised that this formulation would cause adjudicators to deny petitions where the employer did not require already-recognized degrees, such as positions in emerging fields which require an interdisciplinary approach. In the final rule, USCIS instead returned to Congress’ definition of “specialty occupation” in 8 U.S.C. § 1184(i), which requires “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) as a minimum for entry into the occupation in the United States.” In the regulation, USCIS has substituted “in a directly related specific specialty” for “in the specific specialty.” USCIS also defined “directly related” as “a logical connection between the required degree, or its equivalent, and the duties of the position.” USCIS explains that it interprets the congressional definition as requiring a degree in a specific specialty or specialties (or equivalent) that provides a body of highly specialized knowledge “directly related to the duties of the particular position.” USCIS specifies in the regulation that there could be a “range of qualifying degree fields” if each field is “directly related to the duties of the position.” USCIS also addressed that it was not focusing on degree titles, and would consider whether the noncitizen’s “actual course of study is directly related to the duties of the position.”

USCIS has expressed in the preamble to the final rule and in the regulatory text, an intent to focus on the knowledge acquired and to recognize that multiple fields of study could provide this knowledge. USCIS stated that changes to the regulatory definition and related criteria (discussed below) are “intended to codify existing practices” and not expected to create new eligibility restrictions or lead to significant changes in adjudications. But it remains to be seen whether adjudicators will be this nuanced and whether employers and prospective and current H-1B workers instead will experience more denials based on specialized studies not being directly related to the duties of the employer’s job.

Specialty occupation criteria

Employer/petitioners are still required in the regulations to demonstrate that the position meets at least one of four criteria to qualify as within a specialty occupation. Notable changes include:

• All criteria now include the “directly related specific specialty” language.
• First criterion: The degree (or equivalent) is “normally” the minimum requirement to enter the occupation in the United States. During the first Trump administration, USCIS denied H-1B petitions for computer programmers, claiming that a bachelor’s degree was not “normally” required because only most, but not all, computer programming positions required at least a bachelor’s degree in computer programming or a related subject at the entry level. This argument was harshly rejected by the U.S. Court of Appeals for the Ninth Circuit in Innova Solutions, Inc. v. Baran. USCIS now includes a definition of “normally,” which applies to all four criteria, as “characterized by that which is considered usual, typical, common, or routine.” The agency also specified: “Normally does not mean always.”
• Second criterion: Clarifies that parallel positions “among similar organizations” is “in the employer’s industry in the United States.”
• Third criterion: This criterion focuses on the educational requirement for the position when the occupation “normally requires” less than a bachelor’s degree at the entry level. The new regulation replaces “for the position” with “to perform the job duties of the position.” USCIS also incorporated into the regulation, based on the Fifth Circuit decision in Defensor v. Meissner, that if the petitioning employer will be placing the H-1B worker by contract to fill a position at a third party—as contrasted with the petitioner providing services through the worker at the third-party’s work site—then the “normally requires” refers to the third-party.
• Fourth criterion: In the prior regulation, an alternative in the second criterion for showing a “complex or unique” position overlapped with similar language in the fourth. USCIS has modified and combined the criteria as the “specific duties of the proffered position are so specialized, complex, or unique” that the knowledge required to perform them “is normally associated with” the also-revised degree or equivalent requirement.

Deference

In the final rule, adjudicators are required to give deference to a prior approval when subsequent I-129 petitions (i.e., for H-1B and other nonimmigrant classifications)  are filed involving the same parties and same underlying facts, unless—there was a material error in the prior decision, or a material change in circumstances or eligibility requirements, or new material information adversely impacting eligibility (with no deference for material misrepresentations or fraud indicators). USCIS confirmed that deference is not limited to petitions requesting an extension of stay, but also includes for change of status, amendment, and consular processing. Some concern was expressed during the comment period that if USCIS changed the eligibility criteria for the H-1B classification, then some noncitizens who previously qualified for an H-1B classification would no longer qualify. However, USCIS responded that petitions must be adjudicated based on the requirements in effect when the petitions are filed. USCIS also minimized this concern by emphasizing its final rule incorporated existing policies, suggesting that there shouldn’t be a disqualification, assuming the prior petition was correctly adjudicated.

Strengthening Program Integrity

USCIS identified the following regulatory provisions as strengthening program integrity:

• Requiring documentation that an employer/petitioner has a “bona fide position in a specialty occupation” for the H-1B worker as of the start date requested in the H-1B petition. This provision is aimed at preventing a petitioner from seeking approval of an H-1B petition when the petitioner anticipates, but does not yet have, a specialty occupation job opening for the noncitizen.
• Codifying what the agency describes as existing authority to request contracts or similar evidence demonstrating the position is bona fide and its minimum educational requirements. While USCIS noted that it did not intend to limit the period of work authorization (petition validity period) by the end date of contracts, work orders, or similar documentation, the agency declined to codify this practice. By omitting this reassurance from the regulation, it remains to be seen whether adjudicators will honor this restraint.
• “Ensuring” that the Labor Condition Application, certified by DOL, and filed with the H-1B petition, “supports and properly corresponds to” the H-1B petition. USCIS rejected concerns by several commenters that the agency was exceeding its authority and encroaching on DOL’s responsibilities.
• Codifying current agency policy by incorporating into the regulatory definition of U.S. employer that the petitioner has a bona fide job offer for the noncitizen to work within the United States as of the requested start date.
• Adding a requirement that the petitioner be legally present in the United States and will accept service of process in the United States.
• In a welcome development, USCIS has codified that a noncitizen who owns a controlling interest in the petitioning entity may be eligible for an H-1B classification. However, USCIS included as an integrity measure that the validity period for a beneficiary-owner will be limited to 18 months (instead of a possible three-year maximum) for the initial and first-extension petitions. USCIS defines a controlling interest as owning more than 50% of the petitioner or having the majority voting rights.
• Codifying what the agency describes as existing authority to conduct site visits and clarification that refusing to comply with site visits may result in petition denial or revocation. USCIS rejected concerns by several commenters questioning its authority.
• Codifying as a general requirement that if the petitioning employer will be placing the H-1B worker by contract to fill a position at a third party, then the third party’s requirements are “most relevant” to USCIS in determining whether the position is in a specialty occupation.

Expansion of “cap-gap” for F-1 students

For several years, an F-1 student who was the beneficiary of a timely-filed, non-frivolous petition that included a request to change status to H-1B would receive continuation of their F-1 status and any applicable work authorization until October 1, the start of the fiscal year and the earliest start date for a “cap-subject” H-1B petition. But because of processing delays, many H-1B petitions were not adjudicated by October 1. The new rule extends this “cap-gap” coverage until a potential maximum of April 1 of the fiscal year. (The extension could end earlier based on petition adjudication.)

Conclusion

The final rule may provide some protection against the increased rate of H-1B petition denials experienced during the first Trump administration. However, the rule also includes provisions, such as potentially problematic documentation requirements and potential issues arising from site visits (such as when the investigator does not understand the job requirements), that may chill the use of the H-1B category by employers that have bona fide jobs in specialty occupations. A reduction in legitimate use of the H-1B visa category is harmful to the U.S. economy as studies show that H-1B workers can be a catalyst for U.S. employers to expand their operations and hire more workers.

FILED UNDER: H-1B, USCIS