april 17 2008 Newsletter
The H-1B visa struggles: an update

April 17, 2008
By Robert D. Aronson

DEAR CLIENTS AND FRIENDS:

Just to review briefly, the H-1B Temporary Worker classification is a temporary, nonimmigrant visa status utilized by U.S. employers in order to hire a broad range of foreign professionals. This visa classification is intended to provide U.S. employers with a relatively time efficient option to hire foreign professionals for a period of up to six years.

The concern from a public policy standpoint, though, is that the H-1B classification opens a possibility for flooding the U.S. labor market with foreign nationals who will put downward pressure on job availabilities for U.S. workers and/or the wage structure for professional positions. Literally, the ongoing struggle over these past years has been where to set the numerical H-1B bar so as to balance the need to provide U.S. employers with access to professional talent of incalculable benefit to business success, countered against concerns on the downward pressure allegedly posed by foreign nationals on the domestic workforce.

Perhaps this is a spurious distinction since there is a growing body of evidence that suggests that foreign professionals create substantial net job and economic growth. Source: National Foundation for American Policy. www.nfap.com Or as more succinctly stated by Bill Gates, the visionary Chairman of Microsoft: "The whole idea of the H-1B [debate] is don't let too many smart people come into the country. Basically, it doesn't make sense."

Even U.S. Citizenship and Immigration Services (USCIS) believe that Congress needs to increase the H-1B cap. Normally a federal agency such as USCIS would avoid openly advocating a controversial change in the immigration laws. However, in its April 8, 2008, rule expanding certain F-1 students’ eligibility for work authorization (discussed further below), USCIS openly acknowledged that the H-1B cap harms American's competitiveness globally. USCIS cited Mr. Gates' testimony before Congress and itself opined that "[t]he inability of U.S. employers, in particular in the fields of science, technology, engineering and mathematics, to obtain H-1B status for highly skilled foreign students and foreign nonimmigrant workers has adversely affected the ability of U.S. employers to recruit and retain skilled workers and creates a competitive disadvantage for U.S. companies." (73 Fed. Reg. 18944, 18946).

Be that as it may, here is the current state of the law: At present, the general H-1B quota has been set at 65,000 numbers with a supplemental quantity of 20,000 H-1B visa numbers available for foreign nationals holding advanced university degrees (defined as Master’s Degree or higher) from U.S. universities. This allotment of H-1B visa numbers is clearly inadequate to serve the needs of the U.S. employer community, as demonstrated by the fact that for the past several years the cap gets filled faster and faster. This year, the demand on the cap was higher than ever before.

Each year, the H-1B application period opens on April 1, meaning that employers realistically need to file their H-1B petitions on this date to lay claim to an H-1B visa number. This year, the quantity of filed H-1B petitions was torrential. Specifically, U.S. Citizenship and Immigration Services (USCIS) received 163,000 petitions of which 31,200 fall into the advanced degree category.

In order to allocate this inadequate and finite number of H-1B visas, USCIS conducted on April 14 a computer-generated random selection process that selected the 20,000 petitions under the advanced degree classification. Those petitions not selected were then placed into a general lottery drawing that will distribute the 65,000 H-1B numbers existing within the "normal" quota allotment. If a case is receipted, it means that it has been selected for adjudication on the merits. H-1B petitions filed under the Premium Processing Program will be receipted no later than April 29, 2008; those petitions filed under the "normal" processing procedure will be receipted by June 2, 2008. If a case is not receipted, the entire petition along with the filing fee will be returned by USCIS.

As a matter of statistical probability, a holder of a U.S. Master’s Degree or above has a 64% chance of being selected in the H-1B lottery. However, for all others, there is only a 45% chance of being selected in the regular lottery, although even this figure could be lower depending on when USCIS releases the H-1B visa numbers allocated to Chile and Singapore under a previously concluded Free Trade Agreement.

In short, both U.S. businesses and their prospective foreign professional employees are subject to a serendipitous distribution process based on chance, rather than a measured allocation process based on merit.

So, amid all this uncertainty, here are a few recent developments further impacting the H-1B Temporary Worker program.

First, in light of the demonstrated inadequacy in the H-1B numbers, there has been some limited Congressional movement to pass legislation that would reform the H-1B process. Thus far, the principal Congressional proposal has been introduced by Rep. Lamar Smith (R-TX) that would provide a two-year period of H-1B cap relief by raising the annual H-1B quota to 195,000. Two other proposals have been introduced in the House of Representatives - one of which would exempt entirely from the H-1B cap many foreign nationals who have been awarded Ph.D. Degrees; and the other of which would create a more flexible arrangement to readjust the H-1B quota based on various factors.

The current expectation is that we will not see any legislative fix to the H-1B quota situation. Not only does immigration remain a controversial topic during this heated year of Presidential elections, but many segments of Congress - in particular, the Hispanic Caucus - adamantly oppose piecemeal liberalizations to our immigration laws and instead insist that immigration liberalization be raised as an integral part of Comprehensive Immigration Reform.

Second, on April 8, 2008, USCIS announced a new rule intended to provide foreign students with some increased flexibility to work during this period of uncertainty in their H-1B eligibility. Essentially, USCIS announced that a work authorization program provided disproportionately to graduating foreign students (known as F-1 Optional Practical Training/OPT) would be extended beyond its current 12-month maximum in the following instances: 1) an automatic extension to this coming October for qualifying F-1 students who have a pending or approved H-1B petition; and 2) an extension for up to 17 additional months for foreign students who have majored in the STEM (standing for: Science, Technology, Engineering, and Mathematics) disciplines. A listing of the specific STEM disciplines can be found at http://www.ice.gov/sevis/stemlist.htm.

This is a very welcomed - and necessary - initiative for foreign university students who need additional periods of work authorization to bridge the H-1B cap gap and/or to undertake the permanent resident process. Owing both to the complexity of this new rule and its high relevance to U.S. employers and the foreign student community, we will be sending out a Newsletter specifically dedicated to this new F-1 program.

Third, I want to remind our Readership that the tight limitations on the H-1B numbers do not apply to all H-1B petitions. Rather, there are various instances in which an employer can file an H-1B petition on a cap-exempt basis, including: 1) many H-1B extensions/renewals; 2) petitions filed by universities and many non-profit entities; 3) physicians who have received J-1 waivers; 4) foreign nationals who have already been counted against the H-1B quota within the past six-year period of time; and 5) foreign nationals who will work AT a cap-exempt entity (usually, a university institution) even if their employer-of-record is subject to the H-1B cap.

We at this firm believe strongly in the benefits of immigration and the need for U.S. employers to gain access to the finest available talent. We believe that the H-1B provisions are both anachronistic and self-defeating as they serve neither U.S. economic competitiveness nor the integrity of the labor market protections. But in this forthcoming period of time, we will continue to keep track of new H-1B developments and try to make sense of this situation to our community of clients and friends.

Thank you and please feel free to contact us with further questions or concerns.

Cordially,

ROBERT D. ARONSON

This memorandum is one of a series of communications prepared as a general public service to our clients and friends. The information herein presented is not intended nor should it be utilized as legal advice on any specific situation. Furthermore, given the rapid pace of change, the veracity of this information is constantly subject to modification and/or reversal. Rather, this piece represents a good faith attempt to orient clients and other interested parties served by Aronson & Associates to current immigration developments. This piece in no manner supercedes the need to seek competent legal advice when engaged in activities carrying possible immigration-related consequences.