Part 1: Alternatives for “H-1B Lottery Losers”
Consider Cap-Exempt and Concurrent H-1B Options
Sarah Ghazi-Moradi , Nicole S. Schram | 05.09.23
When U.S. employers need to hire skilled foreign national employees, they rely heavily on the H‑1B work visa. Last month, United States Citizenship and Immigration Services (“USCIS”) announced the “winners” of the H‑1B lottery for fiscal year (FY) 2024, and the results left most U.S. employers and their foreign national employees feeling defeated.
This is the first installment of a multi-part series discussing alternatives to the traditional “cap-subject” H‑1B. We begin by exploring cap-exempt and concurrent H‑1Bs, which can be granted even to “regular employers” without participating in the lottery.
In future installments we will explore other lottery-free alternatives, including visa options for employees from select countries, employees of your overseas affiliates, exceptional employees, and more.
Background: The H‑1B Lottery and its Dwindling Odds
There’s a congressional limit (or “cap”) on the number of typical H‑1B visas available each year. In the last decade the demand has always exceeded the 85,000 available H‑1Bs, so USCIS uses a lottery system to choose the lucky employer/employee pairs eligible to file an H‑1B petition. In 2020, USCIS implemented a new electronic system that makes it easier for employers to register their employees in the lottery. Unfortunately (and predictably) this new system has made the odds of being selected progressively worse for employers and H‑1B registrants. Based on USCIS data, the overall selection rate was approximately 42% in FY 2022, 26% in FY 2023, and under 15% this year (FY 2024).
For employers and employees who did not fare so well in the lottery, don’t give up. There are still multiple options.
Option 1: Request a Cap-Exempt H‑1B
H‑1B visas that are exempt from the annual numerical cap (“cap-exempt H‑1Bs”) can be granted without participating in the H‑1B lottery at any time of the year, but only if the employee or employer meet strict qualifications for cap exemption.
Certain types of organizations (referred to here as “Cap-Exempt Employers”) can request cap-exempt H‑1Bs for their employees. Cap-exempt employers include:
- institutions of higher education,
- nonprofit entities related to or affiliated with an institution of higher education,
- nonprofit or governmental research organizations, and
- regular companies performing contract work for a Cap-Exempt Employer identified above, but only if the H‑1B employee works primarily at the Cap-Exempt Employer’s worksite, and the H‑1B employee’s work furthers the essential purpose or mission of the Cap-Exempt Employer.
Example: For-Profit Company Working on Nonprofit Contracts
Javier is a geneticist employed by LabCo. Javier’s work authorization is about to expire, and he was not selected in the H-1B lottery.
LabCo performs contract work for University Medical Foundation (a nonprofit affiliated with an institution of higher education, #2 above). Javier spends 65% of his working hours at LabCo’s labs doing genetic testing essential to the Foundation’s mission.
LabCo learned that it could file a cap-exempt H-1B petition for Javier if Javier did the Foundation’s work in the Foundation’s lab instead of LabCo’s lab. The Foundation agreed, and LabCo filed the cap-exempt H-1B petition, allowing Javier to keep working as LabCo’s employee.
Certain employees are also eligible for cap-exempt H‑1Bs when they have a previously approved H‑1B and/or they were already counted against the H‑1B cap. An employee could be cap-exempt if:
- the employee worked on a previous cap-subject H‑1B for less than 6 years,
- the employee transfers from one H‑1B employer to another, and
- the employee accepts a second simultaneous job with a concurrent H‑1B employer.
We hear some of you saying, “It still doesn’t work! My company and my employee don’t qualify for a cap-exempt H‑1B under any of those scenarios!”
Well, read on… this is where the magic happens, if you’re willing to get creative.
Option 2: Partner with a Cap-Exempt Employer to Unlock a Concurrent H‑1B
If your employee needs a work visa and lost the H‑1B lottery, partnering with a Cap-Exempt Employer can open the door for you to apply for a lottery-free “concurrent” H‑1B. Employees may work in H‑1B status “concurrently,” or for multiple different employers at the same time, and the second H‑1B employer does not need to enter the lottery to file an employee’s concurrent H‑1B application. This is true even if the second employer is not cap-exempt.
There are no strict requirements for the number of hours spent with each employer, but the amount of work time must be reasonable for both the job and the employee.
Example: For-Profit Company with Strong Tech School Ties
Aditi works full-time for EngineerCo, but she was not selected in the H-1B lottery, and her work authorization is expiring.
EngineerCo’s founder asked her alma mater Tech School (a higher ed. institution, #1 above) if it would hire Aditi to teach a remote engineering class each semester. Tech School needed teachers and happily agreed. Immediately after Tech School’s cap-exempt H-1B petition was approved, Aditi started teaching five hours per week, and EngineerCO filed its application for Aditi’s concurrent H-1B. Aditi can return to her regular full-time work at EngineerCo once USCIS issues its receipt for EngineerCo’s concurrent H-1B.
Note: Once the H‑1B employment with the Cap-Exempt Employer ends, the employee’s H‑1B status with the concurrent employer may also be terminated if the concurrent employer is not cap-exempt.
Option 3: Create a New Qualifying Nonprofit to Gain Control Over Cap-Exempt and Concurrent H‑1B
If a company prefers not to rely on partnerships with entities outside of its control, perhaps it can create a new affiliated nonprofit that also qualifies as a Cap-Exempt Employer. This option might work well for companies that perform significant research (form a nonprofit research organization, #3 above) or companies with significant ties to universities (form a nonprofit affiliated with an institution of higher education, #2 above). The qualifying nonprofit would not only further the company’s philanthropic goals, but it could also file cap-exempt H‑1B applications, and unlock the potential for its affiliated for-profit company to request concurrent H‑1Bs for its specialty occupation employees. With careful planning, a newly-created nonprofit could open the door for “regular” companies to secure H‑1Bs, lottery-free, for years to come.
With today’s unfortunate H‑1B lottery odds, employers need to consider creative solutions and take maximum advantage of cap-exempt H‑1B options. These solutions can be complicated, but Boardman Clark is here to help. If you have any questions about securing H‑1B status for your employees, reach out to one of the members of our Immigration practice group. For more alternatives to the H‑1B lottery, stay tuned for Part 2 of our series.
Disclaimer: This information is not intended to be legal advice. Rather, it seeks to make recipients aware of certain legal developments that affect human resource issues. Recipients who want legal advice concerning a particular matter should consult with an attorney who is given a full understanding of the relevant facts pertaining to the particular matter.