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HR Magazine, March 2001: Untied and Ready to Hire

By Carl Shusterman  3/1/2001
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HR Magazine,   March 2001 Vol. 46, No. 3

Free from certain H-1B visa restrictions, employers and foreign-born workers should have an easier time finding each other.

A new economic order has spurred the unprecedented transfer of people across international borders. Few areas of the economy are exempt from this phenomenon. The halls of academia, the corridors of high-tech industry, Fortune 500 boardrooms, Major League Baseball fields and fashion show runways all brim with foreign talent.

However, the limitations imposed by the H-1B visa—which temporarily grants foreign-born individuals the right to work in the U.S.—often have frustrated employers seeking to hire foreign-born workers.

As the domestic labor market has tightened, pressure has increased to modify the laws regulating the H-1B visa. In particular, the high-tech industry has sought to increase the cap on H-1B visas and to ease some of the rules governing the H-1B category.

Last October, President Clinton signed three laws—the most prominent being the American Competitiveness in the 21st Century Act—that already have taken effect and address both goals. Overall, this new legislation should provide employers with a larger pool of foreign-born workers and should make it easier to hire these individuals.

Collectively, these laws:

  • Raise the number of H-1B workers who may be sponsored by U.S. employers.

  • Ease the rules on extending H-1B status in excess of six years.

  • Allow workers to move more easily from one employer to another.

  • Eliminate unnecessary paperwork for employers of H-1B workers in case of mergers and acquisitions.

  • May ensure that the U.S. Immigration and Naturalization Service (INS) accelerates processing times.

  • Increase the filing fees for some employers of H-1B workers.

Raising the Numbers

One of the biggest changes is that the new laws increase—from 115,000 to 195,000 annually—the number of H-1B workers who may be hired by U.S. employers for the next three years.

The new laws also make it easier for employers to hire workers from certain countries. Currently, this can be problematic because there are limits on the number of green cards that can be issued to individuals from any one country.

For example, the number of Chinese and Indian workers applying for green cards generally exceeds the quota for those countries. As a result, many workers from India and China—many of them in the high-tech industry—are unable to obtain green cards before their H-1B visas expire. These workers then fall into limbo and cannot be legally employed—and employers that trained these workers are forced to lose their services.

The new laws, however, would allow these workers to obtain the green cards that remain unused when countries do not fill their annual quotas. (For example, no European, African or Latin American country does so.)

The laws further state that approximately 130,000 immigrant visas that were lost due to government processing delays in 1999 and 2000 may be “recaptured” and used by workers applying for permanent residence through their employers.

Combined, these measures should greatly alleviate the problem of H-1B workers falling out of legal status due to lack of available green cards.

The new laws also state that certain workers may not count against the total H-1B cap. Exempt are H-1B workers sponsored by institutes of higher education, related or affiliated nonprofit entities and government and nonprofit research organizations.

Physicians also are exempted from the cap if they obtain H-1B visas through the “Conrad 20” program, which allows foreign-born physicians to work in medically underserved areas.

The old laws also offered exemptions, but these were limited to:

  • Workers seeking extensions of H-1B status.

  • Workers already employed in the United States on H-1B visas seeking an additional, concurrent job.

  • Workers who sought to change employers.

Portability and I-9 Issues

Under prior law, employers had to file a petition—and get approval from the INS—before they could hire an H-1B professional who was employed at another company. This approval process normally takes between two and four months to complete.

Under the new laws, employers no longer need to wait for approval. Instead, H-1B workers may change jobs as soon as the new employer files the petition.

(For I-9 purposes, employers should follow customary documentation procedures when hiring an H-1B worker away from another company. Typically, this could involve attaching a copy of the receipt notice for the H-1B worker’s filed petition—along with a copy of the I-94—to the I-9 kept on file.

Caveat: To avoid discrimination-related issues, employers that do not currently attach documents to the I-9 to demonstrate a worker’s identity and employment authorization should not do so in this case.)

Similarly, those who applied for “adjustment of status” to become permanent U.S. residents formerly were prohibited from changing employers until the INS approved their petitions—a process that often takes two or three years.

The new law provides that if the application has been pending for 180 days, the applicant is free to accept a job offer from another employer—as long as the new job “is in the same or a similar occupational classification as the job for which the petition is filed.”

The laws do not require that the new employment be located in the same geographical area as the initial job. Neither does the law specify what salary must be paid to the job applicant.

This provision has elicited numerous questions from both employers and foreign professionals. It is apparent that many workers are interested in changing positions. Under the new laws, foreign professionals seeking green cards will not be the “captive audience” of employers, but will enjoy more freedom of movement. For I-9 purposes, these workers typically will possess an Employment Authorization Document that is issued by the INS and demonstrates authorization of employment.

Extensions of Stay Beyond Six Years

Under prior law, employers could not obtain an extension of H-1B status for foreign workers be-yond the visa’s six-year limit. The new law, however, allows for extensions under certain circumstances.

For example, the law limits the annual number of workers born in a particular country who may obtain permanent residence through employer-sponsorship. The law allows any worker, not only H-1B workers, to apply for an extension of stay for more than six years if both of the following are true:

  • The employee is the beneficiary of an employment-sponsored visa petition, either approved or pending.

  • The employee would be eligible to apply for permanent residence except for the application of the per-country limitations.

(Beware that the law states the application for extension “may” be approved by the INS. Ap-proval of an extension request is not mandatory.)

The law also requires the INS to grant extensions of stay to H-1B workers past the usual six years in cases of lengthy adjudications by government agencies.

To qualify, a worker either must be the beneficiary of an employment-sponsored immigrant visa petition or have submitted an application for permanent residence. Even so, employees qualify only if 365 or more days have elapsed since the employer filed, on their behalf, either an alien labor certification or an employment-sponsored immigrant visa petition.

Note: An H-1B worker whose application is still in the alien labor certification stage is not eligible for an extension under this section of the law.

Mergers and Acquisitions

In the past, it was not clear whether employers were obligated to file amended petitions for H-1B workers in the event of a corporate merger or acquisition. Now, it is clear that employers have no such obligation.

The new law specifically states that “an amended H-1B petition shall not be required where the petitioning employer is involved in a corporate restructuring, including but not limited to a merger, acquisition or consolidation, where a new corporate entity succeeds to the interests and obligations of the original petitioning employer and where the terms and conditions of employment remain the same but for the identity of the petitioner.”

In a time when corporate acquisitions and mergers often are the rule rather than the exception, this section of the law should save human resource professionals considerable wasted motion.

Backlog Reduction

Over the past six years, processing times for permanent residence applications have increased from a few months to more than two years. Waiting times for petitions for H-1B status also have increased.

For the first time, the new laws provide that the INS should process permanent residence applications in no more than 180 days and petitions for temporary status in no more than 30 days.

Although these time limitations do not have the force of law, Congress has established special funding designed to ensure that the INS will be able to process applications and petitions within these designated time frames. The agency now is obligated to testify before Congress at regular intervals as to its progress in meeting these goals.

Filing Fees and Exemptions

One of the drawbacks of the new laws is that they raise the filing fees employers must pay when submitting H-1B petitions to the INS. On Dec. 17, the filing fee was increased from $500 to $1,000.

However, some employers are exempt from the fee, including:

  • Those that submit a second extension of stay for an H-1B worker.

  • Institutions of higher education.

  • Related and affiliated nonprofit entities.

  • Nonprofit and government re-search institutions.

  • Primary and secondary education institutions.

  • Nonprofit entities engaged in “established curriculum-related clinical training of students.”

The good news is that some of the filing fees will be used to fund training for U.S. workers.


Taken in concert, the new H-1B laws will make it easier for HR professionals to employ foreign-born professionals. This is good news for HR professionals in a number of different industries.

The economy already has gone global. It is nice to see that U.S. immigration laws are finally catching up.

Carl Shusterman served as trial attorney with the U.S. Immigration and Naturalization Services. He is principal of the Law Offices of Carl Shusterman, a Los Angeles-based immigration law firm.

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