USCIS to Propose H-1B Lottery Reform

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Potential changes to the H-1B visa lottery system could significantly alter the way businesses hire foreign nationals, according to immigration attorneys.

An H-1B is a temporary visa that allows employers to hire foreign workers in specialty occupations, such as biotechnology, computing, engineering, law, medicine and a number of other categories. The annual cap is currently set at 85,000 (though certain organizations are exempt from the cap).

Since there is generally more demand than visas, U.S. Citizenship and Immigration Services (USCIS)—which is part of the Department of Homeland Security (DHS)—conducts an annual two-part lottery at the start of April. Through the lottery system, 20,000 visas are first awarded to eligible workers who hold a master's degree or higher from a U.S. university. Then, 65,000 visas are awarded to workers with at least a bachelor's degree, including any workers with advanced degrees who weren't selected during the first lottery round.

Though USCIS hasn't published a formal proposal, it has indicated that it is seeking to change the rules for U.S. employers filing H-1B petitions that are subject to the regular and master's caps. "The proposed rule would fundamentally change how the H-1B visa lottery program is administered," said Anantha Paruthipattu, founder and principal attorney at Paruthipattu Law Firm, based in Herndon, Va. Employers would need to preregister workers, the order of the two lotteries would be reversed, and the petitions may be prioritized based on skill and compensation.

Here's what employers need to know.

Current System

"The purpose of the proposed rule is ostensibly to facilitate an easier intake process of H-1B cap cases for USCIS," noted Chad Blocker, an attorney with Fragomen in Los Angeles. He explained that under the current system:

  • Employers must submit by overnight mail fully prepared cases in the first five business days of April for the federal government's Oct. 1 fiscal year.
  • USCIS then completes data entry for each case.
  • USCIS runs a random, computerized lottery to select the 85,000 cases.
  • Cases selected in the lottery are processed over the next several months, and any that are not selected are mailed back to the employer or its attorney.  

Under the current system, employers must file the entire petition—including filing fees—before they know whether it's been selected. They then wait for many weeks, typically until mid-June, before they learn the result, Paruthipattu explained. Unsuccessful petitions are returned—in July or August in some cases—along with the filing fees.

"This pressures U.S. employers to figure out their resource needs in advance," he said. He noted that large employers can usually determine their hiring needs ahead of time, but many small employers cannot.

[SHRM members-only toolkit: Obtaining U.S. Employment Visas] 

"Over the past couple of years, USCIS has taken longer and longer to return cases that were not selected in the lottery," Blocker said.

Potential Changes

The agency plans to propose three changes to the lottery system.

The order of the two H-1B lotteries would change. Currently, the master's degree lottery is held first and any petitions that are not selected are added to the bachelor's degree pool. Under the proposed rule, all workers—regardless of the degree they hold—would first participate in the general pool of 65,000 visas, and then any remaining workers with U.S. advanced degrees would be included in the second lottery for 20,000 master's cap visas. The agency expects that the change will increase the probability that visas will go to applicants with advanced degrees.

If the lottery had been reversed for fiscal year 2019, about 3,800 more H-1Bs would have gone to workers with U.S. advanced degrees, reducing the general H-1Bs by the same amount, according to the Society for Human Resource Management's (SHRM's) estimates.

The proposal would likely restrict the number of opportunities for those with bachelor's degrees and could have an impact on hiring for entry-level jobs in information technology that don't require a master's degree, said Amy Peck, an attorney with Jackson Lewis in Omaha.

Companies would have to electronically preregister. Employers would have to first register their workers, then submit the H-1B petition upon winning the lottery. Conceptually, electronic preregistration is an idea with merit, but there are a number of unanswered questions about the process, Blocker said. Electronically registering a case would require less paperwork than submitting a fully prepared H-1B petition to USCIS, so employers are wondering whether a preregistration system would mean a jump in the number of cases in the lottery, he added.

If done right, preregistration could work to simplify the intake process, Paruthipattu said. But it's not clear how much information would be needed at the preregistration stage, he noted, so the change could potentially make the process more cumbersome for employers.

"The details are what matter here," said Justin Storch, SHRM's director of regulatory affairs and judicial counsel. "A system that eliminates the need to file full H-1B petitions for cases that will ultimately be rejected in the lottery is good in theory."

But USCIS needs to make sure there is enough time for employers to prepare filings for cases that are ultimately selected and that the electronic lottery works as intended, he noted.

Visa allocation may be prioritized. Instead of a random lottery, the DHS is considering giving priority to H-1B petitioners who are the most skilled and the highest paid. "Many believe DHS would be sidestepping Congress in promulgating a rule that introduces such a dramatic change," Blocker said. Additionally, it is unclear how the DHS will define the "most skilled" applicants and whether smaller companies would be disadvantaged because they aren't able to pay salaries as high as those offered by larger companies, he said. "Indeed, the devil will be in the details of the proposed rule, and we'll need to closely analyze it to determine whether there are unintended consequences with the proposed weighted criteria."

According to USCIS, the changes would be consistent with President Donald Trump's "Buy American, Hire American" executive order, which called for reform of the H-1B process to ensure that visas are awarded to the most-skilled workers at the highest salary levels. The proposal still must go through the rulemaking process.

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