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Filing Under The FY 2018 H-1B Cap; New Developments In H-1B Cap Exemption

U.S. Citizenship and Immigration Services (USCIS) announced that it will begin accepting H-1B petitions subject to the fiscal year 2018 cap on April 3, 2017. All cap-subject H-1B petitions filed before April 3, 2017, for the FY 2018 cap will be rejected.

Congress set a cap of 65,000 H-1B visas per fiscal year. An advanced-degree exemption from the H-1B cap is available for 20,000 beneficiaries who have earned a U.S. master’s degree or higher. The agency said it will monitor the number of petitions received and notify the public when the H-1B cap has been met.

If the USCIS receives more H-1B petitions than allocated under the two H-1B caps, then it will conduct a lottery of all H-1B petitions received in the first five days from April 3. Like last year, it is anticipated that many more H-1B petitions will be rejected rather than accepted. There will again be many disappointed applicants.

To compound the problem, USCIS also recently announced a temporary suspension of premium processing for all H-1B petitions starting April 3 for up to six months. While H-1B premium processing is suspended, petitioners will not be able to file Form I-907, Request for Premium Processing Service, for a Form I-129, Petition for a Nonimmigrant Worker that requests the H-1B nonimmigrant classification. While premium processing is suspended, any I-907 filed with an H-1B petition will be rejected, USCIS said. If the petitioner submits one combined check for both the I-907 and I-129 H-1B fees, both forms will be rejected.

USCIS reminded H-1B petitioners to follow all statutory and regulatory requirements as they prepare petitions to avoid delays in processing and possible requests for evidence. The I-129 filing fee has increased to $460, and petitioners no longer have 14 days to correct a dishonored payment. If any fee payments are not honored by the bank or financial institution, USCIS will reject the entire H-1B petition without the option for the petitioner to correct it.

The USCIS announcement about the April 3 start date for FY 2018 H-1B petitions is at https://www.uscis.gov/news/news-releases/uscis-will-accept-h-1b-petitions-fiscal-year-2018-beginning-april-3. The announcement about the suspension of premium processing for H-1B petitions is at https://www.uscis.gov/news/alerts/uscis-will-temporarily-suspend-premium-processing-all-h-1b-petitions. Detailed information on how to complete and submit an FY 2018 H-1B petition is at https://www.uscis.gov/sites/default/files/files/form/m-735.pdf. For more information on the H-1B nonimmigrant visa program and current I-129 processing times, see https://www.uscis.gov/working-united-states/temporary-workers/h-1b-specialty-occupations-and-fashion-models/h-1b-fiscal-year-fy-2018-cap-season

H-1B Cap Exemption Options

Many H-1B employers are not subject to the H-1B cap and are considered cap exempt. They include institutions of higher education and non-profits affiliated or related to institutions of higher education. See 214(g)(5)(A) of the Immigration and Nationality Act (INA). Employment at a university that qualifies as an institution of higher education, as defined under section 101(a) of the Higher Education Act of 1965, clearly exempts an H-1B beneficiary from the H-1B cap. What was less clear was the definition of a nonprofit entity related or affiliated to an institution of higher education. The Retention of EB-1, EB-2 and EB-3 Immigrant Workers and Program Improvements Affecting High Skilled Nonimmigrant Workers (High Skilled Worker Rule) , effective January 17, 2017, has broadened the definition of an affiliated or related nonprofit entity if it satisfies the following conditions:

  1. The nonprofit entity is connected to or associated with an institution of higher education through shared ownership or control by the same board or federation;
  2. The nonprofit entity is operated by an institution of higher education;
  3. The nonprofit entity is attached to an institution of higher education as a member, branch, cooperative, or subsidiary; or
  4. The nonprofit entity has entered into a formal written affiliation agreement with a institution of higher education that establishes an active working relationship between the nonprofit entity and the institution of higher education, and a fundamental activity of the nonprofit entity is to directly contribute to the research or education mission of the institution of higher education.

See 8 CFR 214.2(h)(8)(ii)(F)(2).

The High Skilled Worker Rule added the fourth prong, 8 CFR 214.2(h)(8)(ii)(F)(2)(iv), which  recognizes that affiliation may be demonstrated when the nonprofit enters into an agreement with the institution of higher education that establishes an active working relationship, and that a fundamental activity of the nonprofit contributes to the research or mission of the institution of higher education. This broadening of the affiliated relationship opens up the possibility of more H-1B cap exempt petitions for those who have not been able to make it under the H-1B FY 2018 cap and can be employed by nonprofit affiliated entities. Prior to the addition of the fourth prong, it was difficult to show affiliation unless the nonprofit entity was part of the institution of higher education, as defined under 8 CFR 214.2(h)(8)(ii)(F)(2)(i)-(iii).  This is no longer the case if there is a formal written affiliation with an institution of higher education even if the nonprofit is not owned by it or part of it. For example, if the nonprofit enters into an agreement with a university to house student interns, and these interns focus on activities at the nonprofit that contribute to the mission of the university, it will be possible to demonstrate affiliation. Similarly, if the nonprofit enters into agreements that conduct research for the university, such an arrangement could also qualify for showing affiliation and thus H-1B cap exemption.

INA 214(g)(5)(B) also provides for cap-exemption if the H-1B is employed or receives an offer of employment at a nonprofit research organization or governmental research organization. The High Skilled Worker Rule defines a governmental research organization as “a federal, state or local entity whose primary mission is the performance or promotion of basic research and/or applied research.” See 8 CFR 214.2(h)(19)(iii)(C).

Under INA 214(g)(6), it is further permissible for an H-1B beneficiary to be employed by a cap-exempt employer such as a university and then be able to obtain an H-1B, without being counted under the annual H-1B cap, through an employer who would otherwise be subject to the cap. The High Skilled Worker Rule affirms such concurrent employment between a cap-exempt and cap-subject H1B employer, but adds that  there must be a demonstration that the “beneficiary’s employment with the cap-exempt employer is expected to continue after the new cap-subject petition is approved, and the beneficiary can reasonably and concurrently perform the work described in each employer’s respective positions.” See 8 CFR 214.2(h)(8)(ii)(F)(6). The rule further cautions that if the cap-exemption employment is terminated or ends before the end of the validity of the petition that was approved under concurrent employment, the H-1B worker becomes subject to the numerical limitations of the H-1B, and that the USCIS may revoke the cap-subject H-1B petition. See 8 CFR 214.2(h)(8)(ii)(F)(6)(ii). Prior to the high Skilled Worker Rule, it may have been possible to argue that the H-1B worker did not become immediately subject to the numerical limitations even if concurrent cap exempt employment terminated and that he or she would only become subject to the cap upon the filing of the next H-1B petition. This is no longer the case.

Pursuant to INA 214(g)(5), an H-1B worker who is sponsored through a cap subject entity is not counted under the H-1B cap lottery if he or she is employed “at” a cap-exempt institution of higher education or is employed “at” a non-profit affiliated to an institution of higher education. The High Skilled Worker Rule affirms what is commonly referred to the “at” doctrine as the H-1B worker is working at a cap-exempt employer although he or she is the beneficiary of an H-1B petition filed by a cap-subject employer. While a plain reading of INA 214(g)(5) merely requires demonstration of employment at a cap subject employer, the High Skilled Worker Rule imposed additional requirements that are  not supported by the statutory provision. It is now required to demonstrate that the “H-1B beneficiary will spend the majority of his or work time performing job duties at a qualifying institution, organization or entity and those job duties directly and predominately further the essential purpose, mission, objectives or functions of the qualifying institution, organization or entity, namely, either higher education, nonprofit research or government research. The burden is on the H-1B petitioner to establish that there is a nexus between the duties to be performed by the H-1B beneficiary and the essential purpose, mission, objectives or functions of the qualifying institution, organization or entity.” See 8 CFR 214.2(h)(8)(ii)(F)(4). This works best where the petitioner is closely tied to a cap exempt entity, such as a startup using the research laboratory of a university who have both received joint funding, and where the H-1B beneficiary performs research at the laboratory even though sponsored for the H-1B through the startup.

Any H-1B beneficiary who has previously been counted, within the 6 years prior to the approval of a petition shall not be counted towards that limitation again, unless the individual would be eligible for a full 6 years by spending one year outside the United States. See INA 214(g)(7). This is the case even if the beneficiary never entered the United States under the previously approved H-1B petition, unless the employer notified the USCIS and the petition got revoked. The High Skilled Worker Rule adopts a 2006 USCIS Memo that gave the beneficiary a choice of either recapturing the remaining time left on the H-1B or seeking a new period of six years if the beneficiary was outside the United States for more than one year. 8 CFR 214.2(h)(13)(iii)(C)(2) like the 2016 USCIS Memo now allows recapture of remaining time left in H-1B even if the previous H-1B petition was approved more than 6 years ago, and gives the beneficiary who has been physically outside the United States for more than 1 year a choice of either recapturing the remainder of H-1B time or seeking a new period of six years.

Although H-1B cap exemption possibilities clearly exist, and have somewhat broadened under the High Skilled Worker Rule, not everyone will qualify for cap-exemption unless they are specifically offered employment through cap exempt employers or work at cap exempt entities. Most people will not get selected under H-1B lottery. For FY 2017, the USCIS received over 236,000 H-1B petitions, all vying for one of the 85,000 visas available. This means that some 151,000 or more people – highly qualified individuals with dreams and career aspirations – will likely be denied the ability to work in the US. This is not for lack of skill, this is not for lack of good moral character, but for an arbitrary cap system that limits upward mobility and stifles US economic growth and innovation in many fields

Will the Disruption of the H-1B Lottery Force Change for the Better?

A class action lawsuit, Tenrec, Inc. v. USCIS, challenging the annual H-1B lottery recently overcame a motion to dismiss, and will move forward. There is a decent chance that the plaintiffs may prevail and employers will no longer be subject to the H-1B lottery. The annual H-1B visa cap forces employers to scramble way before the start of the new fiscal year, which is October 1, to file for H-1B visas, only to face the very likely prospect of being rejected by an opaque randomized lottery.

The lawsuit asserts that the H-1B lottery contravenes the law, and points to INA § 214(g)(3), which states that “Aliens who are subject to the numerical limitations of paragraph (1) shall be issued visas (or otherwise provided nonimmigrant status) in the order in which petitions are filed for such visas or status.” This suggests that the USCIS should be accepting all H-1B visas and putting them in a queue rather than rejecting them through a randomized H-1B lottery. The parallel provision, INA § 203(e)(1), for immigrant visas reads, “Immigrant visas made available under subsection (a) or (b) shall be issued to eligible immigrants in the order in which a petition in behalf of each such immigrant is filed…”  Although the wording of those two sections are virtually identical, the government rejects H-1B nonimmigrant visa petitions that do not get chosen in the lottery, but accepts all immigrant visa petitions and assigns a “priority date” based on the order they are filed, which in some cases is based on the underlying labor certification.  Unlike the H-1B visa, the immigrant visa petition is not rejected.  Instead, they wait in a line until there are sufficient visa numbers available prior to receiving an immigrant visa or being able to apply for adjustment of status in the United States.

The government in Tenrec, Inc. v. USCIS filed a motion to dismiss for lack of subject matter jurisdiction. In its motion, the government argued that the individual plaintiffs did not have standing because only employers have standing to challenge the H-1B program. The employers too, according to the government, did not show sufficient injury and thus did not have standing.  In a September 22, 2016 decision, Judge Michael Simon rejected the government’s lack of standing claims on both counts. Judge Simon referenced other recent federal court decisions that have ruled that foreign workers who are beneficiaries of immigrant visa petitions have been allowed to challenge their denials, and be given notice of them. This trend has been discussed in my recent blog, Who Should Get Notice When the I-140 Petition Is Revoked? It’s The Worker, Stupid! What is interesting in Judge Simon’s decision is the notion that standing can also extend to nonimmigrant workers. As the recipient of an H-1B visa can become a permanent resident through subsequently filed applications following the grant of H-1B status, there is no distinction between the beneficiary of a nonimmigrant visa petition with an immigrant visa petition. Even if the individual H-1B visa plaintiffs cannot become permanent residents, Judge Simon noted that they are still “more than just a mere onlooker” because their status would be in jeopardy and would lose an opportunity to live and work in the United States, as well as enjoy life here. Judge Simon also held that the employers had standing notwithstanding that the H-1B lottery already occurred since it was likely that the employer could lose in next year’s lottery. This holding in itself is invaluable for providing standing to nonimmigrant visa holders in future challenges even if the plaintiffs are not victorious here.

Even if the plaintiffs succeeding in knocking out the H-1B lottery, they will not be able to readily access the H-1B program. The annual H-1B cap will still be limited to 65,000 per year for applicants with bachelor’s degree, and an additional 20,000 for those with master’s degrees. It will be somewhat similar to the priority date system for immigrant visas that face years of backlogs, and the EB-2 and EB-3 India backlogs is currently several decades long. Although the underlying labor condition application of an H-1B petition is valid for only three years, under a redesigned filing system devoid of the lottery, an LCA could potentially be submitted and activated once the priority date for that H-1B petition becomes current.

While the H-1B lottery benefits employers who file many petitions each year (as they can then at least hope to win some in the lottery), there is already a wait list for most, especially smaller employers who file for one employee.  If the employer loses two or three lotteries before getting a number for that prospective employee, this in any event becomes a de facto waiting list.   The fact that some lucky ones get in the first time does not mean that most will not be subject to a wait list. While a wait list system for all will be fairer than a randomized lottery for a lucky few, it will create pressure for the administration to tweak the system or for Congress to create more access to H-1B visas. Regarding tweaking the system, I have previously argued that beneficiaries of approved H-1B petitions on the wait list should on a case by case basis be given the opportunity to apply for interim immigration benefits such as deferred action or parole.

The U visa serves as a case in point for my idea. Congress only granted the issuance of 10,000 U visas annually to principal aliens under INA 214(p)(2). However, once the numerical limitation is reached, the USCIS does not reject the additional U visa petition like it does with the H-1B visa under the lottery. U-1 visa grantees are put on a waiting list and granted either deferred action if in the US or parole if they are overseas pursuant to 8 CFR 214.14(d)(2). The Adjudicators Field Manual at 39.1(d) explains how the waitlist works for U visa applicants:

2) Waiting list .

All eligible petitioners who, due solely to the cap, are not granted U-1 nonimmigrant status must be placed on a waiting list and receive written notice of such placement. Priority on the waiting list will be determined by the date the petition was filed with the oldest petitions receiving the highest priority. In the next fiscal year, USCIS will issue a number to each petition on the waiting list, in the order of highest priority, providing the petitioner remains admissible and eligible for U nonimmigrant status. After U-1 nonimmigrant status has been issued to qualifying petitioners on the waiting list, any remaining U-1 nonimmigrant numbers for that fiscal year will be issued to new qualifying petitioners in the order that the petitions were properly filed. USCIS will grant deferred action or parole to U-1 petitioners and qualifying family members while the U-1 petitioners are on the waiting list. USCIS, in its discretion, may authorize employment for such petitioners and qualifying family members.

While U visa recipients already in the United States on a wait list can seek deferred action, the USCIS has also recently agreed to grant parole to U visa petitioners and family members based overseas when the 10,000 annual limitation has been reached.

Why can’t the USCIS do the same with H-1B petitions by granting beneficiaries of H-1B petitions deferred action if they are within the United States or paroling them if they are overseas, along with discretionary work authorization? The grant of deferred action or parole of H-1B beneficiaries would be strictly conditioned on certain narrow criteria.    Critics of the H-1B program, and there are many, will howl and shriek that this is an end run around the annual H-1B limitation imposed by Congress.  But such criticism could be equally applicable to U visa applicants in queue, who are nevertheless allowed to remain in the United States. Of course, a compelling argument can be made for placing U visa beneficiaries on a waiting list through executive action, who are the unfortunate victims of serious crimes, as Congress likely intended that they be in the United States to aid criminal investigations and prosecutions. While H-1B wait listed applicants may not be in the same compelling situation as U visa applicants, a forceful argument can be made that many H-1B visa recipients contribute to the economic growth of the United States in order to justify being wait listed and receiving an interim benefit.

If the administration feels nervous about being further sued by anti-H-1B interest groups, after being forced to dismantle the H-1B lottery, perhaps it can limit the grant of deferred action or parole to those H-1B wait listed beneficiaries who can demonstrate that their inability to be in the United States and work for their employers will not be in the public interest. Or perhaps, those who are already in the United States, such as students who have received Optional Practical Training, be granted deferred action as wait listed H-1B beneficiaries. If the administration wishes to narrow the criteria further, it could give preference to those H-1B beneficiaries for whom the employer has started the green card process on their behalf. One could also throw in a requirement that the employer register under E-Verify in order to qualify, and this would expand E-Verify to many more employers, which is one of the government’s  goals as part of broader immigration reform.

Of course, people have gotten comfortable with the status quo, but the H-1B lottery is problematic and thus not worthy of preservation. By turning the lottery on its head, it is hoped that there will be real change for the better. Ideally, Congress should bring about change by creating more H-1B visa numbers, although given that the H-1B visa program has already been poisoned due to the misconception that H-1B workers take away US jobs, other restrictions in exchange for more H-1B numbers will become inevitable, such as forcing employers to recruit before filing for an H-1B visa or by creating more restrictions on dependent H-1B employers. Still, disruption is the order of the day, and if we have witnessed seismic disruption in the taxi industry through Uber or the hotel industry through Airbnb, why not also disrupt the H-1B lottery through a lawsuit in hope for positive change? As Victor Hugo famously said – “Nothing is more powerful than an idea whose time has come.” Who would have imagined a few years ago that those who had come to the United States prior to the age of 16 and were not in status would receive deferred action and be contributing to the United States today through their careers and tax dollars? Or who would have imagined that H-4 spouses could seek work authorization or that beneficiaries of I-140 petitions who are caught in the green card employment-based backlogs are likely to be able to apply for work authorization, even if the circumstances are less than perfect, under a proposed rule?  Moreover, the new proposed parole entrepreneur parole rule is also worthy of emulation in place of  a disrupted H-1B lottery program. If deserving entrepreneurs can receive parole, so can deserving H-1B beneficiaries who are waiting in a queue that may be more fair than the lottery.  Of course, it goes without saying that executive action is no substitute for action by Congress. Any skilled worker immigration reform proposal must not just increase the number of H-1B visas but must also eliminate the horrendous green card backlogs in the employment-based preferences for those born in India and China.  But until Congress acts, it is important to press this administration and the next with good ideas. The lawsuit to end the H-1B lottery is one such good idea. It should be embraced rather than feared in the hope that it will first dismantle and then resurrect a broken H-1B visa program.

Can The H-1B Visa Be Saved Through Executive Action?

The annual H-1B VISA cap forces employers to scramble way before the start of the new fiscal year, which is October 1, to file for H-1B visas, only to face the very likely project of being rejected by a randomized lottery. This is no way to treat US employers who pay thousands of dollars in legal and filing fees, along with all the steps they need to take in being in compliance. The whole concept of a nonsensical quota reminds us of Soviet era central planning, and then to inject a casino style of lottery into the process, makes the process even more unfair. Under the lottery, unsuccessful H-1B petitions may be every year with no guarantee of being selected. In fact, notwithstanding recent criticisms, the H-1B visa program has a positive impact on jobs, wages and the economy. Unfortunately, this time too, it is predicted that there will be far more H-1B visa petitions received when compared to the 65,000 H-1B visa cap plus the additional 20,000 H-1B cap for those who have graduated with advanced degrees from US universities. To have only less than a 30% chance to secure an H-1B visa number under the 65,000 cap renders the program totally unviable for employers and H-1B visa applicants.

I was thus heartened to read a blog by esteemed colleague Brent Renison for suggesting that the H-1B lottery may be illegal. He points to INA § 214(g)(3), which states that “Aliens who are subject to the numerical limitations of paragraph (1) shall be issued visas (or otherwise provided nonimmigrant status) in the order in which petitions are filed for such visas or status.” According to Renison, this suggests that the USCIS should be accepting all H-1B visas and putting them in a queue rather than rejecting them through a randomized H-1B lottery. Renison also points to a parallel provision, INA § 203(e)(1),  which reads, “Immigrant visas made available under subsection (a) or (b) shall be issued to eligible immigrants in the order in which a petition in behalf of each such immigrant is filed…”  Although the wording of those two sections are virtually identical, the government rejects H-1B petitions that do not get chosen in the lottery, but accepts all immigrant visa petitions and assigns a “priority date” based on the order they are filed, which in some cases is based on the underlying labor certification.  Unlike the H-1B visa, the immigrant visa petition is not rejected.  Instead, they wait in a line until there are sufficient visa numbers available prior to receiving an immigrant visa or being able to apply for adjustment of status in the United States.

Renison is contemplating filing a class action to challenge the H-1B visa lottery under 8 CFR 214.2(h)(8). I commend him for this initiative, and now take the liberty to propose an even more audacious idea, building upon his brilliant idea. If he is successful in getting USCIS to cease the H-1B lottery process, and accepting all H-1B petitions and placing them in a queue, then the USCIS should approve such petitions prior to placing them in a queue, but only allowing either the grant of an H-1B visa or a change of status to H-1B when a visa number becomes available. However, beneficiaries of approved H-1B petitions on the wait list should also on a case by case basis be given the opportunity to apply for interim immigration benefits such as deferred action or parole.

The U visa serves as a case in point for my idea. Congress only granted the issuance of 10,000 U visas annually to principal aliens under INA 214(p)(2). However, once the numerical limitation is reached, the USCIS does not reject the additional U visa petition like it does with the H-1B visa under the lottery. U-1 visa grantees are put on a waiting list and granted either deferred action if in the US or parole if they are overseas pursuant to 8 CFR 214.14(d)(2). The Adjudicators Field Manual at 39.1(d) explains how the waitlist works for U visa applicants:

2) Waiting list .

All eligible petitioners who, due solely to the cap, are not granted U-1 nonimmigrant status must be placed on a waiting list and receive written notice of such placement. Priority on the waiting list will be determined by the date the petition was filed with the oldest petitions receiving the highest priority. In the next fiscal year, USCIS will issue a number to each petition on the waiting list, in the order of highest priority, providing the petitioner remains admissible and eligible for U nonimmigrant status. After U-1 nonimmigrant status has been issued to qualifying petitioners on the waiting list, any remaining U-1 nonimmigrant numbers for that fiscal year will be issued to new qualifying petitioners in the order that the petitions were properly filed. USCIS will grant deferred action or parole to U-1 petitioners and qualifying family members while the U-1 petitioners are on the waiting list. USCIS, in its discretion, may authorize employment for such petitioners and qualifying family members.

Why can’t the USCIS do the same with H-1B petitions by granting beneficiaries of H-1B petitions deferred action if they are within the United States or paroling them if they are overseas, along with discretionary work authorization? The grant of deferred action or parole of H-1B beneficiaries would be strictly conditioned on the basis that the employer would comply with the terms and conditions of the H-1B petition and the attestations made in the underlying Labor Condition application.   Critics of the H-1B petition, and there are obviously many, will howl and shriek that this is an end run around the annual H-1B limitation imposed by Congress.  But such criticism could be equally applicable to U visa applicants in queue, who are nevertheless allowed to remain in the United States. Of course, a compelling argument can be made for placing U visa beneficiaries on a waiting list through executive action, who are the unfortunate victims of serious crimes, as Congress likely intended that they be in the United States to aid criminal investigations and prosecutions. While H-1B wait listed applicants may not be in the same compelling situation as U visa applicants, a forceful argument can be made that many H-1B visa recipients contribute to the economic growth of the United States in order to justify being wait listed and receiving an interim benefit.

If the administration feels nervous about being further sued, after being forced to dismantle the H-1B lottery, perhaps it can limit the grant of deferred action or parole to those H-1B wait listed beneficiaries who can demonstrate that their inability to be in the United States and work for their employers will not be in the public interest. Or perhaps, those who are already in the United States, such as STEM (Science, Technology, Engineering and Math) students who have received Optional Practical Training, and are making significant contributions, be granted deferred action as wait listed H-1B beneficiaries. Such deferred action should only be granted if they are well within the three year term of the approved H-1B petition. If the administration wishes to narrow the criteria further, it could give preference to those H-1B beneficiaries for whom the employer has started the green card process on their behalf.

While this proposal will likely not get a standing ovation on first brush, and the best solution is for Congress to either expand the H-1B cap or get rid of it altogether,  it is important to take comfort in Victor Hugo’s famous words – “Nothing is more powerful than an idea whose time has come.” Who would have imagined a few years ago that those who had come to the United States prior to the age of 16 and were not in status would receive deferred action and be flaming successes today? Or who would have imagined that H-4 spouses could seek work authorization or that beneficiaries of I-140 petitions who are caught in the green card employment-based backlogs are likely to be able to apply for work authorization, even if the circumstances are less than perfect, under a proposed rule? Of course, it goes without saying that executive action is no substitute for action by Congress. Any skilled worker immigration reform proposal must not just increase the number of H-1B visas but must also eliminate the horrendous green card backlogs in the employment-based preferences for those born in India and China.  But until Congress acts, it is important to press the administration with good ideas, and to build upon brilliant ideas proposed by others. Good ideas never disappear, and have the uncanny knack of resurfacing again and again, until they come into fruition to benefit deserving immigrants who contribute to America.

AMERICA CANNOT BE OPEN FOR BUSINESS THROUGH AN H-1B VISA LOTTERY

By Gary Endelman and Cyrus D. Mehta

In America, the best day of the week has always been tomorrow except, it seems, when it comes to immigration. On April 1, 2015, U.S. Citizenship and Immigration Services (USCIS) will begin accepting H-1B petitions subject to the fiscal year (FY) 2016 cap. U.S. businesses use the H-1B program to employ foreign workers in occupations that require highly specialized knowledge in fields such as science, engineering, and computer programming.

The congressionally mandated cap on H-1B visas for FY 2016 is 65,000. The first 20,000 H-1B petitions filed for individuals with a U.S. master’s degree or higher are exempt from the 65,000 cap.

USCIS expects to receive more petitions than the H-1B cap during the first five business days of this year’s program. The agency will monitor the number of petitions received and notify the public when the H-1B cap has been met. If USCIS receives an excess of petitions during the first five business days, the agency will use a lottery system to randomly select the number of petitions required to meet the cap. USCIS will reject all unselected petitions that are subject to the cap as well as any petitions received after the cap has closed. USCIS used the lottery for the FY 2015 program last April. It is anticipated that USCIS will also use the lottery again for the FY 2016. The very existence of the H-1B lottery speaks most eloquently to the economic illiteracy of the current H-1B cap. Perhaps more than any other visa, the H-1B is viewed by those in charge as a problem to be contained, not an asset to be maximized. In a political system that has an almost mystical faith in the market, the inflexibility that characterizes the H-1B cap is eloquent testimony to an absence of imagination and a refusal to let the market set the level of H-1B demand.

A few days back, President Obama addressed the SelectUSA Investment Summit, and these were his words:

So the bottom line is this:  America is proudly open for business, and we want to make it as simple and as attractive for you to set up shop here as is possible.  That is what this summit is all about.  I hope you take full advantage of the opportunities that are here.

These words sound hollow if employers who desire to hire foreign talented workers on the H-1B visas have to depend on a lottery. If an H-1B visa petition is selected, the foreign worker can only start employment on October 1, 2015. If the H-1B visa petition is not selected, the employer has to try again in April 2016, with the hopes that the employee will come on board on October 1, 2016. It is self evident that the cap hinders the ability of a company to hire skilled and talented workers in order to grow and compete in the global economy. The hiring of an H-1B worker does not displace a US worker. In fact, research shows that they result in more jobs for US workers. The notion of a nonsensical quota reminds us of Soviet era central planning, and then to inject a casino style lottery into the process, just rubs salt into an oozing old wound. The lack of flexibility that robs our H-1B policies of any notion of flexibility reflects a bedrock belief, as wrong as it can possibly be, that immigration is only for the benefit of the immigrants. It is about them, we seem to be saying, not about us. Our self-interest is not at stake. Not only is this economically incoherent but it ignores the moral integrity of allowing an employment-based immigration system to function in harmony with the economy that it is supposed to serve. It will not only fail to prepare American workers for the future; it will fail utterly to protect them against the present. That is the most telling indictment of our current H-1B approach, namely it does nothing to benefit those who are presumably its intended beneficiaries. So long as this Maginot line of defense persists, those in charge of H-1B policy will have no incentive to look for anything better.

This absurd situation can be remedied quite quickly. The Immigration Innovation Act of 2015 (S. 153) (“I-Squared” Act) was introduced by  Senators Hatch (R-UT), Klobuchar (D-MN), Rubio (R-FL), Coons (D-DE), Flake (R-AZ), and Blumenthal (D-CT). When partisan rancor is the norm in Congress, the I-Squared Act is genuinely bipartisan, and endeavors to provide critical reforms needed in the area of high-skilled immigration. The I-Squared Act will raise H-1B numbers so as to avoid these unnecessary scrambles for the H-1B visa. What is unique is that the H-1B numbers will not be the subject of an arbitrary cap just picked from a hat, but will fluctuate based on actual market demand. The cap will not go above 195, 000, but not below 115,000. In essence, for the first time, the H-1B allotment will be infused with the lubricant of capitalism, rising and falling in concert with the needs of the American economy.

Among the bill’s provisions are the following, although we refer readers to Greg Siskind’s detailed summary:

  •  Increases the H-1B cap from 65,000 to 115,000 and allows the cap to go up (but not above 195,000) or down (but not below 115,000), depending on actual market demand.
  • Removes the existing 20,000 cap on the U.S. advanced degree exemption for H-1Bs.
  • Authorizes employment for dependent spouses of H-1B visa holders.
  • Recognizes that foreign students at U.S. colleges and universities have “dual intent” so they aren’t penalized for wanting to stay in the U.S. after graduation.
  • Recaptures green card numbers that were approved by Congress in previous years but were not used, and continues to do so going forward.
  • Exempts dependents of employment-based immigrant visa recipients, U.S. STEM advanced degree holders, persons with extraordinary ability, and outstanding professors and researchers from the employment-based green card cap.
  • Eliminates annual per-country limits for employment-based visa petitioners and adjusts per-country caps for family-based immigrant visas.
  • Establishes a grant program using funds from new fees added to H-1Bs and employment-based green cards to promote STEM education and worker retraining.

Unfortunately, the prospects of this bill’s passage are not too strong. Senator Grassley chairs the Judiciary Committee in the Senate and he will likely not consider the bill. Nor will Senator Jeff Sessions who chairs the Immigration Subcommittee. Both of them are arch foes of positive skilled immigration reform. They also do not see that passing the I Squared Act will indeed benefit rather than harm the United States. They also have allies on the left such as the AFL-CIO and think tanks like the Economic Policy Institute who oppose the H-1B visa. The reason that they do not know how to use immigration to create economic opportunity is that they do not think of immigration in this fashion. They have a static view of the economy where the focus is on not letting foreigners steal the jobs that do exist rather than examine how employers or entrepreneurs can use immigration to create new economic opportunity. Indeed, the odd marriage of the left and the right in opposition to a rational H-1B program reflects a shared belief that immigration is bad for American workers, that no new wealth can be created, that opportunity is gone, that we have to protect what now exists rather than seek to invent that which has yet to be imagined. The H-1B illustrates the Luddite pessimism of its opponents who believe that America’s best days are behind it. At a time when change is the only constant, those who want to place a straightjacket around the H-1B vainly seek to hold back the future. Operating from these misplaced assumptions, it is not at all surprising that the United States ranks near the bottom among major economies in terms of policies to allow hiring highly skilled immigrant workers, according to a study.

IT consulting employers who hire professional workers from India unfortunately seem to be getting more of a rap for indiscriminately using up the H-1B visa. However, it is this very business model has provided reliability to companies in the United States and throughout the industrialized world to obtain top-drawer talent quickly with flexibility and at affordable prices that benefit end consumers and promote diversity of product development. This is what the oft-criticized “job shop” readily provides. By making possible a source of expertise that can be modified and redirected in response to changing demand, uncertain budgets, shifting corporate priorities and unpredictable fluctuations in the business cycle itself, the pejorative reference to them as “job shop” is, in reality, the engine of technological ingenuity on which progress in the global information age largely depends.  Such a business model is also consistent with free trade, which the US promotes vehemently to other countries, but seems to restrict when it applies to service industries located in countries such as India that desire to do business in the US through their skilled personnel.

While Senator Grassley and his cheerleaders may gloat, decent people should feel bad for all the rejected foreign national prospective employees who would have otherwise qualified to work in a specialty occupation, as defined under the H-1B visa law. More people will get rejected than selected, and their hopes and dreams will be dashed.  Many who are in the United States after graduating from American universities may have to leave. Others won’t be able to set foot into the United States to take up their prized job offers. Imagine if all of these rejected folks could actually come and work in the United States. Their employers would benefit and become more globally competitive – and could have less reason to outsource work to other countries. They would have also been productive workers, and spent money in the US economy, including buying houses and paying taxes. The H-1B cap will once again rob the economy of this wonderful cascading effect.

We have said this before and it is worth repeating again. What we are dealing with is a global battle for talent. More than any other single immigration issue, the H-1B debate highlights the growing and inexorable importance of a skilled entrepreneurial class with superb expertise and a commitment not to company or country, but to their own careers and the technologies on which they are based. They have true international mobility and, like superstar professional athletes, will go to those places where they are paid most handsomely and given a full and rich opportunity to create. We are no longer the only game in town. The debate over the H-1B is, at its core, an argument over whether the United States will continue to embrace this culture, thus reinforcing its competitive dominance in it, or turn away and shrink from the competition and the benefits that await. How can we, as a nation, attract and retain that on which our prosperity most directly depends, namely a productive, diverse, stable and highly educated work force irrespective of nationality and do so without sacrificing the dreams and aspirations of our own people whose protection is the first duty and only sure justification for the continuance of that democracy on which all else rests? This is the very heart of the H-1B maze. The H-1B has become the test case for all employment-based immigration. If we cannot articulate a rational policy here that serves the nation well, we will likely not be able to do it anywhere else.

The ongoing H-1B debate is really about the direction that the American economy will take in the digital age and whether we will surrender the high ground that America now occupies. History teaches us that those who shrink from new challenges rarely achieve greatness. In the 15th century, vast Chinese armadas with ships far larger than Columbus’ fleet crossed the Chinese sea venturing far west to Ceylon, Arabia and East Africa. Seven times from 1405 to 1433, Chinese traders sailed to the Persian Gulf and beyond, bringing vast new trading areas under Chinese imperial control. Yet, precisely at a time when China was poised to create this global commercial empire, they drew back. Less than a century later, all overseas trade was banned and it became a capital crime to sail from China in a multi-masted ship. This was one of history’s great turning points. The high ground in the information age global economy of the 21st century will belong to those who dare to dream. Maybe a rational H-1B policy would be a good place to start.

(Guest Author Gary Endelman is the Senior Counsel of Foster)