Proposed H-1B Regulation Published by USCIS Would Create Major Changes

US Citizenship and Immigration Services (USCIS) has issued a proposed rule to change certain aspects of H-1B adjudications – particularly to address perceived injustices in the cap lottery system.

The proposed regulation is mainly aimed at H-1B workers, although it also includes provisions impacting F-1 students working under OPT, a common pathway to an H-1B offer of employment.

We now enter a 60-day comment period were individuals and organizations can share their thoughts and concerns with USCIS concerning the impact of the proposed rule.  The agency would then need to publish a final rule.

Major proposed changes include:


  • Addressing “Loopholes” in the H-1B Lottery system – For many years, here have been far more lottery entries than there have been available H-1b visas. This led to the lottery system and to ever-decreasing likelihood of selection for an H-1B.

A part of the reason for gross mismatch between entries and available visas (aside from the statutory allotment being disturbingly out of sync with the needs of the economy) has been the incentive to increase chances be entering multiple times.  Though multiple entries by the same company for the same individuals have long been prohibited, foreign nationals with skills in high-demand fields would entertain offers from multiple employers who would each submit separate entries for the same individual.  Often employers would also submit entries through multiple subsidiaries or entities for the same individual.

The proposed rule would limit selections to one per individual beneficiary and eliminate related-entity submissions.  While multiple distinct employers could still submit entries on behalf of a potential foreign national employer, the individual would only be entered in the lottery one time and there would be only one selection for that beneficiary.  Any employer who filed for that beneficiary would be notified of the selection and could then file for the person, leaving the foreign national in the position of picking any employer who entered for that person as the one employer which could use the selection and file a cap-H-1B for them.


  • Core “Specialty Occupation” Definition – While the basic definition of a “specialty Occupation as one that requires “requires theoretical and practical application of a body of highly specialized knowledge requiring attainment of a bachelor’s or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States” is a longstanding one, there has long been confusion and argument over how this has been applied.

USCIS has often taken the position that only one possible degree field can be required if the role is to qualify as a specialty occupation.  Certain appellate decisions have challenged this, indicating that multiple possible degree fields can qualify as long as each field is directly related to ability to perform the duties of the offered role.

Another position often taken by USCIS is that generalized degrees – those without a sub-specialization (business degrees without a marketing, accounting, manufacturing, etc. specification, for instance, or liberal arts degrees without a specification in psychology, communications, etc.) – aren’t sufficiently specific to support a specialty occupation finding.

The proposed rule would codify the ability of a petitioner to require multiple possible degrees as long as all are related to the ability to perform the job duties, but would also codify their position that generalized degrees without a specification can’t be used to support an H-1B.


  • Third-Party Placement – Third party placements refer to situations where the beneficiary employee is stationed at the location of a client of a petitioning employer, rather than at the petitioning employer’s own work site. This is common in situations such as employee-leasing or where the Petitioner has sold a complex product or system to a client and stations an employee there to provide ongoing service.

The proposed rule specifies that if the H-1B petition is for a third-party placement situation, USCIS will look to the third party’s requirements for the beneficiary’s position rather than the petitioner’s requirements.


  • H-1B Adjudication Where Validity Expires – The Labor Condition Application (“LCA”) required from the US Department of Labor as a prerequisite to H-1B filing has limitations on how long it can be filed before the start and end date the petitioner requests. An approved LCA approved before H-1B submission would need to be included with the H-1B filing to USCIS.

This would often result in H-1B petition being “cut off” approval would be for less than the permitted three years since the H-1B can only be approved up to the validity date of the LCA, and this will often be before the three-year period that could otherwise be granted.  No new LCA could be submitted to cover the longer period, as any LCA would need to have been approved before the date of submission.

The proposed rule would change the requirement that the approved LCA already exist at date of filing.  If USCIS officers adjudicate an H-1B petition and less than three years would be permitted by the approved LCA, and that petition could otherwise have been approved after the initially requested validity period end-date, USCIS now can issue a Request for Evidence (RFE)  allowing petitioners to update the requested validity dates by obtaining a new LCA covering the new dates. Certification of that LCA after filing of the petition with USCIS would no longer be an issue.


  • Itinerary – Current rules require an itinerary of worksites in situations where an individual will be placed at multiple work sites over the course of the H-1B period. The proposed rule eliminates this requirement.


  • Cap-Exempt H-1B Changes – Certain institutions qualify for exemptions from the H-1B cap, and so can petition for an H-1B at any time of year without needing to enter and be selected under the cap lottery. Such organizations include Universities, and in some cases nonprofit institutions affiliated with a university and government research institutions.

A nonprofit with a university affiliation would need to demonstrate that a fundamental and primary  activity of the nonprofit would directly contribute to the research or educational mission of the University.

A research institution would need to show that it is primarily engaged in basic or applied research.

The proposed regulations will allow nonprofit entities or government research organizations to qualify for cap exemption if they can show that the conducting research as a “fundamental activity” but not necessarily as a “primary activity” to file as cap-exempt Petitioners.


  • H-1B visas for Entrepreneurs – The H-1B has historically been a challenging visa to use in the context of entrepreneurship. USCIS had taken the position that the H-1b visa required an “arms-length employer/employee relationship” between the petitioning company and the employee/beneficiary, where a person or people at the company had the power to hire, fire, set salary for, assign work to, review, and approve leave for the beneficiary.  Where the beneficiary had a very significant ownership interest, USCIS would interpret this as a lack of the required arms-length employment relationship (although sometimes an agreement to transfer control to others could overcome this).

The new rule amends the definition somewhat to require only a bona fide job offer rather than explicitly an employer-employee relationship.  This may not necessarily be easier to demonstrate in practice, but it touted as providing additional flexibility for H-1B use in an entrepreneurship context.


  • H-1B Start Date – In the past, USCIS had in some cases rejected or denied petitions with a requested start date after the October 1 start date of the fiscal year. Generally, a petition can be filed no more than 180 days before the requested start date. Back in the days when full petitions were filed to enter the lottery, normally on April 1, such a practice therefore made some sense.

However, now an initial cap selection petition can be filed anywhere from April 1 until the end of June – and 180 days from filing may be near the end of the year.  There have also been years with later, additional cap selections as late as after the start of the new fiscal year.  Requiring an October 1 start dates in such circumstances made little sense.

The amended regulations clarify that cap-subject petitions may request a start date on or after October 1.
– The “Cap-Gap” is the period between the time an H-1B beneficiary’s F-1 Optional Practical Training (OPT) ends and the time the H-1B would start. Typically, OPT work authorizations will expire in May, June or July while the H-1B wouldn’t begin until October 1 with the start of the new federal fiscal year, leaving a “gap” in both ability to remain in the US and to continue working for the employer.

“Cap-Gap” authorization already existed to extend a period of authorized stay and work authorization, where an individual had been selected in the lottery and already had an H-1B on file, from the OPT expiration through September 30th.

However, often a cap-subject petition hadn’t yet been approved by October 1, returning the Petitioner and Beneficiary to the same problem. The proposed regulation would extend the “cap-gap” OPT extension period to April 1 of the following year, effectively eliminating this issue.


  • USCIS authority to conduct site visits – As an enforcement mechanism, USCIS has on occasion conducted “site visits” – sending agents to work sites identified in petitions to determine whether the H-1B worker (or foreign national under some other visa permitting employment, such as an L-1) was in fact working at the site in the job described in the petition and under the conditions described (salary, benefits, etc.) The proposed rule seeks to embed in the regulation USCIS’ authority to conduct these visits at a petitioner’s location or a third-party work site location, as well as the authority to deny or revoke a petitioner where an employer or beneficiary refuses to comply with a site visit.


  • Deference to Previous Approvals – This element deals with extension petitions where there has been no material change from the original petition. Older policy had indicated that USCIS should grant deference to an early approval on the same facts (same petitioning employer, same beneficiary employee, same offered role) in the absence of obvious fraud or error on the theory that the earlier adjudication by the same agency – USCIS – could generally be trusted.

This practice was eliminated by the prior administration, but reinstated by the current administration in a 2021 policy Memo.   The proposed rule seeks to upgrade existing policy to the status of agency regulation.