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The Looming Crisis - Upcoming Changes to the H-1B and L Temporary Worker Programs

by Lisa K. Yu and Bernard P. Wolfsdorf

As the U.S. Citizenship and Immigration Services (USCIS) announces statistics for H-1B petitions in 3rd Quarter, Fiscal Year (FY) 2003, immigration attorneys, businesses and professional foreign workers are cringing and gearing up for the fight to protect the H-1B and L-1 visas.

Starting FY 2004, meaning October 1, 2003, the number of H-1B visas available will revert from the current 195,000 to a mere 65,000 visas per fiscal year (October 1st to September 30th). As a result it is likely that H-1B numbers will run out well before the end of FY 2004, particularly if the economy heats up in an election year. To exacerbate the problem, the L-1 intra-company transfer visa program might also experience similar cuts, if not complete obliteration depending on the result of congressional hearings. The combination of these two changes may result in a crisis, which may severely impact business and stifle the economic recovery, which is vital to the welfare of our heavily indebted nation.

History of the cap crisis

In FYs 1997, 1998, 1999 and 2000, the H-1B cap was prematurely reached, resulting in disruption to American businesses and the inability for foreign nationals to work. As a result, for the past three fiscal years, FYs 2001, 2002 and 2003, the American Competitiveness in the 21st Century Act (AC21) temporarily increased the number of H-1B visas to 195,000 visas in order to fill vital vacancies across our economy.

Even with the downturn in the economy in FY 2002, 79,100 H-1B visas subject to the cap were used. 14,100 more H-1B visas than the FY 2004 mandated 65,000 numerical cap. On August 26, 2003, CIS announced statistics for third quarter FY 2003 H-1B usage. As of June 30, 2003, 56,986 H-1B petitions were approved against the cap, up fifteen percent over the same quarter of FY 2002. There are still 47,813 petitions pending adjudication. CIS predicts that approximately one-third (15,937) of those petitions will be counted against the cap, resulting in approximately 72,923 H-1B petitions approved against the FY 2003 mandated cap. But remember, there is still one more month to submit H-1B petitions in FY 2003, therefore, when the final tally are announced, over 73,000 H-1B petitions will have been approved.

Although there are no fears of reaching the cap for FY 2003, as we head into FY 2004, panic and pandemonium will surely cause 65,000 visas to go much faster than anyone expects. Once the reduced numerical cap has been reached, there will be no H-1B visas until October 1, 2005.

Who will be affected by the cap?

The cap will affect not everyone who applies for an H-1B visa. Those who will be affected include, foreign nationals in the U.S. in valid non-immigrant status, such as B, F, J, H-4, seeking a change of status to H-1B visa; those who were previously employed with an exempted employer and seeking a change of employment with a non-exempted employer; and overseas foreign national seeking to enter the U.S. as an H-1B visa worker.

Those who will be exempted include valid H-1B visa holder seeking an extension with their current employer; those who are employed with non-exempted H-1B employer seeking a change of employment; previous holder of H-1B visa who is ineligible for a new six years of H-1B visa; valid H-1B visa holder seeking concurrent employment; foreign nationals seeking employment with an institution of higher education, nonprofit research institution and government research organization; and J-1 physicians changing status to an H-1B visa to be employed in an underserved area in exchange for waiver of the two year foreign residency requirement.

How soon will the cap be reached?

In FY 2000, during the last cap crisis, CIS stopped accepting H-1B cap cases as early as March. This left 115,000 foreign nationals unemployed for a minimum of 7 months from March to October. For FY 2004, it is foreseeable that CIS will reach the mandated numerical cap as early as January 2004.

What will happen once the cap has been reached?

Once the H-1B cap has been reached, all adjudication of H-1B petitions subject to the cap will halt. As a result, professional workers will have to wait until October 1, 2005 or later to start employment.

In the past, during the gap months, CIS had allowed all H-1B applicants who were seeking a change of status from F-1/J-1 to H-1B to remain in the U.S. without the authorization to work and travel internationally. All other foreign nationals, who did not have a valid visa had to wait outside the U.S. until October 1st or later and apply for a visa at a U.S. Consulate.


Currently there are several bills introduced in Congress, including the H.R. 2702, Nonimmigrant Reform Act and H.R. 2849, USA Job Protection Act of 2003 that will drastically alter the landscape of the L visa program to the detriment of many international companies. Some of these proposed changes include:

  • Abolishing the L-1B "specialized knowledge" visa category;
  • Abolishing the L-1 blanket program;
  • Capping L-1 visas from no limitation to 35,000 visas per fiscal year;
  • Requiring employers to file an attestation with the Department of Labor, similar to the H-1B attestation;
  • Increasing experience with foreign company from one year to two years;
  • Limiting L-1A visa from 7 years to 5 years;
  • Limiting L-1B visa from 5 years to 3 years;
  • Requiring L-1B applicant to hold the equivalent of a U.S. bachelor degree;
  • Requiring employer to pay above prevailing or actual wage;
  • Prohibiting the benching of L-1 employee due to non availability of work;
  • Requiring employer to conduct good faith recruitment for U.S. workers for the position;
  • Imposing a fee on employers for L-1 petition;
  • Prohibiting L-1 holders from working at third party worksite where there are indicia of an employment relationship; and
  • Prohibiting the displacement of US workers for 180 days before and after the filing of the L-1 petition.
Unfortunately a small minority of companies has misused the program and in the current economic climate these cases have received extensive public and congressional attention. Instead of evaluating the program broadly and weighing the benefit to the country at large versus the isolated instances of abuse, it appears that Congress may throw the baby out with the bath water. The proposals under consideration will devastate the L visa program. Furthermore, it will force employers to rely more heavily on a crippled H-1B program.

At a time when America needs to pick up its economy by reaching out to international businesses, Congress is taking a restrictive protectionist approach. Instead of encouraging companies to establish offices in the United States by encouraging the transfer of employees, it seeks to isolate us from the world economy. Unfortunately, this negative approach towards nonimmigrant specialist workers and company transfers may be fueling the corporate outsourcing trend that is approaching a frenzy with millions of jobs being lost. Regardless of the ultimate decision of the congress, professional foreign workers and their employers are advised to assess their anticipated specialist labor needs and accelerate H-1B filings for employment. These can be submitted up to six months in advance of the anticipated start date. Moreover, it may be advisable to use the premium processing expedite procedures. Regardless of the action taken, the next few months will be tense, as the battle over the use of temporary alien labor for professional specialists and company workers has already begun. At this time it is hard to predict who will win this war but like most wars-there are almost always casualties on both sides.

About The Author

Lisa K. Yu, Esq. is a Senior Associate at the law firm of Bernard P. Wolfsdorf, P.L.C with offices in Los Angeles, Torrance and New York City. She graduated from the University of California, Los Angeles with a Bachelors of Arts in Political Science; and University of the Pacific, McGeorge School of Law with a Juris Doctorate. She practices exclusively in the area of Immigration and Nationality Law. Ms. Yu can be contacted at or 1(800) visa-law.

Bernard P. Wolfsdorf, Esq. practices exclusively in the area of immigration and nationality law in Los Angeles. He is a California state bar-certified specialist in immigration and nationality law and is listed in Martindale Hubbell's Preeminent Specialist Directory, and in the International Who's Who of Corporate Immigration Lawyers. He currently serves on AILA's Board of Governors and on the ABA Commission on Immigration. He has previously served on several AILA liaison committees, including the AILA/CSC Liaison Committee and the State Department Liaison Committee. With offices in New York, Torrance and Pacific Palisades, the firm assists applicants with consular visa interviews. Mr. Wolfsdorf is a frequent lecturer on consular processing and can be contacted at or 1(800)-visa-law.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.