Dealing With The H-1B Cap - Now And In 2005
On February 17, 2004, the United States Citizenship and Immigration Service (USCIS) announced that it reached its congressionally limited H1-B visa cap and would no longer be accepting H1-B visa applications for the 2004 fiscal year. USCIS began accepting H1-B visa applications on April 1, 2004 for the year beginning October 1, 2004. Thus, it is also likely that the USCIS will reach its H1-B cap for the 2005 fiscal year within the next few months. Employers will now need to alter their hiring plans for bringing temporary professional workers to the United States this year and will carefully have to review and plan their hiring needs for the 2005 fiscal year.
WHY THE EARLY H1-B VISAS CUT-OFF?
H1-B visas were initially limited to 65,000 but because this number proved to be hopelessly inadequate, Congress temporarily increased the number of available H1-B visas to 195,000 in the preceding three years through the American Competitiveness and Workforce Improvement Act of 1998 and American Competitiveness in the 21st Century Act of 2000. Under these statutes, the numerical limit on H1-B visas reverted back to the initial 65,000 on October 1, 2003. This numerical limit is further reduced by free trade agreements that specifically allocate 6,800 H1-B visas for nationals of Singapore and Chile and approximately 18,000 H1-B applications carried forward from the 2003 fiscal year.
WHO IS EXEMPT FROM THE H1-B CAP?
On February 25, 2004, the USCIS published a federal register notice listing the following cases as exempt from the H1-B cap: 1) extensions for current H1-B workers, whether for a new or existing employer in sequential employment situations; 2) concurrent employment in a second H1-B position; 3) amended petitions; 4) H1-B employment for nationals of Chile or Singapore, and 5) petitions for new employment at an exempt organization such as a nonprofit research organization, an institution of higher education or an affiliated non-profit entity. This cap also does not apply to applicants already counted against the cap in the last 6 years. There is some uncertainty whether the cap applies to J-1 nonimmigrant physicians who have obtained a Conrad waiver of the two-year foreign residence requirement.
On April 2, 2004, Representative Lamar Smith (R-TX), introduced the "American Workforce Improvement and Jobs Protection Act" (H.R. 4166). This bill proposes a permanent exemption from the H-1B cap for graduates of U.S. universities who have earned a Master's or higher degree. This bill also proposes that this exemption is capped at 20,000 per year, that the annual employer filing fee be reinstated and that a $500 fraud fee be imposed on petitions.
IMPACT OF THE EARLY CUT-OFF OF H1-B VISAS
Private employers cannot hire new temporary professional workers in H1-B status this year. The USCIS has advised that it will return all H1-B petitions for first-time employment with a start date prior to October 1, 2004 and filed after February 17, 2004. For those employers in need of hiring temporary professional foreign workers this year, there may be alternative options available.
WHAT OTHER VISA OPTIONS ARE AVAILABLE?
The L-1 Visa
The L-1 or intra-company transfer visa facilitates the transfer of key employees from a foreign corporation to a U.S. branch, parent/subsidiary or affiliated entity. This visa allows a U.S. company to bring in top-level managerial or specialized employees for a temporary period. The employee must have worked for the foreign company for at least one of the past three years and must work for the U.S. company or its clients in a similar position. The foreign entity may pay the employee his or her salary but the U.S. company must control the employee's performance of his or her work. Authority to engage and terminate the employee is strong evidence of control. There are no numerical limits on the L visa and the spouse of an L visa holder may apply for work authorization. The L visa is initially valid for three years in the case of an existing business and one year where a new business is established in the United States. There is a five-year limit on L-1 employees with specialized skills staying in the U.S. and a seven-year limit for executives.
In a recent Department of State (DOS) cable (R140343Z dated February 4, 2004), the DOS cautioned that consular posts could expect to see an increase in L-1 applications after the H1-B cap is reached. It also states "there is no legal reason why aliens eligible for H1-B status cannot legitimately seek out other type of visas, including L [visas]." It is interesting to note that U.S. embassy statistics show the number of intra-company transfer or L-1 visa applications fell from 7,321 at this time in 2003 to 6,744 in 2004.
The Treaty-Trader/Treaty -Investor Visa (E-1/E-2)
E or treaty visas are available to persons or entities engaging in trade between the United states and their home country or persons coming to the United States to develop and direct enterprises in the United States in which they are investing substantial amounts of capital. As a threshold issue, in order for a foreign national to qualify for this visa there must be a trader or investor treaty between the U.S. and the applicant's home country. For treaty traders, the company set up in the United States must be at least 50% owned by a treaty country national but the applicant does not have to be an owner of the business. There must be a "substantial" flow of trade (either goods or services) between the U.S. business and the treaty national's home country. The USCIS determines whether the trade is substantial on a case-by-case basis. Factors that may be considered include the nature of the business, the number of transactions, quantity of trade and capital outlay.
With respect to an investment visa, again the business must be 50% owned by treaty nationals and there must be a substantial investment, which like the treaty-trader visa is determined on a case-by-case basis. The investor must have experience in the business and must be actively involved. The investor cannot simply invest in a company run by someone else. An E visa holder is normally admitted to the U.S. for a 2-year period with unlimited 2-year renewals. Spouses of E visa holders may apply for work authorization.
Employers may continue to sponsor Canadian nationals in TN status under the North American Free Trade Agreement (NAFTA). This visa is available to Canadian nationals who have been offered a temporary position in one of the professions described in schedule 2 of NAFTA. The applicant must have the degree or credentials required for that profession. The TN visa is valid for one year and may be renewed indefinitely. Unfortunately this option is not available to Mexican nationals even though there is a NAFTA treaty in place because the numerical limit on Mexican nationals in TN status was reached on January 1, 2004. A spouse of an employee in TN status is not eligible for work authorization.
The O Visa
Foreign nationals with extraordinary ability in the arts, sciences, athletics, education or business, may apply for an O visa. Applicants in the sciences, athletics, education or business filed must show that they have risen to the top of their field evidenced by national or international recognition. Applicants in the arts must show prominence and a record of extraordinary achievement. Applicants in the motion picture or television industry need to show a high level of accomplishment in their field. The O visa is usually granted for three years and is renewed in one-year increments. The O visa may be renewed indefinitely. A spouse of an O visa holder cannot apply for work authorization.
The J-1 Visa
This visa is available to foreign nationals to enter the United States as exchange visitors to participate in government approved exchange programs. First, the prospective employer must establish an approved exchange program. Such program may be sponsored by government agencies, private businesses or educational agencies. The foreign national may then enter the United States for the purpose of doing research, gaining experience or studying. Depending on the foreign national's qualifications and the type of exchange program, the J-1 visa is available anywhere from 18 months to 42 months. Certain foreign nationals may be subject to a two-year home residency requirement at the end of their stay.
MAKING THE H1-B CUT-OFF FOR 2005
Employers need to assess their employment needs for the 2005 fiscal year which begins on October 1, 2004. If hiring is anticipated in the H1-B category, employers should file their H1-B petitions as soon as possible. H1-B petitions may be filed six months in advance. The USCIS has stated that it will begin accepting H1-B cap-subject petitions for the 2005 fiscal year in April 2004. These petitions must have an employment start date of October 2004 or later. The fact that the 2004 numerical cap was reached just 5 months after the beginning of the 2004 fiscal year indicates that 2005 H1-B cap may be reached even before the 2005 fiscal year begins. Employers can anticipate that the H1-B cap for 2005 will be reached well before February 2005. Because the USCIS generally works on petitions in the order they were received, it may be worthwhile to pay the extra $1,000 premium processing fee and/or to file H1-B petitions well before the commencement of the 2005 fiscal year.
Until Congress reconsiders the number of annual H1-B visas issued, employers will have to make use of other visas available to bring temporary workers to the United States this year and will have to file their H1-B petitions as early as possible to make the H1-B cap for 2005.
About The Author
Karen Lee Pollak, Esq. is an associate at Kirkpatrick & Lockhart LLP's Dallas office. Ms. Pollaks immigration practice includes a wide variety of immigration issues, including non immigrant visas, permanent residency and naturalization applications. Karen Pollak may be reached at firstname.lastname@example.org.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.
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