Chapter 11 Cap-Exemption Strategies for the H-1B Visa Category

• Jurisdiction: United States

One of the most baffling aspects of the employment-based immigration system in the United States is its limit on the number of H-1B visas granted each year to professional workers. That number, 65,000, was set nearly a quarter-century ago and has failed to grow even though the country’s gross domestic product per capita is about 50 percent larger than it was when the H-1B cap was initially set. Plus, the economy is much more globalized than it was when the cap was created in 1990, and American employers often need to bring in highly specialized talent from abroad to remain competitive.

The cap particularly affects doctors because H-1B numbers are almost always expended before physicians typically complete their training in June. Cap-subject employers can sometimes file H-1B visas in early April and might have a chance (in 2015, that would have been about 1 in 3); but for many, licensing cannot be finished in time or the job offer comes too late. And many employers cannot wait months, or even years, for an H-1B cap number.

While there is no panacea that can solve this problem for all doctors, there are strategies that can work to bypass the H-1B cap.

Cap Exemption Strategies

How can an employer avoid the H-1B cap?

An employer can try to avoid the H-1B cap by claiming cap exemption status. Higher education institutions qualifying under the Higher Education Act of 1965[1] (generally, nonprofit colleges and universities offering an associate’s degree or higher) are cap exempt, as are nonprofit research organizations that mainly engage in basic or applied research, governmental research organizations and nonprofits related to or affiliated with qualifying higher education institutions, or research organizations.

Simply being a nonprofit is not enough, but some nonprofits may not realize that they qualify. For example, a nonprofit hospital may have a nursing school at the hospital. Or they may have an affiliation with a local college and are responsible for providing training to the school’s students. An employer should investigate all of the relationships it has with local colleges and research institutions.

Some employers, even those that are for-profit organizations, can claim cap-exemption status for H-1B employees if the employee will work at a cap-exempt institution of higher education or affiliated nonprofit (known informally as “employed at” cap exemption). U.S. Citizenship and Immigration Services (USCIS) also often looked to see if there was a “nexus” between the purpose of the university or nonprofit and the work to be performed by the H-1B worker.

As part of the high-skilled worker regulation that took effect on January 17, 2017, USCIS changed the standard. Under the rule, an H-1B petition may be exempt from the cap based on an employee’s work at a qualifying institution, only if (1) the majority of the worker’s duties will be performed at the qualifying institution, organization, or entity; and (2) such job duties directly and predominantly further the essential purpose, mission objectives or functions of the qualifying institution, organization or entity.

Potentially qualifying examples of being employed by a for-profit organization at a cap-exempt location include the following:

• A physician staffing a student health center at a local college;

• A physician providing clinical services at a nonprofit charity care clinic that has an affiliation with a local college or university;

• An employer providing funding for research and sending a physician to conduct clinical research at a cap-exempt research institution;

• A physician teaching health and medicine courses at a local college; and

• A hospitalist employed by a for-profit medical group providing professional services at a cap-exempt hospital.

Proving the work arrangement is not enough, however. It is important to document that the employer or the worksite qualifies as cap exempt. In the 15-plus years after passage of the American Competitiveness in the Twenty-First Century Act of 2000, or AC21, USCIS took many inconsistent positions regarding the application of the statute provisions allowing nonprofit employers to claim cap-exemption status based on being “related or affiliated” with a university or nonprofit research institution. U.S. Department of Homeland Security (DHS) settled on a formal position in the high-skilled worker regulation that took effect on January 17, 2017.

The rule allows nonprofit entities to qualify for the H-1B cap and fee exemptions if they (1) are connected or associated with an institution of higher education through shared ownership or...