Race to the Finish: DHS to Publish Part Two of H-1B Modernization Rule

Quick Hits

• DHS’s new final rule amends and updates the regulatory definition and criteria governing “specialty occupation” adjudication, codifies existing policies related to deference to prior adjudications, and clarifies circumstances requiring the filing of a new or amended H-1B petition.
• The final rule expands H-1B cap exemption benefits by updating the definitions of “nonprofit research organization” and “governmental research organization,” and it extends the timeline for F-1 cap-gap where there is a timely filed H-1B cap petition.
• The final rule includes provisions related to program integrity, codifying USCIS’s authority to conduct site visits and impose penalties for compliance failures, and it requires employers to establish the availability of bona fide positions as of the requested start date.

According to a press release issued by DHS’s Office of Public Affairs on December 17, 2024, the goals of the final rule are to “modernize[] the H-1B program by streamlining the approvals process, increasing its flexibility to better allow employers to retain talented workers, and improving the integrity and oversight of the program.”

Modernization and Efficiencies

Amended Definition of ‘Specialty Occupation’

The final rule will update the regulatory definition of “specialty occupation” as follows:

[A]n occupation which requires theoretical and practical application of a body of highly specialized knowledge in fields of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts, and which requires the attainment of a bachelor’s degree or higher in a directly related specific specialty, or its equivalent, as a minimum for entry into the occupation in the United States.

The rule establishes that a position is not a specialty occupation if “attainment of a general degree, without further specialization, is sufficient to qualify for the position.” This provision differs from DHS’s draft rule in that the draft rule included references to specific degree titles that have been removed, namely to general degrees in business administration or liberal arts. In DHS’s response to public comments on the rule, DHS indicates that the final rule places the burden on the petitioner to demonstrate the required relationship between the degree and the occupation (i.e., that the degree and the occupation are directly related). The final rule provides a definition of the term “directly related,” meaning that there is a logical connection between the required degree and the duties of the position.

The final rule also updates the regulatory criteria used to demonstrate that a position qualifies as a specialty occupation. Specifically, petitions must now demonstrate at least one of the following criteria:

(1) A U.S. baccalaureate or higher degree in a directly related specific specialty, or its equivalent, is normally the minimum requirement for entry into the particular occupation;

(2) A U.S. baccalaureate or higher degree in a directly related specific specialty, or its equivalent, is normally required to perform job duties in parallel positions among similar organizations in the employer’s industry in the United States;

(3) The employer, or third party if the beneficiary will be staffed to that third party, normally requires a U.S. baccalaureate or higher degree in a directly related specific specialty, or its equivalent, to perform the job duties of the position; or

(4) The specific duties of the proffered position are so specialized, complex, or unique that the knowledge required to perform them is normally associated with the attainment of a U.S. baccalaureate or higher degree in a directly related specific specialty, or its equivalent.

In response to public comments, DHS indicates that meeting one of the criteria is necessary to satisfy the definition of “specialty occupation”; however, meeting only one criterion may not be sufficient to establish H-1B eligibility depending on the facts of the petition.

The final rule defines the term “normally” to mean “conforming to a type, standard, or regular pattern, and is characterized by that which is considered usual, typical, common, or routine.” The final rule clarifies that “normally” does not mean “always.”

Amended Petitions

The final rule codifies current U.S. Citizenship and Immigration Services (USCIS) policy related to worksite changes and the requirement of filing an amended H-1B petition. Namely, if there are material changes in the terms and conditions of employment, including the authorized worksite, the amended H-1B petition must be filed before the material changes take place. This includes material changes in the beneficiary’s worksite.

The final rule clarifies that any change in the worksite location that requires a corresponding labor condition application (LCA) to be certified to USCIS is considered a material change and will require an amended petition to be filed with USCIS before the H-1B worker may begin employment at the new place of employment, unless permitted by H-1B portability provisions.

Provided there are no material changes in the terms and conditions of the H-1B worker’s employment, a petitioner does not need to file an amended or new H-1B petition in the following examples:

• The beneficiary moves to a new job location within the same area of intended employment as listed on the LCA certified to USCIS in support of the current H-1B petition approval;
• The beneficiary is placed at a short-term placement(s) or assignment(s) at any worksite(s) outside of the area of intended employment for a total of thirty days or less in a one-year period, or for a total of sixty days or less in a one-year period where the H-1B beneficiary maintains a permanent worksite, the beneficiary spends a substantial amount of time at the permanent worksite in a one-year period, and the beneficiary’s residence is located in the area of the permanent worksite and not in the area of the short-term worksite(s); or
• An H-1B beneficiary is going to a non-worksite location to participate in employee development, “will be spending little time at any one location,” or when the job is peripatetic in nature, in that the normal duties of the beneficiary’s occupation (rather than the nature of the employer’s business) requires frequent travel (local or non-local) from location to location.

Deference to Prior Adjudications

The final rule, consistent with current guidance in the USCIS Policy Manual, confirms that when a Form I-129, Petition for a Nonimmigrant Worker, involves the same parties and facts, USCIS officers will give deference to its prior determination. However, USCIS officers are not required to give deference to a prior determination if there was a material error involved with a prior approval, there has been a material change in circumstances or eligibility requirements subsequent to the adjudication of the prior petition, or there is new, material information that adversely impacts eligibility for the immigration benefit.

Evidence of Maintenance of Status

The final rule provides that a petition for an amendment or extension of stay must include evidence that the applicant or beneficiary maintained the prior nonimmigrant status before the extension was filed. Such evidence may include but is not limited to copies of paystubs, W-2 forms, quarterly wage reports, tax returns, contracts, and work orders.

Elimination of the H-1B Itinerary Requirement

The final rule will eliminate itinerary requirements for H-1B petitions. Specifically, at the time of filing, a petitioner must establish that it has a bona fide position in a specialty occupation available for the beneficiary as of the start date of the requested validity period. A petitioner is no longer required “to establish specific day-to-day assignments for the entire time requested in the petition.”

Validity Expirations Before Adjudication

The final rule establishes that if USCIS officers adjudicate an H-1B petition after the validity period end date requested in Form I-129, and the petition is otherwise approvable, USCIS may issue a request for evidence (RFE) asking the petitioner if they wish to update the requested dates of employment, which may include submission of a new LCA even if the LCA was certified after the H-1B petition filing date.

Benefits and Flexibilities

Expansion of Eligibility for Cap-Exempt Classification

The final rule expands options for nonprofit and governmental research organizations to petition for cap-exempt beneficiaries. The final rule amends the regulatory language to replace the term “primary” with the term “fundamental” in regard to the role of research in these organizations. This change was made to include nonprofit and government research organizations that conduct research as a fundamental activity but where research may not be the primary mission of the entity.

Additionally, the final rule expands eligibility for cap-exempt employment for a beneficiary not directly employed by the qualifying organization if the beneficiary spends at least half of the time supporting the purpose of the qualifying organization, and includes work arrangements that are hybrid or fully remote.

Cap-Gap Extension

The final rule provides an automatic extension of stay and post-completion optional practical training (OPT) until April 1 of the relevant fiscal year (FY) for which the H-1B petition is requested or until the validity start date of the approved H-1B petition, whichever is earlier.

Program Integrity

H-1B Registration

A large portion of the proposed rule addressing updates to the H-1B cap lottery went into effect on March 4, 2024. The final rule includes additional updates to the cap lottery process, including removing language limiting related entities from submitting multiple H-1B cap registrations for the same individual. In the agency’s codification of the beneficiary-centric process in the March 2024 final rule, and in subsequent data from the FY 2025 cap season, DHS confirmed that the switch to the beneficiary-centric process greatly decreased the number of multiple registrations for the same beneficiary, and the beneficiary-centric process eliminates any unfair advantage previously gained by multiple registrations. DHS concluded that the limitation on multiple registrations by related entities is no longer necessary, and it is excluded from the final rule.

Bona Fide Job Offer for a Specialty Occupation Position

The final rule authorizes USCIS to request contracts, work orders, or similar evidence to show the bona fide nature of the beneficiary’s position and that the position offered meets the definition of a specialty occupation. This language is a change from the initial draft, which proposed to give USCIS authority to request documentation on the terms and conditions of the beneficiary’s work. If the H-1B worker will be staffed to a third party, the requirements of the third party’s role must meet the definition of specialty occupation.

The final rule includes a definition of “U.S. employer” for H-1B purposes. The new definition removes reference to an employer-employee relationship and includes a requirement that the petitioner have extended a bona fide job offer to the H-1B beneficiary to work in the United States. The new definition also requires that the petitioner have a legal presence in the United States and be amenable to service of process in the United States.

H-1B Beneficiary-Owners

The final rule confirms that business owners may petition for themselves for H-1B status when the beneficiary owner has a controlling interest in the petitioning entity, though validity of the initial petition and the first extension will be limited to eighteen months. DHS defines “controlling interest” in the regulations as more than 50percent ownership or the majority voting rights in the petitioning company.

Site Visits

The final rule codifies USCIS’s authority to conduct both in-person and electronic inspections to confirm the validity of the H-1B petition information. The authority includes the right to inspect both the petition and any third-party location at which the beneficiary is placed. USCIS can conduct inspections for petitions at any stage in the filing process, both pending and approved filings. The final rule also confirms that if USCIS is unable to verify the facts contained in the petition, including due to a failure of the petitioner or third-party worksite host to cooperate, USCIS can deny or revoke the petition and any other petitions filed by that employer or at those specific worksites.

Next Steps

DHS will publish the final rule on December 18, 2024, and the rule is expected to become effective thirty days later, on January 17, 2025, only three days prior to the inauguration of the new presidential administration. In its December 17, 2024, press release, DHS indicated that a new edition of the Form I-129 would be required, beginning on the effective date of the rule (January 17, 2025) and with no grace period for accepting prior form editions. It remains to be seen if the new H-1B modernization rule will be subject to challenges from the new administration, either under the Administrative Procedure Act (APA) or via congressional review and rescission pursuant to the Congressional Review Act (CRA).

Ogletree Deakins’ Immigration Practice Group will continue to monitor developments and will publish updates on the Immigration blog as additional information becomes available.

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