H-1B Filing Season Starts April 1 OPT Cap-Gap Rule – Affiliation

Each year, there is an 85,000 numerical cap on the number of H-1B petitions for professionals to work in the U.S. on a temporary basis. Generally, the USCIS will start accepting H-1B petitions submitted by employers starting on April 1 for workers who will start their jobs on October 1, 2011.

Of these 85,000 H-1Bs, 20,000 are reserved for persons in possession of an advanced degree from a university in the U.S. This past year, the 20,000 cap was reached on December 24, 2010, while the 65,000 cap was reached a little over one month later on January 26, 2011. This year, as in past years, we will track the number of approvable H-1B petitions filed with the USCIS on a weekly basis.

• OPT Cap-Gap

The H-1B system is complex and contains many exceptions to the general rule that employment may not commence until October 1. One exception involves foreign-born students who graduate from universities in the U.S.

These students typically obtain a one-year work permit under a program called Optional Practical Training (OPT). Many students then seek to change from OPT to H-1B. A problem often arises when they obtain their OPT work permit after graduation in June, and their OPT expires one year later. Their employers submit H-1B petitions for them in April, but they are not permitted to be employed in H-1B status until October.

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The question is, what are they supposed to do between the time that their OPT expires in June and their H-1B begins in October? Quit their jobs and leave the U.S. for four months? This period of time is commonly referred to as the “cap-gap”.

In order to solve this problem for these university graduates and their employers, the USCIS promulgated a cap-gap regulation.

This regulation allows a student working with an OPT work permit that is about to expire to continue working unless he is able to change status to H-1B on October 1, as long as his employer submitted an H-1B petition and change of status for him before the expiration of his OPT. Even if his OPT expires prior to the approval of his H-1B change of status, the regulation provides that his OPT status is automatically extended. Of course, if the H-1B petition or change of status is denied, he must immediately cease working, and leave the U.S. within 60 days.

What happens if the H-1B petition and change of status are not submitted by the employer until after the OPT work permit has expired, but while the student is within his 60-day grace period after graduation? In this case, the regulation allows the student to remain present in the U.S., but not to work until his status changes to H-1B on October 1.

• Affiliation

H-1B professionals who work at following places are exempt from the H-1B numerical caps:

1) Institutions of higher education or related or affiliated non-profit entities;
2) Non-profit research organizations; or
3) Governmental research organizations.

One contentious issue revolves around the definition or what is an “affiliated” non-profit entity.

Without going into details, suffice to say that the USCIS has taken an increasingly restrictive approach about what the word “affiliated” means. Where, in the past, evidence that a research lab or a hospital had an affiliation agreement with a university was enough to satisfy this requirement, during the past year, the USCIS has issued numerous Requests for Evidence demanding to see proof the two organizations were commonly owned. As a result, many employers chose to submit their H-1B petitions under the numerical caps rather than challenge USCIS’ interpretation of the word “affiliated” in AC-21 in Federal Court.

On March 16, the USCIS announced that “it is currently reviewing its policy on H-1B cap exemptions for non-profit entities that are related to or affiliated with an institution of higher education.”  The agency further announced it would “give deference to prior determinations made since June 6, 2006, that a non-profit entity is related to or affiliated with an institution of higher education – absent any significant change in circumstances or clear error in the prior adjudication – and, therefore, exempt from the H-1B statutory cap. However, the burden remains on the petitioner to show that its organization previously received approvals of its request for H-1B cap exemption as a non-profit entity that is related to or affiliated with an institution of higher education.”

Although this is welcome development, USCIS made clear that this is an “interim” policy. One can only hope that the agency will not return to its previous restrictive attitude.