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Fiscal 2008 H-1B Visas Update

April 2007
Executive Compensation, Benefits and Employment Law Focus
Tal Marnin, Marko C. Maglich, Stuart Lasky

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On April 2, 2007, the congressionally mandated "caps" on H-1B visas delivered a stunning blow to US employers' ability to compete globally. On that first day of filing alone, United States Citizenship and Immigration Services (USCIS or CIS) received far more H-1B petitions than the 58,200 visas available for all of fiscal 2008 for prospective H-1B employees who do not hold graduate degrees from US universities — which makes up the vast majority of prospective H-1B employees. At the time of writing, just under 2,000 visas remained of the 20,000 available under an extra cap for holders of US graduate degrees. At the current rate of filing, these could be exhausted within several days or a few weeks.

H-1B is the applicable visa status for professional workers, who are not US citizens or permanent residents, whose positions require a bachelor's degree or higher in a particular field or choice of fields, and who hold this required degree. In most cases, the H-1B is the only option for employers to retain, beyond 12 months after graduation, almost any recruits who are or recently have been foreign students in US colleges. The effective annual quota, or "cap," on such visas is 58,200 per year — far fewer than are needed by US businesses.¹ An additional 20,000 are available for holders of US advanced degrees² — also far fewer than are needed. The caps are applicable only to "new" H-1Bs, i.e., beneficiaries who have not held H-1Bs before, who have previously held H-1Bs for six years and left the US for a year or more since last holding one, or who currently hold one of the relatively few cap-exempt H-1Bs³ and are moving to a cap-subject H-1B employer.

In each of the last two years, the cap was met dramatically quicker than in the prior year, i.e., by August 2005 for fiscal 2006, and by May 2006 for fiscal 2007. This year, however, was a watershed. The economy is stronger and employers are now educated to the need to secure the services of their foreign-national professionals against the ravages of the caps. Knowing of the likelihood that the first day of filing could be the last, we pressed clients to have all of the petitions we prepared for them executed and returned to us in time to submit on the night of March 30, 2007. As those of you who are our clients know, you did well in that respect and your petitions were filed on the first possible day, putting yourselves in the best position possible. As a result, all of your US advance degree holders are having their H-1B petitions processed. The remainder were, like all others around the country similarly situated, subject to a random lottery prescribed by C.I.S. regulations to determine which petitions the agency would adjudicate. The lottery winners are being processed, and the balance will be returned to us with filing fees undeposited.

The result is that, save for the last 2,000 H-1Bs available to US advance-degree holders visa numbers, no H-1B start dates prior to October 1, 2008 are available except for the following:

Employees or prospective employees who are nationals of Chile, because of H-1B set-asides under the US-Chile Free Trade Agreement
Employees or prospective employees who are nationals of Singapore, because of H-1B set-asides under the US-Singapore Free Trade Agreement
Employees of an institution of higher education or related nonprofit entity
Employees of a nonprofit research organization or
Employees of a governmental research organization.

All of the above H-1B exceptions require analysis and special Department of Labor and CIS filing procedures. We regularly advise on and process such applications for our employer clients. In addition, nationals of Australia can qualify for E-3 visa status for employment meeting the H-1B criteria. Since the relatively recent inception of the E-3, we have filed several of these for US employer clients hiring Australians.

Other alternatives remain, such as TN (Treaty-NAFTA) professional visas for Mexican and Canadian employees, a variety of trainee and exchange-visitor visa types, intra-company transfer, and treaty-trader and -investor visas, on which we are currently working for several clients. Before deciding that a professional is not available to you for the next year and a half because of the caps, we encourage you to consult with us on possible alternatives.

The unavailability of US work visas for professionals has created new incentives for US employers to outsource professional operations to countries with more liberal visa allotments. Moreover, universities will have an even harder time attracting foreign students than they recently have. This year, foreign students who have invested four or more years of time and money in a US education and in making US professional contacts, are forced to hang their hopes on (1) getting a US employer to commit to October employment, early enough in the year to prepare and make an April 2 filing and (2) having found such an employer, then relying on a lottery with no connection to the merits of the employer or employee, simply to have the employer's petition considered for approval.

In the wake of the April 2 H-1B cap exhaustion, there are signs that Congress is waking up to the need to enact emergency legislation to relieve the employment-based quotas for both H-1B nonimmigrants, and the professional permanent residence categories. Employers must be sanguine, however, realizing that we have seen such signs before, with no action. Bill Gates has testified several times in Congress in support of lifting the cap albatross from business' neck. Legislative relief may depend on decoupling this employer-critical need from the issue of broader immigration reform. Broader reform raises many more policy issues and is likely to tie up the Congress beyond the time where the coming fiscal year might still be salvaged. Employers' voices will be important in the lobbying process for narrower relief aimed at keeping these professional jobs in the US.

As always, White & Case would be happy to assist or advise you with respect to H-1B visas and alternatives in the wake of the exhausted cap.

¹ The statutory cap is 65,000, but free trade agreements between the US and Chile, and the US and Singapore, create set-asides for nationals of those two countries that reduce the cap available to all others to 58,200.

² Holders of masters' degrees, J.D.'s and other doctorates, and other post-baccalaureate academic degrees generally qualify for these extra H-1B visas.

³ The following H-1B employment is cap-exempt: Employment for an institution of higher education or related nonprofit entity; Employment for a nonprofit research organization; and Employment for a governmental research organization.

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