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H-1B Status for Specialty Occupations

Written by Henry J. Chang

Number of H-1B Numbers Available Annually

Prior to the American Competitiveness and Workforce Improvement Act of 1998 ("ACWIA"), which was enacted on October 21, 1998, H-1B numbers were limited to an annual cap of 65,000. ACWIA temporarily increased the H-1B numbers for a period of three years, but also imposed several detrimental provisions.

The subsequent enactment of the American Competitiveness in the Twenty First Century Act of 2000 ("AC21"), which was enacted on October 17, 2000, further increased the annual cap on H-1B numbers to 195,000 in fiscal years 2001, 2002, and 2003 and eliminated the backlog from previous years. Unfortunately, the three year period is now over. As of October 1, 2003 (the beginning of fiscal year 2004), the annual cap for H-1Bs has dropped from 195,000 in the previous year back to 65,000.

However, as a result of the United States-Chile Free Trade Agreement Implementation Act (Pub. L. 108-77) and the United States-Singapore Free Trade Agreement Implementation Act (Pub. L. 108-78), both of which became effective on January 1, 2004, the number of H-1B numbers available per year were reduced to 58,200 from 65,000. A total of 6800 of the available H-1B numbers (1400 for Chile and 5400 for Singapore) are to be used for a new nonimmigrant category referred to as the H-1B1.

AC21 provided several exemptions from the annual cap, including an exemption for H-1Bs hired by institutions of higher learning, affiliated research organizations, nonprofit research organizations and governmental research organizations. These exemptions are still effective. They are briefly described below:

  1. Employees of higher education institutions, nonprofit research organization and government research organizations will not be counted toward the H-1B cap. H-1B aliens that leave one of these employers to work for an employer not exempt from the cap will be counted toward the cap in the year in which they change jobs.

  2. H-1B nonimmigrants who have already been counted toward a cap in the six years prior to the filing of a new petition, are not to be counted again unless they are eligible for a full six years of authorized admission under Section 214(g)(4) at the time of filing. Provides that where multiple petitions are filed for a single individual, that individual is only to be counted once toward the cap.

  3. J-1 physicians who are beneficiaries of a Conrad 20 waiver of the two-year home residence requirement who change status to H-1B may be granted such a change without regard to the cap, and are not counted toward the cap. Unlike employees of higher educational institutions, these nonimmigrants are not later counted toward the cap, even if they later change employers or occupations.

On December 8, 2004, the President signed the FY2005 Omnibus Appropriations Bill, P.L. 108 - 447 (H.R. 4818) into law. The new law contained several immigration-related measures, most notably, reforms to the L-1 and H-1B visa programs. The section dealing with the H-1B category is referred to as the "The H-1B Visa Reform Act of 2004" (the "H-1B Reform Act"). The H-1B Reform Act amended INA §214(g)(5) to include among the classes of H-1B exempted aliens an alien who has earned a Master's or higher degree from a U.S. institution of higher education. This exemption is capped at 20,000 per fiscal year.

Meaning of Specialty Occupation

Under the Immigration and Nationality Act ("INA"), the H-1B category is open to aliens seeking to enter the United States for the purpose of working either in a "specialty occupation" or as a fashion model of distinguished merit and ability. As the eligibility requirements for fashion models of distinguished merit and ability are different from those for specialty occupations, H-1B status for fashion models is discussed here.

The term "specialty occupation" is defined as an occupation that requires:

  1. A theoretical application of a highly specialized body of knowledge; and
  2. The attainment of bachelor's or higher degree (or its equivalent) in the specific specialty as a minimum for entry into the occupation in the United States.

The list of potential occupations that fall within the term "specialty occupation" is not closed. Provided that an occupation can be shown to fall within this definition, it can qualify for H-1B status.

In order to establish that a proposed position is a specialty occupation, one of the following must be documented:

  1. A bachelor degree or higher degree (or it equivalent) is normally the minimum entry requirement for the position;
  2. The requirement of a degree for the position is common in the industry or the position is so unique or complex that it can only be performed by someone with a degree;
  3. The employer normally requires a degree or its equivalent for the position; or
  4. The nature of the job duties is so specialized and complex that the knowledge required to perform the duties is usually associated with a bachelor or higher degree.

Certain occupations have no trouble meeting this definition, since specialty occupations are deemed to include "professions." INA §101(a)(32) states that the term "profession " shall include but not be limited to architects, engineers, lawyers, physicians, surgeons, and teachers in elementary or secondary schools, colleges, academies, or seminaries. These occupations would easily qualify for H-1B status.

Many IT workers such as engineers and systems analysts are also considered specialty occupations. However, programmers are normally not considered specialty occupations since they often qualify without a four-year university course (unless they are regularly involved in scientific or engineering applications which usually require a bachelor's degree with a major in computer science and a minor in physical science.) Nevertheless, there is some authority to argue that programmers qualify as specialty occupations.

Establishing the Necessary Credentials

Once it has been established that the proposed position is a specialty occupation, the alien worker must then show that he or she possesses the necessary qualifications for that position. The INS regulations state that the alien must meet the following criteria:

  1. Hold a United States baccalaureate or higher degree required by the specialty occupation from an accredited college or university;
  2. Hold a foreign degree determined to be equivalent to a United States baccalaureate or higher degree required by the specialty occupation from an accredited college or university;
  3. Hold an unrestricted State license, registration or certification which authorizes him or her to fully practice the specialty occupation and be immediately engaged in that specialty in the state of intended employment; or
  4. Have education, specialized training, and/or progressively responsible experience that is equivalent to completion of a United States baccalaureate or higher degree in the specialty occupation, and have recognition of expertise in the specialty through progressively responsible positions directly related to the specialty.
It is possible to establish equivalency to a bachelor degree in the specialty using one or more of the following:

  1. An evaluation from an official who has authority to grant college-level credit for training and/or experience in the specialty at an accredited college or university which has a program for granting such credit based on an individual's training and/or work experience;
  2. The results of recognized college-level equivalency examinations or special credit programs, such as the College Level Examination Program, or Program on Noncollegiate Sponsored Instruction;
  3. An evaluation of education by a reliable credentials evaluation service which specializes in evaluating foreign educational credentials;
  4. Evidence of certification or registration from a nationally-recognized professional association or society for the specialty that is known to grant certification or registration to persons in the occupational specialty who have achieved a certain level of competence in the specialty;
  5. A determination by the INS that the equivalent of the degree required by the specialty occupation has been acquired through a combination of education, specialized training, and/or work experience in areas related to the specialty and that the alien has achieved recognition of expertise in the specialty occupation as a result of such training and experience.

Where experience is substituted for education, it must include the theoretical and practical application of specialized knowledge required at the professional level; ordinary on the job training is insufficient. An alien is supposed to require three years of specialized training and/or work experience for each year of college-level training that she lacks. However, credential evaluation services will often confirm equivalency to a United States bachelor degree even though the alien does not meet this standard; the INS still accepts these evaluations at face value.

Complying with Labor Condition Application ("LCA") Attestations

The filing of an H-1B petition for an alien in a specialty occupation requires an approved LCA, valid for the dates of intended employment. An LCA does not require proof that U.S. workers are unavailable. However, it does require that the employer make several attestations to the Department of Labor ("DOL").

The LCA form itself is quite innocuous. However, the obligations that arise from making the attestations contained in the LCA form require the employer to perform several tasks and to document these tasks prior to making the attestations.

As the DOL only reviews submitted LCAs for obvious errors, the employer's failure to perform the necessary tasks will only be discovered if the DOL performs an audit of the employer's records. However, failure to comply will result in penalties and other sanctions.

The DOL has recently published an Interim Final Rule (the "DOL Regulations"), which implements many of the onerous provisions contained in ACWIA. The following analysis of the LCA attestations is provided within the context of the DOL Regulations.

Attestation #1 -- The Required Wage Rate

In order to comply with the first attestation, the employer must attest that it will pay its H-1B employees the higher of the following:

  1. The actual wage rate that it pays to all other individuals with similar experience and qualifications, and
  2. The prevailing wage level for the occupation in the geographic area of employment.

This is designed to ensure that an H-1B employer won't undercut its competitors (because it must pay the prevailing wage). At the same time, an employer already paying higher than normal wages to its work force must pay those same wages to its H-1B workers.

The DOL Regulations provide that the required wage must be paid in cash, in pro-rated installments no less frequently than monthly (except that nondiscretionary bonuses may be paid less frequently), and with no deductions other than those specifically authorized. For example, those deductions that are required by law, authorized by a collective bargaining agreement, reasonable and customary in the occupation, or voluntary deductions by and for the benefit of the employee are permitted.

In documenting the actual wage rate, the employer must show how it determines its actual wage level, which is defined as the wage paid by that employer to all other individuals "with similar experience and qualifications for the specific employment in question." Where no such other employees exist at the place of employment, the actual wage is the wage paid to the H-1B worker. In determining the actual wage level, the following factors may be considered: (a) experience, (b) qualifications, (c) education, (d) job responsibility and function, (e) specialized knowledge, and (f) other legitimate business factors. The term "legitimate business factors" means those that it is reasonable to conclude are necessary because they conform to recognized principles or can be demonstrated by accepted rules and standards. The documentation must be detailed enough that a third party can understand how the employer applied its pay system to arrive at the actual wage for its H-1B workers.

The prevailing wage for the occupational classification in the area of intended employment must be determined as of the time of filing the application; the employer must rely on the best information available as of the time of filing the application. If applicable, the appropriate wage shall be a wage determination for the occupation and area issued under:

  1. The Davis-Bacon Act, 40 U.S.C. 276a et seq. (see also 29 CFR part 1), or the McNamara-O'Hara Service Contract Act, 41 U.S.C. 351 et seq. (see also 29 CFR part 4) (which shall be available through the State Employment Workforce Agency ("SWA")); or
  2. A union contract, which was negotiated at arms-length between a union and the employer, which contains a wage rate applicable to the occupation.

Otherwise, the prevailing wage shall be the average rate of wages, as determined by an appropriate wage survey. The wage stated in the LCA must be within 5 percent of the average rate of wages.

The employer is not required to use any specific methodology to determine the prevailing wage. It may utilize (in the DOL's order of preference) a SWA, an independent authoritative source, or other legitimate sources of wage data. If independent authoritative sources or other legitimate sources of wage information are utilized, they must meet all of the criteria set forth in the DOL Regulations.

SWA wage information provides some protection to employers since the DOL will accept that prevailing wage determination as correct and will not question its validity. However, using SWA wage information creates problems if the employer disagrees with the SWA, since cannot simply dismiss the SWA determination. Also, SWAs generally utilize wage information from the Occupational Employment Statistics ("OES") system, which can be inaccurate because it utilizes only two skill levels.

ACWIA now provides that in computing the prevailing wage for an employee of:

  1. an institution of higher education or a related or affiliated nonprofit entity;

  2. a non-profit research organization or a Governmental research organization;

the prevailing wage shall only take into account employees at such institutions and organizations in the area of employment.

In the case of a professional athlete, when the job is covered by professional sports league rules or regulations, the wage set forth in those rules or regulations shall be considered to be the prevailing wage.

These revised computations apply to:

  1. applications filed on or after October 21, 1998; and

  2. applications filed before October 21, 1998, but only to the extent that the computation is subject to an administrative or judicial determination that is not final as of such date.

As a result of ACWIA, the employer must further attest that the H-1B worker will be offered benefits and eligibility for benefits on the same basis, and in accordance with the same criteria, as offered to U.S. workers. They cannot be subject to stricter eligibility criteria, and cannot be treated as "temporary workers" for benefits purposes by virtue of their nonimmigrant status. However, benefits received by the H-1B worker do not have to be identical to those received by U.S. workers, as long as the same benefits package was offered and the H-1B worker voluntarily chose different benefits.

The employer must also attest that it will continue to pay this wage during periods when the alien is in non-productive status due to a decision by the employer or due to the employee's lack of permit or license. This obligation also arises from the enactment of ACWIA.

ACWIA also prohibits the employer from requiring (directly or indirectly) that the H-1B worker pay a penalty for ceasing employment prior to an agreed date. Such penalties are common in many IT worker contracts. The DOL Regulations permit the employer to receive bona fide liquidated damages (as opposed to a penalty,) although it does not appear as though such damages can be collected via a deduction from or reduction in payment of the required wage. The distinction between liquidated damages and a penalty is to be made on the basis of the applicable State law.

Attestation #2 - Working Conditions

The employer must attest that the employment of the H-1B alien will not adversely affect the working conditions of workers similarly employed in the area of intended employment. The DOL will look at issues such as hours, shifts, vacation periods, and benefits such as seniority-based preferences for training programs and work schedules. The employer must document the validity of its working conditions in the event of an investigation. The employer has the burden of establishing that its working conditions have no adverse effect on similarly employed workers in the same industry, in the same area of employment.

Attestation #3 - No Strike or Lockout

The employer must attest that at the time of filing there is no strike, lockout, or work stoppage in the H-1B worker's occupation at the workplace. No documentation need be developed or maintained but, in the event of an investigation, the employer bears the burden of proving the truth of the attestation.

If a strike begins after placement of an H-1B worker, the employer must notify the DOL in writing within three days of the strike. Further, the employer may not place, assign, lease, or otherwise contract out an H-1B nonimmigrant, during the entire period of the labor condition application's validity, to any place of employment where there is a strike, lockout, or work stoppage in the course of a labor dispute in the same occupational classification as the H-1B nonimmigrant. Finally, the employer may not use the labor condition application in support of any petition filings for H-1B nonimmigrants to work in such occupational classification at such place of employment until ETA determines that the strike, lockout, or work stoppage has ended.

Attestation #4 - Notice

The employer must attest that it has provided notice of the filing of the labor condition application to the collective bargaining representative of its employees in the H-1B occupation or, lacking such a representative, has conspicuously posted such a notice. Notice must be given on or within 30 days before the date the LCA is filed; where the notice is posted, it must stay posted for a total of ten days. In addition, the employer must give a copy of the certified LCA to the H-1B employee on or before the first day on the job.

The DOL Regulations impose a requirement that notices must be posted at new worksites within the area of intended employment on or before the date that the H-1B worker reports to that site. It also expressly requires postings at third party worksites in addition to the employer's own facilities.

Additional Attestations for H-1B Dependent Employers

(Although these additional provisions, applicable to H-1B dependent employers and wilful violators, sunset on September 30, 2003, they were permanently reinstated by the H-1B Reform Act on December 8, 2004.)

As a result of ACWIA, additional attestations must be made where an employer is considered "H-1B dependent" or where it is found to be a willful violator. Under ACWIA, an employer is H-1B dependent if it has in the United States: (a) 25 or fewer full-time equivalent ("FTE") employees and more than 7 H-1B workers, (b) between 26 and 50 FTE employees and more than 12 H-1B workers, or (c) at least 51 FTE employees and a number of H-1B workers equal to at least 15% of the employer's FTE employees (including its H-1B workers.) The term "FTE employees" includes part time employees whose combined hours equal the same number of hours per week as a full-time employee. Willful violators include any employer who is found to have committed a willful failure to meet a condition of the LCA or who has made a misrepresentation of a material fact on the LCA. Such willful violators are required to make the additional attestations and be subject to random DOL investigations during the five-year period following the date of the final determination of such violation.

An employer that is subject to the additional attestations is prohibited from displacing any U.S. workers, whether directly or indirectly. The employer must attest that it did not displace and will not displace a United States worker within the period beginning 90 days before and ending 90 days after the date of filing of any petition supported by the LCA.

The attestation also extends to employees of a secondary employer in contractor situations, where there are indicia of an employment relationship between the H-1B worker and such other employer. Indicia of an employment relationship include:

  1. The secondary employer has the right to control when, where and how the H-1B worker performs the job (the presence of this indicia would suggest that the relationship between the nonimmigrant and the other secondary employer approaches the relationship which triggers the secondary displacement provision);
  2. The secondary employer furnishes the tools, materials, and equipment;
  3. The work is performed on the premises of the secondary employer (this indicia alone would not trigger the secondary displacement provision);
  4. There is a continuing relationship between the H-1B worker and the secondary employer;
  5. The secondary employer has the right to assign additional projects to the H-1B worker;
  6. The secondary employer sets the hours of work and the duration of the job;
  7. The work performed by the nonimmigrant is part of the regular business;
  8. The secondary employer is itself in business; and
  9. The secondary employer can discharge the H-1B worker from providing services.

Where the secondary displacement provision applies, the employer must make certain inquiries and/or have certain information concerning the secondary employer's displacement of similarly employed U.S. workers in its workforce. However, even if the required inquiry is made, the employer will still be found liable if the secondary employer has actually displaced similarly employed U.S. workers during the applicable time period.

Under ACWIA, certain H-1B workers are considered exempt. In other words, an H-1B dependent employer will not obliged to meet the additional attestation requirements in the case of these exempt H-1B nonimmigrants. "Exempt H-1B nonimmigrants" include those H-1B workers who: (a) receive wages (including cash bonuses and similar compensation) at an annual rate equal to at least $60,000; or (b) have attained a master's or higher degree (or its equivalent) in a specialty related to the intended employment.

For the purposes of the displacement attestation, the job from which the U.S. worker is laid off must be essentially equivalent to the job for which the H-1B worker is sought. The job of the H-1B worker must involve essentially the same duties and responsibilities as the job from which the U.S. worker was laid off. The comparison focuses on the core elements and competencies for the job, rather than non-essential duties. The job responsibilities must be similar and both workers must be capable of performing those duties. The qualifications and experience of the laid off U.S. worker must also be substantially equivalent to the qualifications of the H-1B worker. Finally, the job of the H-1B worker must also be located in the same area of employment (within normal commuting distance) as the job from which the U.S. worker was laid off.

The employer is required to retain (but not create) all records that it makes or receives concerning the circumstances under which each U.S. worker in the same locality and occupation as the H-1B worker left the employer's employ or was terminated by the employer's action during the relevant period.

The employer is also required to attest that it has engaged in "good faith recruitment" using "industry wide standards." It must, at a minimum, recruit both internally and externally and use both active and passive methods. Active methods include job fairs, using college placement services or headhunters, and internal job training. Passive methods include print and Internet advertising and internal job postings. At least some recruiting should also target former employees.

In order to establish "good faith steps" in the recruitment of U.S. workers, the employer must perform its recruitment so as to offer fair opportunities for employment to U.S. workers, without skewing the recruitment process against U.S. workers in favor of H-1B workers. The employer may not give preference to its current nonimmigrant workers who do not yet have H-1B status (such as students who are working for the employer pursuant to optional practical training.)

The employer must make and maintain documentation of the recruiting methods used, including the dates and places of any advertisements, postings, or other methods used, the content of the advertising or postings, and the compensation terms (if they are not already included in the advertisements or postings.) The employer must also keep any documentation it has received or prepared concerning the treatment of applicants for the position, such as copies of applications and related documents.

Once approved, the LCA must be included with the H-1B petition that is filed with the Immigration and Naturalization Service ("INS"). LCAs are valid for the period of intended employment indicated on the form itself, up to a maximum period of three years.

Increased Filing Fee

In a separate piece of legislation (H.R. 5362), Congress increased the $500 H-1B filing fee (created by ACWIA) to $1,000. It also expanded the exemptions from this fee to include primary and secondary schools and nonprofits engaged in curriculum-related clinical training of students registered at an institution of higher education. The fee increase was effective two months after enactment (December 17, 2000,) but the new exemptions took effect immediately.

As stated above, the H-1B filing fee sunset on September 30, 2003. However, on October 8, 2004, the H-1B Reform Act permanently reinstated the fee for each petition and raised it from $1,000 to $1,500. However, employers with no more than 25 full-time employees employed in the U.S. will have to pay only $750. This new H-1B fee is effective as of October 8, 2004.

The H-1B Reform Act also imposed a new $500 fraud fee. Such fee will be in addition to other fees and will apply to employers filing either an initial petition for an H-1B or for a change of status or change of employer petition. The fee will be imposed only on principal aliens, not their dependents. Only petitions that seek to amend or extend the stay of the beneficiary will be exempt from this fee. The effective date of the fraud fee is March 8, 2005.

Dependents of H-1B Aliens

The dependent spouse (legal) or child (unmarried and under age 21), who are accompanying or following to join the H-1B alien, may be admitted as H-4 dependents for the same period as the principal H beneficiary. H-4 dependents are not permitted to engage in employment. However, they may study and also engage in activities ordinarily permitted for B-2 visitors. The doctrine of dual intent is also recognized for H-4 dependents of H-1B aliens.

Terms of Admission

Period of Permitted Stay

An H-1B is valid initially for up to three years. Extensions may be requested up to a maximum total stay of six years in either H or L status (there are exemptions from the six-year limit as a result of AC21). The H-1B worker must then live outside the United States for at least one year before becoming eligible for H status again.

Exemptions from the Six Year Limit

Under AC21, a beneficiary of an approved employment-based first, second or third preference petition who would be eligible to file for adjustment of status but for the per-country limits may continue to obtain extensions of the H-1B status until their adjustment of status case is decided. This provision allows individuals in H-1B status who reach the end of their six-year limit, while waiting for their priority date to become current, to obtain an extension of H-1B status until they can file for their adjustment of status and their case is adjudicated. This exemption will primarily benefit nationals of India, China, Mexico and The Philippines who are subject to country-specific backlogs. The wording of this exemption appears to limit it to adjustment of status and not consular processing.

AC21 also provides that beneficiaries of any employment-based petitions on whose behalf an immigrant petition or adjustment of status application has been filed may continue to extend their H-1B status in one-year increments until adjustment processing is completed, as long as 365 days or more have elapsed since the labor certification application or immigrant petition was filed. This ensures that such H-1B beneficiaries do not fall out of status while waiting for lengthy immigrant petition and adjustment of status adjudications. This exemption appears to be available, regardless of whether the alien seeks adjustment of status or consular processing.

Material Changes in the Beneficiary's Status

Where there is a material change in the beneficiary's employment, an amended H-1B petition must normally be filed. However, the Visa Waiver Permanent Program Act, Public Law No.106-396, has now eased this requirement in certain situations. An amended H-1B petition shall not be required where the petitioning employer is involved in a corporate restructuring, including but not limited to a merger, acquisition, or consolidation, where a new corporate entity succeeds to the interests and obligations of the original petitioning employer and where the terms and conditions of employment remain the same but for the identity of the petitioner. The Visa Waiver Permanent Program Act was signed into law on October 30, 2000.

Portability of H-1B Status

AC21 now allows a beneficiary of an H-1B petition to change employers and to begin working for the new employer upon that employer's filing of the petition, rather than waiting until the petition has been approved. The petition must be nonfrivolous and the beneficiary must be a nonimmigrant admitted to the U.S., must not have been employed without authorization before the petition was filed, and must be in an unexpired period of stay (from the previous H-1B petition) when the petition is filed. However, if the petition is denied, the work authorization terminates. This provision applies to petitions filed "before, on, or after" the date of enactment.

Liability for Return Transportation

Pursuant to 8 CFR § 214.2(h)(6)(vi)(E), the employer of an H-1B alien will be liable for the reasonable costs of return transportation of the alien abroad, if the alien is dismissed from employment for any reason by the employer before the end of the period of authorized admission. If the alien voluntarily terminates his or her employment prior to the expiration of the validity of the petition, the alien has not been dismissed. This provision applies to any employer whose offer of employment became the basis for the alien obtaining or continuing H-2B status. However, there is no statutory or administrative mechanism for enforcing this obligation.

Dual Intent

The doctrine of dual intent is statutorily recognized for the H-1 category. Please refer to the article on dual intent for additional information.


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