DHS Issues H-1B Modernization Final Rule

On December 18, 2024, the Department of Homeland Security (DHS) announced a Final Rule, impacting H-1B, F-1, and other nonimmigrant work-authorized categories. The Final Rule includes many of the proposed provisions from the Notice of Proposed Rulemaking, which was published in the Federal Register on October 23, 2023. The Final Rule also builds on a previous rule, announced in January 2024, which has already improved the H-1B cap registration and selection process. The Final Rule becomes effective on January 17, 2025, only a few days before President-elect Trump takes office. We have provided an overview of the key changes below. 

Codification and Expansion of USCIS’ Deference Policy

The final rule codifies its existing policy on giving deference to prior approvals on subsequent I-129 petitions and to clarify the circumstances on when this policy will apply, to ensure consistent adjudications. The current policy only applies to extension of stay requests, however, the new codified policy will apply to all Form I-129 petitions and may therefore apply to filings such as change of employer where the jobs remain essentially the same. The USCIS’ deference policy is not new and has been a long-standing policy for I-129 extension of stay petitions since 2004. However, this policy was rescinded in 2017 by the Trump Administration, which required the USCIS to adjudicate extension requests as new petitions. In 2021, under the Biden Administration, the USCIS  reinstated its 2004 deference policy. The codification of the policy should make the policy less vulnerable to recession by the incoming Trump Administration.

Revision to Specialty Occupation Definition

To merit approval for the H-1B visa, the position offered must be a “specialty occupation” and the beneficiary must possess a bachelor’s degree (or the equivalent). In its final rule, the DHS revises the regulatory definition of an H-1B specialty occupation through some key changes. For instance, the rule clarifies that a position “normally” requiring a bachelor’s degree does not mean that it must “always” require a bachelor’s degree. The rule goes on to clarify that a position may qualify as a specialty occupation even if the employee accepts a range of qualifying degree fields, as long as each field is “directly related” to the position’s duties. The final rule also provides a clear definition of “directly related,” defining the term to mean a ‘”logical connection” between the required degree, or its equivalent, and the duties of the position.

Amended H-1B Petitions 

Under the final rule, the DHS codifies its precedent decision Matter of Simeio Solutions, LLC, which held that a change in geographic area of employment for H-1B workers is considered a material change and requires the filing of an amended or new petition before the H-1B worker may perform work under the changed conditions. While LCA regulations generally apply to H-1B, E-3, and H-1B1 workers, the final rule includes a specific carveout for H-1B workers that allows for short-term placement of less than 30 days, or in some cases, up to 60 days and does not require a new LCA or amendment petition, if certain conditions are met.

Provisions to Ensure Bona Fide Job Offer for a Specialty Occupation Position

The final rule codifies the existing requirement that the petitioner have a bona fide job offer and effectuates the following measures:

• Contracts: DHS will have the authority to request specific documentation that will assist in determining whether a bona fide job offer exists. Specifically, the DHS will have the authority to request contracts, statements of work (work orders), or milestone tables. 

• Non-speculative employment: Employers will be required to demonstrate that they have non-speculative positions available for the beneficiary beginning on the requested start date of the petition. 

• LCA correspondence with petitions: The DHS will have express authority to determine whether an LCA properly supports and corresponds with an accompanying H-1B petition.

As part of the final rule, the DHS also clarifies that a petitioning employer is not required to establish specific day-to-day assignments for the entire requested H-1B validity period in the petition. It is important to note that the final rule will also eliminate the itinerary requirement for H-1B petitions filed by agents.

Revised Policy for ‘Beneficiary-Owner’ H-1Bs

The final rule provides a pathway for entrepreneurs to use the H-1B program to start and grow their businesses. As long as individuals meet certain conditions, the DHS will allow beneficiary-owners to be sponsored for an H-1B by their business. In particular, the rule lays out a ‘majority of the time’ framework whereby the petitioner must establish that the beneficiary-owner will spend the majority of their time performing specialty occupation duties. This condition would allow the beneficiary-owner to spend less than a majority of the time on non-specialty duties directly related to owning and directing the business, including incidental tasks, such as answering phones and making copies. The rule will limit the validity period for the first two H-1B petitions for beneficiary-owners to 18 months each, as opposed to the usual 3 years, as a ‘guardrail’ to protect the H-1B program from fraud and other abuses. 

Lengthening of H-1B Cap-Gap Extension Period

The final rule would lengthen the H-1B ‘cap-gap’ extension period by six months, to help minimize gaps in student work authorization caused by USCIS processing delays. The current cap-gap extension was added to the H-1B regulations in 2008 to allow F-1 students with optional practical training (OPT) work authorization who were selected in the annual H-1B lottery to continue working between the end of their OPT work authorization period, and the start of the fiscal year, on October 1st, which is when their H-1B petition would normally take effect. Under the final rule, the cap-gap extension end date will be extended from October 1st to April 1st of the fiscal year for which the H-1B cap petition was filed. It is hoped that this additional 6-month extension will provide sufficient time for the USCIS to complete the adjudication of all H-1B cap petitions for that fiscal year. As with the existing rule, cap-gap work authorization would cease before the end of the cap-gap period if the H-1B petition is denied. 

Site Visits

The final rule will expand the scope of on-site visits to determine compliance with immigration laws and regulations, such as an on-site visit of the petitioning organization’s facilities, access to all sites where the H-1B labor will be performed, interviews with its officials, and review of any records related to H-1B compliance. The rule also clarifies that an inspection may take place at the employer’s (or third party’s) headquarters, satellite locations, or the location where the H-1B employee works or will work, including their home, or third-party worksites, as applicable. Furthermore, any lack of cooperation or failure to allow the USCIS inspectors to conduct the on-site inspection or to interview H-1B workers outside the presence of the employer or its representatives will result in denial or revocation of the H-1B. 

H-1B Cap Exemptions 

The final rule expands the requirements for exemption to the H-1B cap lottery when a beneficiary is not directly employed by a qualifying institution, organization, or entity, and revises the definition of ‘‘nonprofit research organization’’ and ‘‘governmental research organization’’ to clarify and expand eligibility and address modern employment relationships. Under the final rule, H-1B beneficiaries who split their work 50/50 between a cap-exempt institution, organization, or entity and a non-cap-exempt entity may qualify for an H-1B exemption. The rule also clarifies definitions of an H-1B cap-exempt beneficiary’s duties related to furthering the qualifying entity’s mission and activities. Furthermore, the proposal will expand the definition of ‘‘nonprofit research organization’’ and ‘‘governmental research organization’’ to include entities that conduct research as a fundamental activity but are not primarily engaged in research, or where research is not the primary mission of the entity. 

Flexibility to Change H-1B Approval Period

The final rule allows petitioners to amend a petition’s requested nonimmigrant employment validity period if the requested validity period has passed by the time the petition is adjudicated. Under current policy, the USCIS would be required to deny the petition, because the validity period has passed. Under the final rule, the USCIS may issue a request for evidence, informing the petitioner that it found the petition to be approvable, and asking it if it would like to change the validity dates to cover a period in the future. The petitioner would be permitted to submit a new labor condition application (LCA) which is required for all H-1B petitions, to cover the new requested validity period, even if the LCA was filed after the initial petition was filed. 

What this Means for our Clients

The final rule will enhance the H-1B program by giving more opportunities to entrepreneur nonimmigrants, and provide much-needed clarity to long-standing USCIS policies. By codifying these policies, the USCIS will improve transparency and accessibility for stakeholders whose lives and businesses are often deeply affected by them.