DHS Releases Proposed New Regulations Aimed at Retaining High-Skilled Nonimmigrant Workers

January 20, 2016

As announced in our previous alert, the Department of Homeland Security (“DHS”) has released long-overdue proposed regulations (“Proposed Rule”) to codify its interpretation of important sections of the American Competitiveness in the Twenty-First Century Act of 2000 (“AC21”) and other laws relating to the employment and retention of high-skilled foreign workers. Although more than 15 years have passed since AC21 was enacted, until now, DHS has not proposed comprehensive rules to interpret this important statute. Its interpretation has instead been articulated in a patchwork of memoranda, opinion letters, liaison minutes and administrative appeals decisions. The lack of complete guidance on AC21 has resulted in ambiguity surrounding the rules governing many important areas of business immigration, including H-1B extensions beyond the 6-year limit based on pending green card processes and portability of adjustment of status (green card) applications.

If adopted, the Proposed Rule would add new regulatory provisions and amend existing regulations to clarify several interpretive questions raised by the statutes, and should improve consistency in DHS’ adjudication of related petitions and applications. In addition, the Rule would provide several new benefits designed to provide certain high-skilled foreign workers greater stability and flexibility to change jobs and remain in the U.S., while also providing U.S. employers greater stability and flexibility in the employment and sponsorship of these workers. Significant proposed benefits include a 60-day grace period following termination of employment for certain foreign temporary workers enabling them to seek new employment, as well as employment authorization for qualifying beneficiaries of approved I-140 immigrant visa petitions, under certain compelling circumstances.

The Proposed Rule will not take effect unless and until the Rule clears the administrative rule-making process, which, as explained below, typically takes several months. We have summarized and provided analysis on the key features of the proposed regulations below.


Section 104(c) of AC21: 3-Year Extensions of H-1B Status beyond the 6-Year Limit

Under Section 104(c) of AC21, H-1B workers are eligible for 3-year extensions of their H-1B status beyond the 6-year limit if such workers are beneficiaries of an approved EB-1, EB-2 or EB-3 I-140 immigrant petition, and are also subject to an immigrant visa quota backlog. The Proposed Rule addresses several interpretive issues with this section of the statute:

  • Multiple 104(c) Extensions. Although Section 104(c) benefits are termed “one-time” extension benefits in the statute, under the Proposed Rule, consistent with current policy, petitioners would be able request multiple 3-year extensions on behalf of beneficiaries so long as such beneficiaries remain subject to an immigrant visa quota backlog.

  • 104(c) Extensions While Beneficiary is Outside the U.S. The proposed rule also clarifies that the 104(c) 3-year extension benefit would be available whether or not the H-1B worker is physically present in the U.S. at the time of filing the "extension" petition. This addresses a key ambiguity in Section 104(c). The word “extension” in the statute could be interpreted narrowly to mean an “extension of stay,” which is only available when a person is physically present in the U.S.  The Proposed Rule interprets the term more broadly to give the statute its intended effect.    

  • Impact of I-140 Revocation on 104(c) Benefits. Under the Proposed Rule, I-140 immigrant petitions approved for 180 days or more would remain valid indefinitely for purposes of extending the beneficiary’s H-1B status, so long as the petition is not revoked for fraud, material misrepresentation, invalidation or revocation of a labor certification, or USCIS error. This proposal addresses another well-known gap in DHS’ policy relating to Section 104(c). Under current interpretation, it is unclear whether an employer can cut-short an H-1B worker’s eligibility for H-1B extensions under Section 104(c) by simply withdrawing the I-140 immigrant petition filed on the employee’s behalf, even where the employee has long since left that employer. It is similarly unclear whether H-1B workers would remain eligible for extensions under 104(c) where the petitioning employer goes out of business. The Proposed Rule clarifies that neither withdrawal by the petitioning employer, nor termination of the petitioning employer’s business operations, more than 180 days following petition approval, will impact the beneficiary’s ability to seek continued H-1B extensions under Section 104(c). This will allow H-1B workers greater flexibility in changing jobs, and provide U.S. employers greater flexibility in hiring such workers without jeopardizing the worker’s eligibility for continued H-1B extensions beyond the 6-year limit.


Sections 106(a) and (b) of AC21: 1-Year Extensions of H-1B Status Beyond the 6-year Limit

Prior to enactment of AC21 in 2000, H-1B workers were in all cases limited to a 6-year maximum period of stay in the U.S., and could only be eligible for an additional 6-year period by being physically outside the U.S. for one continuous year. Under Sections 106(a) and (b) of AC21, H-1B workers are eligible for 1-year extensions of their H-1B status beyond the 6-year limit if a labor certification application or I-140 immigrant petition has been filed at least 365 days before the maximum authorized period of stay is reached. The Proposed Rule addresses a number of important interpretive issues with Section 106(a) and (b):

  • 106(a) Extensions While Beneficiary is Outside the U.S. As with Section 104(c) which is discussed above, the Proposed Rule clarifies that 106(a) “1-year extensions” would be available whether or not the H-1B worker is physically present in the U.S. at the time of filing the petition.

  • New Restriction on 106(a) Extensions for Workers Who Do Not Take Final Step in Green Card Application Process. Under the Proposed Rule, in order to remain eligible for 1-year H-1B extensions under 106(a), the worker must file the final step in the green card application process (the adjustment of status or immigrant visa application) within one year of becoming eligible to do so. If, during that year, the worker becomes ineligible to file the final step due to changes in the immigrant visa quota backlog, the worker will be allowed to continue extending H-1B status so long as he/she files the final step once an immigrant visa become available again. The agency may—in its discretion—excuse an individual’s failure to file within the one-year period if the foreign worker establishes that the failure was due to circumstances beyond his/her control.

Under current policy, there is no such limitation to 106(a) extensions, and H-1B workers can conceivably extend their H-1B status indefinitely based on an approved I-140 immigrant petition, even if the employee is not affected by a quota backlog. This proposed change will thus limit the number of extensions that may be filed on an H-1B worker’s behalf in some cases.

  • Subsequent 106(a) Extensions after the 7th Year. The Proposed Rule also address the important question of whether a one-year extension under section 106(a) may be requested on the basis of a PERM or immigrant petition that was filed after the beneficiary had exceeded his or her initial 6-year H-1B time limit. This situation is common in the H-1B change of employer context where an employee obtains a one-year extension based on a PERM application filed by his or her previous employer, and the PERM certification later expires, or the application is withdrawn by the previous employer. Under DHS’ current guidance, there is some ambiguity as to whether the worker in this scenario would be eligible for subsequent one-year extensions under 106(a), based on a new PERM or I-140 that was filed after the worker had exceeded his or her initial 6 years in H-1B status, but 365 days before the new H-1B expiration date provided by the earlier 106(a) extension. The Rule clarifies that each 106(a) exemption from the 6-year limit affords the foreign worker a new date on which his/her maximum period of admission will expire for purposes of determining 106(a) eligibility. This will allow workers in some situations to request one-year extensions based on PERM applications or immigrant petitions that were filed after the 6-year limit had been reached. 


Section 106(c) of AC21: Job Portability for Adjustment Applicants

Section 106(a) of AC21 allows certain foreign workers who are being sponsored by their employers for a green card to transfer ("port") their application to a new job at a new employer once they have reached the final stage of the sponsorship process (the “adjustment of status”), provided the new job is in the same or similar occupational classification, and the adjustment application has been filed and remains pending for 180 days or more. The Proposed Rule clarifies procedural requirements relating to this section and addresses the definition of “same or similar” occupation.

  • Clarification on What May Be Considered “Employment” for Purposes of Adjustment Portability. Consistent with current DHS practice, the Proposed Rule makes clear that the new qualifying job for purposes of Section 106(c) may be with the same employer that sponsored the worker’s green card, a new employer, or based on self-employment.

  • Defining “Same” or “Similar.” As the statute does not define the terms “same” or “similar,” DHS proposes definitions for these terms consistent with their common dictionary definitions and DHS practice and experience. Specifically, the new Rule defines “similar occupational classification” as an occupation that shares essential qualities or has a marked resemblance or likeness with the occupation for which the underlying employment-based immigrant visa petition was approved. While the proposed regulations do not provide elaboration on the dictionarydefinition, a Memorandum released by the U.S. Citizenship and Immigration Services (“USCIS”) in November 2015 instructs officers adjudicating such applications to look at factors such as job duties, skills, experience, education, training, licenses or certifications required, wages offered, and any other credible/material evidence submitted by the applicant. This more specific policy guidance is not incorporated or referenced in the Proposed Rule, so is unclear whether the policy memo was intended to complement the Rule, or was written independently of the Rule.

  • Impact of I-140 Revocation on Adjustment Portability. Under existing policy, where a foreign worker’s adjustment of status application has been pending for at least 180 days, and the sponsoring employer subsequently withdraws the approved I-140 immigrant petition underlying the application, the beneficiary may still port that application so long as he/she has a new offer of employment in the same or similar occupational classification. In contrast, if the sponsoring employer were to withdraw the approved I-140 immigrant petition before the adjustment application had been pending for 180 days, the foreign worker would not be eligible for portability and would need to be named in a new immigrant petition. DHS’ current policy does not specifically address the situation in which an employer goes out of business after the I-140 immigrant petition has been approved and the adjustment of status application has been pending for at least 180 days.

The new Rule proposes that approved employment-based I-140 immigrant petitions will no longer be automatically revoked based solely on withdrawal by the petitioner or termination of the petitioner’s business. Notably, however, DHS would limit this protection to include only those I-140 immigrant petitions that have been approved for at least 180 days at the time of revocation.
 
This amendment thus expands restrictions such that in addition to the adjustment application needing to have been on file for 180 days, the I-140 immigrant petition must also have been approved for at least 180 days at the time of withdrawal by petitioner, or termination of petitioner’s business, in order for the foreign worker to remain eligible for portability. Although this subtle change would not affect the majority of foreign workers seeking to port their applications, it would in some cases result in applicants having to wait longer before being able to safely rely on adjustment portability. It is unclear whether DHS has fully considered the implications of this new proposed restriction which does not appear to align with the goal of fully implementing the job portability provisions of AC21.

  • New Adjustment Portability Form. The new Rule also introduces a new form, supplementary to the adjustment of status application, to be filed by the intending immigrant worker, describing the worker’s eligibility for adjustment portability. The form will assist DHS in determining whether a new offer of employment is in the same or similar classification as the offer listed on the original immigrant visa petition. This is a departure from current practice, as there is currently no official guidance in place for workers seeking to avail themselves of such portability benefits.

 

Section 105(c) of AC21: Job Portability for H-1B Workers

Under Section 105(c) of AC21, a foreign worker who was previously issued an H-1B visa or otherwise granted H-1B status, may commence employment with (“port to”) a new employer upon the filing of an H-1B petition by the new employer, provided that the foreign worker was admitted lawfully to the U.S., and has not worked without authorization. Despite the clear statutory language which says that portability is available to workers “previously” granted H-1B status, the Proposed Rule confirms DHS’ current policy which states that this option is available only to foreign workers who are present in the U.S. in H-1B status at the time of filing the new petition. The Rule also confirms that an H-1B worker who has changed employers based on an H-1B portability petition may again change employers based on the filing of a new H-1B portability petition, even before the previous petition is approved.

 

Recapturing H-1B Time toward the 6-Year Limit

Under current policy guidance, DHS does not count time spent outside of the U.S. by an H-1B worker during the worker’s petition validity period toward the H-1B 6-year limit. Petitioners may seek to “recapture” that time toward the worker’s 6-year limit. The Proposed Rule confirms DHS’ longstanding policy requiring that the H-1B petitioner bears the burden of demonstrating eligibility for “recapturing” time outside the country. The Rule also confirms DHS’ current policy allowing for any trip of at least a continuous 24-hour period outside of the U.S. for any reason may be recaptured.

 

Cap Exempt H-1B Employment under AC21 and ACWIA

Under Section 103 of AC21, an H-1B employer may claim an exemption from the annual H-1B cap if the worker will be employed at an institution of higher education, nonprofit entity related to or affiliated with such an institution, nonprofit research organization, or governmental research organization.

  • Broadening of Cap-Exempt Employment. Under current policy, H-1B workers may only be treated as cap exempt when employment is located directly at a qualifying organization and the worker will perform job duties that directly and predominantly further the normal, primary, or essential purpose, mission, objectives or function of the qualifying organization. The Proposed Rule broadens the exemption to include petitioners that are not themselves a qualifying organization if: (1) the majority of the worker’s duties will be performed at a qualifying organization; and (2) such duties directly and predominantly further the essential purpose, mission, objectives, or functions of the qualifying organization.

Consistent with current policy, the Proposed Rule would adopt the definition of the term “institution of higher education” provided by the Higher Education Act. This definition does not include for-profit institutions of higher education.
 
Also consistent with current policy, the term “related or affiliated nonprofit entity” would be defined to include nonprofit entities that are connected or associated with an institution of higher education through shared ownership or control by the same board or federation; operated by an institution of higher education; or attached to an institution of higher education as a member, branch, cooperative or subsidiary. DHS seeks to modify current policy by providing additional means by which nonprofit entities may establish a sufficient bona fide relation or affiliation with an institution of higher education.

  • Counting Previously Exempt H-1B Workers against the Annual Cap. The Proposed Rule confirms that H-1B workers who were not previously counted against the numerical cap, and who cease employment at cap-exempt institutions, will be subject to the cap if no other exemptions apply. In the absence of regulations, there has been some degree of uncertainty as to interpreting the statute on the issue of H-1B cap exemptions.

 

Protection for H-1B Whistleblowers

Under Section 413 of ACWIA, where credible evidence is provided demonstrating that an H-1B worker has faced retaliatory action for reporting an employer’s violations of the LCA obligations, DHS may afford the worker time to secure new H-1B or other authorized employment. The proposed regulations confirm this protection and the related evidentiary requirements.   
 

Additional Changes to Further Improve Stability and Job Flexibility for Certain Workers

Under current regulations, DHS automatically revokes previously approved I-140 immigrant petitions upon invalidation of the labor certification supporting the petition, death of the petitioner or beneficiary, withdrawal by the petitioning employer, and termination of the petitioning employer’s business. The regulations also allow for revocation when the need for revocation comes to the attention of DHS, such as petitions involving fraud, material misrepresentation, or erroneous approval by USCIS.

The Proposed Rule would amend the regulations so that approved I-140 immigrant petitions withdrawn by the petitioning employer at least 180 days following petition approval solely due to employee termination or termination of the petitioner’s business would not be automatically revoked, and would remain valid for various purposes under the immigration laws.  

  • Continued Validity of I-140 Approvals Following Withdrawal by Petitioner or Termination of Petitioner’s Business. To better reflect and enhance job portability authorized under AC21, DHS proposes that approved employment-based I-140 immigrant petitions will no longer be automatically revoked based solely on withdrawal by the petitioner or termination of the petitioner’s business. However, as noted above, the agency’s restriction of such revocation would be limited to I-140 immigrant petitions that have been approved for at least 180 days. Under the Proposed Rule, so long as the petition has been approved for at least 180 days, and has not been revoked for fraud, material misrepresentation, invalidation or revocation of a labor certification, or USCIS error, it will remain valid for various immigration benefits including the retention of priority dates, adjustment of status portability, and H-1B extensions beyond the 6-year limit.

Overall, this amendment would increase the ability of H-1B workers to change employers without fear of retributive action taken by the petitioning employer, and/or fear that the petitioner’s business failures would impact the worker’s ability to extend H-1B status or pursue permanent residence in the U.S. Yet, as noted above, the new requirement that I-140 immigrant petitions be approved for 180 days or more before becoming immune from automatic revocation would also result in certain workers having to wait several months longer before being able to change employers through adjustment portability. The agency’s stated reason for the 180-day wait period is to provide additional assurance that the petition was bona fide when filed. As stated in the preamble to the rule, “In addition to the period that it typically takes for a petitioning employer to obtain a labor certification from [Department of Labor] and approval of an immigrant visa petition from DHS, the 180-day requirement would provide additional assurance that the petition was bona fide when filed.” However, it is unclear whether DHS has fully considered the implications of this new proposed restriction which do not appear to align with the goal of fully implementing the job portability provisions of AC21.

  • Retention of Priority Date Following I-140 Withdrawal. Under the Proposed Rule, where an I-140 immigrant petition has been approved, the beneficiary will retain his/her priority date for future filings unless USCIS denies or revokes the petition due to fraud, material misrepresentation, invalidation or revocation of a labor certification, or USCIS error. Notably, unlike the retention of I-140 benefits for adjustment portability, the ability of a beneficiary to retain his/her priority date would begin immediately upon petition approval, even if the petition is later revoked based on withdrawal or business termination. While not explicitly stated in any policy memorandum, current practice is consistent with this proposal. This clarification, in combination with the change above, would provide greater certainty and stability for beneficiaries in their pursuant of permanent residence.

To further improve stability and flexibility for certain high-skilled nonimmigrant workers, DHS seeks to establish and expand grace periods in certain nonimmigrant visa classifications.


Expansion and Establishment of Nonimmigrant Grace Periods

  • Expansion of 10-Day Grace Period to Other Nonimmigrant Classifications. Under existing regulations, H-1B workers are afforded a 10-day grace period preceding and following the validity period of approved employment. The proposed regulations seek to extend this 10-day grace period to other classifications, including E-1, E-2, E-3, L-1, and TN, and the dependents of those nonimmigrant workers. Employment would not be authorized during these 10-day grace periods.

  • Establishment of 60-Day Grace Period. Under existing regulations, there is no grace period for nonimmigrant workers whose employment ends during the authorized validity period—whether voluntarily or upon being laid off. Such workers are generally considered to be in violation of status and required to depart the U.S. immediately. The Proposed Rule would permit a one-time grace period of up to 60 days upon termination of employment during the authorized validity period for workers in E-1, E-2, E-3, H-1B, H-1B1, L-1, and TN status, and their dependents. This grace period is intended to provide workers the opportunity to seek new authorized employment, apply for another nonimmigrant status, or to make arrangements to depart the U.S., and is consistent with the flexibility already afforded to nonimmigrants in F-1 and J-1 status. Such a grace period was initially proposed in a policy memorandum in 2000, but did not take effect.


Employment Authorization for Beneficiaries of Approved I-140 Immigrant Petitions Facing Compelling Circumstances

To improve stability and flexibility for certain high-skilled nonimmigrant workers, DHS also seeks to permit qualifying individuals to apply directly for employment authorization under compelling circumstances.

  • Employment Authorization under Compelling Circumstances. Under the new Rule, nonimmigrants may apply for a 1-year Employment Authorization Document (“EAD”) under the following circumstances: (1) the individual is in the U.S. in E-3, H-1B, H-1B1, L-1 or O-1 status; (2) the individual is the beneficiary of an approved I-140 immigrant petition under the EB-1, EB-2, or EB-3 classifications; (3) the individual is subject to a per-country quota backlog and therefore does not have an adjustment of status application pending; and (4) the individual can demonstrate compelling circumstances that justify an independent grant of an EAD.

DHS has not defined “compelling” circumstances, and may retain discretion in granting such requests, but the agency has identified four circumstances in which it would consider granting such a request, including: (1) a geographical move due to serious illness or disability; (2) employer retaliation; (3) other substantial harm if required to return home; or (4) significant disruption to employers.
 
Applicants may not have been convicted of a felony or two or more misdemeanors and must appear in person at a USCIS Application Support Center to submit biometric information.  In order to be considered for a renewal, applicants must continue to face compelling circumstances or have a priority date that is less than 1 year from the current cut-off date for the relevant employment-based category and country of nationality. Qualifying dependent spouses and children would also be eligible for an EAD.
 
DHS anticipates that use of this proposal would be limited for the following reasons: (1) the other proposed changes would significantly decrease instances where this proposal would be needed; (2) nonimmigrant workers will have significant incentive to choose other options, as the this proposal would require the worker to relinquish his/her nonimmigrant status, thus restricting his/her ability to change nonimmigrant status or adjust status to that of a lawful permanent resident. Accepting the EAD under this proposal would, for example, generally require the worker to forego adjusting status in the U.S. and instead seek an immigrant visa abroad through consular processing. Furthermore, DHS anticipates that a small number of nonimmigrants will be able to demonstrate compelling circumstances justifying issuance of an EAD; such EADs will not be granted solely because a worker’s statutory limit for L-1 status is approaching, or if the compelling circumstance is within the worker’s control. 



Processing of EAD Applications

Under existing regulations, individuals applying for EAD renewals in certain eligibility categories (including EAD applications based on pending adjustment of status applications) are not authorized to continue employment pursuant to the pending application. Rather, their applications must be approved in order to derive work authorized status. This can result in interruptions to work authorization where adjudication of such applications is delayed for any reason.

  • Automatic EAD Extensions Based on Timely Filed Applications. Under the new Rule, USCIS would automatically extend the validity period of expiring EADs for up to 180 days from the document’s expiration where a renewal application was filed before the current EAD expires under the same eligibility category. The change would allow employers to utilize the expired EAD and I‑765 receipt notice as I-9 evidence of employment authorization. Meanwhile, the current requirement that USCIS process EAD applications within 90 days of receipt would be lifted in consideration of fraud and national security concerns and technological and process advances relating to document production.

 

H-1B Licensing Requirements

Under existing regulations, where the intended beneficiary of an H-1B petition requires a state or local license to fully perform the duties of the occupation, the petition may not be approved unless the beneficiary possesses the license. This sometimes results in a “catch-22,” as the licensing authority may not issue licenses to individuals lacking a social security number and/or evidence of employment authorization. Under current policy, DHS may approve such a petition for a 1-year period, provided that the only obstacle to obtaining licensure is the lack of a social security number of employment authorization. However, the implementation of this policy is not uniform in adjudications by USCIS.  

  • Clarification of H-1B Licensing Requirements. Under the new Rule, consistent with current policy, DHS may approve an H-1B petition for a 1-year validity period if a state or local license is required to engage in the occupation and the licensing authority will not grant such license without evidence that the beneficiary has been issued a social security number or granted employment authorization. The Rule confirms that petitioner would be required to demonstrate at the time of filing the petition that the beneficiary has already filed an application for the relevant license in accordance with state or local licensing procedures, or show that the beneficiary cannot file such an application due to the lack of a social security number of employment authorization. Extensions beyond the 1-year period would not permitted without proof of licensure.

The Proposed Rule also clarifies that an individual without an occupational license may obtain H-1B status if he/she will be employed in a state that allows an unlicensed individual to fully practice the occupation under the supervision of licensed senior/supervisory personnel.

The Proposed Rule will not go into effect immediately after the mandatory notice and comment period has concluded. The comment period will close on February 29, 2016. After the comment period has closed, the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB) will then review the comments and either revise the Rule or clear it for final publication. The time period for this review can vary. The Proposed Rule is considered a “significant rule.” As a result of this designation, the Administrative Procedure Act (APA) requires a minimum 60-day delay between the final publication of the Rule and its effective date. It is unclear what the exact date of publication for the Rule will be at this time. We will provide additional details as they become available.
 

How This Impacts You

If passed, the Proposed Rule would increase clarity regarding many important areas of business immigration law, including: the rules governing H-1B extensions and adjustment portability, improving processes for employers seeking to sponsor and retain immigrant and nonimmigrant workers, greater stability and job flexibility for such workers, and increased transparency and consistency in the application of agency policy related to affected classifications. The changes are largely aimed at improving the ability of employers to hire and retain high-skilled workers who are beneficiaries of approved employment-based immigrant visa petitions and waiting to become permanent residents, while increasing the ability of such workers to seek promotions, accept lateral positions with current employers, change employers, or pursue other employment opportunities. The Proposed Rule does, however, impose some new restrictions on adjustment portability which would negatively impact some green card applicants. Our office will be submitting comments through the rule-making process to encourage DHS to produce a final version of the Rule that is better aligned with the intended purpose of AC21—most important of which is the enhancement of job stability and flexibility for high-skilled foreign workers. We encourage our clients to provide input on these important proposed regulatory changes. Please contact our office if you would like our assistance in submitting comments to the DHS. 

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