What Trump’s Regulatory “To-Do” List Will Mean for High-Skilled Foreign Workers and Their Employers in 2018: Elimination of H-4 Work Authorization; Changes to H-1B Cap Filing Procedures; and More Restrictive Standards for H-1B Petitions

December 19, 2017

On Thursday, December 14th, the Trump Administration published its Fall 2017 regulatory agenda for the coming year. The immigration-related rules that will be proposed by the United States Citizenship and Immigration Services (USCIS) are likely to have a largely unfavorable impact on employers of high-skilled foreign workers, and the foreign workers themselves. Among the regulatory actions that are expected to be introduced over the course of 2018, the Administration will seek to modify the legal standard for H-1B classification to make sponsorship under this category more difficult. The Administration also aims to rescind two important rules introduced under the Obama Administration: a rule that allows certain spouses of H-1B workers (H-4s) to apply for work authorization, and the International Entrepreneur Rule (IER), which would have allowed certain qualified foreign entrepreneurs to obtain work authorization to start businesses in the United States. Among the possible good news, the Administration indicates that it will improve the process for submitting H-1B petitions in the annual H-1B cap lottery. We provide a summary and brief analysis of key points from the Administration’s regulatory agenda below.

Eliminating Work Authorization for Spouses of H-1B Workers.

The USCIS announced that it will propose regulations to rescind an Obama-era rule that provides work authorization for certain H-4 dependent spouses of H-1B nonimmigrants (“H-4 work authorization rule”). The Obama Administration introduced this rule in February 2015 to allow H-4 spouses who were being sponsored as derivatives of their spouses’ green card process to apply for work authorization, where the green card process was being delayed due to quota backlogs, and/or lengthy government processing times. Because most of these spouses would ultimately obtain work authorization anyway, the rule essentially sped up the process of allowing them to start work. The USCIS is planning on introducing regulations to rescind the H-4 work authorization program in February 2018.

Analysis

The rescission of the H-4 work authorization rule is not unexpected. Trump’s “Buy American, Hire American” Executive Order issued earlier this year clearly signaled that the Administration would rollback regulatory immigration benefits introduced by the Obama Administration. Although the USCIS indicates that it will publish the rescission rule in February 2018, it is unclear from Thursday’s announcement when the rescission will take effect, or how it will affect foreign nationals who are currently working in H-4 status. The rule will likely have to go through the regulatory notice and comment process before coming into effect, which usually takes several months. It is also likely that the rule would not cut short periods of work authorization that have already been granted, prior to the rule taking effect.

Given the likelihood that the H-4 work authorization program will be eliminated in the coming year, we strongly encourage employers to consider alternative forms of work authorization for employees currenting working in H-4 status. It may be advisable in some cases to file an H-1B petition for such workers during the upcoming H-1B cap filing season. Note however that not all foreign nationals working pursuant to H-4 work authorization will be eligible for H-1B classification. Furthermore, the likelihood of being selected in the annual H-1B cap lottery based on results over the last five years will likely only be 30%-40% for workers who do not have a U.S. Master’s or higher degree. 

We will be reaching out to our clients to discuss contingency planning for employees who we know are currently working in H-4 status. However, we may not be aware of all employees in H-4 status, and we encourage our clients to contact our office.  

Rescission of International Entrepreneur Rule (IER)

USCIS will also introduce proposed regulations to rescind the International Entrepreneur Rule which was published in the Federal Register on January 17, 2017. The final rule established a program to grant work authorization to certain inventors, researchers, and entrepreneurs who had established a U.S. start-up entity, and who had been awarded substantial U.S. investor financing or otherwise hold the promise of innovation and job creation through the development of new technologies or the pursuit of cutting edge research. The USCIS is expected to introduce the proposed regulations to rescind the IER program before the end of this year.

Analysis

The rescission of the IER program is also not unexpected. The IER final rule was set to take effect on July 17, 2017, six months after it was published in the Federal Register during the waning days of the Obama administration. The Trump Administration introduced an interim rule to postpone the effective date by another six months, a few days before it was to take effect in July. The interim rule clearly signaled the Trump Administration’s intention to ultimately rescind the IER rule. A Federal court recently nullified the interim rule, and, consequently, the USCIS has now acknowledged that it will accept applications under IER program. However, given that the IER program would afford the USCIS' broad "case-by-case" discretion adjudicating these applications, and the Administration’s clear intention to eliminate the program in any case, the IER will probably not provide a viable, long-term means for foreign entrepreneurs to obtain work authorization.

Changes to H-1B Cap Lottery Process 

The USCIS also announced its intention to propose rules to improve the H-1B cap petitioning process. One such rule mentioned in the agenda is the creation of an electronic pre-registration program for H-1B petitions subject to annual numerical limitations (“the cap”) to streamline the H-1B numerical limitation allocation process (“the cap lottery”). According to the announcement, the Department of Homeland Security (DHS) “anticipates that implementing a pre-registration process could benefit the regulated public by potentially reducing the cost and time involved in petitioning for H-1B nonimmigrants, through an up-front cap selection process where only those employers who have obtained a cap number would be required to submit the entire Petition for a Nonimmigrant Worker, Form I-129.”

Analysis

While the Trump Administration’s regulatory agenda for immigration is generally unwelcome news for employers of foreign workers, proposals to change the H-1B cap lottery selection process to a pre-filing electronic registration process, may provide some modest good news for H-1B employers. The current cap lottery process, whereby H-1B petitions are selected for the lottery in the USCIS mailrooms, lacks transparency, and creates a long period of uncertainty while employers and their would-be H-1B workers wait for the clerks to open and process hundreds of thousands of petitions received during the first week of April.

Although the USCIS has indicated February 2018 as its target for introducing the proposed changes to the lottery selection process, it is unclear whether the change will come into effect in time for the FY2019 cap filing season, which starts on April 1, 2018. This will likely depend on whether the rule is deemed exempt from the “notice and comment” procedure required for most rulemaking. This procedure usually take several months to complete. We will of course be monitoring this situation closely, and notify our clients of any changes to the cap filing procedures.

Changes to the Definition of “Specialty Occupation” and “Employer-Employee Relationship” for H-1B Workers

The USCIS also announced that it would propose regulations that would “revise the definition of specialty occupation to increase focus on truly obtaining the best and brightest foreign nationals via the H-1B program,” and also would “revise the definition of employment and employer-employee relationship to help better protect U.S. workers and wages.” The USCIS has indicated October 2018 as its target for publishing these regulations.

Analysis

The USCIS proposal to change the definition of specialty occupation will likely have a negative impact on most employers of H-1B workers. As has been the case with many of the Trump Administration’s immigration policy changes, the promulgation of this proposed rule will very likely lead to extensive litigation. The term “specialty occupation” is defined by statute, and cannot be changed by administrative rulemaking. Under the Administrative Procedures Act, such rulemaking is limited to interpreting the statutory definition.

Under the current Administration, the USCIS has already sought to limit the definition of specialty occupation through internal policy memoranda. The so-called “computer programmer” memo has been used to question petitions filed for traditional software engineering petitions, and the rate of requests for evidence (RFEs) raising the specialty occupation issue has increased dramatically during the past year.

It is unclear how the USCIS plans to revise the definition of employer-employee relationship, which is already interpreted restrictively by the USCIS. Current regulations make it very difficult for employees who own a large stake in the sponsoring employer to qualify for H-1B classification. These regulations also make it difficult to place H-1B workers at other companies. The likely target of the USCIS proposal to further restrict the definition of employer-employee relationship are software consulting companies, which the Trump Administration claims undercut opportunities for U.S. software engineers. The repercussions of such definitional changes, however, will likely impact many traditional employers as well.

The Trump Administration’s Fall 2017 regulatory plan provides little insight into the specific details of the proposed rules or how they will be implemented, other than announcing the Administration’s plan to review and rescind certain regulations under its immigration policy and the President’s Executive Orders. We will continue to monitor the USCIS regulatory actions and will provide updates accordingly.   

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