On Jan 21 2015 by Lisa T. Felix

No Reform Means More of the Same for Annual H-1B Visa Cycle

The positive news Jan. 9 of the declining U.S. unemployment rate (5.6 percent, a six-year low, according to the Department of Labor) does have one discouraging prognostication for employers hoping to hire specialty occupation workers on H-1B visas this year.

Strong economic growth, coupled with a lack of any meaningful business immigration reform, suggests that the perpetually oversubscribed H-1B quota will be exhausted for the next federal fiscal year (FY 2016) within the first days of the filing period, which begins April 1. Private-sector employers have begun the annual petition preparation cycle with the expectation that they will have less than a 50 percent chance of being able to go through with their desired H-1B hires, even when they file on the first available date.

The H-1B visa is used to bring experienced professionals from abroad, and to hire international students from our local universities, most often in the science, technology, engineering and mathematics (STEM) fields that are vital for maintaining competitiveness in the world economy. The H-1B visa is an employer-sponsored visa for “specialty occupation” jobs—defined as positions that normally require a minimum of a bachelor’s degree or higher in a specific field. This is the visa for professionals—software developers, industrial engineers, financial analysts and pharmaceutical researchers, among others. While foreign-owned and multinational companies may have other visa options they can use, the H-1B is the only visa available to American companies that have no operations outside the United States.

An annual quota of 65,000 new H-1B nonimmigrants per year was established more than 20 years ago, in 1990. One aim of this cap was to protect the U.S. workforce. And, at that time, the 65,000 quota was sufficient to meet demand. However, in the second half of the 1990s, the need for H-1B workers in occupations such as information technology, teaching, medicine, engineering, finance and marketing far exceeded the annual 65,000 quota. This resulted in employers being unable to hire foreign national workers to meet the huge demand in these and other specialty professions during the last several months of the government fiscal year. American business and competitiveness suffered.

Responding to this serious problem, Congress raised the H-1B quota twice, finally setting it at 195,000 per year for the fiscal years ending Sept. 30, 2002, and 2003. Congress also exempted from the count H-1B workers employed by universities and related institutions. However, the threefold increase in the H-1B quota was temporary, with its sunset effective Oct. 1, 2003.

In 2004, recognizing that graduates of U.S. master’s degree programs are valuable to the nation’s economy, Congress passed the H-1B Visa Reform Act. This added 20,000 H-1B visas for foreign-born individuals who have graduated from U.S. universities with a master’s degree or higher.

Despite this measure, the annual quota is still inadequate to ensure that employers can hire the specialized employees they require, as needed throughout the year. Demand has exceeded supply, and the cap has been exhausted every year since 2004, even during the recent major economic downturn. When the cap is reached, employers essentially face a hiring block until the start of the next federal fiscal year if the employee with the specific skill or experience they need happens to be foreign. Every year, the cap adds to the uncertainty U.S. companies face when trying to keep up, plan for the future, and remain agile and innovative in a fragile economic environment.

Last year, the economy was weaker—and unemployment was a full percentage point higher—than it is today. Still, twice as many H-1B petitions were filed with the U.S. Citizenship and Immigration Services (USCIS) during the first available filing period (April 1-7, 2014) than could be accommodated for the entire year. The 172,500 petitions (each for a specific employer-sponsored job in a specialty occupation) were subjected to a random “lottery” to determine which would be selected for processing—and all this for H-1B jobs that had to wait until the FY 2015 began Oct. 1, 2014, to start. That’s a high level of uncertainty for a business trying to stay competitive or grow in a fragile economy. This year promises more of the same.

While leaving the future of our tech economy and other American innovation and commerce to random chance may not seem to be the best immigration policy, legislative action to increase the H-1B cap appears unlikely in the near future. Despite the annual frustration and zealous advocacy on the part of employers and reputable economic researchers who unfailingly confirm the need for more highly skilled immigrants, Congress has turned a deaf ear when it comes to increasing numbers to meet demand. A comprehensive immigration reform bill drafted—and rejected—last year included a host of changes aimed at the H-1B specialty occupation cap.

But what about the Immigration Accountability Executive Action announced by President Obama on Nov. 20, 2014? That package of immigration reforms did touch upon certain business immigration reforms, including expanding options for investors and entrepreneurs, and lengthening the student training period available to recent foreign graduates of U.S. colleges and universities. However, neither of these provisions offers any direct relief to address the inadequacy of the H-1B cap faced by thousands of disappointed U.S. employers every year. Furthermore, at this time, and as with the rest of the Immigration Accountability Executive Action, neither of these provisions has any actual established implementation protocol. Nor is any likely to be in place by the first week of April, when the H-1B filing season opens—and, we expect, slams right back shut again until FY 2017.

Without legislative changes to the H-1B quota, U.S. employers are forced to go without the employees they wish to hire. Or, they can relocate the work abroad. Creative immigration solutions may also exist to secure permission for the employer to legally hire the individuals they need for a given position.

Other visa categories with current availability or no numerical limitations can be considered pursuant to specific eligibility criteria, such as country of origin or proposed activity in the United States. For Canadian or Mexican nationals, the TN visa allows for three-year admission of professionals in select occupations specified in the North American Free Trade Agreement. The E-3 professional visa is available to citizens of Australia, and 6,800 H-1B1 professional visas are available annually to citizens of Chile and Singapore. The E-1 treaty trader visa and the E-2 treaty investor visa may also be available to nationals of countries that have qualifying international commerce treaties if they will be employed by a company that is more than 50 percent owned by citizens of their qualifying treaty country. The O-1 extraordinary ability visa may be an option for aliens who can prove that they have achieved a level of outstanding accomplishments or are renowned in their fields. The H-3 visa may be available for positions that fall within the parameters of a corporate training program. The L-1 visa may be awarded for executive, managerial, or specialized knowledge work in the United States when the foreign transferee has recently worked for at least one year at a foreign entity related to the U.S. company (parent, subsidiary, affiliate, etc.). In addition to the above, other options may also present themselves in particular situations.

In some scenarios, no viable option exists for immediate employment. That does not mean, however, that there are no long-term viable visa options. Immigration counsel can assist in long-term planning and suggest options to enable the employee to perform services for the company in the interim, perhaps while physically outside of the United States, that may lead to viable visa options to work in the United States in the future.

For those optimists, and fatalists alike, who do intend to file H-1B petitions this year despite the disheartening odds, it is imperative to file on April 1, or within the first five business days of the filing season. So it is time for U.S. employers to look into their future, anticipate hiring needs for specialty occupations into 2016, and begin preparations. Do you want to hire an individual who is not in H-1B status already? Are you hiring an individual who is already in H-1B status, but is currently employed with a college/university or a nonprofit government research organization (these situations require a new H-1B number)? Is your current employee in F-1 student status? Is your employee in another nonimmigrant status and may want to seek legal permanent residence in the United States? While analyzing the next year’s needs and preparing for April 1 filings, employers and immigration counsel will keep one eye trained on a Congress challenged by the president to pass an immigration bill that we hope will change the H-1B equation.