The U.S. Department of Homeland Security (DHS) has released a new proposed rule that aims to make it easier for founders to obtain H-1B visas, specifically for those in startup businesses. While the proposed rule does not increase the number of H-1B visas available each year, it recognizes the value of retaining startup founders in the U.S. and the potential benefits they can bring, such as job creation and innovation.
Key Takeaway
The proposed rule by the U.S. Department of Homeland Security aims to make it easier for startup founders to qualify for H-1B visas, recognizing the benefits they can bring to the U.S. in terms of job creation and innovation.
Greater flexibility for founders
The proposed rule provides greater flexibility for startup founders in qualifying for H-1B visas. In the past, founders often faced challenges in demonstrating an employer-employee relationship, which required them to reduce their equity stake or give up control of their companies. The proposed rule clarifies that founders who hold more than half of the equity in their startups can still qualify for H-1B visas without compromising their ownership or control. Startup founders only need to submit the necessary documentation, such as a Labor Condition Application approved by the U.S. Department of Labor and an employment agreement or offer letter from their startup.
Greater flexibility for students
The proposed rule also offers greater flexibility for international students on F-1 visas who are working under optional practical training (OPT) or STEM OPT work authorization. If selected in the H-1B lottery, these students can continue living and working in the U.S. under a cap-gap extension. The proposed rule extends the cap-gap extension through April 1, providing an additional six months of employment authorization to avoid disruption. This change benefits both students and employers, as it eliminates the need for employers to pay for premium processing when filing an H-1B petition on behalf of an F-1 student.
Streamlined processes
The proposed rule also aims to streamline processes and clarify certain policies. It codifies the existing policy of deferring to prior decisions when evaluating applications for extension of status, ensuring consistency. It also clarifies that a specialty occupation position may allow a range of degree fields, as long as there is a direct relationship between the required degree field and the duties of the position. Additionally, the proposed rule addresses the issue of specialty occupations not always requiring a bachelor’s degree, emphasizing that a specialty occupation “normally” requires at least a bachelor’s degree, not “always.”
More cap-exempt employers
Under the current H-1B cap, some employers qualify for exemption and can petition for an H-1B visa at any time without going through the lottery. These cap-exempt employers include institutions of higher education, nonprofit research organizations, and governmental research organizations. The proposed rule expands the definition of nonprofit research and governmental research organizations, potentially increasing the number of eligible petitioners who can benefit from the cap exemption.
Leveled playing field
The proposed rule seeks to level the playing field in the H-1B lottery system. Currently, some H-1B candidates have multiple employers registering them for the lottery, increasing their chances of selection. However, multiple registrations from the same employer for the same candidate are automatically disqualified. The proposed rule would allow H-1B candidates to be registered by different employers, but each unique candidate would only be entered into the lottery once. If selected, the candidate would then have the choice of which employer to work for.
Potential downsides
While the proposed rule offers several benefits, there are potential downsides as well. The proposed rule includes a narrower definition of what qualifies as an H-1B specialty occupation, requiring a U.S. bachelor’s degree or higher in a directly related specific specialty. This change aligns with the skills-based hiring approach of most modern employers, but it may restrict some candidates. Additionally, the proposed rule limits the initial H-1B approval and the first renewal period for startup founders to 18 months each, after which the H-1B would be renewable for another three years. This differs from the current rule, which allows for an initial three-year period and subsequent three-year renewals, regardless of whether the visa holder is a startup founder.
The proposed rule is currently open for comment until December 22, 2023. Those interested, including founders and employers, are encouraged to provide feedback on the proposed changes. The DHS will review the comments and make any necessary revisions before issuing a final rule. It is hoped that the new rule will be in effect in time for the H-1B lottery in March, which will determine the beneficiaries for fiscal year 2025 starting from October 1, 2024.
In conclusion, the proposed rule aims to make it easier for startup founders to obtain H-1B visas, recognizing their value in terms of job creation and innovation. The rule offers greater flexibility for founders, students, and employers, while also streamlining processes and leveling the playing field in the H-1B lottery system. However, there are potential downsides to consider, such as a narrower definition of specialty occupations and shorter approval periods for startup founders. It is important for interested individuals to provide feedback during the comment period to ensure their voices are heard.
