Guide to H-1B Cap Exempt Employers

March 04th, 2008 | Category: H-1B, News

Many foreign nationals who seek to obtain H-1B status face significant difficulties due to the current structure and limited numbers of the H-1B visa program. As many of our readers are well-aware, the H-1B visa program has an annual cap which was exhausted on the first day during April 2007 and is expected to be exhausted during the first day of the filing season in April of 2008. Because of this very limited window for filing, many foreign nationals who graduate from U.S. colleges or universities every year in May find themselves unable to obtain H-1B visa shortly after graduation and while many are able to use OPT work authorization for up to one year, they still may face a gap in their employment authorization in the following H-1B filing season. Many foreign nationals, however, are not aware that a qualified institution of higher education or research non-profit organization is exempt from the H-1B cap and can sponsor a H-1B visa at any time of the year and at a lower filing cost. This memo aims to clarify which institutions qualify for the cap-exempt status. June 6, 2006, USCIS Memo The guidance on which institutions qualify for cap-exempt status comes from American Competitiveness in the Twenty-First Century Act of 2000 (AC21) and from a June 6, 2006, USCIS Memorandum (the “USCIS Memo”) by Michael Aytes, then Director of Domestic Operations at USCIS. AC21 and the USCIS Memo spell out the three categories of employers who are cap-exempt. They are 1) an institution of higher education, 2) related or affiliated to a higher education institution nonprofit entity, and 3) nonprofit research organization or a governmental research organization. Institutions of Higher Education The definition of “institution of higher education” comes from the Higher Education Act of 1965. Under the definition, an institution of higher education is one which:

• admits students who have completed secondary education;
• is licensed to provide education beyond secondary school;
• provides educational programs for which the institutions award bachelors’ degrees or provide programs of not less than 2 years that are acceptable for full credit toward bachelors’ degrees;
• is a public or nonprofit institution; and
• is accredited or has been granted pre-accreditation status by a recognized accrediting agency.

It should be noted that all of the criteria above must be met in order for an institution to qualify for a cap-exempt status for H-1B purposes. Therefore, the definition eliminates elementary or secondary schools, such as public or private schools, charter schools, etc. Affiliated or Related Nonprofit Entity The USCIS Memo states that it is sufficient that the nonprofit entity is connected to the institution of higher education through shared ownership, control or be somehow attached to the higher education institution as a member, branch or subsidiary. Nonprofit Research Organization or a Governmental Research Organization A nonprofit research organization is an organization that is primarily engaged in basic research and/or applied research. A governmental research organization is a United States Government entity whose primary mission is the performance or promotion of basic research and/or applied research. Basic research is general research to gain more comprehensive knowledge or understanding of the subject under study, without specific applications in mind. Basic research is also research that advances scientific knowledge, but does not have specific immediate commercial objectives although it may be in fields of present or potential commercial interest. It may include research and investigation in the sciences, social sciences, or humanities. Applied research is research to gain knowledge or understanding to determine the means by which a specific, recognized need may be met. Applied research includes investigations oriented to discovering new scientific knowledge that has specific commercial objectives with respect to products, processes, or services. It may include research and investigation in the sciences, social sciences, or humanities. Conclusion An employer or a foreign national who wishes to seek a cap-exempt H-1B petition should verify whether the employer qualifies for a H-1B cap exempt employer given the three categories above. In many cases such analysis will be fairly quick (e.g. recognized universities) but in some cases, especially with nonprofit organizations, the analysis may be more complicated and nuanced.