HR Hero Line

Alternatives to H-1B status and the H-1B cap

by Leigh Cole

H-1B nonimmigrant status allows U.S. employers to hire international workers in “specialty occupations” that require at least a bachelor’s degree or equivalent vocational preparation. Most H-1B applications are subject to an annual limit on H-1B approvals known as the H-1B cap.  

Some employers are exempt from the cap, but most H-1B applications must be filed with U.S. Citizenship and Immigration Services (USCIS) on April 1 of each year for employment to start on October 1, when the new federal fiscal year starts. The USCIS usually has to conduct a lottery to determine which applications make it in. This year, the cap was reached within five days, so it’s a good time to consider whether your organization is exempt from the H-1B cap and whether it can use more readily available immigration categories.

Some employers exempt from H-1B cap
It’s worth considering whether your organization is exempt from the H-1B cap. Exempt employers can sponsor H-1B workers at any time, and they are not required to file an application on April 1 and win a slot in the H-1B lottery. Colleges and universities, nonprofit organizations that are affiliated with a college or university in some way, nonprofit research organizations, and government research organizations are exempt from the H-1B cap.

Nonprofit organizations that are interested in H-1B sponsorship should carefully consider whether they have a working relationship with a college or university. If so, they should consult an immigration lawyer to assess whether they are exempt from the cap.

Cap isn’t an obstacle for some employees
The United States has treaties or free trade agreements with some countries to allow ready employment of nationals from those countries in the United States. Canada and Mexico are prime examples. Under the North American Free Trade Agreement (NAFTA), citizens of the United States, Canada, and Mexico have broad authorization to work in NAFTA countries in certain professions.

Also, citizens of Chile, Singapore, and Australia are eligible to work in the United States in categories that are very similar to H-1B status. The categories have simplified application processes and lack the obstacles of the annual H-1B cap. To facilitate immigration approval, employers may choose to focus recruitment efforts in those countries.

Employing Canadian or Mexican citizens under NAFTA
Particularly in border states, Trade NAFTA (TN) status is an excellent alternative to H-1B status in many cases, depending on the type of position involved. NAFTA contains a list of positions that are eligible for TN status, including accountants, computer systems analysts, engineers, a variety of scientists and medical/allied health professionals, college or university professors, and other positions provided in NAFTA Appendix 1603.D.1.

To qualify, a position must require a qualified professional in one of the listed categories, and the employee must hold the minimum qualifications provided in NAFTA Appendix 1603.D.1. The full list of positions and qualifications is available at www.nafta-sec-alena.org/default.aspx?tabid=97&ctl=sectionview&mid=1588&sid=8fd98e3e-4495-43a8-ba47-4a6955d6b5db&language=en-us#ap1603A.1

The application process for TN status is much simpler than the process for H-1B status. The employer must provide a letter confirming that the position requires an employee in a profession that is listed in NAFTA and that the employer is offering the individual temporary employment for up to three years. Canadian citizens must present the employer’s letter and their professional credentials at a U.S. port of entry to apply for admission to the United States and may be approved the same day. Citizens of Mexico must present the employer’s letter and their professional credentials as part of a TN visa application at a U.S. consular post in Mexico. It’s possible to apply for TN status or an extension by filing an I-129 nonimmigrant petition with the USCIS. In fact, that may be preferable, depending on the circumstances.

There is no annual cap on TN approvals, and the application process is simple. So employers that find it difficult to fill positions that require professionals listed in NAFTA may want to recruit in Canada or Mexico because candidates from those countries won’t need H-1B approval to start work.

TN status can be renewed indefinitely for three years at a time. However, it’s an indefinite “temporary” status, not permanent resident status. Permanent resident status (with a “green card”) is important for things such as mortgage applications because lenders generally get nervous when loan applicants have temporary immigration status.

TN status is not a route to permanent residency. If an employee with TN status wants to become a permanent resident, an employer could sponsor her for H-1B status as the first step in the process and then pursue permanent residency sponsorship. Permanent residency sponsorship often involves testing the labor market to establish that no minimally qualified U.S. candidates are available, which may be the case at any particular time. The point is, while TN status can be renewed indefinitely, it remains a temporary status. There is no assurance that an employee with TN status will be eligible to become a permanent resident of the United States.

Employing citizens of Australia
Australian citizens in specialty occupations that require at least a bachelor’s degree or equivalent vocational preparation are eligible for employment in the United States in E-3 status. E-3 status is comparable to H-1B status, but the application process is much simpler. Spouses of E-3 workers are eligible for employment authorization, while spouses of workers with H-1B or TN status are not. That can be a valuable tool for recruiting purposes.

The E-3 application process requires labor condition approval (LCA) from the U.S. Department of Labor (DOL) to confirm prevailing wage compliance. Then, the employee must apply for an E-3 visa at a U.S. consular post in Australia, Canada, or Mexico. The employee must present the LCA and a letter of support from the employer offering employment for up to two years. It’s possible to apply for E-3 status or an extension by filing an I-129 nonimmigrant petition with the USCIS, which may be preferable, depending on the circumstances.

E-3 status can be renewed indefinitely in two-year increments. Like TN status, E-3 status is not permanent resident status. Rather, it’s an indefinite temporary status. If an employee with E-3 status wants to become a permanent resident, the employer could sponsor her for H-1B status, obtain H-1B approval under the cap, and pursue permanent residency sponsorship.

Employing citizens of Chile and Singapore
Citizens of Chile and Singapore are eligible for employment in H-1B1 status (referred to as free trade agreement visas in Chile and H-1B1 in Singapore) under free trade agreements between those countries and the United States. H-1B1 status is the same as H-1B status in many respects, but it has a simpler application process and a separate cap that has never been met.

Like E-3 status, the H-1B1 application process requires an LCA from the DOL to confirm prevailing wage compliance. Then, an employee must apply for an H-1B1 visa at a U.S. consular post in Chile, Singapore, Canada, or Mexico and present the LCA and a letter of support from the employer offering temporary employment for up to 18 months. It’s possible to apply for H-1B1 status or an extension by filing an I-129 nonimmigrant petition with the USCIS. That method may be preferable, depending on the circumstances. H-1B1 status can be extended indefinitely in 18-month increments.

Like TN status and E-3 status, H-1B1 status is not permanent resident status. It’s an indefinite temporary status. If an employee with H-1B1 status wants to become a permanent resident, an employer could sponsor her for H-1B status, obtain an H-1B approval under the annual cap, and pursue permanent residency sponsorship.

No cap on transfers to a U.S. branch, parent company, or subsidiary
U.S. employers that have affiliated companies with common ownership and control outside the United States can transfer multinational executives, managers, and employees with qualifying specialized knowledge to the United States with L-1 status. There is no annual cap on the number of L-1 approvals available to citizens of any country. Companies with qualifying affiliates in the United States and abroad can hire new executives, managers, and employees who have or will have specialized knowledge to work for an affiliate abroad for at least one year to become eligible for transfer to the United States in L-1 status. L-1 transfers can be made to newly formed U.S. companies and branches even if the company or branch is established immediately before the immigration application is filed.

L-1 status requires approval of a U.S. employer’s I-129 nonimmigrant petition. Canadian citizens can present a U.S. employer’s L-1 petition at a U.S. port of entry and apply for L-1 status the same day. For citizens of all other countries, the employer must file an I-129 petition with the USCIS by mail and obtain approval in advance. Then, the employee must apply for an L-1 visa at a U.S. consular post in his home country, Canada, or Mexico. Spouses of L-1 workers are eligible for employment authorization, which can be a valuable tool for recruiting purposes.

Initially, L-1 status is available for up to three years (one year for a newly established affiliate in the United States) and can be renewed in two-year increments, up to seven years for executives and managers and five years for employees who have specialized knowledge. The idea is that L-1 personnel will either train their replacement in five to seven years or decide to settle in the United States and pursue permanent residency. L-1A status is a direct path to permanent residency for executives and managers, but employees with specialized knowledge qualify for permanent residency only if (1) they are promoted to managerial or executive positions or (2) a test of the labor market confirms that no minimally qualified U.S. candidates are available to fill the position.

Bottom line
H-1B status is of limited use to employers because of the annual cap, which requires that all H-1B applications be filed on April 1 for employment to start on October 1. However, H-1B petitions aren’t the only option. Some employers are exempt from the H-1B cap, and other employers may be able to focus their recruitment efforts in countries that have free trade agreements or treaties with the United States. Employers that have affiliates abroad can use L-1 status to transfer personnel to the United States after employees have worked for an affiliate for one year.

There are options for hard-to-fill positions. With advance planning, employers can position themselves to better utilize options available under U.S. immigration law.

Leigh Cole is an attorney with Dinse, Knapp & McAndrew, P.C. in Burlington, Vermont. She may be contacted at lcole@dinse.com.