H-1B Modernization: Biden’s Final Move, Trump’s First Challenge? | Mayer Brown

The US Department of Homeland Security (DHS) published a new regulation to “modernize” the H‑1B program, a visa category commonly used by US employers to hire skilled foreign workers. The new regulation takes effect on January 17, 2025. The timing of the rule is notable, coming at the end of the Biden Administration and implemented days prior to the inauguration of President-elect Trump. The rule is intended to update and streamline the H‑1B regulatory framework to align with contemporary workforce needs. Changes are grouped into three categories: (1) Modernization and Efficiencies; (2) Benefits and Flexibilities; and (3) Program Integrity.

A revised Form I-129 (Petition for Nonimmigrant Worker)—a form required for H-1B filings—also will be issued on January 17, 2025.

BACKGROUND

About the H-1B Visa. The H-1B nonimmigrant visa category allows US organizations temporarily to employ foreign workers in “specialty occupations”: positions requiring a bachelor’s degree or higher (or its equivalent) in a specific specialty. It is predominantly used for jobs in technology and software development, engineering, healthcare, education and academia, and business and financial services.

Congress statutorily limited the number of new H-1B visas that may be approved each fiscal year. In most years, demand for H-1B visas exceeds the available quota, making it a coveted visa category.

Impact of the Rulemaking. The rule holds both strategic and political importance. By enacting the rule, the Biden Administration intends to cement its legacy of reshaping the H-1B program—and, due to administrative rulemaking requirements, create procedural barriers for the Trump Administration if it wants to make changes to the terms of the H-1B rule.

More specifically, a president can easily rescind, modify, or replace executive orders and administrative policies without requiring public input or a lengthy procedural process. However, regulations, such as the H-1B Modernization Rule, are formal rules created by federal agencies that have the force of law and require agencies to go through a formal rulemaking process to make changes.

The rulemaking process typically takes at least a few months and includes drafting a proposed rule; publishing it in the Federal Register for the public to review and provide comments; reviewing the comments; submitting the rule for an assessment by the Office of Management and Budget; and, finally, issuing the final rule.

Alternatively, Congress may take action under the Congressional Review Act (CRA) to overturn the rule by passing a joint resolution of disapproval that is signed by the president.

Both methods are time-sensitive and procedurally complex for the Trump Administration to pursue, with the CRA offering a more expedient but potentially politically challenging route.

SUMMARY OF CHANGES IMPACTING H-1B CATEGORY

The following is a summary of the changes by category.

A. Modernization and Flexibilities

Codified Agency Deference: The new rule codifies existing internal policy stating that US Citizenship and Immigration Services (USCIS), the agency responsible for adjudicating immigration benefits in the United States, will defer to its prior determination of eligibility when adjudicating petitions involving the same parties and underlying facts. For example, USCIS would be expected to give deference to a prior H-1B approval when reviewing an extension petition filed by the same petitioner for the same H-1B worker and involving the same employment details. However, USCIS codifies that it will not give deference to a prior approval if there is a material error involved with the prior approval; change in circumstances or eligibility requirements; or new information that adversely impacts eligibility.

Specialty Occupation Definition: Changes include clarifications that an H-1B beneficiary’s degree or equivalent must be “directly related” to the position as part of the regulatory definition of specialty occupation and the related criteria. USCIS now defines “directly related” as having “a logical connection.” USCIS added specific language stating that a position is not a specialty occupation if attaining a general degree is sufficient to qualify for the position and that a range of degrees is acceptable. The changes also include an explicit statement that “normally” does not mean “always,” which pertains to the degree requirement in the first prong of the regulatory specialty occupation definition.¹

New “Maintenance of Status” Requirement: The rule adds a new requirement for a current petitioning employer to demonstrate the H-1B worker maintained immigration status with prior employers. Employers are required to submit this evidence when requesting an extension of stay or amended petition for the worker. USCIS provides examples of the type of evidence that may help a petitioner demonstrate that the H-1B worker’s past employment was consistent with the prior approved petition (as opposed to there being a material change in the beneficiary’s employment).

B. BENEFITS AND FLEXIBILITIES

Cap Exempt Requirements: The rule clarifies and simplifies the requirements for those seeking H-1B cap exemption pursuant to employment at a qualifying institution, organization, or entity.

Flexible Start Dates: If USCIS adjudicates an H-1B petition and deems it otherwise approvable after the initially requested validity period, or the last day for which eligibility has been established, USCIS may issue a Request for Evidence (RFE) asking whether the petitioner wants to update the dates of intended employment. This means USCIS will permit a cap-subject petition start date of October 1 or later so long as the requested petition start date does not exceed six months beyond the filing date of the petition. In other words, employment may be authorized for an additional six months, from October 1 to April 1 of the following calendar year, which will help to address petitions that have intended work validity dates that expire before USCIS adjudicates the petition.

F-1 to H-1B Auto Extension: USCIS now codifies the automatic “cap-gap” extension for a student’s status and post-completion Optional Practical Training (OPT) work authorization to avoid lapses while the H-1B petition is in process.

C. PROGRAM INTEGRITY

Bona Fide Employment Requirements: The modernized rule brings back USCIS’s authority to request contracts, work orders, or other evidence ‘‘showing the bona fide nature of the beneficiary’s position.’’ This is not intended to be a substantive change but to clarify what DHS means when it uses the term ‘‘non-speculative.’’ USCIS will review such evidence to determine if the position is bona fide but codifies that this does not mean petitioners or end-clients must provide evidence of the beneficiary’s day-to-day work assignments for the duration of the requested validity period. The new rule clarifies that the petitioner must establish, at the time of filing, that it has a bona fide position in a specialty occupation available for the beneficiary as of the start date of the validity period requested on the petition, the beneficiary will perform the work, and the work will be performed within the United States. Notably, the regulation explicitly allows for telework, remote work, or other off-site work within the United States.

Third-Party Placement Compliance: Under the modernized rule, USCIS now decides whether a consulting firm is “staffing” visa beneficiaries to third parties or merely “providing their services” to a client. In instances where the beneficiary is “staffed” to a third party—i.e., they become part of that third party’s organizational hierarchy by filling a position in that hierarchy—USCIS will consider the third party’s degree requirements as determinative of whether the position is a specialty occupation. In other words, when beneficiaries are “staffed” to third parties, USCIS now considers the third party to be more knowledgeable as to the actual degree requirements for the beneficiary’s work than the petitioner.

Expanded Site Visit Authority: The modernized rule enhances USCIS’s authority at site visits. Under the rule, if USCIS is not able to verify facts, it may deny or revoke the approval of an H-1B petition. This includes when the petitioner or third party fails or refuses to cooperate with a site visit from officers from USCIS’ Fraud Detection & National Security (FDNS).

USCIS Authority to Review the LCA: The modernized rule codifies USCIS’s authority and obligation to determine whether a Labor Condition Application (the “LCA,” which is filed and certified by the US Department of Labor) properly supports and corresponds with the H-1B petition. This is not a change that departs from USCIS’s current practice.

Entrepreneurs with Ownership Interest: The modernized rule eliminates the common law employer-employee relationship definition, which means there are fewer impediments for beneficiary-owned employers. The rule now allows entrepreneurs to obtain H-1B visas through petitions filed by their own start-ups and further allows the beneficiaries to perform some non-specialty occupation work so long as the work is directly related to owning and directing the business. DHS wishes to signal that entrepreneurs with more than 50% ownership interest in the petitioning employer can seek H-1B visas. This change, however, comes with an 18-month approval validity period for the initial filing and first extension, which is half of the otherwise maximum approval period per petition.

CONCLUSION

The H-1B Modernization Rule requires strategic adjustment to workforce planning and compliance practices. While DHS aims to clarify ambiguous definitions, streamline procedures, and provide additional flexibilities for organizations to retain or rehire key talent, the rule also introduces heightened compliance obligations that could impact employer’s operations, including enhanced documentation requirements and increased scrutiny for offsite placements at customer sites.

For employers, it is critical to take a proactive approach, ensuring internal policies align with the new requirements, leveraging legal expertise to mitigate risks, and adapting strategically in a changing regulatory environment—particularly because the interpretation of the rule, as well as its longevity under the Trump Administration, remains to be seen.

¹ An H-1B petition must meet the statutory and regulatory requirements, which include demonstrating that the position qualifies as a specialty occupation under one of four prongs. Two of these prongs use the term “normally” (i.e., the degree requirement is “normally the minimum requirement for entry into the particular position” and “the employer normally requires a degree or its equivalent for the position.” 8 C.F.R. § 214.2(h)(4)(iii)(A)(1) and (3)).

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