Policy Update: Final DHS Rules on H-1B Modernization

The Department of Homeland Security (DHS) has announced sweeping updates to the H-1B visa program, aimed at aligning the program with modern workforce needs while enhancing compliance and integrity measures. Effective January 17, 2025, these changes reflect the Biden Administration's commitment to refining the program for greater clarity, operational efficiency, and fairness. Below is an overview of the rule changes, their implications, and recommended actions for stakeholders.

Specialty Occupation

The new rule clarifies the concept of “specialty occupation” to ensure that H-1B positions align closely with the program’s intent of filling roles requiring highly specialized knowledge. Under the new rule, employers must demonstrate that the position requires a specific degree or its equivalent in a particular field of study “directly related” to the position’s duties. “Directly related,” according to the new rule, means “there is a logical connection between the required degree, or its equivalent, and the duties of the position.”

The final rule also states that “a position is not a specialty occupation if attainment of a general degree, without further specialization, is sufficient to qualify for the position.” Compared to the proposed rule, USCIS in the final rule deleted the references to “business administration or liberal arts” as a general degree. This indicates that, when adjudicating the petition, USCIS will not merely look to the title of the degree but will also dive into the actual course of study in a fact-dependent inquiry. 

Under the new rule, when a petitioner proves a specialty occupation by demonstrating that a degree is normally the minimum requirement for entry into the occupation or is normally required to perform job duties, the petitioner does not need to prove that the degree is always the minimum requirement. DHS specifically mentions that “normally” does not mean “always.”

U.S. Employer

The new rule also revised the definition of “United States employer” by eliminating the traditional employer-employee relationship requirement. Instead, DHS imposed the bona fide job offer requirement for the beneficiary to work, which may include telework, remote work, or other off-site work within the United States. Additionally, the new rule eliminated the legal presence in the United States as a requirement of U.S. employers. The current requirement is that the U.S. employer is amenable to service of process in the United States, and has an IRS tax identification number. 

Deference Policy

Under the new rule, DHS has formally codified its deference policy for adjudicating H-1B visa extension requests. Specifically, when adjudicating an H-1B petition involving the same parties and the same underlying facts, “adjudicators generally should defer to a prior USCIS determination on eligibility, unless a material error in the prior approval is discovered or other material change or information impacts the petitioner's, beneficiary's, or applicant's eligibility.”

Maintenance of Status 

The new rule also expressly requires that evidence of the beneficiary's maintenance of status must be included with a petition seeking an extension or amendment of stay.

H-1B CAP Exemptions  

The new rule clarifies the eligibility criteria for cap-exempt petitions. The rule expands the scope of “nonprofit research organization” and “governmental research organization” by replacing the terms “primarily engaged” and “primary mission” with “fundamental activity” to permit nonprofit entities or governmental research organizations that conduct research as a fundamental activity, but are not primarily engaged in research or where research is not a primary mission, to meet the definition of a nonprofit research entity or governmental research organization for purposes of establishing exemption from the annual statutory limit on H-1B visas.

Furthermore, the new rule recognizes that certain beneficiaries may qualify for H-1B cap exemption when they are not directly employed by a qualifying organization, but still spend at least half of their time providing essential work that supports or advances a fundamental purpose, mission, objective, or function of the qualifying organization. 

Cap-Gap Extension 

The cap-gap period refers to the period between the expiration of an F-1 student’s status and employment authorization and the start date of an individual’s H-1B petition validity. F-1 students are eligible for cap-gap extension when a cap-subject H-1B petition is timely filed with a change of status to H-1B request to USCIS. F-1 students can continue to work during the extension period until September 30 if the H-1B petition is approved. 

The new rule provides more flexibility to the cap-gap extension as it extends the duration of the F-1 cap-gap expiration from October 1 to April 1 of the relevant fiscal year to avoid disruptions in lawful status and employment authorization while a petition requesting a change of status to H-1B is pending. 

Beneficiary-Owned Entities

The new rule provides that the beneficiary owner may petition for H-1B status when the beneficiary owner has a controlling interest in the petitioning entities. The new rule defines controlling interest as the beneficiary owning more than 50 percent of the petitioner and or majority voting rights in the petitioner. The validity of the petition and the first extension will be limited to 18 months. 

DHS Site Visits

The new rule also explicitly includes the USCIS’s authority to conduct site visits to verify the validity of the H-1B petition information. Specifically, USCIS is authorized to conduct telephonic and electronic inspections of the petitioner’s or third party’s basic business information.  They may also conduct facility visits, interview the petitioner’s or third party’s officials, review records, and obtain information or interview any other individuals possessing pertinent information related to the petitioner’s and beneficiary’s eligibility. 

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The rule takes effect on January 17, 2025. To incorporate the change, DHS mandates that all H-1B petitions submit the updated version of Form I-129, Petition for a Nonimmigrant Worker, leaving no grace period for accepting the prior version.