H-1B Cap Exemptions

Cap-Exempt Aliens. Certain aliens are exempt from the H-1B quota. Whether the alien is located abroad or in the U.S. in a nonimmigrant status other than H-1B, if he/she was the beneficiary of an approved cap-subject H-1B petition with an effective date within the preceding six years, the individual may be cap exempt. See 8 C.F.R. §214.2(h)(13)(iii). This principle seems to apply even if the alien beneficiary was abroad at the time the previous H-1B petition was approved and never entered the U.S. in H-1B status or even applied for an H-1B visa stamp.

Cap-Exempt Employers. Certain types of employers are exempt from the H-1B quota and may file petitions even though the quota has been reached. Exempt employers include higher education institutions, nonprofit organizations related or affiliated with higher education institutions (such as hospitals and research facilities), nonprofit research organizations engaged primarily in basic or applied research, and governmental research organizations.

Simply because an employer may be a nonprofit organization does not mean it is cap-exempt. It must be a nonprofit properly related or affiliated with a higher education institution, or a qualifying nonprofit research organization.

Private employers (“third-party petitioners”) may petition under INA §214(g)(5)(A) if the employee will physically work at the institution of higher education or related or affiliated nonprofit and there is “nexus” between the work performed and the normal purpose of the nonprofit. See Aytes, Assoc. Dir. Domestic Operations, USCIS, HQPRD 70/23.12 (June 6, 2006), published on AILA InfoNet at Doc. No. 06060861.

In order to prove there is a logical nexus, a third-party petitioner must provide evidence to show how the majority of the job duties of the foreign national will further the normal, primary, or essential purpose, mission, objective, or function of the qualifying institution. Such evidence should include a list of job duties with respective time percentage allocations, demonstrating that a majority of the duties will occur at the institution in furtherance of the identified and institutional mission. The third-party petitioner also may submit its contract with the qualifying institution that outlines the terms and conditions of the employment agreement, emphasizing how the job duties are related to the overall objective of the organization.

Although the June 6, 2006 Aytes memo made more H-1B workers potentially eligible for cap exemptions by virtue of employment “at” an institution of higher education, it applied a narrow definition of what kinds of “related or affiliated” nonprofits may claim the exemption. To qualify as an affiliated or related nonprofit entity, the entity must be: (1) connected or associated with an institution of higher education, through shared ownership or control by the same board or federation; (2) operated by an institution of higher education; or (3) attached to an institution of higher education as a member, branch, cooperative, or subsidiary. See 8 C.F.R. §214.2(h)(19)(iii)(B). By adopting such a strict definition requiring proof of shared ownership or control by the same board or federation, or a member, branch, cooperative, or subsidiary of an institution of higher education, USCIS substantially limited the nonprofit organizations to which this cap exemption is available.

In 2010-2011, USCIS began denying cap exemptions for third-party petitioners that had previously been approved. This created great upheaval in the academic community. In March 2011, USCIS retrenched and announced that it will give “deference to prior determinations made since June 6, 2006, that a non-profit entity is related to or affiliated with an institution of higher education absent any significant change in circumstances or clear error” until it revisits its position on cap-exemption under this category. Applicants should provide proof of previous determinations. See USCIS, H-1B Cap Exemptions Based on Relation or Affiliation (Mar. 18, 2011), published on AILA InfoNet at Doc. No. 11031760; AFM 31.3(g); Policy Memo, USCIS, Additional Guidance to the Field on Giving Deference to Prior Determinations of H-1B Cap Exemption Based on Affiliation, PM 602-0037 (Apr. 28, 2011), published on AILA InfoNet at Doc. No. 11050130.

Moving from Cap-Exempt to Cap-Subject Employment. The same legislation that exempted certain employers from the H-1B cap subjects the H-1B employee to the annual cap if the employee should leave that "cap-exempt" employer for a private-sector, "cap-subject” employer. The alien must maintain employment with the exempt employer or reapply for H-1B status subject to that year’s fiscal H-1B cap.