ALP: When Should Employers Begin the Preparations of H-1B Cases for the next CIS Fiscal Year?

January 2006

My short answer to this question is: NOW.

The H-1B visa is the most commonly used work visa for professionals. Employers in the United
States routinely hire doctors, lawyers, teachers, software engineers, actuaries, plant managers,
and a host of professionals utilizing this visa.  

Qualifying for an H-1B visa is a two-step process: (1) The minimum educational requirement for position must be a Bachelor’s degree, its foreign equivalent, or its equivalent in experience; and (2) The beneficiary of the petition must have a relevant degree or a minimum of twelve years of experience in a field relevant to the position without a degree.  There are 65,000 H-1B visas available in each U.S. Citizenship and Immigration Services (CIS) fiscal year. The CIS fiscal year runs from October 1st to September 30th each year. Thus, current fiscal year 2006 (FY 2006) runs from October 1, 2005 to September 30, 2006. The H-1B cap of 65,000 numbers was reached for FY 2006, on August 10, 2005, before the fiscal year even began. 

The obvious question is how could the number of H-1B visas for FY 2006 be exhausted before the fiscal year began? There are many reasons for this, but the most compelling is that employers are allowed to begin filing petitions for new H-1Bs as early as six months in advance of the start of the fiscal year. Thus, savvy employers begin preparing their H-1B cases in February and March so that they are ready to be filed on April 1. As mentioned above, in FY 2006 the demand for H-1B visas saw them exhausted within 4 ½ months. It is important to note that even if you are able to file your H-1B petition in April, the start date of the petition must be October 1.

Thus, a strategically planned H-1B petition filed April 1, 2006 will bear a final approval period of October 1, 2006 to October 1, 2009, the three-year validity period for an initial H-1B.  Why is this important to you? Reaching the 65,000 visa H-1B Cap means that no additional H-1B visas may be obtained until the start of the new CIS fiscal year. Since the cap was reached this year on August 10, 2005, employers have been unable to utilize the H-1B program unless their petition was allowed under an exemption or exception. For employers that hire foreign nationals, this can mean an extremely long wait to bring an employee on board or to the U.S. I will offer two examples to illustrate the potential issues. 

Typically, foreign students enter the U.S. in F-1 status. This status allows them to work pursuant to practical training for one year following the completion of their studies provided they are issued an employment card. The expiration of their employment card typically marks the end of their employment authorization unless they are able to change status to another working status such as H-1B prior to its expiration. Most students graduate in May or June and their employment cards are issued from June to June or July to July. Therefore, if the student is unable to obtain an H-1B petition approval in the fiscal year in which they graduate, they may have to come off the payroll from the expiration of their employment card until H-1B visa numbers again become available on October 1. Thus, if the employee’s employment card expires in June, they could be off the payroll for up to four months. Having an employee that has worked for you for one year suddenly be removed from your workforce because they could not get a visa can be problematic for your business.  Another group of employees that are subject to the H-1B Cap are international candidates. 

International employers should note that if they have international candidates who they would like to hire in the U.S., an H-1B visa must be available in order for the employee to be brought to the U.S. Taking this year as an example, if an employer identified an overseas candidate for a job on August 19, 2005, even based upon the earliest possible filing date (April 1, 2006) the candidate would not have an H-1B petition approval and be in the U.S. to work until October 1, 2006. Thus, barring some other option for bringing the employee to the U.S. such as the L-1, TN, E, O, or P visas, an employer would have to wait 14 months to have their international candidates on site to work.  Not all H-1B visa petitions are subject to the H-1B Cap. Filing an H-1B extension is not subject to the H-1B Cap. In addition, if you would like to hire an employee already in H-1B status with another company, your petition would not be subject to the H-1B Cap. There are other exemptions to the H-1B Cap. The most notable is the 20,000 exemptions made available to petitions filed where the beneficiary has earned a U.S. master’s degree or higher.  However, these 20,000 exemptions for this fiscal year were exhausted on January 17, 2006.   Therefore, if you fail to think and act strategically, you could find yourselves on the outside looking in when needing an H-1B visa.