Posted Apr 27, 2002; updated Oct 10, 2007
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The laws regarding the H1B program have changed and evolved over the years as the result of several legislative and regulatory enactments, including: the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA), U.S. Department of Labor's (DOL's) interim final regulations pertaining to certain aspects of ACWIA, the American Competitiveness in the 21st Century Act (AC21), enacted October 17, 2000, the H1B Visa Reform Act of 2004, and the DOL's amendments to regulations dated December 5, 2005. In addition to legislative changes, the USCIS interoffice memoranda have provided additional guidance and interpretations of legislation.
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Number of H1Bs Available Each Fiscal Year
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The current annual cap on H1Bs is 65,000. Out of the 65,000 cap numbers, 6,800 are set aside for H1B1s for nationals of Singapore and Chile. Any H1B1 numbers out of the set-aside for Singapore and Chile that are not used are applied to the general H1B quota. In addition to the 65,000 H1B visas, another 20,000 cap exemptions are available for those who have masters' or higher degrees from U.S. universities. If the H1B cap is met for a particular fiscal year, the earliest a company can bring an employee on board in H1B status is in the next fiscal year. Note that the government's fiscal year begins on October 1st and ends on September 30th. For example, the 2008 fiscal year began on October 1st, 2007. The 2008 H1B cap, however, was met on April 2, 2007, the very first day petitions could be filed for the 2008 fiscal year. At this time, it is not atypical for the cap to be met very early, as in this case.
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H1B workers in the following situations are not subject to the annual H1B quota / cap:

• one already in H1B status filing for an extension, amendment to the existing terms of employment, or a change of employers

• a physician who obtained a Conrad 30 waiver of the J-1 two-year home residency requirement or other Interested Government Agency waiver, based upon work in an underserved area

• one who has been in H status at any time in the past, who did not use the entire 6 years or who is eligible for an extension beyond the 6 years based on a labor certification (LC) or an approved I-140 Petition, even if s/he is not in the U.S. at the time of filing the H petition

• one employed at a university, affiliated nonprofit entity, nonprofit research organization, or government research organization, or who is placed at one of these entities

Time an Individual Can be in H1B Status in the U.S.
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Generally, an H1B worker may be in H1B status in the U.S. for a total of 6 years. Any time spent outside of the U.S. during the validity period of an H1B approval notice may be recaptured to the total of 6 years in the U.S. in H1B status. To become eligible for another full 6-year period, one must remain outside of the U.S. for an entire year.
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Options for those Outside the U.S. One Year or More after Holding H1B Status in the U.S.
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Prior to December 2006, an individual who had remained outside of the U.S. for more than one year became subject to the annual cap, even if s/he did not use all of the 6 years prior to leaving the U.S. According to the December 2006 Memo issued by the USCIS, an individual who, was previously in H1B status and did not exhaust the permitted 6 years prior to his/her tenure outside of the U.S. for a year or more, may choose either one of the following options:
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1. opt for another 6 years and be counted against the annual cap for that fiscal year
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2. opt to use the balance of the 6 years remaining from her/his previous period in H1B status and not be counted against the annual cap
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Extensions Beyond the Six Years
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Under certain circumstances, extensions beyond the 6-year limitation are possible. Such circumstances are:

• If an Application for Alien Labor Certification was filed on behalf of the employee 365 days prior to the end of the 6 years, H1B extensions may be obtained in 1 year increments.

• If an I-140 petition was approved on behalf of the employee prior to the expiration of the 6 years, extensions may be obtained in 3-year increments if, at the time of requesting the extension, no Permanent Residency Visas are available for the I-140 Priority Date, according to the Department of State's Visa Bulletin for that month, specifically. There is no limit to the number of these 1- or 3-year extensions, as long as there is a proper basis for requesting the extension/s.

Extension Beyond the Six Years May be Obtained Even When Individual Not Currently in H1B Status and/or not in the U.S.
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According to a memorandum issued by USCIS on December 5, 2006, an H1B petition requesting an extension beyond the 6-year maximum may be filed on behalf of a beneficiary, even if the beneficiary is not in H1B status at the time of filing. The beneficiary of a 7th-year extension petition may be in another nonimmigrant status or may even be outside of the U.S.
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Decoupling H1B and H-4 Periods of Stay in the U.S.
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Prior to December 5, 2006, the maximum allowable total time of 6 years in H status applied to dependents in H-4 status, as well. That is, time in H-1 counted toward the total 6 years allowed in H-4 and visa versa. For example, a spouse in H-4 status for 3 years, who wished to change to H1B status, was eligible for H1B status for the duration of only 3 more years. A December 5, 2006 USCIS interoffice memorandum, known as the Decoupling Memo, provides that time spent in H-4 status no longer be counted against the total 6 years permitted in H1B status. Thus, an individual who may have spent 6 years in H-4 status as the spouse or child of an H1B status holder is eligible for the full 6 years in H1B status.
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Extension of H1B Status
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Prior to October 17, 2000, an H1B beneficiary was not allowed to work for a different employer until Legacy INS had approved the H1B petition. (An H1B beneficiary, however, was able to continue working for the same employer before the approval of the H1B petition for extension for 240 days after the expiration of his or her current status noted on Form I-94. This rule was not changed by AC21). Under AC21, one who is already in H1B status is allowed to accept a new offer of employment and begin working for the new employer immediately upon filing the new H1B petition, as long as s/he:

• has been lawfully admitted in the U.S.

• filed a non-frivolous H1B or other nonimmigrant petition, which is pending for new employment; and

• was never employed without authorization in the U.S. before the filing of the H1B petition

This clause is retroactive and applies to all H1B petitions that were filed before, on, or after October 17, 2000, the date of the enactment of AC21. If the H1B petition is denied, however, one can no longer work for the new petitioning employer. Such a situation may create practical problems for the employee, whose prior employer may have terminated his/her previous job or revoked the approved H1B petition associated with that position.
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LCA under the H1B Program
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Before filing the H1B Petition with the USCIS, the following conditions must be met:
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1. The employer must first file a Labor Condition Application (LCA) with the U.S. Department of Labor. The employer must attest to certain wage and working conditions. Additional attestations are required of employers who are H1B-dependent. [See below for more details on H1B dependency.]
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2. The employer must give notice of the proposed action to the relevant collective bargaining unit or post a notice in a conspicuous location so other employees can see it.
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3. The employer must pay the return transportation costs if the employee is dismissed.
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4. The employer must keep certain records.
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The LCA must include all of the intended employment sites where the beneficiary will be placed.
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New Labor Condition Applications must be filed for any sites not anticipated during the initial filing, if the employee will be placed at the site for 90 or more days within a one-year period. A new I-129 petition is not required if the only change in the employment is the geographic location and the LCA is approved in advance of the change in geographic location. There is a complaint process, through which the employer's proposed wages or working conditions for the alien can be contested, resulting in various employer liabilities and sanctions.
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H1B Prevailing Wages
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The employer must attest to a willingness to pay "no less than the greater” of the following:
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1. the actual wage level paid to all other individuals at the worksite with similar experience and qualifications for the position in question; OR
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2. the prevailing wage for the occupational classification in the area of intended employment
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There are methods to ensure compliance with the actual wage paid to the employer. The Murthy Law Firm will assist the employer in complying with the U.S. Department of Labor requirements.
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In any of these wage determination situations, the employer needs to keep on file for inspection the documentation upon which the company relied to determine the wage to be paid. The LCA can be filed no earlier than six months before the beginning date of the period of employment, as indicated on the LCA. The LCA is valid for a maximum period of three years. This means that the validity period of an LCA may not exceed the validity period of an H1B petition, which is also three years.
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Working Conditions
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In addition to attesting to the appropriate wage, the employer must confirm that prospective employees will have the same working conditions as others similarly employed and that the employment of prospective H1B workers will not adversely affect other employees. If there are no similarly-employed workers in the company, then the employer must be able to show that the conditions are similar to those existing in like-business establishments in the area of employment. Working conditions include hours, shifts, vacation periods, and fringe benefits.
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Additional Obligations for H1B-Dependent Employers :
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H1B Dependent Employers
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In December 2000, the Department of Labor issued an interim rule defining certain employers as H1B-dependent and imposed additional obligations and attestation requirements on such employers. The Interim Rule expired on October 1, 2003. The DOL then issued the Final Rule on December 5, 2005, making the H1B-dependency obligations and attestations effective from March 8, 2005.
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H1B-dependent employers are defined as follows : if there are 1 to 25 full-time employees and 8 or more are of these are in H1B status; if there are 26 to 50 employees and more than 12 are in H1B status; or if there are over 50 employees and 15 percent or more are in H1B status. For H1B-dependent employers, there are additional promises (attestations) that must be made on the LCA. These are: that no U.S. workers in similar positions have been or will be displaced within 90 days; that, if the worker will be placed at another employer site, the petitioner has inquired of that other employer and found that no U.S. worker has been or will be displaced within 90 days (if such displacement does occur, the petitioning employer could be held liable); AND that the company has recruited for a U.S. worker to fill the position and has offered the position to any such worker who is as qualified as (or more qualified than) the H1B beneficiary.
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Please note that, if the beneficiary holds a master's degree in a field relevant to the job offered, or will be paid $60,000 or more, then the H1B beneficiary qualifies as "exempt" and these additional attestations are not required, even if the employer meets the definition of H1B-dependent. H1B workers who are considered exempt are still counted among the total number of H1B workers to determine whether the employer is H1B dependent. Also, for a beneficiary who would appear to qualify in one of the EB1 immigrant categories, the recruitment attestations would not apply. Under the law it is unclear what type of proof is required for the beneficiary to qualify for such exception.
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No Strike or Lock-Out
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The employer also has to attest to the lack of a strike or lock-out.
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Recordkeeping
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Within one working day of the filing of the LCA, upon request of any person, the employer must make available for inspection certain documentation about the LCA. This folder must be retained for at least one year beyond the end of the period of employment specified on the LCA or one year after the employee's termination of employment, whichever is later. The specific documents that must be available for public examination are:
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1. a copy of each completed LCA filed (Form ETA 9035)
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2. the wage paid to the H1B worker/s
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3. the system used to set the actual wage for the occupation
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4. a copy of the documents used to establish the prevailing wage of the H1B occupation/s
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5. documents showing compliance with the notice requirement
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In addition to the public access documentation, the employer must maintain certain payroll records for the DOL to review, should they choose to investigate. The DOL requires that the employer:
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1. Retain payroll records of all employees in the occupational classification of the H1B worker from the time the LCA is filed throughout the period of employment
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2. The payroll records of each H1B employee must contain:

a. full name and home address
b. occupation, rate of pay, and hours worked each week
c. any overtime earnings each week
d. total additions and deductions from each pay period and total wages paid for each pay period, date of pay, and period covered

3. Retain documentation regarding the basis the employer used to establish the actual wage
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The employer must maintain the payroll records for a period of three years from the date of the creation of the records. The prevailing wage is valid for three (3) years during the validity of the H1B petition.
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Benching Rule
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If H1B employees are "benched" for business reasons on the part of the employer (such as a lack of available work), then they must still be paid for the full hours specified on the petition. If an employee is absent for non-work reasons (such as for personal or health matters) then the above provision does not apply. This requirement took effect immediately upon enactment of the law.
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Departure Penalties Prohibited
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It is illegal to require an H1B employee to pay a penalty for leaving the employer. It is permissible, however, to require an employee to reimburse the employer for actual expenditures. This requirement took effect immediately upon enactment of the law.
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Training Fee and Anti-Fraud Fee
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In addition to the standard filing fee, the law also imposes an additional fee for each H1B petition, to be used to fund scholarship and training programs for U.S. workers, as well as for the DOL expenditures. This is called the H1B Training Fee. Colleges, universities, and nonprofit research organizations are not required to pay this fee. The fee applies to new petitions, first petition for extension, and petitions for new or concurrent employment. It is not required for amendments that do not request extensions. This must be paid by the employer. It is illegal to require the employee to reimburse the employer for this fee. The employer will be subject to a penalty if the H1B beneficiary pays the fee. This fee originated in ACWIA and was reinstated and increased by the Omnibus Appropriations Bill, in December 2004.
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The Omnibus Appropriations Bill also created a Fraud Protection and Detection Fee that applies to H1B petitions. This fee must be paid with the first H1B petition filed by the employer for the particular foreign national.
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Penalties
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Failure to meet any of the requirements, substantial failure to meet the notice requirements, or misrepresentation of a material fact can result in denial, invalidation, or suspension of the LCA, prevention for a year from sponsoring other foreign nationals in the same occupational classification, or an order to pay back wages, civil monetary penalties, or other administrative penalties. As in most areas of federal law, there are criminal statutes governing willful submission of false statements to the federal government. ACWIA provides for enhanced enforcement mechanisms and new penalties with debarment (prohibition on petitioning for other nonimmigrant workers) and fines up to $35,000 for certain willful violations of the law.
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Summary of the H1B Process and Responsibilities
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While these rules sound onerous, the best approach is to document everything and take it one step at a time. The primary concern is that employees make a formal complaint. The number of complaints or problems is comparatively few in relation to the number of cases filed. If an employer properly pays all H1B employees, and otherwise is careful with documentation, the H1B program can be very useful for U.S. employers seeking to hire qualified, highly-skilled foreign workers.

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