Interim Policy on H1B-Cap Exemption for Affiliates of Institutions of Higher Education

The U.S. Citizenship and Immigration Services (USCIS) issued an announcement on March 16, 2011 that they are reviewing the current policy regarding H1B cap exemptions for cases filed by nonprofit affiliates of institutions of higher education. This is an important topic for many MurthyDotCom and MurthyBulletin readers. It is a significant issue for hospitals who rely on this cap exemption when filing H1B cases for medical residents.

Background: AAO Decision and Problems

It is undisputed that nonprofit affiliates of institutions of higher education are exempt from the H1B cap. The controversy surrounds the definition and requirements for affiliation. This matter was litigated and resolved, it seemed, along with the requirements set forth in a USCIS memorandum dated June 6, 2006. That memorandum was reported to readers in our news article, USCIS Guidance on H1B Cap Exemptions (16.Jun.2006).

In 2010, however, the Administrative Appeals Office (AAO) issued a denial of an H1B cap exemption request for a hospital claiming affiliation with an institution of higher education. That case did not eliminate the exemption. Many hospitals have affiliation agreements and arrangements that would more solidly fit within the terms of the USCIS memorandum than the employer whose appeal was denied. That case was the start, however, of difficulties and uncertainties for H1B employers who have affiliation agreements, many of whom had long relied upon the cap exemption. Among other issues, the timing of the residency “match” and the start of the medical residency programs in the United States do not fit with the H1B cap cycle.

Announcement of Interim Policy of Deference to Prior Decisions

The announcement does not actually contain any new policy on the cap exemption in question. What is stated in the announcement is that the USCIS is reviewing the matter and, until it issues further guidance, it will give deference for cap-exempt eligibility to employers who obtained approvals of H1B petitions under this exemption since June 6, 2006. (This is the issuance date of the memorandum referenced above.)

Employers to Provide Prior H1B Approvals and Documents

Employers are instructed to provide a copy of the prior H1B approval notice under the cap exemption (for any employee) with the supporting documentation previously provided. The USCIS suggests including a statement from the employer that the organization was approved under the cap-exemption since June 6, 2006. If there is not a clear error, or a significant change in circumstances, the USCIS will give deference to the prior determination of cap-exempt eligibility. The USCIS states that this is temporary. They will engage in further public discussions regarding future guidance on this issue.

Employers Without Prior Approvals

The announcement states that deference will be given to the claims of employers with prior cap-exempt H1B approvals based on the required affiliation, since June 6, 2006. It does not state that employers who have not previously utilized these provisions are precluded from doing so, as there is no mention of these employers. It appears that if such employers are seeking the cap exemption, they need to fully document that they are sufficiently affiliated, under the terms of the June 6, 2006 memorandum and in keeping with the AAO interpretation. Clearly, any employers, particularly those without H1B approval before June 6, 2006, should carefully weigh the risks and options with their attorneys.


The issuance of this USCIS announcement regarding the interim measures is helpful. While questions remain, this announcement is an apparent attempt to avoid disruption and maintain the status quo. It reflects the USCIS’s efforts to address the concerns of stakeholders who provided input when this particular matter emerged. As mentioned, these provisions are extremely important to many hospitals, particularly in connection with their residency programs. The timing of this announcement should alleviate some of the immediate concerns for hospitals and medical residents. Of course, a more long-term solution is needed, and we at the Murthy Law Firm urge a practical, realistic policy that infuses stability and consistency into this important policy matter.

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Disclaimer: The information provided here is of a general nature and may not apply to any specific or particular circumstance. It is not to be construed as legal advice nor presumed indefinitely up to date.