New Regulation Simplifies Process for H1B Entrepreneurs

The H1B program has long been a valuable way for U.S. businesses to employ highly skilled workers. Recent regulatory changes implemented shortly before the end of the Biden Administration also have created an easier pathway for H1B workers who seek to establish their own businesses in the United States.

Key Provisions for Beneficiary-Owners

Under the updated regulations, a United States employer may include a business where the H1B employee holds a controlling interest, which is defined as owning more than 50 percent of the petitioner or possessing majority voting rights. Importantly, these regulations allow the H1B employee to perform duties directly related to owning and directing the business, which the U.S. Citizenship and Immigration Services (USCIS) has indicated may include “signing leases, finding investors, negotiating contracts, developing a business plan, engaging with potential suppliers and stakeholders, and talent acquisition.” However, the H1B employee must spend more than half of their time performing specialty occupation duties. This flexibility acknowledges the dual role of entrepreneur-beneficiaries as both business owners, with specific responsibilities related to running, managing, and growing the business, and specialty occupation workers.

To ensure compliance with this rule, the USCIS has indicated that H1B petitioners must detail all duties the beneficiary will perform, specifying the percentage of time spent on each. Non-specialty occupation duties must directly relate to owning and managing the business. Incidental duties – those that “occur by chance, are intermittent, and are of minor consequence,” such as answering phones, making copies and the like – are also permissible, provided they remain secondary to the specialty occupation tasks.

Limited Validity Periods

The updated regulations impose a limited validity period for H1B petitions involving beneficiary-owners. More specifically, the initial filing and the first extension are limited to 18 months each. While this shorter duration requires more frequent filings, it reflects the intent of the USCIS to balance flexibility for entrepreneurs with “safeguards to prevent program abuse” and to ensure compliance.

Encouraging Entrepreneurial Innovation

Historically, beneficiary-owned entities faced challenges in obtaining H1B approvals due to concerns about the employer-employee relationship. However, USCIS has taken significant steps to address these issues, particularly with the rescission of a prior memorandum on employer-employee relationship. The new regulations aim to encourage beneficiary-owners to pursue H1B status by clarifying the requirements and ensuring greater transparency in the proper use of the H1B program.

This regulatory shift aligns with broader efforts to support entrepreneurship and innovation. By enabling highly skilled individuals to establish and grow businesses in the U.S., these provisions not only create opportunities for foreign national entrepreneurs but also contribute to economic growth and job creation within the United States.

Conclusion

The updated H1B regulations for beneficiary-owners represent a welcome and needed opportunity for foreign entrepreneurs to leverage their expertise while building businesses in the U.S. By meeting the regulatory requirements and carefully structuring their H1B petitions, these individuals can secure H1B status and contribute meaningfully to the American economy. This is a positive development for those seeking to combine their entrepreneurial aspirations with the benefits of the H1B program.

 

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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.