Qualifying as a Cap-Exempt Nonprofit Research Organization Under New H1B Rule

Last month, the U.S. Department of Homeland Security (DHS) implemented a final rule that updates the criteria for nonprofit and governmental research organizations sponsoring H1B visa beneficiaries under the cap-exempt category. This change is expected to expand the number of organizations that qualify as cap exempt.

Defining “Fundamental Activity” of Research

Prior to the implementation of this final rule, an organization had to prove that research was their “primary mission” and that they were “primarily engaged” in research. Now, an organization need only show that research is a “fundamental activity.” This means research must be an important and substantial part of the organization’s operations, but it does not need to be the sole or primary focus.

Change in Evidence Required to Show Tax-Exempt Status

The final rule eliminates the requirement that the petitioning employer submit an IRS letter indicating the organization was granted tax-exempt status for research or educational purposes. The employer still will generally need to submit evidence that it qualifies as a nonprofit or tax-exempt organization, but that evidence does not specifically have to be an IRS letter.

Change in Provision for Foreign Nationals Not Directly Employed by a Qualifying Institution

Under the prior rule, a non-qualifying organization could file a cap-exempt H1B petition if the foreign national would be spending the majority of their workday performing jobs at a qualifying organization, and their job duties directly and predominantly furthered the essential purpose, mission, objectives, or functions of the qualifying organization. The new rule has made it easier for a non-qualifying employer to meet the requirements of filing a cap-exempt H1B petition. First of all, per the new rule, the requirements can be met, even if the foreign national will not be working at the physical work location of the qualifying organization. Also, the petition may qualify as cap-exempt if the H1B worker will spend at least half of their work time performing job duties that directly further an activity that supports or advances one of the fundamental purposes, missions, objectives, or functions of the qualifying institution.

Conclusion

The new rule provides more flexibility and expands the types of evidence that can be submitted for cap-exempt filings based on work being provided for a nonprofit or governmental research organization. This should expand opportunities for foreign nationals who have not been counted against the H1B cap to nevertheless work in H1B positions.

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