"Posted on AILA InfoNet at Doc. No. 03092314 (Sep. 23, 2003)"

By the AILA Business Immigration Committee

The number of H-1B visas available in fiscal year (FY) 2004 (October 1, 2003 to September 30, 2004) will drop to 65,000, a decrease of almost two-thirds from the 195,000 available the past few years. Such a low cap may mean that H-1B numbers may run out before the end of FY 2004. If so, that could cause significant problems for U.S. businesses and their foreign national employees.

The reduction stems from the expiration of a federal law that temporarily increased the number of H-1B visas the past few years. With the expiration of this temporary increase, other aspects of the H-1B program also sunset on October 1, 2003, unless and until Congress acts to extend the law.

This memo briefly outlines who will and will not be affected, how this situation arose, what other changes may occur in the H-1B category, and what to do about it.

Who is affected by the H-1B cap
Given that the H-1B cap returns to 65,000 on October 1, managers, recruiters, and human resource departments planning to bring a foreign national from overseas to work in the United States on an initial H-1B visa after September 30, 2003, should be concerned about the H-1B quota. Additionally, foreign nationals in some other nonimmigrant status such as B, F, J or H-4 who request a change of status to H-1B after September 30, 2003, are also affected by the H-1B quota.

Who is not affected
Foreign nationals currently in H-1B status who need to file an extension of status or change of employer are not affected by the drop in H-1B numbers. Further, foreign nationals seeking employment through institutions of higher education, nonprofit research organizations, and government research organizations will continue to be exempt from the H-1B cap.

Who may be affected
There is some question, based on statutory language, whether physicians previously in J-1 status who have agreed through a state health department to work in underserved areas (HPSAs or MUAs) in exchange for waiver of the J home residence requirement will be subject to the numerical limit after September 30.

Other changes after September 30
Other H-1B provisions are scheduled to sunset on September 30. These include the additional requirements that H-1B "dependent" employers were required to meet, along with the Labor Department's expanded investigatory authority to investigate possible H-1B violations without first having to wait for a complaint to be filed.

The provision authorizing the $1000 employer surcharge imposed on most H-1B petitions is also set to expire October 1. The surcharge, which funds U.S. worker training programs, generated $210 million in FY 2001. Because the government is unlikely to allow such a large revenue stream to lapse, expect Congressional action at some point to reimpose the surcharge. However, this probably will not happen before October 1. Thus, there may be a short window beginning October 1 in which H-1B petitioners will not have to pay the $1000 employer surcharge.

How did this situation arise?
In 1990 Congress imposed a numerical cap on the number of H-1B visas issued each fiscal year. The first cap set H-1B numbers at 65,000 annually. In the thriving economy of the late 1990s, the cap was prematurely reached in FY 1997, FY 1998, FY 1999, and FY 2000. Once a fiscal year's cap was reached all additional H-1B petitions were returned until a new fiscal year began, thus causing significant strain on U.S. businesses. To alleviate this problem, Congress raised the fiscal year cap to 115,000 for FY 1999 and FY 2000, and then to 195,000 for FY 2001-2003. However, barring Congressional action, the cap is set to return to 65,000 October 1.

H-1B visa usage has decreased during the recent recession. In FY 2002, 79,100 H-1B visas subject to the cap were used-a figure well above the 65,000 cap set for FY 2004, but below usage during the peak years of FY 2001 and FY 2002.

What to do

Allow additional time for H-1B filings made close to October 1, as changes in the law may affect processing times. If Congress does not act to raise the cap again, file the H-1B petition as soon as possible after October 1 to maximize the likelihood of securing an H-1B visa number.