On December 18, 2024, the U.S. Department of Homeland Security (DHS) published a final rule that will take effect on January 17, 2025, with several changes to the H-1B program.1 The final rule will codify the proposed rule announced by the department in October 2023 (for related coverage, see GMS Flash Alert 2023-201, October 30, 2023).
Employers will use a new Form I-129, Petition for Non-Immigrant Worker, for any applications filed after January 17, 2025, when the final rule takes effect.
The H-1B specialty occupation is one of the most popular temporary visa options to employ foreign nationals in the United States. The final rule from DHS addresses ways to inhibit fraud and abuse to prevent the “gaming” of the lottery.
The changes under the published final rule benefit U.S. employers and resolve several ambiguities. The published rule also includes other ways to improve the H-1B program. For example, with the extension of the automatic cap-gap extension for F-1 students transitioning to H-1B status to April 1 of the fiscal year, the DHS is aiming to provide greater flexibility to students and prevent disruptions in employment for U.S. employers. Also, the final rule broadens the range of entities subject to H-1B cap exemptions, which introduces greater flexibility and options for employers.
The DHS, through its final rule, is revising the definition of “specialty occupation” in response to feedback from commenters. The rule explains that that an occupation “normally” requiring a bachelor’s degree does not mean that it “always” requires a bachelor’s degree. The rule goes on to clarify that a position may qualify as a specialty occupation even if the employer accepts a range of qualifying degrees for an H-1B petition as long as they are directly related, or there is a logical connection to the proposed job duties the Beneficiary will be performing for the Petitioner.
The United States Citizenship and Immigration Services (USCIS) may request contracts or similar evidence that demonstrate the “bona fide nature of the beneficiary’s position.” The DHS will look at contracts or similar evidence to make sure the job offer is legitimate and aligns with the H-1B program requirements. The agency’s goal is to increase the H-1B program’s integrity and refine the regulations.
The DHS decided not to finalize a proposed regulation that would explicitly prohibit the registration by related entities. Based on FY2025’s H-1B registration process, the agency claims there was a notable decrease in total registrations compared to FY2024, including a reduction of multiple registrations for the same beneficiary. The DHS intends to revisit the issue in a future rule.
The final rule formalizes USCIS’s policy regarding deference to previous nonimmigrant adjudications. Under the codified rule, the USCIS will give deference to prior adjudications as long as the previous petitions involve the same parties and there are no material changes to the Beneficiary’s job description or location. The rule will give deference to previous petitions to all Form I-129 adjudications rather than just extensions of stay petitions.
The final rule also formalizes and codifies the existing requirement that employers must file an amendment to a nonimmigrant worker petition when there is a significant change to the employment location of an H-1B worker. The amendment must be submitted before the change in location occurs. An amendment will not be required if the new location is in the same Metropolitan Statistical Area as the location disclosed in the Labor Condition Application (LCA).
As was hinted through the proposed rule, the DHS is formally announcing an extension of the automatic cap-gap extension for F-1 students transitioning to H-1B status. The automatic extension, previously valid until October 1 of the fiscal year for which H-1B status was being requested, is now being extended until April 1 of the fiscal year. The DHS’s goal is to provide greater flexibility to students and prevent disruptions in employment for U.S. employers who are lawfully employing F-1 students and requesting a Change of Status (COS).
In summary, the DHS’s decision to extend the automatic cap-gap extension will enhance employment stability for F-1 students, avoid work interruptions for U.S. employers, and allow the USCIS to manage resources effectively.
Within the H-1B visa regulations, the DHS is making important clarifications regarding a Beneficiary’s “controlling interest.” A Beneficiary will have a “controlling interest” if the Beneficiary owns more than 50 percent of the Petitioner or possesses majority voting rights in the Petitioner. H-1B Beneficiaries who have a controlling interest may be eligible for H-1B status but will be limited to an initial validity period of 18 months.
The final rule broadens the range of certain H-1B cap exemptions. Cap-exempt organizations include nonprofit organizations and governmental research entities. If the nonprofit organization’s main focus is not research or education, it may still qualify as a cap-exempt entity if research and education are still considered fundamental to the organization’s operations.
The DHS clarifies that if individuals refuse or fail to fully cooperate with an inspection from the FDNS unit of the USCIS, it may lead to a denial or revocation of their petition. This section of the rule reinforces DHS’s authority to perform site visits at various locations related to the H-1B employment as well as third-party worksites.
President-elect Donald Trump will be sworn into office on January 20. The new administration may choose to make further changes, but this would necessitate informing the public and allowing them a chance to provide their input.
KPMG Law LLP in Canada is tracking this matter closely. We will endeavor to keep readers of GMS Flash Alert posted on any important developments as and when they occur.
1 See Department of Homeland Security, Federal Register, “Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Nonimmigrant Workers” webpage (December 18, 2024).
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in Canada.
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