Savitz Law Offices, P.C.

6 Beacon Street 

Suite 900 

Boston, MA 02108 

Telephone: (617) 723-7111 

Fax: (617) 723-7171 

The number of H-1B visas available in fiscal year 2004 (October 1, 2003 to September 30, 2004) dropped to 65,000, a decrease of about two-thirds from the 195,000 available previously. Since then, H-1B numbers for FY 2005 ran out on October 1, 2004, the first day of the fiscal year, and H-1B numbers for FY 2006 ran out on August 10, 2005, almost two months before the fiscal year began. Even more dramatically, H-1B numbers for FY 2007 ran out on May 26, 2006, less than two months after filing began, and H-1B numbers for FY 2008 and FY 2009 ran out on the first day of filing! Barring Congressional action, the cap will remain at 65,000. This significant gap causes significant problems for U.S. businesses and their foreign national employees.

The reduction stems from the expiration of a federal law on October 1, 2003 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 expired.  However, many of these previously expired provisions were re-implemented -- and new provisions were created -- when the "H-1B Visa Reform Act of 2004" was signed into law on December 8, 2004.

Since an H-1B petition may be filed up to six months prior to the requested start date, H-1B petitions for FY 2009 may be filed starting on April 1, 2008. Given the likelihood that H-1B numbers will run out on the first day as was the case last year, it is crucial to plan ahead and prepare to file any H-1B petition subject to the cap by April 1st.

Whom does the H-1B cap affect?

Given that the H-1B cap returned to 65,000, 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 should be concerned about the H-1B quota. Additionally, the H-1B quota also affects foreign nationals in some other nonimmigrant status such as B, F, J or H-4 who request a change of status to H-1B.

Who is not affected?

The drop in H-1B numbers does not affect foreign nationals currently in H-1B status who need to file an extension of status or change of employer. 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.

Other changes after December 8, 2004.

Other H-1B provisions also expired on October 1, 2003, but were re-implemented by the H-1B Visa Reform Act of 2004. These re-implemented provisions include the additional requirements that H-1B "dependent" employers are 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.

Additionally, the H-1B Visa Reform Act exempts from the H-1B cap the first 20,000 beneficiaries who have earned a Master’s or higher degree from a U.S. institution of higher education. After those 20,000 slots are filled, USCIS is required to count those cases against the 65,000 cap for the remainder of the fiscal year.

The H-1B Visa Reform Act also implements two additional filing fees. The first fee is a reinstatement and increase of a fee that expired on October 1, 2003.  Petitioners who employ more than 25 full-time employees must pay a fee of $1,500; petitioners who employ 25 or fewer full-time employees may submit a reduced fee of $750. Certain types of petitions are exempt from the new $1,500 or $750 fee. The new $1,500 or $750 fee applies to any non-exempt petitions filed with USCIS after December 8, 2004.

The second fee is a new "Fraud Prevention and Detection Fee" of $500 which must be paid by all petitioners seeking a beneficiary’s initial grant of H-1B or L nonimmigrant classification, or those petitioners seeking to change a beneficiary’s employer within those classifications. Other than petitions to amend or extend status filed by an existing H-1B or L employer, there are no exemptions from the $500 fee. The new $500 fee applies to all petitions filed with USCIS on or after March 8, 2005.

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 will remain at 65,000.

Given the situation, it is crucial that you act now!  There are several things you should be doing today to ensure that you will be able to hire the employees you need.  Please call us immediately to discuss the best strategy for your company.