H

H-1B VISAS - THE "CAP" HAS BEEN REACHED

FOR FISCAL YEAR 2004

Highlights

·On February 17, 2004, the U.S. Citizenship and Immigration Services (USCIS) announced that they had stopped accepting H-1B petitions subject to the H-1B cap. (See paragraph below as to "Who is exempt?").

·USCIS will reject all H-1B petitions filed after February 17, 2004.

·USCIS will start accepting H-1B petitions subject to the FY 2005 cap beginning April 1, 2004, however, the approval will not be valid until October 1, 2004 at the earliest.

Reduction in H-1B numbers

At the start of fiscal year (FY) 2004, on October 1, 2003, the number of H-1Bs available went 195,000 to 65,000 per fiscal year (October 1st to September 30th).

In FYs 1997, 1998, 1999 and 2000, the H-1B cap was reached prematurly, resulting in disruption to American businesses and the inability of many foreign nationals to work. As a result, for the past three fiscal years, FYs 2001, 2002 and 2003, the American Competitiveness in the 21st Century Act (AC21) temporarily increased the number of H-1Bs to 195,000 in order to fill vital vacancies across our economy.

Even with the downturn in the economy in FY 2003, 78,000 H-1Bs subject to the cap were used. On February 17, 2004, the USCIS officially announced that they had received enough H-1B petitions to meet this year's H-1B mandated cap. They will continue to adjudicate petitions currently pending at the Service Centers. The USCIS will start accepting H-1B petitions subject to FY 2005 cap on April 1, 2004. However, the validity date for the approval will not start until October 1, 2004 or later.

Who is affected?

·Foreign nationals in the U.S. in valid non-immigrant status (e.g. B, F, J or H-4) seeking a change of status to H-1B;

·Overseas nationals seeking to enter the U.S. as an H1-B visa worker; and

·Individuals in H-1B status changing employment from an exempted organization to a private non-exempted organization or company.

Who is exempt?

·Individuals in valid H-1B status seeking an extension with their current employer;

·Individuals in H-1B status seeking a change of employment;

·Individuals in H-1B status seeking a concurrent H-1B petition;

·Previous holders of H-1B status, who are ineligible for a new 6 years of H-1B status;

·Foreign nationals seeking employment with an institution of higher education, nonprofit research institution or government research organization; and

·H-1B workers from Singapore and Chile consistent with Public Laws 108-77 and 108-78.

What happens once the cap has been reached?

The CIS has yet to provide instructions regarding individuals currently in the United States seeking a change of status to H-1B. It is unclear whether the USCIS will allow H-1B applicants who are "stuck" because of the cap and have filed for a change of status from F-1/J-1 to H-1B to remain in the U.S. (without travel or work authorization). In the past many foreign nationals had to wait outside the U.S. until October 1st or later to apply for a visa at a U.S. Consulate. The Department of State did previously provide a special dispensation for these so-called "gap in the cap" cases to allow them to apply for new H-1B visas at US border posts in Canada or Mexico.

There may also be some leftover H-1B numbers once final tabulations are made both from the general allotment of H-1Bs, as well as the H-1Bs reserved under the United States-Chile and the United States-Singapore Free Trade Agreements.

Another unanswered question concerns J-1 physicians. In the past J-1 physicians who had been granted waivers of the two-year home residence requirement pursuant to the Dept. of Health (Conrad program) had been exempt from the cap. That provision arguably expired October 1, 2003, and the USCIS has yet to address this particular issue.

ACTION REQUIRED

If your company is seeking to file an H-1B change of status petition or a new H-1B visa petition for consular processing, we invite you to contact us to determine alternatives to an H-1B visa. We would also encourage employers to start filing H-1B petitions on April 1, 2004 or as soon thereafter as possible. This is because these visas will count towards the 65,000 visas allotted for FY 2005. With this early demand it is anticipated that the next H-1B cap for FY 2005 will be reached by as early as October 2004 when the new fiscal year actually starts.

This summary does not attempt to answer all questions relating to the H-1B program and does not constitute legal advice. If you have specific questions, please contact Bernard. Wolfsdorf (bernard@wolfsdorf.com), Michele Buchanan (mbuchanan@wolfsdorf.com), Stephen Dewar (sdewar@wolfsdorf.com), Avi Friedman (afriedman@wolfsdorf.com), Rita Kushner (rkushner@wolfsdorf.com), Tien-Li Loke Walsh (tloke@wolfsdorf.com), Frieda Wong (fwong@wolfsdorf.com), Lisa Yu (lyu@wolfsdorf.com), Naveen Rahman (nrahman@wolfsdorf.com), Angela Hsu (ahsu@wolfsdorf.com), Cliff Rosenthal (crosenthal@wolfsdorf.com), Kim Kurata (kkurata@wolfsdorf.com), Audrey Georg (ageorg@wolfsdorf.com), Shannon Naylor (snaylor@wolfsdorf.com), Betti Engler (bengler@wolfsdorf.com).