Employer Alert: USCIS Changes H-1B CAP Rules

On January 7, 2021, USCIS announced that it will promulgate a Final Rule changing how it administers the H-1B lottery for new H-1B visas.  The rule will change the lottery process from the system in place for many years, where registrants are selected without regard to the merits of their cases, to one where USCIS will give preference to registrations whose proposed salaries are relatively high in comparison to others.  In brief, the rule will result in an increased number of selections for relatively highly paid workers and a reduction in selections for lower paid workers.  The effect, and the aim, is to reduce or eliminate the issuance of H-1B visas to workers earning level 1 wages.


This rule dramatically alters the process for granting H-1B visas.  If implemented, it will provide a distinct advantage to more highly paid H-1B beneficiaries relative to their lower-paid peers. The fate of this rule, however, is not at all clear.  Litigation, or action by the new administration, could change when it goes into effect or prevent it from taking effect at all.  We will provide further updates as more information becomes available.


                The Previous H-1B CAP Selection Process

Each year, a limited number of new H-1B visas are made available.  Congress has set the number by law at 65,000 in a ‘regular’ quota and has provided an exemption for 20,000 visas to be issued to holders of US advanced degrees (Master CAP).  Beginning last year, USCIS began an electronic registration process that allowed employers to register their proposed candidates for H-1B visas without needing to prepare and file complete petitions.  The registration process allowed employers to submit relatively limited information about the worker and whether they qualified for the Master CAP.  Once the registration period closed, USCIS removed duplicate submissions, and ran two lotteries: first to select the 65,000 regular CAP visa spots (Master CAP candidates are included in the first lottery) and second a selection against only the Master CAP candidates to fill the 20,000 Master CAP spots.  USCIS did not have or review any information about the proposed employment or rate of pay of the registered candidates.

US DOL Wage Levels

The US Department of Labor classifies jobs into several categories (Standard Occupational Classifications, “SOC”).  Positions in each SOC are divided based on wage levels – 4 salary levels that represent somewhat arbitrary percentile lines in the salaries paid to workers in those occupations in specific geographical areas.

An example may be helpful in the discussion that follows.  For reference, the wage levels for the SOC of “Architects, Except Landscape and Naval” in Los Angeles County are:

Level 1 Wage:    $57,574 year
Level 2 Wage:    $74,506 year
Level 3 Wage:    $91,416 year
Level 4 Wage:    $108,347 year

Changes In the New Rule:

In the Final Rule, USCIS will be changing the process outlined above in a few significant ways.  First, before conducting the lottery selections, USCIS will order registrations based on the wage level corresponding to the salary offered to the worker.  In our example above, an Architect working in Los Angeles County offered $110,000 would be considered under wage level 4 while one offered $75,000 would be considered under wage level 2.

USCIS will allocate visas to worker in descending order starting with wage level 4.  If there are not enough visas to satisfy demand at a particular wage level, USCIS will conduct a lottery to allocate visas among the workers at that level.

For example, considering the regular CAP, if there were 10,000 registrations that met level 4, 30,000 registrations that met level 3, 120,000 registrations that met level 2, and 50,000 registrations that met level 1, USCIS indicates it would assign visas as follows:

  • Level 4 – 10,000 visas to 10,000 registrations
  • Level 3 – 30,000 visas to 30,000 registrations
  • Level 2 – 25,000 visas to 120,000 registrations, allocated at random
  • Level 1 – no visas remaining.

Because the wage levels are based on specific geographic locations, USCIS will require employers to provide data about the proposed H-1B job that they did not in the previous registration, namely:

  • Worksite – at least the county or Metropolitan Statistical Area
  • Offered salary
  • Occupation/SOC
  • Wage level that the offered salary meets or exceeds

For employers who employ workers to support client projects or whose workers must relocate, this may create significant uncertainty in the registration process.

USCIS explicitly indicates that it will monitor subsequent new or amended filings by the sponsoring employer after the approval of the CAP case and may revoke approval of the CAP case and any petitions where “USCIS determines that the filing of the new or amended petition is part of the petitioner’s attempt to unfairly decrease the proffered wage to an amount that would be equivalent to a lower wage level, after listing a higher wage level on the registration to increase the odds of selection.”

Several parties who submitted feedback to the USCIS rule suggested that the rule may be contrary to the statutory direction to issue H-1B visas in the order that petitions were filed for them.  8 USC § 1184(g)(3).  USCIS dismissed those concerns, among others, but the lack of statutory authority for distributing H-1B visas based on wages may support legal challenges to the implementation of the rule.

The incoming Biden administration has the ability to suspend this rule’s effective date pending review.  The rule could be withdrawn and never take effect.

Timeline and what to watch for:
Key dates:

  • H-1B start date for cases filed in this CAP: October 1, 2021
  • Earliest date to file CAP cases: April 1, 2021
  • Latest day USCIS can open the registration window: March 17th (14 days prior to the filing date)
  • Effective date of the Final Rule: March 9, 2021 (60 days after planned publication on January 8th)
  • Latest Date USCIS can announce the opening of the registration window February 15, 2021
  • January 20, 2021 – first date that the incoming administration can order rules that have not yet taken effect to be placed on hold.