H-1B for Startup

• Beneficiary owning H-1B Petitioner/Employer: DHS has codifed a petitioner’s ability to qualify as a U.S. employer even when the beneficiary possesses a controlling interest (more than 50%) in that petitioner. (a big deal!).
  • DHS has some limitations, first and the second H-1B petition durations to be of 18 months only instead of standard 36 months. 2nd Extension (i.e. 3rd filing) could be for a full 36 months duration. The beneficiary must work majority of time in that controlling stake petitioner, H–1B beneficiary could seek authorization to work for a business in which they have a controlling interest while concurrently working for another employer. Standard H-1B requirements still apply such as the requirement of specialty occupation, offered wage rate to be higher or equal to the prevailing wage rate, etc. For an enterpreneur, it will involve forming a business entity, preparing right set of legal documents and compliance policies, and for business entity to bear the costs and expenses involved in filing the petition and ability to compensate the enterpreneur for the H-1B specialty occupation work.
• Specialty Occupation Definition and Criteria: DHS has codified and clarified the specialty occupation standard, including by:
  • Clarifying that “normally” does not mean “always” within the criteria for a specialty occupation.
  • codifying the “directly related” requirement in the definition and criteria, and clarifying this as meaning “a logical connection”.
  • codifying current practice that a generalized degree is not sufficient.
  • codifying current practice that a position may allow for a range of qualifying degree fields.

[read the new definition below]

• Deference to prior decision: Codifies exisiting policy to give deference to previously approved H-1B petition unless some material issues in previous petition.
• H-1B Cap Exemptions: DHS is revising the requirements:
  • to qualify H-1B Cap exemption when a beneficiary is not directly employed by a qualifying institution, organization, or entity.
  • DHS is revising the definition of “nonprofit research organization”, “governmental research organization” and “non-profit or tax exempt organization. DHS is replacing “primarily engaged” and “primary mission” with “a fundamental activity in basic research and/or applied research,” in order to permit a nonprofit entity or governmental organization that conducts research as a fundamental activity but is not primarily engaged in research to meet the definition of a nonprofit research entity or a governmental research organization.
• H-1B Amedment: Codies into the rule that an H-1B Amendment Petition will be necessary when the worksite change is outside the normal commuting distance from previously approved petition as this worksite change is treated as a material change and any material change requires an H-1B Amendment petition.
• Evidence of Maintenance of Status: DHS clarifies that the evidence of maintenance of status is required (e.g. pay stubs, W-2, tax returns, evidene of work products, etc.) for petitions where there is a request to extend or amend the beneficiary’s stay.
• Eliminating the Itinerary Requirement: DHS eliminates the H programs’ itinerary requirement.
• Validity Expires Before Adjudication: DHS allows H-1B petitions to be approved or have their requested validity period dates extended if USCIS adjudicates and deems the petition approvable after the initially requested validity period end date, or the period for which eligibility has been established, has passed. This typically will happen if USCIS deems the petition approvable upon a favorable motion to reopen, motion to reconsider, or appeal.
• Automatic Extension of Authorized Employment “Cap-Gap”: DHS is revising the automatic cap-gap extension end date from October 1 to April 1 of the fiscal year for which H-1B status is being requested for F-1 holders in H-1B Cap-Gap period. This will give DHS more flexibility to adjudicate the petition later or employee to continue to have their OPT/STEM EAD work authorization get automatically extended till then.
• Bona Fide Job Offer for a Specialty Occupation Position: DHS has codified USCIS’ authority to request contracts, work orders, or similar evidence “showing the bona fide nature of the beneficiary’s position,” rather than “showing the terms and conditions of the beneficiary’s work” as stated in the Notice of Proposed Rulemaking (NPRM).
• Site Visits: DHS is modifying the H-1B regulations to codify its existing authority to conduct site visits and clarify the scope of inspections and the consequences of a petitioner’s or third party’s refusal or failure to fully cooperate with these inspections.
• Third-party placement (Codifying Defensor case’s precedent): In this provision, when the beneficiary will be staffed to a third party, USCIS will look at the third party’s requirements for the beneficiary’s position, rather than the petitioner’s stated requirements, in assessing whether the proffered position qualifies as a specialty occupation.

These reformed policies have been be effective since January 17, 2025.

DHS amends chapter I of title 8 of the Code of Federal Regulations as follows:

An updated definition of Specialty Occupation

Specialty occupation means an occupation which requires theoretical and practical application of a body of highly specialized knowledge in fields of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts, and which requires the attainment of a bachelor’s degree or higher in a directly related specific specialty, or its equivalent, as a minimum for entry into the occupation in the United States. A position is not a specialty occupation if attainment of a general degree, without further specialization, is sufficient to qualify for the position. A position may allow for a range of qualifying degree fields, provided that each of those fields is directly related to the duties of the position. Directly related means there is a logical connection between the required degree, or its equivalent, and the duties of the position.

United States employer means a person, firm, corporation, contractor, or other association, or organization in the United States that:

(1) Has a bona fide job offer for the beneficiary to work within the United States, which may include telework, remote work, or other off-site work within the United States;

(2) Has a legal presence in the United States and is amenable to service of process in the United States; and

(3) Has an Internal Revenue Service Tax identification number.

(4) If the H-1B beneficiary possesses a controlling interest in the petitioner, meaning the beneficiary owns more than 50 percent of the petitioner or has majority voting rights in the petitioner, such a beneficiary may perform duties that are directly related to owning and directing the petitioner’s business as long as the beneficiary will perform specialty occupation duties a majority of the time, consistent with the terms of the H-1B petition.

Bona fide position in a specialty occupation: DHS has codified USCIS’ authority to request contracts, work orders, business plan or similar evidence “showing the bona fide nature of the beneficiary’s position,” not just showing the terms and conditions of the beneficiary’s work.

(F) Bona fide position in a specialty occupation. At the time of filing, the petitioner must establish that it has a bona fide position in a specialty occupation available for the beneficiary as of the start date of the validity period as requested on the petition. A petitioner is not required to establish specific day-to-day assignments for the entire time requested in the petition.

H-1B Beneficiary owning H-1B Petitioner/Employer: DHS has codifed a petitioner’s ability to qualify as a U.S. employer even when the beneficiary possesses a controlling interest (more than 50%) in that petitioner with the following changes:

(E) H-1B petition for certain beneficiary-owned entities. The initial approval of a petition filed by a United States employer in which the H-1B beneficiary possesses a controlling interest in the petitioning organization or entity, meaning the beneficiary owns more than 50 percent of the petitioner or has majority voting rights in the petitioner, will be limited to a validity period of up to 18 months. The first extension (including an amended petition with a request for an extension of stay) of such a petition will also be limited to a validity period of up to 18 months.

With these changes, USCIS has done away with the employer-employee relationship requirement which was an important requirement previously. These changes have made H-1B more pragmatic and also more available and flexible for start-up companies.