Bridging the Cap-Gap: Strategies for Dealing with the Unavailability of H-1B Visas in Fiscal Year 2010¹

The H-1B is the most popular “work visa” category for most U.S. employers. H-1Bs may be obtained by virtually any established company seeking to hire a foreign national who will be working in a “specialty occupation,” which is defined as an occupation requiring at least a bachelor’s degree in a specific field. H-1Bs are a favorite of tech companies seeking to hire skilled engineers and IT professionals. They are also widely used by companies seeking professionals to work in numerous other professions, such as lawyers, accountants, actuaries and financial analysts.

Not surprisingly, H-1B is the most heavily regulated nonimmigrant classification, and numerous restrictions are imposed on employers by the Department of Labor (“DOL”) and the USCIS. Prior to filing an H-1B petition, the employer must sign and submit to the Department of Labor a Labor Condition Application (“LCA”) in which the employer attests that it will comply with several requirements designed to protect U.S. workers. These include a requirement that the employer pay the H-1B worker the prevailing wage for the position, and no less than it pays other similarly situated employees at the company, and that it will offer the same working conditions to the H-1B worker as it offers to similarly situated U.S. workers. The employer must also agree to comply with complex record-keeping requirements, including a requirement that the employer prepare and maintain a “public access file” containing information regarding salary, benefits, and prevailing wage documentation for all H-1B workers. This file must be made available to any member of the public who wishes to see it.

The restrictions on H-1Bs also include an annual limit (“the Cap”) on the number of new H-1Bs that may be approved by the USCIS in a given year. Originally set at 65,000 by the Immigration Act of 1990, Congress has raised the limit several times as it sought to balance the competing pressures of various stakeholders. The Cap was reached for the first time in August 1997. In 1998, Congress temporarily raised the Cap for FY1999 and FY2000 to 115,000 pursuant to the American Competitiveness and Workplace Improvement Act (“ACWIA”). The increased numbers were not sufficient to satisfy businesses’ need for engineers and IT professionals during the economic boom of the late 90s, however, and the FY1999 Cap was reached again in June 1999.

Expressing concerns with America’s competitiveness in the global marketplace, Congress passed the American Competitiveness in the 21st Century Act (“AC21”) which raised the Cap yet again to 195,000 for fiscal years 2001, 2002, and 2003. Shortly after this law was passed, however, the demand for skilled workers decreased as the economy and the job market slowed down. The 195,000 limit was never reached in any of the three years in which it was effective.

In FY2004, the Cap returned to its original level of 65,000, which was reached in February 2004. Due to a strengthening job market, the FY2005 Cap was reached on the first day of the fiscal year, on October 1, 2004. Congress responded in December 2004 by providing an additional 20,000 for H-1B candidates graduating from U.S. institutions with advanced degrees (master’s or higher). Regular non-masters H-1Bs for FY2006 capped-out well before the beginning of that fiscal year, on August 11, 2005 and the Cap on H-1Bs under the advanced degree exception was reached for the first time on January 17, 2006. The regular H-1B Cap for FY2007 was reached on May 26, 2006, more than four months before the beginning of the fiscal year. H-1B demand was so high for FY2008 that the cap was reached on the very first day the petitions could be filed, April 2, 2007. The advanced degree exemption of 20,000 visas was reached soon after on April 30, 2007. H-1B demand was even higher for FY2009, and the limits were both reached within the first week of April 2008.

Despite over a billion dollars generated by filing fees for the H-1B program over the last several years which has been earmarked to train US workers, the best candidates for many new jobs continue to come from other countries and require employer sponsorship. Reaching of the Cap, however, should not cause employers to abandon hope for qualified foreign national workers. Although in many cases H-1B status may be the only option for some prospective hires, there are often many alternatives to H-1B status that should be considered. Many of these options are in fact superior to H-1B status in terms of cost, speed and flexibility. Moreover, it should not be assumed that a person is subject to the Cap without first carefully reviewing the person’s background. It is often incorrectly assumed by employers that because a candidate is not in H-1B status, a petition filed on his or her behalf would be treated as a “new” H-1B and therefore subject to the Cap.

There are various options still available to employers seeking to hire foreign nationals now that the Cap has been reached. We hope that the sections below provide a guide to employers once it has been determined that a candidate requires immigration sponsorship. The article is not, however, intended to substitute for sound legal advice from a qualified immigration attorney. An experienced attorney may be able to identify options in addition to the ones discussed below based on a candidate’s specific background. There may also be reasons specific to an individual or employer that one or more of the options that we have set forth are inadvisable in a particular case.

Prior to looking for alternatives to H-1B status, the first question to ask is whether the job applicant is in fact subject to the Cap. It is often assumed that a prospective hire who is not currently in H-1B status, or is not in the United States, is subject to the annual numerical limitations. This was the law until the American Competitiveness in the 21st Century Act made several important amendments to the H-1B Cap provisions of the Immigration and Nationality Act in October 2000. Now, many foreign workers who were previously granted H-1B status are not counted towards the Cap, even if they haven’t held H-1B status for several years. As noted above, the H-1B Visa Reform Act of 2005 also provides a limited exemption from the Cap for persons graduating from a U.S. institution with a Master’s or higher degree. To determine whether the applicant is subject to the Cap, three initial questions should be asked: has the applicant held H-1B status before?; Does the applicant have an advanced degree from a U.S. institution?; and, will the applicant work concurrently at a Cap-exempt employer?

The Immigration and Nationality Act now exempts from the Cap anyone who was previously counted against it within the last six years, unless the person left the United States for a continuous one year period. To take an example, a person who was last approved for an H-1B in December 1999, never actually worked on that H-1B and instead came to study as an F-1 student in October 2000, and then returned to the United Kingdom in November 2004, would not be subject to the Cap if filing a petition in October 2005. Because the person was already counted against the H-1B Cap within the last six years, and was never outside of the US for a continuous year since being approved, she is exempt. Although this may seem to be an unusual scenario, similar fact patterns are not at all uncommon. You may interview foreign nationals who were approved for an H-1B a few years ago but decided not to work, and went back to school, or changed status to a dependent status. We have seen many H-1B petitions that were incorrectly filed as Cap-subject petitions because the question was never asked: “have you ever held H-1B status?” Of course, this question shouldn’t be asked until the job applicant indicates that he or she does require immigration sponsorship, but it should be asked before deciding not to hire the applicant because of the Cap.

In December 2006, the USCIS issued a policy memo allowing exemption from the Cap through what is known as the “remainder option.” An H-1B worker who is physically present outside the U.S. for more than one continuous year, but who did not exhaust his or her six-year limit, may choose to avoid the Cap and utilize the remainder of his or her six-year limit.

n December 2004, Congress passed the H-1B Visa Reform Act which exempts from the H-1B Cap up to 20,000 new H-1B petitions filed for persons who have graduated with a Masters or other advanced degree from a U.S. institution. The 20,000 limit has been reached for Fiscal Year 2008. USCIS policy guidance has made it clear that the Masters need not have been issued recently or in the same or related field required to perform the duties of the position. Thus, a prospective hire for an engineering position who has a Bachelor’s degree in engineering, and who also obtained a Master’s in French literature from the University of California at Berkeley in her spare time, would not be subject to the regular H-1B Cap.

Also exempt from the annual Cap are H-1Bs working at certain nonprofit research institutes. Although this may seem to be of little value to “for-profit” companies, a prospective candidate who is working pursuant to H-1B status at a Cap exempt, nonprofit research institute may concurrently work at an employer that would otherwise be subject to the. For example, XYZ, Inc. wants to hire Jose, a biochemist from Costa Rica, to fill a research position. Jose has never held H-1B status, and is therefore subject to the Cap. Jose decides to join the research department of a nearby university on a part-time basis pursuant to H-1B status. Once the H-1B for the university is approved, a concurrent H-1B may be filed for Jose to work at XYZ. It should be noted, however, that as soon as Jose’s employment with the university terminates, he will become subject to the Cap and his work authorization at XYZ will cease. An amendment petition should therefore be filed as possible once new H-1Bs are available.²

Because the H-1B is the most common work-authorized nonimmigrant (temporary) status, it is often incorrectly assumed that it is the best option for hiring a foreign national employee. There are several other common nonimmigrant classifications that the candidate may be eligible for that can be less costly, more flexible, and quicker to obtain than the H-1B. Many of these classifications also allow the employer to avoid the onerous LCA requirements discussed above which are required are required by the H-1B program. Even if it is determined that a candidate is eligible for an H-1B, the alternatives below should be considered, and a decision carefully made as to whether an H-1B is the best way to secure work authorization for the alien.

The following visa classifications are generally better than H-1B status in terms of flexibility, cost and speed.

Treaties with the countries of Australia, Chile and Singapore provide a special allocation of visas similar to the H-1B for nationals of these countries. Nationals of Australia offered positions in specialty occupations are eligible for up to 10,500 newly created E-3 visas based on the Australia-United States Free Trade Agreement (AUSFTA) which was signed in May 2004. This classification was codified by the REAL ID Act of 2005. Nationals of Chile and Singapore offered positions in specialty occupations are eligible for up to 6,800 H-1B1 visas (1,400 For Chile and 5,400 for Singapore) based on free trade treaties with these two countries.

The requirements for these treaty-based classifications are essentially the same as they are for the H-1B. The beneficiary must be offered employment in a specialty occupation, and the employer must comply with the LCA requirements for each person it hires pursuant to these classifications. However, because the classifications have their own allocation, they are not subject to the annual H-1B Cap. As of this writing, the quota for H-1B1s has never been reached, and it is unlikely that the E-3 quota will be reached in FY2011.

In addition to being exempt from the H-1B Cap, H-1B1 and E-3 statuses may be obtained more quickly at a lower cost. Unlike H-1B visa applications, H-1B1 and E-3 visa applications may be applied for directly at a U.S. embassy or consulate abroad, without having to file a petition with a regional USCIS Service Center in the United States beforehand. This allows employers to avoid the USCIS’ lengthy processing times for H-1B petitions (which at times have exceeded six months), as well as the ‘optional’ $1,000 premium processing fee to guarantee adjudication with two weeks. Given the slow pace of USCIS processing, the optional premium processing fee is almost always necessary when filing an H-1B for a new hire. Moreover, neither the H-1B1 nor the E-3 visas require the new $500 “Fraud Prevention and Detection Fee” imposed by the Consolidated Appropriations Act of 2005, which came into force on December 20, 2005. E-3 classification also does not require the additional $1,500/$750 training fee imposed on H-1Bs by the H-1B Visa Reform Act. Although the USCIS has stated that it will require the additional $1,500 or $750 training fee to be filed for H-1B1 petitions filed in the U.S., the Department of State does not require this additional fee for H-1B1 visa applications made at consular posts. Thus, filing an H-1B1 or E-3 can save an employer several weeks of processing time, and over $3,000 in government filing fees.

There are other benefits to E-3 and H-1B1 classifications. They are not subject to the maximum six year limit of H-1Bs, and both can be renewed indefinitely. Like E-1 and E-2 statuses (discussed below), E-3 status also allows the principal applicant’s spouse to apply for unrestricted work authorization while accompanying the principal to the United States.

However, it should be noted that E-3 and H-1B1 statuses do have some disadvantages when compared to H-1B. E-3 and H-1B1 statuses are not “dual intent” statuses, which means applicants for these classification must prove that they will leave the United States upon completion of their temporary assignment in the U.S. Thus, if an applicant seeks to pursue green card status upon being admitted to the U.S., E-3 and H-1B1 statuses would not be appropriate. H-1B1 visa status is also only granted in increments of 18 months, as opposed to 3 years.

Friendship, Navigation and Commerce treaties with various countries provide work authorized visa status for key employees, managers and executives. To qualify, the employer must have the nationality of a treaty country, and the employee must have the same nationality. A company is considered to be a “national” of another country if it is owned by nationals of that country (excluding persons residing permanently in other countries, including those residing in the United States as green card holders). For example, XYZ Ltd. is a British company which is owned by British citizens. It has a wholly owned subsidiary in the United States and seeks to hire Nigel, also a British national, to work at the U.S. subsidiary, XYZ, Inc. Even if Nigel has never worked for XYZ, he may qualify for an E-1 or E-2 visa if it can be shown that substantial trade is carried out between XYZ Ltd. and the U.S. (E-1 status), or XYZ Ltd. has made, or is in the process of making, a substantial investment in the U.S. by setting up its U.S. subsidiary (E-2 status). In order to qualify, the company would also have to be shown that Nigel has unique skills that are “essential” to the U.S. operation, or that he he will be serving in a managerial or executive capacity.

Like the other treaty-based visa classifications discussed above, E-1 and E-2 statuses has numerous advantages compared to H-1B. E-1 and E-2 employer are not required to file a petition with the USCIS prior to applying for a visa. The $500 fraud prevention and detection is also not required, and, unlike the H-1B and the H-1B1 and E-3, E-1 and E-2 employers are not required to file an LCA, or comply with the rigid prevailing wage and public access restrictions. Spouses in dependent E-1 or E-2 status may obtain unrestricted work authorization in the U.S. Additionally, E-1 and E-2 status does not have a maximum time limit, and, for nationals of many countries, may be issued for up to five years. Because of these benefits, in most cases it is preferable for employers to hire employees pursuant E-1 or E-2 status, if qualified, even when the H-1B Cap has yet to be reached.

U.S. companies that are a part of an international organization may qualify to transfer key employees working at subsidiaries, affiliates, and parent companies abroad pursuant to L-1B and L-1A statuses. Like the other preferred statuses discussed above, L-1A and L-1B multinational transferees are not subject to the annual Cap, and do not face many of the numerous restrictions imposed by the H-1B. There are no prevailing wage or Department of Labor record requirements. Although an L-1 petition must be filed with the USCIS beforehand³, filing fees for most new L-1s are substantially lower than they are for new H-1Bs, and government processing is generally quicker. Unlike the case for H-1Bs, payment of the L-1 employee’s salary may be made by the U.S. organization or by the foreign entity, and, spouses of L-1s in dependent L-2 status may obtain unrestricted work authorization in the United States by filing an application for employment authorization document with the USCIS.

The criteria that must be met to qualify for L-1 statuses are straightforward. The prospective employee must have worked fulltime at a qualifying entity abroad in a specialized knowledge (L-1B status), or managerial or executive capacity (L-1A status) for one year in the three years preceding the employee’s transfer to the U.S., and, the employee must be offered employment with a qualifying U.S. entity in a specialized knowledge, managerial or executive capacity. To be a qualifying entity, the foreign employer must have a common ownership relationship with the U.S. company. In other words, one must be the affiliate, parent or subsidiary of the other.

Although L-1 status is most often used to transfer employees who are currently working for a parent, subsidiary or affiliate abroad, there are other scenarios where an L-1 may be utilized. A candidate may qualify as an L-1 even if he or she is currently in the U.S. in a different status. For example, Marie has been in the U.S. in F-1 student status for nearly two years, attending school to obtain an MBA. Immediately prior to moving to the U.S., she worked at XYZ Ltd. in London for a year and a half as a Market Analyst. XYZ, Inc., which is XYZ Ltd.’s subsidiary in the U.S., now wishes to hire her as an Account Manager at its New York office. Based on these facts, XYZ, Inc. should be able to file a change of status for Marie to L-1A multinational manager status, and have her begin working in as little as a few days. Although this may appear to be an unusual fact pattern, we see it fairly regularly, particularly with very large international corporations. It is important to review the employment history of candidates who require immigration sponsorship to determine whether they have worked at a related company abroad in the last three years. If so, there is a good chance that the candidate will be eligible for employment sponsorship, even though the H-1B Cap has been reached.

The North American Free Trade Agreement (NAFTA) may also provide an alternative to H-1B status for Canadians and Mexican citizens. “TN” status is reserved for citizens of Canada and Mexico seeking to enter the United States to perform services in a list of professions specified by NAFTA⁴. Although TN status is similar to H-1B status in that it is available to professionals entering the United States to work for a specific employer at a professional level, it is not subject to an annual Cap, and has several advantages compared to H-1B status. Unlike H-1B status, an employer of a person in TN status is not required to meet prevailing wage requirements, or comply with LCA requirements and restrictions. Although TN status is not subject to a maximum time limit, unlike the H-1B it is not a “dual intent” status. TN applicants may not, therefore, enter the U.S. with the intention of residing here permanently.

As with E-3, H-1B1, E-1 and E-2 statuses, the sponsoring employer of a TN is not required to file a petition with the USCIS. Canadians may apply directly at a Class A port of entry, or pre-flight inspection facility without prior approval from the USCIS. Mexicans may apply directly by submitting a visa application at a U.S. embassy or consulate in Mexico. Although avoiding the petition process has obvious advantages, for Canadians it also has certain disadvantages. Adjudications by Customs and Border Protection (“CBP”) officers at the port-of-entry or pre-flight inspection facilities are less consistent and often more arbitrary than those handled by the USCIS, and an adverse decision normally cannot by reviewed by a court. Applicants also do not have a right to an attorney when applying at the border.

Perhaps the most important difference between TN and H-1B statuses, is the scope of occupations that each includes, which can be either an advantage or disadvantage. H-1Bs are for “specialty occupations” which generally means occupations requiring a bachelor’s degree in a specific field. Thus, H-1B status is very flexible, encompassing any occupation that fit within this definition. In many respects, TN status is more rigid. NAFTA specifically identifies the list of allowable TN occupations. If an occupation cannot be fit into one of the occupations on the list, the TN will be denied. In other respects, however, TN status is broader, as it includes many positions, such as “technologists”, which do not require a bachelor’s degree.

Although TN status has numerous advantages as compared to H-1B status, if the Cap has not yet been reached, it is often preferable to sponsor a qualified applicant pursuant to H-1B status, rather than dealing with the limitations of TN status discussed above. This is particularly true when it is known that the applicant will be working for the company on a long-term basis or seeking green card status. In a situation where the Cap has been reached, TN status may be the only alternative for many Canadian and Mexican applicants.

If the applicant is in F-1 student status, he or she may be eligible for practical training which may provide interim work authorization. Depending on the date of graduation, practical training may provide coverage until the start of the next fiscal year, or at least for part of the time until the beginning of the fiscal year. F-1 students are normally entitled to up to one year of “optional practical training” at the conclusion of their studies in the United States (see exceptions below). Most graduating students who are in F-1 status are aware of this benefit, and will usually notify the employer of this option.

A typical problem encountered by F-1 students in Optional Practical Training has been that the one year of practical training begins around graduation time (usually June) and ends a year later, well short of the beginning of the next fiscal year. Until recently, the employee would be hit by the Cap and would lose work authorization during the summer preceding the start of the fiscal year. Fortunately, this issue has been addressed in an interim rule published by the United States Immigration and Customs Enforcement (“ICE”) agency in April 2008. F-1 students who have had an H-1B petition filed on their behalf and have been selected in the H-1B lottery, will now have their F-1 status automatically extended, along with any grant of OPT work authorization, until the first day of the next fiscal year. If the H-1B petition is rejected, denied or revoked, the automatic extension of status, and work authorization, will immediately terminate. The new rule also allows for OPT extension for up to 29 months (an additional 17 months is applied to the standard 12-month OPT) if the foreign national has earned a degree in the area of science, technology, engineering, or mathematics (“STEM”) and the U.S. employer is enrolled in the government’s E-Verify program. Please refer to our separate article entitled Cap Gap Solution for F-1 Students Announced by DHS.

If it is too late to avoid the Cap-Gap, students who have not yet graduated may be able to extend their practical training further and bridge the gap using another form of practical training: “curricular practical training” (CPT), which is designed for students to gain practical experience in conjunction with their studies prior to graduation. CPT authorization is noted on the student’s I-20 form and is approved by the school’s foreign studies officer (referred to as the “Designated School Official”) for employment only at a specific employer. This approach requires advance planning and the cooperation and willingness of the student’s academic institution to “be creative”, and in most cases should only be considered where the more preferable options discussed above are unavailable.

It should be pointed out that like most nonimmigrant classifications, F-1 status does not allow for “dual intent”, and an F-1 student therefore bears the burden of proving his or her intention to return to home at the conclusion of his or her temporary stay in the United States.

The following “other” alternatives to H-1B status may provide temporary work authorization for prospective new hires if none of the preferred options discussed above are available.

O-1 status is reserved for persons who have risen to the very top of their field of endeavor. For prospective hires with exceptional credentials, the O-1 may be a viable alternative to the H-1B. Although most often used for scientists, athletes and performers, O-1 is also available to engineers, businesspersons and other professionals.

O-1 status has many advantages compared to H-1B status: the employer is not required to obtain a prevailing wage determination, or to comply with the LCA requirements Employees in O-1 status are also not subject to a maximum time limit, and the filing fees are much less expensive.

However, except in the strongest of cases, sponsoring a prospective hire for O-1 status generally involves a great deal more work than the H-1B, and the risks of a denial are much higher. Voluminous supporting documentation must be compiled, organized and packaged in preparing an O-1 petition and the beneficiary must be able to present recommendation letters from well known colleagues in his or her field demonstrating that his or her work has been widely recognized as extraordinary. Ultimately, whether the petition is approved or not depends on an immigration officer’s subjective evaluation of the caliber of the candidates credentials. Given these downsides, we generally only consider filing an O-1 when the prospective hire is clearly at the very top of his or her field (for example, the CEO of a large corporation or a scientist who has won internationally recognized awards), or when the H-1B Cap has been reached, and none of the better options discussed above are available.

Another possible short-term alternative to H-1B status is the J-1 exchange visitor visa. There are several J-1 programs that are designed to allow foreign nationals to come to the United States to obtain training, or impart unique expertise for a limited duration. Employers can seek J-1 status for foreign national employees through one of a number of organizations which are recognized by the Department of State to sponsor J-1 programs. Like F-1 and TN statuses, J-1 is not a “dual intent” classification, and is not intended to provide work authorization for an indefinite period, or to perform local work for hire. However, there may be circumstances where a J-1 would be an appropriate substitute for H-1B status. For example, where the candidate will work and receive training in the United States for a few months and then work for an affiliated company abroad, the J-1 may be appropriate. Given the limitations of J-1 status, the employer should discuss the purpose and activities associated with the program with the J-1 sponsoring organization and the employer’s immigration counsel prior to deciding to hire an employee through a J-1 program, especially given the recent regulatory changes to the J-1 program.

Another possible short-term alternative to H-1B status, is the H-3 training visa. H-3 status is available to companies transferring foreign nationals to the U.S. for a temporary period of up to two years to engage in a structured training program. H-3 trainees may engage in limited “hands on” work incidental to the training program. H-3 status may be appropriate where a new hire will initially spend several months engaged in a training program, prior to being transferred to an affiliated company abroad. However, the H-3 carries a number of important restrictions. As with TNs, F-1s and J-1s, H-3 status is not a dual intent status. Persons in H-3 status are also restricted from changing to H-1B or L-1 status if the training program lasts for more than six months. These limitations should be considered carefully and discussed with immigration counsel prior to deciding to hire a candidate through an H-3 program.

The so-called B-1 in lieu of H-1 provides an additional alternative to H-1B. This “quasi-classification” was developed by Department of State regulations for employees who are otherwise qualified for H-1B status, but are employed by and on payroll for a company located outside of the U.S. Thus, a U.S. company that has a subsidiary, parent or affiliate abroad, may be able to have a person provide services in the United States by hiring him or her at the foreign company, and then applying for a B-1 in lieu of H-1. This would allow the person to transfer to perform services in the U.S. while remaining on the foreign payroll. It should be noted, however, that the status of the B-1 in lieu of H-1B doctrine has been unclear since the passage of the Immigration Act of 1990 which imposed the annual Cap, and LCA requirements on the H-1B. Because B-1 in lieu of H-1B would seem to circumvent these requirements, many immigration practitioners suggest that employers not pursue this option, as doing so could be seen as contrary to the restrictions imposed by the Immigration Act. Each year, however, the Department of State reaffirms that the B-1 in lieu of H-1, at least in its view, is alive and well, and many posts have demonstrated a willingness to approve this classification after the Cap has been reached. It is unclear whether the Immigration and Customs Enforcement (“ICE”), which is responsible for enforcing employer’s employment authorization verification compliance, will continue to take the same view as the Department of State. We therefore suggest that employers consider this option carefully after discussing the potential risks with immigration counsel.

Another alternative to H-1B sponsorship is to assign the prospective hire abroad until either Congress acts to increase the Cap, or until the beginning of the next fiscal year, on October 1, 2011. Congress is under pressure from employers and pro-immigration groups to increase the Cap numbers.

If the person is assigned to work at a company that is a qualifying affiliate, subsidiary or parent of the U.S. employer, he or she may become eligible for L-1B or L-1A status a year from the date of being hired abroad, which may be sooner than the beginning of the next fiscal year. As noted above, L-1 has numerous advantages to H-1B, and is generally a better option for employers when available.

Before giving up on hiring a foreign national who requires immigration sponsorship because of the H-1B Cap, employers should carefully review the person’s background to determine whether in fact he or she is subject to the Cap. It is often incorrectly assumed that because a person is not in H-1B status at the time that they are being considered for employment, they are subject to the Cap. Due to changes in law and policy, there are several exemptions from the Cap which are sometimes missed by employers. Even if the candidate does not meet these exemptions, there are several alternatives to H-1B classification which may in fact be superior to this classification. E-1, E-2, E-3, L-1A, L-1B and H-1B1 statuses are usually preferable options, even when the H-1B Cap has not been reached. They are all quicker and less expensive, and the E-2, L-1A and L-1B have no restrictions regarding prevailing wage, and require less recordkeeping on the part of the employer. Finally, if the person does not qualify for one of the preferred alternatives, and is in fact subject to the Cap, other, less favorable alternatives can be considered, such as the O-1 Alien of Extraordinary Ability, J-1, and B-1 in lieu of H-1B. In many cases, these less preferred alternatives will not be suitable given the restrictions and risks associated with them. If all else fails, multinational employers may hire the candidate to work at a related company abroad until either Congress acts to increase the Cap, the person has gained a full year of experience abroad to qualify for L-1A or L-1B status, or the new fiscal year begins on October 1, 2011.

1. Note: due to recent regulatory changes, the “Cap Gap” problem for F-1 students in Optional Practical Training has largely been resolved. Please refer to section A(5) of this article, and our separate article entitled Cap Gap Solution for F-1 Students Announced by DHS for further details.

2. Unless Congress acts to increase the Cap, the soonest that employers will be able to file new Cap subject petitions will be April 1, 2010, six months prior to the start of FY2011.

3. Most large multinational corporations will qualify to transfer employees pursuant to the “L-1 Blanket” program which does not require an individual petition to be filed with the USCIS prior to each visa application. To learn more about the L-1 Blanket program, please visit our website at: http://www.mgplc.com/resources/nonimmigrant_visas/l1a_l1b.php

4. Appendix 1603.D.1 to Annex 1603 of NAFTA