The H-1B visa program is probably the most well-known US federal employment visas, and arguably the most controversial. Businesses say it’s too restrictive. Labor organizations complain that it displaces US workers and lowers their wages. Some politicians use it to appeal to their base with scant ability to fix the process to the benefit of all. But the truth lies somewhere in between these extremes.
The following overview of the H-1B visa is accurate as of the publication date. Be aware that the rules and internal business processes of the H-1B visa are complex. Either could be changed by legislation, executive order, or internal process reviews. For the latest rules, consult the Department of Labor (DoL), US Citizenship and Immigration Services (USCIS), or a legal firm specializing in immigration.
What is the H-1B visa?
The H-1B visa allows US employers to hire foreign national professionals to work in the US when qualified Americans cannot be found. The H-1B visa holder can work only for the sponsoring employer or the visa will be revoked. The visa was created in 1990 when Congress expanded the 1965 Immigration and Nationality Act and is not a direct path to citizenship.
According to the Department of Labor website, “The intent of the H-1B provisions is to help employers who cannot otherwise obtain needed business skills and abilities from the US workforce by authorizing the temporary employment of qualified individuals who are not otherwise authorized to work in the United States.”
H-1B visa requirements
To be eligible for an H-1B visa, professionals from other countries must work in a “specialty occupation” that requires “theoretical and practical application” of a unique body of knowledge and hold at least a bachelor’s degree, or equivalent, in the discipline. IT, engineering, medicine, math, law, accounting, and other difficult-to-master occupations are eligible for H-1B visas.
H-1B visa process
To obtain an H-1B visa, an employer must complete the following steps:
- File a Labor Condition Application (Form 9035E/ 9035) with the Department of Labor. The employer demonstrates adherence to the H-1B, H-1B1, or E-3 program requirements. The employer must attest that qualified Americans are not available and that wages to be paid are at least equal to the prevailing wage and to wages paid to others in similar positions within the company.
- Following approval of the Labor Condition Report, the employer must file a Petition for a Nonimmigrant Worker (Form I-129) with the US Citizenship and Immigration Services (USCIS), along with supporting documentation and payment, through an online portal. Employers must provide their legal company name, company business, EIN, and address, as well as the authorized representative/signatory of the company’s full name, title, phone number, and address. Companies must then add information for each “beneficiary,” referring to potential H-1B visa holders the company wants to sponsor. USCIS asks for the beneficiary’s legal name, male/female gender (only options available), date of birth, country of birth, country of citizenship, passport number, and whether they currently hold a US master’s degree. There is a $460 fee for each petition filed, and companies can submit up to 250 petitions. If selected, companies have 90 days to then complete and submit their workers’ full applications.
- After the Petition for a Nonimmigrant Worker is approved, the named worker can apply for the actual H-1B visa. The approved visa will allow the individual to enter the US. If the individual is already in the US legally, the actual H-1B visa is required if the employee wants to leave and reenter the US.
H-1B visa quotas and lottery
The H-1B visa lottery is limited to 65,000 new statuses or visas for each fiscal year, with an additional 20,000 spaces available for petitions filed for beneficiaries holding a master’s degree or higher from a U.S. institution that qualifies them as exempt from the original cap. Only new H-1B applicants are required to go through the lottery system — and petitions are selected at random to be evaluated. Foreign workers who are still within the three-year limit of their H-1B visa are free to transfer to another employer without being subjected to the lottery pool. However, for foreign workers who have exceeded the six-year limit on the H-1B visa may be required to re-enter the lottery system if they plan to return to work in the US after the one-year waiting period.
H-1B cap-exempt workers include those who have been previously granted an H-1B status and are still within the six-year period. Exemptions can also apply to workers in higher education, nonprofit organizations associated with a higher education institution, or nonprofit research or government organizations. You may also qualify for a cap-extension through your employer if you currently live in a country outside the US but have been “in status” within the past six years, without reaching your maximum duration of stay.
The USCIS modified the process this year, initially planning to scrap the lottery system, instead prioritizing the highest-paid and -skilled H-1B applicants in an attempt to “protect the economic interests of U.S. workers and better ensure the most highly skilled foreign workers benefit from the temporary employment program.” The Trump-era rule was put into place on Jan. 8, 2021, and scheduled to go into effect starting March 9, 2021, but the Biden administration announced they will delay the rule’s effective date until Dec. 31, 2021, giving the USCIS more time to work on the proposed modifications to the lottery system and to provide a smoother transition.
In addition, the USCIS states that individuals with H-1B visas working in the Commonwealth of the Northern Mariana Islands (CNMI) and Guam may not be counted in the H-1B cap. Since the rules can change frequently, consult the Department of Labor for the most recent updates.
Individuals must have a relevant degree from a public or not-for-profit university located in the United States. The school must be properly accredited by a formally recognized accrediting organization such as the Accrediting Council for Independent Colleges and Schools or the Accrediting Council for Continuing Education and Training. For more information visit the USCIS website.
H-1B visa impacts on US workers
Much attention has been drawn in the past decade to numerous instances of H-1B abuse. Firms that have twisted the intent of the program to hire inexperienced workers at lower pay, outsourcers that have flooded the applicant pool, IT workers needing to train H-1B replacements — incidents such as these have only fueled controversy around the H-1B visa’s impact on US workers.
Contrary to popular belief, however, foreign national talent, including that working in the US under the H-1B visa program, has a net positive impact on the labor market, according to the American Immigration Council. Skilled immigrants’ contributions help create jobs and opportunities for expansion through innovation, and despite suggestions to the contrary, H-1B workers do not drive down wages of native-born workers; in fact, some studies show a positive impact on wages overall.
From 2009 to 2011, wage growth for US-born workers with at least a bachelor’s degree was nominal, but wage growth for workers in occupations with large numbers of H-1B petitions was substantially higher. For example, in the Computer Systems Design and Related Services category, there has been a 5.5% wage growth since 1990 and a 7% wage growth since 2009. In comparison, wage growth across all industries has been 0.8% since 1990 and 1.6% since 2009.
Despite such evidence, politicians have introduced legislation to protect Americans from being displaced by H-1B visa holders. In April 2017 the DoL increased coordination with Homeland Security, the Department of Justice and other government agencies to investigate possible discrimination. In October 2018 the DoL updated the Labor Condition Application (Form ETA-9035) and the worker complaint form (Form WH-4) to increase transparency.
These changes intend to improve H-1B compliance and promote greater transparency regarding the employment of foreign national workers, according to DoL. The Labor Condition Application form now requires employers to provide more detailed information about H-1B worker employment conditions, including:
- Disclosing all places of employment for H-1B workers, including periods of short duration
- Providing the estimated number of H-1B workers at each place of intended employment
- Requiring clear identification of secondary entities who are using H-1B workers
- Requiring H-1B dependent employers who claim an exemption based on education, such as a master’s degree, to provide documentation of the degree
Revisions to the worker complaint form included additional data fields designed to better describe the nature of an alleged program violation. Finally, the USCIS has established an email address for individuals to submit ideas for improvement or tips regarding potential violations.
H-1B visa duration
According to USCIS, foreign workers with H-1B visas can stay in the US for up to six years, as an H-1B visa is initially valid for three years and can be extended for another three years. When a worker’s H-1B expires, the worker must either leave the U.S., obtain an extension of the visa through the American Competitiveness in the Twenty-First Century Act (AC21), or apply for a different visa status. If the worker simply stays in the US past the expiration of the H-1B status, the worker loses legal status in the US and can be removed (deported).
Under AC1, two groups of H-1B visa holders can extend their visa past the six-year maximum, according to NOLO.com, an online legal information service that connects people with available immigration attorneys in their geographic area: workers who are the beneficiary of an approved immigrant worker petition (I-140) and cannot yet file a green card application because the worker’s “priority date” is not current, and workers whose US employers filed a Labor Certification application or an I-140 petition on the worker’s behalf prior to the beginning of the sixth year in H-1B status.
Due to backlogs in priority dates for some categories, workers could potentially be in H-1B status for many years beyond the six-year maximum waiting for their priority date to become current.
H-1B denial rates
Rates of H-1B visa denials have risen sharply over the past few years, according to Forbes, and there’s been a substantial increase in Requests for Evidence (RFE), which requires sponsoring employers to submit further information about their sponsored employee(s) or to fill in gaps or omissions in the visa application.
Denial rates for H-1B petitions rose from 6% in 2015 to 24% through Q3 2019 for new H-1B petitions for initial employment, according to a National Foundation for American Policy (NFAP) analysis. The denial rate for H-1B petitions for continuing employment (for existing employees) remained relatively stable (and high) at 10% in Q2 2019 and 9% in Q3 2019, according to the NFAP analysis.
As of Q2 2019, the RFE percentage of completed H-1B visa petitions was 48% compared to an RFE percentage in 2015 of 22%, according to USCIS data compiled by Envoy Global.
How much are H-1B visa holders paid?
The current minimum salary for H-1B visa holders is $60,000 per year, unchanged since the program began in 1989. The program does mandate that employers pay H-1B holders the “prevailing wage” for their work in the area where they are hired. That means in technology some H-1B workers can earn upwards of $100,000 annually; however, a recent report showed that between 2010 and 2016, the average salary for H-1B visa holders working in technology was $80,600.
In January 2017 California Representative Zoe Lofgren introduced the High-Skilled Integrity and Fairness Act of 2017. This bill prioritizes allocation of H-1B visas to companies that agree to pay H-1B visa holders 200% of the current minimum salary, $130,000. In addition, the bill reserves 20% of H-1B visas for businesses with less than 51 full-time employees, including parent companies, subsidiaries, or other affiliated entities. The bill was referred to the Subcommittee on Immigration and Border Security, but nothing further has happened with it.
In January 2017 Congressman Darrell Issa (R-Calif.) supported by Congressman Scott Peters (D-Calif.) introduced H.R. 170, the Protect and Grow American Jobs Act. This bill would increase the attestation requirements of H-1B employees to $100,000. It too is awaiting action by the Subcommittee on Immigration and Border Security, and has languished in Congress.
Path to permanent U.S. residence
The holder of an H-1B visa can have “dual intent.” Although the H-1B is a non-immigrant visa, the holder can apply for a green card at the same time. Because the time required to obtain a green card has lengthened in recent years, the H-1B offers a way for individuals to work in the U.S. while seeking to become permanent residents.
That stands to change in the near future if the Biden administration passes it’s sweeping immigration reform plan, which includes plans to eliminate per-country caps on employment-based green cards and to clear out the decades-long waitlist that has built up. The Biden administration also hopes to improve the path to residency for foreign workers, especially those who have earned STEM degrees in the US.
H-1B visa revocation
The USCIS can revoke an H-1B visa. While it is not common, it does happen if the sponsoring employer is going out of business or cancels their original request. After the H-1B visa has been granted, employers can terminate employees but must comply with the terms of any employment agreement and follow federal, state, and local employment law.
Visas similar to H-1B
A number of visas similar to H-1B exist. The H-1B1 visa and the E-3 visa, for example, allow individuals from Chile and Singapore and from Australia, respectively, to work in the US under essentially the same requirements as the H-1B visa. Each year, 1,400 workers from Chile and 5,400 workers from Singapore may obtain H-1B1 visas. The E-3 visa allows 10,500 Australians to work in the US.
The Temporary Business visa allows holders to remain in the US for six months to cut a business deal, attend a conference or complete training. The F-1 visa is for international students studying at US colleges and universities, and the Optional Practical Training (OPT) program allows F-1 visa holder students to remain in the US for 12 months after graduating. Those with STEM degrees from Student and Exchange Visitor Program (SEVP)-certified and accredited U.S. colleges and universities are eligible for an additional 24-month OPT extension. To read more about STEM-OPT, see “Hiring STEM-OPT Employees: What businesses need to know.”
H-1B visa dependents
Spouses and unmarried children under 21 can get an H-4 visa to enter the US with an H-1B visa holder. The H-4 visa holder can stay in the US as long as the H-1B is in effect. An individual with an H-4 visa can attend school, get a driver’s license, and open a bank account. As of May 26, 2015, certain H-4 visa holders can become “lawful permanent residents” (LPR) and become eligible to work.
In August 2020, the Trump administration passed an executive order that revoked H-4 visa opportunities, stripping away work authorization from spouses of H-1B visa holders. The move left families, who were often living in high cost of living areas such as Silicon Valley, dependent on a single income. However, President Biden overturned the order on his first day in office, allowing dependents of H-1B visa holders to continue working in the US. Biden’s proposed immigration reform also includes measures to ensure that those already holding H-1B visas will gain permanent work authorization for dependents and that their children will not be aged out of the system.
Biden’s immigration reform also includes changes and improvements to the H-1B visa process. His plan is to increase availability of employment-based green cards without increasing the annual H-1B quota. If passed, Biden’s proposal would end per-country caps on employment-based green cards, which would clear the decades-long backlog of people on the waiting list to receive one. Overseas students who earn advanced STEM degrees in the US will also have a faster path to permanent residency and the new laws would also include permanent work authorization for H-1B dependents and prevent children from aging out of the system.
With the backlog cleared, it would open up the H-1B visa process to new applicants, without extending the H-1B quota, which is a move that concerns labor unions who feel tech companies abuse the H-1B visa system by overlooking US talent in favor of hiring foreign talent at a lower salary. Tech companies say this isn’t the case, however, and argue that it is difficult to find the right skillsets and talent for engineering and IT personnel roles. Either way, the move comes as a way to meet in the middle with labor unions while still improving the H-1B visa process and giving more foreign workers a path to an employment-based green card.
H-1B visa holder taxation
H-1B visa holders have to obtain an Individual Taxpayer Identification Number and pay US taxes, Social Security, and Medicare. However, the rules can get very complicated depending on whether the H-1B visa holder is categorized as a resident alien or a non-resident alien. At a summary level, the IRS uses the “substantial presence test“ to classify each H-1B holder.
Substantial presence is a function of the number of days an individual has spent in the US during the current tax year along with the prior three tax years. Individuals who fall above the threshold are deemed resident aliens and are taxed on all income, including non-US income. Individuals who fall below the threshold are considered non-resident aliens and are only taxed on US income. There are a large number of rules and exemptions, so it’s recommended that H-1B visa holders consult a tax specialist.