The H-1B Visa Dilemma: A Closer Look at the Legal Uncertainty Facing Employers
Posted on Mar 3, 2025Diana Pacheco
In the closing days of Biden's presidency, the Department of Homeland Security implemented new regulations to 'modernize' the H-1B program.[1] This midnight rulemaking maneuver, born from anxieties over the Trump administration’s hardline stance on immigration, codified common agency practices and created hurdles for the new President should he seek to amend those practices.
Created by the Immigration Act of 1990, the H-1B Visa is a temporary (nonimmigrant) visa for highly educated foreign professionals to work in “specialty occupations.”[2] These foreign professionals must have a bachelor’s degree or higher (or its equivalent) in a specific specialty to qualify for H-1B status.[3] The program is capped annually at 65,000 visas, with an additional 20,000 petitions set aside for those who have obtained advanced degrees (a master’s degree or higher) from U.S. institutions.[4] Not subject to the numerical cap are individuals employed or petitioned for by institutions of higher education or related nonprofit entities, a nonprofit research organization, or a government research organization.[5] Once approved, an H-1B Visa is only valid for 3 years but may be extended to a maximum of 6 years.[6] This program allows U.S. businesses to temporarily employ educated foreign workers in specialty areas. Technology and software development, engineering, healthcare, education, and business and finance are the primary sectors that rely on H-1B visas for skilled talent.
Supporters of the H-1B visa argue that it is crucial for global companies, enabling them to bring in international talent to drive innovation in the U.S. On the other hand, critics of the program highlight issues with inadequate oversight and the misuse of H-1B visas by some companies to replace American workers with cheaper foreign labor. During his first term, President Trump issued an executive order temporarily suspending new grants, stating that H-1B visas “should include only the most skilled and highest-paid applicants and should never, ever be used to replace American workers.”[7] Despite attempts to justify the policy with the COVID-19 pandemic, a federal judge struck down the policy.[8] The first Trump administration continued its push against H-1B visas by tightening eligibility requirements and mandating higher salaries for H-1B employees.[9] However, some of these eligibility rules, including the salary increase mandate, were also vacated in federal court.[10] Other restrictions imposed by the Trump administration on the H-1B program expired in March 2021 and were not extended under the Biden administration.[11]
Biden’s “modernized” regulatory framework for the H-1B program took effect on January 17, 2025. Biden’s timing creates procedural obstacles for the Trump administration if it wants to alter H-1B regulations. While a president can easily rescind, modify, or replace executive orders without public input, regulations like the H-1B Modernization Regulations require a formal rulemaking process, which involves several steps, including public comments, review by the Office of Management and Budget, and the issuance of a final rule. Alternatively, Congress could use the Congressional Review Act (CRA) to overturn the rule, but this route is politically complex and time-sensitive, making it challenging for the Trump administration to take swift action.[12]
Key changes introduced by Biden’s modernization include:
(1) Codified Agency Deference. Although already the standard practice, the new regulations codify deference to the U.S. Citizens and Immigration Services (USCIS) prior determinations when reviewing petitions involving the same parties and facts, such as extension petitions unless there’s a material error, change in circumstances, or new information impacting eligibility.[13]
(2) Specialty Occupation Definition. An H-1B worker's degree must be "directly related" to the job. "Directly related" is defined as having a "logical connection." The ruling emphasizes that a general degree is not enough to qualify for a position as a specialty occupation; however, it codifies discretional flexibility in acceptable degrees.[14]
(3) Maintenance of Status. Employers must now demonstrate that an H-1B worker maintained immigration status with previous employers when applying for an extension or amended petition.[15]
(4) F-1 to H-1B Auto Extension. The ruling codifies the automatic "cap-gap" extension to avoid lapses in status and OPT work authorization while an H-1B petition is processed.[16]
(5) Entrepreneurs with Ownership Interest. The ruling removes the previous common law employer-employee relationship requirement, making it easier for entrepreneurs to obtain H-1B visas through petitions filed by their own start-ups. Individuals with more than 50% ownership interest in the business can now apply for H-1B visas, and may perform some non-specialty occupation work related to owning and directing that business.[17]
As we settle into a new Trump term, it is unclear whether the President will seek to reinstate his previous H-1B restrictions or how he will react to Biden’s midnight rulings. Business leaders like Elon Musk favor the H-1B program while others continue to push for reducing or completely eliminating the H-1B visa. During his first term, Trump promised to discontinue H1-B visas,[18] but recently, he stated “I have many H-1B visas on my properties. I’ve been a believer in H-1B. I have used it many times. It’s a great program...”[19] Given the mixed signals from President Trump and the ongoing debate over the future of the H-1B visa, it remains to be seen how his policies will ultimately evolve and impact both businesses and foreign workers.
Economists consistently argue that immigrant workers in the U.S. contribute to the creation of new job opportunities for native-born workers in various ways.[20] This is especially true for H-1B workers, which helps explain the relatively low unemployment rates in fields that employ a significant number of H-1B workers.[21] Further, a recent study found that in light of higher restrictions on H-1B visas, such as increasing denial rates, U.S.-based multinational corporations reduce the number of jobs they offer domestically and instead opt to expand employment at their existing foreign affiliates or establish new ones abroad.[22] As a result, restrictive H-1B policies may ultimately drive talent and job opportunities overseas, undermining the very competitiveness they seek to protect.
There are serious implications for the business community should the second Trump administration choose to return to restrictive H-1B rules. Such restrictions would significantly increase the cost of hiring H-1B talent, narrow eligibility for foreign workers whose degrees aren't directly tied to their job role, restrict third-party worksite assignments, and make selection in the annual lottery more dependent on higher-wage, senior-level positions. Employers would also likely face considerable operational challenges, with amendments, extensions, and new cap-subject petitions all being impacted. Given the critical role that H-1B visas play in fostering business innovation and economic growth, it is in the best interest of businesses to support and advocate for the program's continued existence. Companies should advocate for the consistent administration and lawful application of the H-1B program.
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[1] U.S. Citizenship and Immigration Services, H-1B Final Rule, H-2B Final Rule, and Revised Form I-129 Effective Jan. 17, 2025, Jan. 17, 2025, https://www.uscis.gov/newsroom/alerts/h-1b-final-rule-h-2-final-rule-and-revised-form-i-129-effective-jan-17-2025.
[2] See 8 CFR § 214.2(h)(4)(ii).
[3] See INA secs. 101(a)(15)(H)(i)(b) and 214(i); 8 U.S.C 1101(a)(15)(H)(i)(b) and 1184(i).
[4] See INA sec. 214(g)(1)(A), 8 U.S.C. 1184(g)(1)(A).
[5] Id. See also 8 U.S.C. 1184(g)(5)(A)-(B); INA sec. 214(g)(5)(A)-(B).
[6] See 8 U.S.C. § 1184(g)(4); 8 C.F.R. §§ 214.2(h)(9)(iii)(A)(1), (h)(13)(iii)(A).
[7] Michael D. Shear & Alan Rappeport, Trump Signs Executive Order on 'Buy American, Hire American', N.Y. Times, Apr. 18, 2017, https://www.nytimes.com/2017/04/18/us/politics/executive-order-hire-buy-american-h1b-visa-trump.html.
[8] Chamber of Commerce v. U.S. Dep't of Homeland Sec., 504 F. Supp. 3d 1077 (N.D. Cal. 2020).
[9] Michael D. Shear & Abby Goodnough, Trump Administration Moves to Limit H-1B Visas for Skilled Foreign Workers, N.Y. Times, Oct. 6, 2020,https://www.nytimes.com/2020/10/06/us/politics/h1b-visas-foreign-workers-trump.html.
[10] See JSW Chamber of Commerce of the United State of America et al. v. United States Department of Homeland Security, et al., 4:20-cv-07331 (N.D. Cal. Dec. 1, 2020).
[11] American Immigration Council, H-1B Visa Program Fact Sheet (Jan. 3, 2025), https://www.americanimmigrationcouncil.org/sites/default/files/research/25.01.03_h-1b_visa_program_fact_sheet.pdf.
[12] Christopher M. Davis and Maeve P. Carey, Cong. Rsch. Serv., IN12408, CRA Lookback Period Currently Estimated to Begin in August 1 Time Frame (2024).
[13] See 8 CFR 214.1(c)(5).
[14] See 8 CFR 214.2(h)(4)(ii).
[15] See 8 CFR 214.1(c)(6).
[16] See 8 CFR 214.2(f)(5)(vi).
[17] See 8 CFR 214.2(h)(9)(iii)(E).
[18] Donald J. Trump (1st Term), Statement by Donald J. Trump on Position on Visas Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/314461.
[19] Jon Levine, Donald Trump Backs H-1B Visa Program Supported by Elon Musk, N.Y. Post, Dec. 28, 2024, https://nypost.com/2024/12/28/us-news/donald-trump-backs-h-1b-visa-program-supported-by-elon-musk/.
[20] See Zsoka Koczan, et al., “The Impact of International Migration on Inclusive Growth: A Review,” IMF Working Paper WP/21/88 (International Monetary Fund, March 2021), 10-13, https://www.elibrary.imf.org/downloadpdf/ journals/001/2021/088/001.2021.issue-088-en.pdf.
[21]American Immigration Council, H-1B Visa Program Fact Sheet 6 (Jan. 3, 2025), https://www.americanimmigrationcouncil.org/sites/default/files/research/25.01.03_h-1b_visa_program_fact_sheet.pdf.
[22] Britta Glennon, How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program, 70 Management Science 907, 925 (2023), https://doi.org/10.1287/mnsc.2023.4715.