Certain H-1B Positions are “Cap Exempt”

I. Introduction:

Certain employers are cap exempt from the numerical limitations set forth by Congress in the H-1B visa program. These are employers who are not limited by the 65,000 H-1B visas available worldwide every year or the 20,000 H-1B visas set aside annually for graduates of a Master's or higher degrees from a U.S. academic institution. Such employers are referred to as “cap exempt” and they include: 1) an institution of higher education; 2) a nonprofit entity related or affiliated to an institution of higher education; or 3) a nonprofit research organization or a governmental research organization. These employers are referred to collectively as “H-1B cap exempt” employers.

The greatest advantage to filing a cap-exempt H-1B visa petition is that an H-1B visa may be issued after the H-1B visa cap had reached in any fiscal year. Congress intended to provide unlimited flow of H-1B visa workers to higher education, research, and certain nonprofit employers and thus it did not limit them to any of the statutory numerical restrictions which for-profit companies face.

II. Any Employer Could File a Cap Exempt H-1B Visa

One intriguing element of this law is that any employer could file a cap-exempt H-1B visa petition if the alien will be “working at” a cap-exempt employer. In other words, if the H-1B employer, who happens to be a for-profit company that is not related or affiliated with an institution of higher education, but has a contract to place one if its employees to “work at” a cap exempt organization, then that particular H-1B visa petition becomes cap exempt itself.

1. Does the “Working At” Rule Require a Minimum Number of Hours?

The “working at” language is specifically stated in the law which introduced the cap exempt provisions. This law did not specify that the alien must work a minimum number of hours in order for his H-1B visa petition to be deemed cap-exempt. In other words, so long as the alien is “working at” an organization that qualifies as cap-exempt under the rules, the petition becomes exempt from the cap even though the alien’s employment is less than full time. The lack of such restriction in the statute allows an employer to file an H-1B visa petition after the cap has been reached albeit only a portion of the alien’s weekly employment involves “working at” a cap-exempt employer and the remainder of the hours, the alien is providing work elsewhere.

2. Can an Alien Transfer His Cap Exempt H-1B Visa to a For-Profit Employer?

One of the disadvantages of these regulations is that once the alien receives an H-1B visa that is deemed cap exempt, she may not transfer to a for-profit employer without being counted towards the annual cap. In other words, an alien who received her H-1B visa through a cap-exempt employer directly (as explained above) or through a private employer pursuant to the “working at” provision, must be counted towards the cap if she wished to work exclusively for an employer who is not cap-exempt.

Lack of planning on this particular issue can be lead to unpleasant consequences. Attempting to transfer an H-1B visa from a cap-exempt employer to a cap-subject employer after the cap had reached in that particular year means that the worker may not begin working for the new employer before the beginning of the next federal fiscal year.


  • On July 1, 2008 Company “A,” a for-profit organization offered Jane Alien, who at the time was on OPT, full-time employment and promised to sponsor her H-1B visa. On that date, the H-1B visa cap had already reached for federal fiscal year 2009.
  • Company “A” tells Jane that it wished to place her at the Ohio State University as a Programmer Analyst. Since Jane will be “working at” the Ohio State University, an institution of higher education and an H-1B visa cap exempt employer, the H-1B visa petition that Company “A” filed for Jane was deemed cap exempt and was subsequently approved after the cap had already reached.
  • Jane worked for Company “A” until December 21, 2009 on which date she received a job offer from Company “B” for a substantially higher salary which she accepted.
  • Jane resigned from Company “A” thinking that transferring her H-1B visa petition to Company “B” should be routine.
  • On December 22, 2009 Company “B” files Jane’s H-1B visa transfer which was rejected by the USCIS because it deemed the petition to be subject to the H-1B visa cap. Since the cap for federal fiscal year 2011 had reached the day before, this case could not be accepted by the USCIS until April 1, 2010 for employment to begin on October 1, 2010, the following federal fiscal year.
  • This was disastrous for Jane because Company “A” had already substituted her position and will not take her back.
  • Jane was without visa options and had to return back to her home country.

3. Can an Alien Who is in Possession of a Cap Exempt H-1B Visa Join a For-Profit Employer Upon the Filing of a Cap H-1B Visa?

The classical portability provisions introduced by the American Competitiveness in the Twenty-First Century Act of 2000 (AC21) set forth three (3) conditions thereby allowing an H-1B visa worker to transfer her employment to another employer upon the filing of an H-1B visa petition. These conditions are: 1) the alien was lawfully admitted to the US; 2) A new employer files an H-1B visa petition in good faith; and 3) the alien had not previously worked illegally. Hence, if the alien changes employment from a cap-exempt employer to cap-subject employer, and she satisfies all of the portability rules cited above, she can then join the new employer.

One caveat about the portability provision is that the employer may work for the new employer until the new petition is approved or denied. If approved, obviously the alien will continue working for the new employer. If denied, the H-1B visa employee must immediately stop her employment with the new employer. Specifically, INA §214(n)(1) provides “[e]ployment authorization shall continue for such alien until the new petition is adjudicated. If the new petition is denied, such authorization shall cease” (emphasis added). This provision is clear and it states that the employment authorization provided in the portability period ends upon the issuance of the H-1B visa decision by the USCIS.

A peculiar situation arises when the alien had been working for a cap-exempt employer. If the portability period ends upon the issuance of the H-1B visa decision, then may the alien continue to work for the new employer between the date of the H-1B visa issuance and October 1? Technically, the alien has no status in this interim period. The answer is, yes.

Let’s consider the example above again with some modifications.

  • Jane actually is offered new employment on March 15, 2009.
  • Company “B” files a cap H-1B visa with the USCIS on April 1, 2009 to start Jane’s employment on October 1, 2009.
  • Jane satisfies all the portability rules and joins Company “B” once the receipt notice is issued by the USCIS.
  • On June 1, 2009, USCIS issues an approval notice and Jane’s H-1B visa new I-94 begins on October 1, 2009.
  • Jane has technically has no status between June 1, 2009 and October 1, 2009.

This question was posed to the USCIS. On May 23, 2007, Mr. Efren Hernandez of the USCIS answered the question as following:

“As you note, section 214(n) provides employment authorization until the H-1B petition is either denied or adjudicated. Congress appears to have not contemplated a situation in which H-1B status would not be immediately conferred upon the portability worker upon approval of the H-1B petition. By addressing the result of a denial but not an approval Congress seems to have assumed that the alien would immediately be covered by the approval and would no longer require the employment authorization conferred by 214(n), and thus drafted 214(n) so that the employment authorization it provides ends upon “adjudication.” I agree that a result in which an alien with a pending petition is in a better situation than one with an approved petition makes no sense. A reading of 214(n) such as the one you suggest that continues employment authorization until H-1B status is available is a logical one, and USCIS will explore this position in future rulemaking.”

III. Conclusion:

US Immigration laws allow an employer who itself is not an H-1B visa cap exempt to successfully file a cap-exempt H-1B visa petition upon the showing that the alien is “working at” a cap-exempt employer. Deciding who is a cap exempt employer and representing such clients requires experience and skill which the attorneys of The Law Firm of Shihab & Associates, Co., LPA clearly possess. They have demonstrated competence and experience in representing Colleges, Universities, Health Care providers and other employers and employees and have in-depth knowledge in this complex area. If you have a case concerning a cap-exempt employer or position, contact The Law Firm of Shihab & Associates, Co., LPA at an office near you.

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