The Department of Homeland Security (“DHS”) has posted a final rule regarding the H-1B cap selection process. The rule will be published in the Federal Register on January 31, 2019 and will go into effect on April 1, 2019.

The Final Rule

The posted rule is the final version of the proposed rule titled “Registration Requirement for Petitions Seeking to File H-1B Petitions on Behalf of Cap-Subject Aliens,” which was published for public comments on December 3, 2018.  During the 30-day comment period, the proposed rule received over 800 public comments.

Under the final rule, United States Citizenship and Immigration Services (“USCIS”) will reverse the order in which the H-1B regular cap and advanced degree exemption lotteries are conducted, beginning with this year’s selection process. Under the current selection process, if the regular cap and advanced degree cap are reached in the first five business days that cap-subject petitions may be filed, USCIS randomly selects sufficient H-1B petitions to reach the 20,000 advanced degree cap first. Then, USCIS randomly selects sufficient H-1B petitions from the remaining pool of beneficiaries, including those not selected in the advanced degree lottery, to reach the 65,000 regular cap limit. USCIS rejects all remaining unselected H-1B cap-subject petitions.

The final rule reverses the selection process so that USCIS will randomly select registrations (or petitions if, as with FY2020 filings this year, the registration requirement is suspended) for the H-1B regular cap first, including registrations for petitions eligible for the H-1B advanced degree exemption. Then, USCIS will randomly select registrations for the H-1B advanced degree exemption.  Consistent with Executive Order 13788, “Buy American, Hire American,” and as noted in the proposed rule, this change is projected to increase the chances of selection for H-1B petitions filed on behalf of beneficiaries who hold master’s or higher degrees from US institutions by as much as 16%.

The final rule also introduces an electronic pre-registration system for employers seeking to file cap-subject H-1B petitions. It will require that prospective petitioners submit an online registration for each beneficiary containing information needed to identify the prospective H-1B cap-subject petitioner and beneficiary, eliminate duplicate registrations, and match selected registrations with subsequently filed petitions. After considering public feedback, DHS states that it is “suspending the registration requirement for the FY2020 cap season to complete all requisite user testing of the new H-1B registration system and otherwise ensure the system and process are operable.”

Impact on H-1B Employers

In light of the agency’s decision to suspend the pre-registration requirement for FY2020, USCIS will follow its normal practice of accepting H-1B cap-subject petitions beginning on April 1, 2019 for employment beginning on October 1, 2019. Accordingly, employers should begin, or continue, to prepare H-1B petitions to be filed the first week of April. The change in the way the lotteries will be conducted, however, will mean that an estimated 5,340 additional beneficiaries holding advanced degrees from US institutions will be selected in the two lotteries. This will mean that fewer H-1B visas will be available for beneficiaries with non-US degrees and beneficiaries who hold a US degree at the bachelor’s level only.