• Reduction in Number of H-1B Visas Could Stall US Business Growth
  • June 4, 2004 | Authors: Priscilla J. Cortez; Brian E. Schield
  • Law Firms: Squire, Sanders & Dempsey L.L.P. - San Francisco Office ; Squire, Sanders & Dempsey L.L.P. - Los Angeles Office
  • US employers who anticipate hiring non-US professionals later this year, or in 2005, should begin applying for H-1B visas as soon after April 1 as possible, if they want to ensure that prospective employees are approved for visas and able to start work as scheduled. As of Feb. 17, US immigration officials had issued 65,000 visas, the maximum allowed by Congress for the 2004 federal fiscal year, and will not accept applications again until April 1. That means new visas will not be available until the next fiscal year begins Oct. 1.

    Congress reduced the H-1B cap to 65,000 after having set it at 195,000 for each of the previous three years. The alarming fact is that the cap had been reached only four months into the fiscal year. Unless Congress enacts legislation to change the number, the United States Citizenship and Immigration Service (USCIS) will issue only 65,000 visas for the 2005 fiscal year (Oct. 1, 2004 to Sept. 30, 2005). And, as evidenced this year, those visas certainly will go quickly, perhaps even by the beginning of the 2005 fiscal year, based on anticipated pent-up demand. The cap has a huge impact on US businesses that employ H-1B visa workers, and the forecast is not looking good. Recent reports from sources in Washington indicate that Congress is unlikely to increase the number of H-1B visas anytime soon because of the depressed condition of the US labor market in an election year.

    Petitions for current H-1B workers do not count toward the congressionally mandated H-1B cap. Accordingly, the USCIS will continue to process petitions filed to:

    1. Extend the amount of time a current H-1B worker may remain and work in the US
    2. Change the terms of employment for current H-1B workers
    3. Allow current H-1B workers to change employers
    4. Allow current H-1B workers to work concurrently in a second H-1B position

    The H-1B program is vital to America's economy. Many US companies, as well as medical and educational institutions, use H-1B visas to employ highly educated, non-US professionals to come to work in the United States for a specified period of time. These professionals enable US employers to develop new products, create groundbreaking research, implement new projects, expand operations, create new jobs and compete in the global marketplace.

    US employers hire these non-US professionals for specialty occupations such as engineers, professors, accountants, researchers, medical personnel, computer professionals and business managers. Besides obtaining essential skills, or unique knowledge, US employers use the visa program to acquire special expertise in overseas markets, trends or distribution channels. This equips US businesses to compete in global markets. Non-US professionals also alleviate temporary shortages of US professionals where they occur in specific occupations.

    In light of the still slow economy, the USCIS also announced March 9 that the cap on H-2B visas had been reached for the first time in history. The H-2B visa is available strictly for temporary employment, such as seasonal jobs commonly found in the hospitality and other vacation-oriented businesses. The fact that the cap was reached so early in the fiscal year may present significant difficulties to employers who failed to anticipate their summer labor demands in advance.

    Given these new visa limitations, along with new Department of Labor regulations expected to be enacted this fall, it is even more critical for businesses in the United States to map out effective immigration strategies for their workers.