The Department of Homeland Security (DHS) has proposed new regulations aimed at addressing abuse and ensuring fairness in the annual H-1B visa lottery. The proposed changes, released on Friday under the regulation number 1615-AC70, would select registrations based on unique beneficiaries, regardless of the number of registrations submitted on their behalf.

The H-1B visa program, widely used in the tech industry, allows employers to hire foreign workers with specialized skills for up to two three-year terms, with the option to extend their status further when applying for permanent residency. However, the demand for these visas has far exceeded the annual allocation of 85,000 new visas, including 20,000 for workers with advanced degrees. In fact, registrations for the 2024 fiscal year lottery exceeded a staggering 740,000, despite the recent layoffs in many tech firms. The DHS has cautioned that such high numbers may indicate attempts to manipulate the system.

By basing the lottery selection on unique beneficiaries, the proposed regulations aim to eliminate incentives for gaming the system, while potentially enhancing the bargaining power of workers. This change may lead to higher wages for H-1B workers, which could have a positive impact on US workers as well, according to Greg Siskind, a partner at Siskind Susser PC. Under the new system, selected H-1B workers would still have the option to choose between multiple employers who have submitted petitions on their behalf.

The proposed regulations also address other issues related to the H-1B program. They include guidelines for voluntary work-site visits as part of compliance reviews and requirements to file new visa petitions when there are changes in employment details. Additionally, the proposal offers more flexibility for entrepreneurs aiming to launch start-ups while on H-1B visas and seeks to address "cap-gap" issues faced by student visa holders when their work authorization ends before the start of H-1B employment.

Another significant change proposed by the DHS is the codification of the ability for visa petitioners to qualify as employers, even if the H-1B visa recipient holds majority ownership of the business. This move is designed to encourage more entrepreneurs to participate in the program. However, the duration of visas sought by beneficiary-owned businesses would be limited to 18 months for the initial visa petition and the first extension.

Furthermore, the proposed rule aims to clarify the exemption criteria for certain organizations from the annual H-1B visa cap. Nonprofit organizations, such as hospitals and universities, that have significant research activities would be eligible for the exemption, rather than those primarily engaged in research.

The proposed changes to the H-1B visa lottery process and related regulations are expected to undergo a review process. If approved, they could potentially bring a more transparent and fair approach to the allocation of H-1B visas, ensuring that the program continues to meet the needs of both employers and skilled foreign workers.

Bill Stock, a partner at Klasko Immigration Law Partners LLP, commended the proposed rule's focus on whether an organization is fundamentally a 'research organization' instead of narrowly considering the percentage of research-related activities performed by an organization.

The DHS's proposed changes have received mixed reactions, with some stakeholders applauding the efforts to address abuse and enhance worker bargaining power, while others express concerns about potential limitations on beneficiary-owned businesses. The review and feedback process will help determine the final outcome and implementation of these proposed regulations.