ABCs of Immigration: Cap-Exemption Strategies For the H-1B Visa Category

Posted on: June 28th, 2017
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[This month’s ABCs of Immigration issue is adapted from Greg Siskind’s new book, The Physician Immigration Handbook.]

ABCs of Immigration: Cap-Exemption Strategies For the H-1B Visa Category

The limitations placed upon the number of H-1B visas which can be granted each year to professional workers are one of the most confounding aspects of the United States employment-based immigration system. That allotment of 65,000 was decided upon nearly a quarter-century ago and has failed to grow despite the country’s gross domestic product per capita is about 50 percent larger than the H-1B cap was originally set. Furthermore, the economy is far more globalized than is was when it was created in 1990, and American employers, with the purpose of remaining effective, often need to bring in highly specialized talent from abroad.

Because H-1B numbers are almost always expended before physicians generally are able to complete their training in June, the cap particularly affects doctors. It is possible for employers to file H-1B visas on April 1 which would give them a chance (in 2005 that would have been roughly one in three); for many, however, either licensing cannot be completed in time or the job offer comes too late. Also, many employers cannot wait months, or even years, for an H-1B cap number.

While no universal solution exists for all doctors, there are strategies which can be utilized to bypass the H-1B cap.

Cap Exemption Strategies

How can an employer avoid the H-1B cap?

An employer can attempt to bypass the H-1B cap by claiming cap exemption status. Higher education institutions which qualify under the Higher Education Act of 1965, typically nonprofit colleges and universities offering an associate’s degree or higher, are cap exempt, along with nonprofit research organizations that mainly engage in basic or applied research organizations and nonprofits related to or affiliated with qualifying higher education institutions, or research organizations.

Solely being a nonprofit does not guarantee qualification, but some nonprofits may not realize that they do, in fact, qualify. For example, a nonprofit hospital could have a nursing school at the hospital, or they may have an affiliation with a local college and are responsible for providing the school’s students with training. Employers should investigate every one of its relationships with local colleges and research institutions.

Some employers, even for-profit organizations, can claim cap exemption status for H-1B employees if the employee would be spending work hours at a cap-exempt institution of higher education or affiliated non-profit. USCIS looked, for many years, to find an actual “nexus” between the purpose of the university or nonprofit and the work to be performed by the H-1B worker. However, as part of the high-skilled worker regulation that took effect on January 17, 2017, the standard changed. The new rule mandates that “employed at” works if (1) the majority of the worker’s duties will be performed at the qualifying institution, organization, or entity; and (2) such job duties directly and predominantly further the essential purpose, mission objectives or functions of the qualifying institution, organization, or entity. The petitioner is required to establish this eligibility based on the preponderance of the evidence showing a nexus between the work performed and the purpose, mission, or objectives if the exempt entity.

Potentially qualifying examples of being employed by a for-profit organization, but being employed at a cap-exempt location include the following:

  • A physician staffing a student health center at a local college;
  • A physician providing clinical services at a nonprofit charity care clinic that has an affiliation with a local college or university;
  • An employer providing clinical services at a nonprofit charity care clinic that has an affiliation with a local college or university;
  • A physician teaching health and medicine courses at a local college; and
  • A hospitalist employed by a for-profit medical group providing professional services at a cap-exempt hospital.

In the more than 15 years since the passage of AC21, USCIS held multiple inconsistent positions regarding the application of the statute provisions permitting nonprofit employers to claim cap-exemption status based on being “related or affiliated” with a university or nonprofit research institution. DHS reached a formal position in the high-skilled worker regulation that took effect on January 17, 2017. The rule allows for qualification of nonprofit entities for the H-1B cap and fee exemptions if they (1) are connected or associated with an institution of higher education through shared ownership or control by the same board or federation; (2) are operated by an institution of higher education; (3) are attached to an institution of higher education as a member, branch, cooperative, or subsidiary; or (4) have a written affiliation agreement with an institution of higher education that demonstrates an active working relationship between the nonprofit entity and the institution of higher education for the purposes of research and education and a fundamental activity of the nonprofit entity is to directly contribute to the research or education mission of the institution of higher education. The rule should increase the ease with which the country’s nonprofit teaching hospitals demonstrate cap-exempt eligibility.

Additionally, the high-skilled worker rule defined “governmental research organization” for purposes of claiming cap exemption and exemption from the ACWIA filing fees. Explicitly stated as a “governmental research organization” are local, state, and federal government research entities.

A previous policy of USCIS allowing any employers that had demonstrated cap-exemption status prior to June 2006 to be given deference in determining cap-exemption status was repealed with the issuance of the new regulation.

Another potentially viable strategy is for cap-exempt employers to contract a physician’s services to a location or organization that is not exempt from the cap. For example, a physician employed by a cap-exempt academic medical center could be contracted to provide services at a for-profit clinic with which the academic medical center has a relationship.

Can filing concurrent H-1B visa petition avoid the H-1B cap?

H-1B workers are permitted to simultaneously work for multiple employers, contingent upon each having a separate approved H-1B petition. This arrangement is referred to as concurrent employment; it can be used for “moonlighting” arrangements where there is a full-time employer and the worker seeks outside part-time work, as well as arrangements where there are multiple part-time employers.

USCIS outlined its policy on concurrent H-1Bs in a May 2008 memorandum where it states that any worker who “ceases” to be employed in a cap-exempt position, then he or she is not counted toward the cap. The question is, what happens if employment with the cap-exempt employer stops after the second H-1B petition with the cap-subject employment is approved? USCIS answered this question in the new high-skilled worker regulation that took effect in January 2017. Altering prior policy which allowed employment to continue until the end of the I-94 period, USCIS will now contemplate ceasing employment with a cap-exempt employer to mean that it may revoke the approval of the cap-subject employment petition. The H-1B holder does not immediately lose status, but the possibility of the H-1B being revoked without prior notice will obviously have a negative effect on remaining employed with the cap-subject employer any longer than absolutely necessary.

Concurrent employment might offer a solution for a doctor to begin working for a cap-subject H-1B employer in the time period after graduate medical training ends as long as the teaching hospital extends employment through October 1. An alternative possibility is where a cap-subject H-1B employer finds a second position for a doctor at a cap-exempt employer. Similar to the previously mentioned by/at strategy, if the doctor can find a part-time position teaching at a local college or part-time hours working at a university’s medical center and the doctor has an H-1B approved for working directly for that institution, full-time employment with a separate cap-subject employer would be permitted. It is noteworthy that in such a case, the cap-exempt, part-time employment would need to be approved first and the approval notice for that employment would need to be included with the cap-subject employer’s concurrent petition.

Alternatives to the H-1B Visa

The H-1B visa is not the exclusive course of action for a doctor who is affected by the cap. There are numerous other statuses and visas which could be a possibility, including E-2, E-3, H-1B1, O-1, and TN.

What are the E3 and H1B1 visas?

There are two nonimmigrant visa categories closely resembling the H-1B, with the most glaring difference being that they have quotas which are rarely over-subscribed. Up to 10,000 E-3s are available to Australians in specialty occupations every year. Up to 6,800 H-1B1 visas are available to Chileans and Singaporeans with 1,400 designated for Chile and 5,400 going to Singapore. In each case, it is the responsibility of the employer to pay the prevailing wage and to demonstrate that the position has a minimum requirement of a bachelor’s degree.

What is the TN visa?

The North American Free Trade Agreement (NAFTA) between the United States, Mexico, and Canada permits the entrance of specific types of professionals to the United States to work and is not subject to caps. Though its usefulness for physicians is limited due to the inability to use it for clinical positions, if a physician can arrange a teaching or research position that is not involved with patient care, the TN can be a viable option. It is also noteworthy that the TN category is not one of dual-intent, so complications may arise if it is used long term.

What is the E-2 treaty investor visa?

The E-2 visa is available to nationals of several dozen countries that have commercial investment treaties with the United States. If a physician from a qualified country is establishing his or her own medical practice, it may be possible to seek an E-2 visa if he or she is going to hold a managerial or executive role or the position requires “essential skills,” and he or she is investing a “substantial” amount in the practice.

Though the category may seem unusual for physicians, a number of years ago, the U.S. consulate in Toronto released a memorandum detailing what it would expect to see in a physician E-2 petition. That memorandum is still a valuable tool for presenting an E-2 petition for a doctor:

The Department of State concurs with the Immigration and Naturalization Service in finding that, if the consular officer determines that the investment meets the tests for substantiality and proportionality (see discussion below) and if the consular officer is satisfied that the physician will be the sole manager of the enterprise, then said physician can be issued an E-2 visa. If the applicant is to engage in patient care, he must also provide to the consular officer proof that he has a license from the state in which he intends to practice.

Qualifying funds for E-visa purposes must be more than half of the total value of the enterprise if investing in an existing business, or the amount normally considered necessary to establish a new enterprise.

Marginality, on the other hand, is a separate test that the applicant must overcome to establish entitlement to E-2 status irrespective of how much he has invested.

Two alternate means by which an applicant can demonstrate that the enterprise will not return only enough income to provide for him and his family are: (1) to demonstrate that the U.S. investment will expand employment in the locality of his business; or (2) prove that he has substantial income from other sources. If purchasing an ongoing enterprise, he should provide us with its previous and most recent U.S. Corporate Tax audited financial statements, review engagements, payroll register, W-2 and W-4 tax forms. If starting a new venture, he must submit a personal statement of net worth prepared by a certified account accompanied by evidence of other income such as his last personal tax return or the corporate tax returns of his other businesses (if any); investment certificates, bank account balance confirmations, etc.

What is the O-1 alien of extraordinary ability?

The O-1 visa is available to people who have “extraordinary ability in the sciences, arts, education, business or athletics which has been demonstrated by sustained national or international acclaim.”

Although this category might seem to apply only to physicians with many years of experience, experience shows that USCIS will approve physicians in fellowship programs or without many years in the workforce if they have a strong resume with multiple accomplishments, such as a number of publications, cutting-edge research, work at top academic medical centers or have otherwise distinguished themselves in the field. For many years, the O-1 approval rate has been much higher than the similar EB-1 “extraordinary ability” green card category, so physicians seeking an O-1 visa may be more likely to receive it that one might assume.

Is it possible to switch to J-1 status if a physician enters on an H-1B visa?

A physician may occasionally face a situation in which a cap exempt employer has lost its cap-exempt status (such as when a nonprofit employer is brought by a for-profit entity). Switching to J-1 status may well be the only option available is these cases. Though the physician would have to deal with getting a J-1 waiver later, he or she might have additional H-1B cap exemption options based on meeting the J-1 waiver requirements.

Some doctors on H-1Bs also may seek to proactively switch to J-1 status, even when the employer continues to be cap exempt, specifically because of their confidence in a J-1 waiver’s viability and the post-training position will be cap exempt based on receiving the J-1 waiver. A physician choosing to pursue a longer training track may consider this option rather than burning through most of his or her H-1B time.

What is Temporary Protected Status? What is asylum?

If a physician is from a country that suffers from instability, there may be options available to protect that person from returning. One possible solution might be Temporary Protected Status (TPS), an option occasionally made available by the president of the United States for countries where it would be dangerous for individuals in the United States to return. Physicians from Syria, for example, have been able to remain and work in the United States under TPS status since the civil war in the country was considered a basis for TPS designation. TPS is, by definition, temporary and thus can expire, but for some countries, the status has remained for years.

Doctors fearing return to their countries due to persecution based on one’s race, religion, nationality, membership in a particular social group, or political opinion may be eligible for asylum. Though the eligibility rules are strict, they could be worth exploring if the facts are strong.

Can a physician simply apply for a green card instead?

A physician could ultimately skip the nonimmigrant options and apply for permanent residency. There are several types of green-card options, each of which is governed by its own set of rules.

The most common type of green-card process initiated by employers through the Program Electronic Review Management System (PERM). This process is for a labor certification-based petition in which an employer convinces the Department of Labor that the employer has a position available for which there is no qualified U.S. worker available. PERM is a time-consuming process, so it is to be expected that it could take a year or possibly longer to get to a point where the physician could receive employment authorization based on a PERM approval. Compounding this issue, the EB-2 category under which PERM cases are filed is backlogged for Indian and Chinese nationals and an employment document may not be available for several years following the initiation of the process. On the flip side, if an employer hires a doctor far enough in advance of the anticipated start date, a practice not uncommon in physician recruiting, and the doctor is not in one of the few nationalities subject to per-country backlogs, the option might be appealing. Note that a license is required prior to the beginning of the PERM process, so PERM is a preferred option only for physicians in fellowship training and beyond.

Another common green-card strategy for doctors is seeking a physician national interest waiver (PNIW), which is obtainable for physicians agreeing to work for five or more years in shortage areas, and who obtain the recommendation of an interested government agency. A physician pursuant of a green-card on this basis can often obtain an employment authorization card much sooner, possibly as soon as a few months after filing. It is also, however, in an EB-2 category that often oversubscribes (such as India or China). Additionally, each state and federal agency that sponsors PNIWs has its own set of rules, which can potentially be problematic. Some states, for example, only sponsor doctors who have received J-1 waivers in their states. Note that if the PNIW option is selected, there is still a possibility to receive a green card sooner based on a separately filed PERM petition.

There also exists green-card options for physicians with exceptionally strong backgrounds like the EB-1 “extraordinary ability” category and the EB-2 national interest waiver category (based on work other than working in a physician shortage area). Both categories have extremely high standards and relatively low approval rates, and thus tend not to be the most favorable options for avoiding the H-1B cap when alternatives have yet to be exhausted.

As part of the high-skilled worker regulations that took effect on January 17, 2017, DHS created a narrow, discretionary benefit which allows individuals to apply for one year of employment authorization as long as the following criteria are met:

  1. The individual is currently in the United States and maintaining E-2, H-1B, O-1, or L-1 nonimmigrant status;
  2. The individual is a beneficiary of an approved immigrant visa petition under the E-1, EB-2, or EB-3 classification;
  3. The individual does not have an immigrant visa immediately available; and
  4. The individual, to the satisfaction of DHS, can demonstrate compelling circumstances that justify an independent gran of employment authorization.

In the commentary that DHS offered regarding the new benefit, it made not that a physician who is the beneficiary of an approved shortage-area based National Interest Waiver petition might be able to offer that approval as demonstration of a “compelling circumstance”.

At this time, DHS has not released information on how the application process for the new benefit will work.


The H-1B cap is an extremely serious problem for physicians training on H-1Bs because it can dramatically limit the employment options available when a residency or fellowship is completed. However, there are other options that can salvage the job opportunity, with sufficient planning and plenty of time and flexibility from the doctor and employer.

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