#1: Your Employer is NOT H-1B quota exempt, BUT, your Employment is "AT" an H-1B Exempt Institution (a “third party petitioner")

The USCIS has interpreted the regulations to deem an H-1B nonimmigrant "quota exempt" who works "at" a quota exempt institution, even if he or she works for a non-exempt employer, under certain circumstances, as discussed in this article. Normally, in order to be deemed quota exempt, an H-1B nonimmigrant would have to actually work for an exempt employer, such as "Institution of Higher Education", e.g., a College or University, or a company which is affiliated or related to an "Institution of Higher Education", or a Nonprofit Research Organization or Government Research Organization.

However, under this interpretation, the USCIS has decided to deem even H-1B workers who are employed by non-exempt employers, such as for-profit companies, to be exempt, provided that they work "at" an exempt institution, and meet other conditions. It is important to note that these are complex cases, and experienced legal counsel should be retained to prepare these cases. However, this article will review some of the key concepts.

This USCIS policy is set forth in a Memorandum (Guidance Regarding Eligibility for Exemption from the H-1B Cap Based on §103 of the American Competitiveness in the Twenty-First Century Act of 2000, by Michael Aytes, Associate Director for Domestic Operations, USCIS), as follows:

Commonly, qualifying institutions petition on behalf of current or prospective H-1B employees and claim this exemption. In certain instances, petitioners that are not themselves a qualifying institution also claim this exemption because the alien beneficiary will perform all or a portion of the job duties “at” a qualifying institution. For purposes of this memorandum, such petitioners are referred to as “third party petitioners.” A third party petitioner is one who petitions on behalf of an H-1B worker who will work “at” a qualifying institution, but where the alien is or will be employed by the third party petitioner, not the qualifying institution. These types of cases should be adjudicated based on the guidance provided below.

Congress deemed certain institutions worthy of an H-1B cap exemption because of the direct benefits they provide to the United States. Congressional intent was to exempt from the H-1B cap certain alien workers who could provide direct contributions to the United States through their work on behalf of institutions of higher education and related nonprofit entities, or nonprofit research organizations, or governmental research organizations. In effect, this statutory measure ensures that qualifying institutions have access to a continuous supply of H-1B workers without numerical limitation.

USCIS recognizes that Congress chose to exempt from the numerical limitations in section 214(g)(1) aliens who are employed “at” a qualifying institution, which is a broader category than aliens employed “by” a qualifying institution. This broader category may allow certain aliens who are not employed directly by a qualifying institution to be treated as cap exempt when needed to further the essential purposes of the qualifying institution.

USCIS will, therefore, allow third party petitioners to claim exemption on behalf of a beneficiary under either section 214(g)(5)(A) or (B), if the alien beneficiary will perform job duties at a qualifying institution that directly and predominately further the normal, primary, or essential purpose, mission, objectives or function of the qualifying institution, namely, higher education or nonprofit or governmental research. Thus, if a petitioner is not itself a qualifying institution, the burden is on the petitioner to establish that there is a logical nexus between the work performed predominately by the beneficiary and the normal, primary, or essential work performed by the qualifying institution.

In many instances, third-party petitioners seeking exemptions from the H-1B cap are companies that have contracts with qualifying federal agencies (or other qualifying institutions) which require the placement of professionals on-site at the particular agency. The H-1B employees generally perform work directly related to the purposes of the particular qualifying federal agency or entity and thus may qualify for an exemption to the H-1B cap. However, qualifying third-party employment can occur in a variety of other ways. USCIS therefore is providing a non-exhaustive list of examples in the AFM to assist adjudicators in determining cap exemption eligibility.

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Thus, if a petitioner is not itself a qualifying institution, the burden is on the petitioner to establish that that there is a logical nexus between the work predominately performed by the beneficiary and the normal mission of the qualifying entity. Petitioners must therefore demonstrate how the beneficiary’s duties are directly and predominately related to, and in furtherance of, the normal, primary or essential purpose, mission, objectives or function of the qualifying institution, namely, higher education or nonprofit or governmental research.

The following are key examples provided by the USCIS in its Memo:

Example 1: Company A, a for-profit consultant firm that would not otherwise be a qualifying institution, files an H-1B petition on behalf of an employee working directly for the firm. The H- 1B petition describes the alien beneficiary’s job duties, which will be performed on-site at a qualifying governmental research organization pursuant to a joint-agreement between the two entities. Company A submits evidence in support of its H-1B petition demonstrating that the alien beneficiary will be working on a research project performing duties similar to those performed by actual employees of the governmental research organization in furtherance of the qualifying entity’s mission. If the alien beneficiary was sponsored directly by the government research organization, he or she would clearly qualify for the H-1B cap exemption.

Q: Would the alien beneficiary qualify for the H-1B exemption?

A: Yes. In this case, the alien beneficiary would be exempt from the H-1B cap because the alien beneficiary will perform research duties that would or could otherwise be performed by employees of the qualifying institution, in furtherance of the qualifying institution’s primary mission.

Example 2: Company B, a for-profit hospital and research center that would not otherwise be a qualifying institution, files an H-1B petition on behalf of a renowned Oncologist who will be a direct employee of the hospital and whose duties will consist of clinical treatment of cancer patients and laboratory research on a new medication to treat liver cancer. Company B maintains a relationship with a qualifying non-profit research organization dedicated to finding a cure for liver cancer, whereby Company B occasionally provides resources and data in exchange for access to the non-profit’s national database on protocols for treating liver cancer. Company B’s new Oncologist will spend 55% (i.e., a majority) of her time working on-site at the non-profit research organization conducting research and laboratory experiments on the new medication to treat liver cancer and accessing the national database. The Oncologist will be performing sophisticated research and laboratory experiments that are not normally conducted by employees of the non-profit research organization but that nonetheless directly and predominantly further the normal, primary, or essential purpose, mission, objectives or function of the non-profit organization. Company B and the non-profit entity will collaborate on a joint paper publishing the research.

Q: Would the Oncologist qualify for an H-1B cap exemption based on this employment?

A: Yes. In this case, the Oncologist’s work clearly furthers the overall mission of the qualifying non-profit research organization and benefits the United States The fact that Company B and the qualifying non-profit entity share a cooperative relationship helps establish a sufficient nexus between the Oncologist’s work and the normal, primary, or essential purpose, mission, objectives or function of the non-profit organization. Further, the Oncologist will spend more than half of her time working physically on-site “at” the qualifying entity.

Example 3: A medical fellow in pediatrics has been employed at a qualifying non-profit university medical center for two years in H-1B status. At the end of the fellowship, the doctor will become a member of Company C, a private pediatrics practice group which has its primary offices within the university medical center and predominantly trains medical students and treats patients in the medical center. The doctor will be doing exactly the same work that he did during his fellowship, including remaining on the university medical center’s faculty, but for reasons related to hospital billing practices and medial malpractice insurance requirements, his technical, and therefore petitioning, employer will be the private pediatrics practice group.

Q: Would the doctor qualify for an H-1B cap exemption based on this employment?

A: Yes. In this case, the doctor would be exempt from the H-1B cap because the conditions of employment demonstrate that the doctor will be performing the same work that he performed while employed directly by the qualifying university medical center. Thus, the H-1B employment directly furthers the primary mission of the hospital because the doctor will remain on the university medical center’s faculty, and will continue to educate and train its medical students and treat patients at the medical center.

Example 4: Company D, a for-profit market research firm that would not otherwise be a qualifying institution, files an H-1B petition on behalf of a direct employee. The H-1B petition states that the alien beneficiary will be conducting a specific kind of market research on-site at a qualifying University. In addition, the petition states that the University has a specialized research tool that can only be accessed from its facilities and that the alien beneficiary’s research will be conducted for the benefit of the petitioner’s clients and business, and not for the University.

Q: Would the alien beneficiary qualify for the H-1B exemption based on this employment?

A: No. In this case, the alien would not qualify for a cap exemption as he or she is only physically located “at” the qualifying institution and no nexus has been demonstrated between the work performed by the beneficiary and the normal purpose of the qualifying entity. The alien beneficiary will not perform work for the benefit of the qualifying institution, but rather for the for-profit firm.