“AC21 Series: New Ways for Nonprofits to Claim Exemption from Annual H-1B Quota”


“…The H-1B visa program allows U.S. employers to supplement their workforces with key foreign professionals for up to six years. This coveted visa comes with a well-publicized limitation: the annual H-1B quota. Congress only permits U.S. Citizenship and Immigration Services (USCIS) to allocate approximately 85,000 new H-1B visas annually, and demand has far exceeded supply for the past several years.

“When Congress passed the American Competitiveness in the Twenty-First Century Act (AC21)…it carved out important exemptions from the annual H-1B quota for U.S. institutions of higher education…and certain other nonprofit entities. The exemptions were created to ensure eligible organizations have reliable and uninterrupted access to international professionals who support their research or educational missions.

“AC21 generally exempts two types of U.S. nonprofit organizations from the annual H-1B quota: research nonprofits and nonprofits related to, or affiliated with, U.S. universities. An earlier USCIS regulation defines what a ‘research’ nonprofit is but does not clarify the types of university relationships nonprofits can show to qualify for the quota exemption. USCIS did…publish policy guidance in 2006 requiring an exempt nonprofit to be ‘connected to or associated with an institution of higher education, through shared ownership or control by the same board or federation, operated by an institution of higher education, or attached to an institution of higher education as a member, branch, cooperative or subsidiary.’

“This definition precluded many independently governed and operating nonprofits from qualifying for the H-1B quota exemption. It also resulted in inconsistent adjudications, making it difficult for nonprofits to gauge whether their university ‘attachments’ were sufficient under the law. 

“…USCIS, in recognizing this limitation, promulgated the new regulation to clarify and expand the ways nonprofits can demonstrate their relationship to, or affiliation with, U.S. universities and request an exemption from the annual H-1B quota.

“Under the new regulation, a nonprofit is now considered to have the requisite relationship or affiliation with a university, and will be exempt from the annual H-1B visa quota, if it meets any one of the following four conditions:

  • “The nonprofit is connected to or associated with an institution of higher education through shared ownership or control by the same board or federation.

  • “The nonprofit is operated by an institution of higher education.

  • “The nonprofit is attached to an institution of higher education as a member, branch, cooperative or subsidiary.

  • “The nonprofit has entered into a formal written affiliation agreement with an institution of higher education that establishes an active working relationship between the nonprofit and the institution of higher education for the purposes of research or education, and a fundamental activity of the nonprofit is to directly contribute to the research or education mission of the institution of higher education.

“The first three of the above criteria are consistent with USCIS' prior guidance. By adding the fourth criterion, USCIS has meaningfully expanded the pool of university-affiliated nonprofits that are eligible to apply for an exemption from the H-1B quota. This fourth criterion has two key elements:

  • “A written affiliation agreement…

  • “…A fundamental activity of the nonprofit…

“…Although many nonprofits engaged in basic or applied research are already exempt from the H-1B quota regardless of their affiliation with universities, the new regulation is most likely to have an impact on nonprofits that partner with universities to provide educational opportunities to students. 

“…In addition to broadening the scope of eligibility for nonprofits to be cap-exempt, the new regulation clarifies that there may be circumstances where a petition on behalf of an H-1B worker is exempt from the annual quota even if the individual won't be employed directly by a qualifying cap-exempt entity.

“…The boundaries of the new regulation will be tested over time as more organizations file H-1B petitions and argue the merits of their requests for quota exemptions. It seems clear, however, that the narrowly drawn requirements of the prior policy guidance have given way to a more reasonable interpretation of Congress' intent that institutions of higher education and those that serve them benefit from a steady stream of international talent.”

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