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Impact of “Buy American, Hire American” Executive Order

By Brett Reynolds, Partner

Brett Reynolds

Brett Reynolds

In April 2018, The Trump Administration  signed an Executive Order entitled, “Buy American, Hire American”. The policy directs the Department of Homeland Security to issue H-1B visas to only the most-skilled foreigners or highest-paid beneficiaries.  While this is a laudable purpose, according to new data acquired by the National Foundation for American Policy (NFAP), the USCIS has begun to increase H-1B visa denials and the number of Requests for Evidence (RFEs) issued to H-1B visa. As a result, employers have reported that the time lost due to the increase in denials and Requests for Evidence has cost millions of dollars in fees and delays, while often aiding competitors that operate exclusively outside the United States.  Since the Trump Administration has taken office, the RFEs for H-1Bs have skyrocketed:

H-1B Petitions

Fiscal Year H-1B Initial Denial Rate H-1B RFE Rate H-1B Approved After RFE Rate
2015 4.3 22.3 83.2
2016 6.1 20.8 78.9
2017 7.4 21.4 73.6
2018 15.5 38 62.3
2019 (Q1) 24.6 60 61.5
  • In the first quarter of FY 2019, the RFE rate jumped to 60 percent, compared to 45.6 percent in the first quarter of FY 2018.
  • The rate of denials more than doubled between FY 2017 and FY 2018, and it more than tripled in FY 2018 compared to FY 2015.
  • The approval rate, even after providing additional information via an RFE, has steadily dropped since FY 2015.

So, last year, 60% of all H-1B petitions received an RFE. 

H-1Bs are, generally, great visas, and in recognition of that, they are vastly oversubscribed.  Beginning in 2014, the applications greatly exceeded the number of H-1Bs allowed (annually

85,000 – 65,000 for bachelor’s and 20,000 for masters, although the masters will be applied first so it reduces the number of bachelor’s each year) – the oversubscription has been primarily in the tech industry where large companies subscribe for hundreds of persons each.  As a result of the numbers being oversubscribed, a lottery has been in place for each year since FY 2014.

The numbers of applications for the last several fiscal years (April 1 to October 1) have been as follows:

2014                                                       124,000

2015                                                       172,500

2016                                                       233,000

2017                                                       236,000

2018                                                       199,000

2019                                                       190,098

2020                                                       201,011

We expect the numbers to be similar, if not higher, again, for the FY 2021 H-1B season, and with our current situation in Washington, nothing will happen to improve the situation.  In short, all applications have to first be selected in a lottery before they can be processed – last year’s odds were roughly 42%.   With a Masters, the chances are a bit improved, since they are selected first, but employers need to understand that even with the best candidate and petition, we still have to get that candidate in the front door through the lottery.

Generally, of the 85,000 visas available, 65,000 are for Bachelor’s degree and 20,000 for Master or other advanced degrees.  In the past, the lottery was conducted as follows, typically beginning around the second week in April:

  • The computer-generated selection process picked 65,000 from the entire pool.  Those not selected by eligible for Master or other advanced degrees exemptions then went back in for a second chance.
  • The second lottery then chose 20,000 for Master or other advanced degrees exemptions cap.
  • 6,800 spots are reserved for citizens of Singapore and Chile.

This year, there will be some changes.  Employers planning to file H1B petitions for next fiscal year are required to pre-register with USCIS electronically during a designated registration period.  The deployment of lottery pre-registration process was postponed for this past year but is slated for implementation in FY 2021. This electronic pre-registration system will allow the annual lottery to be run based on the pre-registrations rather than requiring employers to file entire H-1B applications. The rule has obvious appeal because it would save employers considerable time and money If USCIS receives more than required number of petitions for the cap, then they would conduct random selection for the registration received during that period.  They would keep unselected registrations on reserve in system and use them if needed to meet the quota cap as needed.  We will let you know when pre-registrations are being accepted.

Also, the new rule changes the lottery selection.  These changes give preferential treatment to H-1B visa petitions filed by employers for individuals with advanced degrees (Master’s or above) from a U.S.-based college or university. Under this new protocol, the USCIS would first select 20,000 of the H-1B petitions filed for individuals with a US-earned advanced degrees, which is known as the “Master’s Cap”. Thereafter, all cases that were not selected under the “Master’s Cap” quota and all other cases (“Regular Cap” cases – meaning those cases that are not U.S.-earned Master’s degree cases) would undergo the random selection process of selecting the remaining 65,000 H-1B visas. The USCIS predicts that this new process will result in a 16% increase in the proportion of H-1B recipients who hold at least the eligible U.S. master’s degree.  So, a Master’s degree or higher increases the odds of selection.

For more information on the H-1B cap visit the H-1B FY 2020 Cap Season page.

For more information on legal immigration issues that could or are impacting your business, contact me anytime: Brett Reynolds (breynolds@elpolaw.com, 270-781-6500).