How to Qualify as a Research Organization to Hire Foreign Workers Not Selected in H-1B Visa Lottery

Learn how qualifying as an H-1B cap-exempt research organization can help you retain foreign national employees that missed out on the H-1B visa lottery.

A continuing dilemma for many employers is how to retain or hire a talented foreign national employee for whom it had hoped to obtain H-1B status in the United States. If the company's registration is not selected for processing in the annual registration lottery conducted by United States Citizenship and Immigration Services (USCIS), those plans might be stymied.

This article explores a lesser-known path to an H-1B visa, appropriate for some employers who engage in research activities.

How Does the H-1B Lottery Prevent Some Employers From Hiring Foreign Nationals?

For years now, demand for an H-1B visa has far outstripped the quota of available spots, since it is one of the few temporary visa categories that authorizes employment for professionals such as scientists, engineers, finance executives, and IT workers, among others.

To deal with the high demand, USCIS conducts an annual "lottery," in which an employer submits a registration naming as a potential "beneficiary" the foreign national it wants to hire (or perhaps already has on staff, in some other visa status). Then the agency randomly selects some registrations for further processing.

As described in Steps Employers Must Take to Hire an H-1B Worker, if an employer's registration is not selected, the employer cannot submit an H-1B request (Form I-129) for the worker or workers in question. Only employers whose cases are selected can submit the H-1B petition request and supporting documentation. The case might then be approved or denied.

The H-1B lottery is quite competitive. In fiscal year (FY) 2021, for example, employers submitted over 250,000 registrations, yet only about 30% of those were selected. For FY 2022 the percentage could turn out to be even lower. In some cases, employers have been known to register for a particular employee two years in a row, without success.

For example, a company might employ an international student who graduated from a U.S. university and is able to work on Optional Practical Training (OPT) for a limited time. If the company's registration is not selected and the foreign national's period of stay in the U.S. is expiring, the employee might have to leave the U.S., as discussed next.

Can Foreign Workers Remain in the U.S. If Their H-1B Registration Is Not Selected?

As you might expect, there are few options for a foreign national to both remain in the U.S. and work lawfully after reaching the end of an OPT, J-1, or other temporary visa status. A worker who wasn't selected in the registration lottery might have to depart the U.S., which could disrupt a promising career and leave the employer without key talent.

But to stay lawfully in the U.S., the worker must meet the eligibility requirements for some new category, then apply to "change status" before the authorized period of stay expires. The most likely alternative categories include B-1/B-2 (visitor)), F-1 (full time student), or H-4 (dependent of an H-1b visa holder).

Unfortunately, none of these categories allow someone to work (with limited exceptions for F-1 and H-4). Thus, requesting a change of status to one of these categories is not a long-term solution for the employee or employer. It might, however, serve as a stopgap—particularly given the disruption to immigration processes created by the COVID-19 pandemic.

Other Work-Based Visa Categories

There are a few other visa categories for which a few applicants might qualify. However, they fit only narrow situations, such a the TN visa for Canadians and Mexicans, or the L-1 for workers being transferred within the same company.

H-1B Workers Might Need More Than One Change of Status to Stay in the U.S.

The pandemic has impeded normal travel due to embassy closures, caused cancelled flights, and led to government travel restrictions on entry. These difficulties, coupled with extremely long USCIS processing times, make it likely that a beneficiary will have to apply for more than one change in status or extension, often without even hearing from USCIS whether the first request was approved.

This makes it challenging to maintain lawful status in the United States, much less work here, a combination of circumstances that causes anxiety, uncertainty, and financial difficulty. Is there anything that an employer, then, can do to hire or retain the employee in a working capacity?

One route that's sometimes overlooked is to see whether the employer can be considered "cap exempt." Employers that qualify as a nonprofit research organization, or that set one up, can legitimately petition for an H-1B employee at any time, as long as the eligibility criteria are met.

How an Employer Can Qualify as an H-1B Cap-Exempt Research Organization

H-1B petitions filed by qualifying universities, nonprofit research organizations, or governmental research organizations, as defined in 8 C.F.R. § 214.2(h)(19)(iii), are exempt from the cap. In practical terms, this means the employer does not have to go through the H-1B lottery selection process and can petition for an eligible employee at any time during the year.

A nonprofit research organization is an organization that can show that it is primarily engaged in basic research and/or applied research. These terms have specific definitions under U.S. immigration law. In addition, the research organization should already possess or obtain a determination by the Internal Revenue Service that it qualifies as a 501(c)(3) nonprofit organization.

This option represents an opportunity for employers to think outside the normally limited immigration box. Qualifying research does not have to be scientific, although it can be.

For example, a nonprofit arts organization that provided residency programs for artistic fellows to research the intersection of technology and art was able to obtain an H-1B approval for a curator and avoid the lottery restrictions.

A private company could also consider establishing a foundation or other nonprofit organization that engages in research and then petition for an H-1B visa for its key employee to perform the necessary research as an employee of the nonprofit. An example is a scientific institute that treated brain injury patients; it employed scientists who did both research and clinical work. It established a foundation to focus solely on research into novel treatments for brain injury, obtained a 501(c)(3) determination from the IRS, and was able to successfully obtain an H-1B visa for a highly talented researcher from China.

In another example, a laboratory performing research on personalized medicine solutions wanted to hire an international student, but the company's H-1B petition was not selected two years in a row and the potential beneficiary was reaching the end of her authorized stay. The company set up a nonprofit entity focused primarily on applied research and obtained H-1B approval for the chemist.

One other exemption from the H-1B cap allows a private company to petition for a beneficiary who will work at a third-party entity that qualifies as a research organization.

Of course, establishing a nonprofit organization cannot be taken lightly, and should not be done to circumvent any immigration laws.

Not only does the organization have to establish a nonprofit, but it must comply with tax reporting laws and prove to USCIS that its primary aim is basic or applied research, or a combination. This can be done by producing evidence of research goals (mission statement, board members, and so forth), published and submitted articles, grant applications and awards, news articles, and other documentary evidence. This path might be the right one for a research-oriented company that doesn't want to lose one of its most talented employees.

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