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Companies Trying to Hire Professionals Face a Lower Cap on Visas

The cap on H-1B visas will likely be reached by early spring. Premium processing--at a cost--is one way to secure them.

January 30, 2004
Related Topics: Immigration, Recruitment, Staffing Management
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Y ou might normally associate the term "cap management" with NFL general managers who deal with the intricacies of the league’s salary cap. But it’s also a skill that human resources executives who hire foreign nationals may now have to cultivate.

    In October, Congress allowed a law to expire that had temporarily increased the number of highly skilled foreign professionals legally authorized to enter the United States on H-1B visas. The annual H-1B cap had gone from 65,000 in fiscal year 1998 to 115,000 in 1999 and 2000, then up to 195,000 in 2001, 2002 and 2003. As a result of Congress’s inaction, no more than 65,000 H-1B visas will be issued in fiscal 2004. The American Immigration Lawyers Association had asked for 115,000.

    Those who believe that immigration policy should be controlled by market forces say that the low cap number simply reflects the lower demand for labor at a time of economic downturn. The number of approved H-1B visas counted against the cap declined from 201,079 in 2001 to 79,100 in 2002. But amid signs that the economy is improving, and concern that the low cap might persist beyond this year, human resources professionals are scrambling to adjust to the new H-1B landscape. "It’s like a throwback to the days of ‘cap management,’ " says immigration attorney Ronald Rose of Half Moon Bay, California, referring to the era before the cap was first raised in 1999.

    In mid-December, U.S. Citizenship and Immigration Services said the cap was not close to being reached. But most immigration experts believe it will be hit by the early spring, leaving many employers unable to hire foreign nationals until 2005. "Some HR manager is going to call me and say, ‘We need to hire this guy,’ " predicts Elizabeth Dickson, director of immigration services at industrial equipment manufacturer Ingersoll-Rand. "I’m going to have to turn around and say, ‘Sorry, we can’t do that.’ "

    H-1B, or Temporary Professional Worker, employees currently account for less than 5 percent of the U.S. workforce. Applicants must possess a U.S. bachelor’s degree or the overseas equivalent, as well as relevant experience in the position they hope to fill. The visa lasts for a maximum of six years. The government first imposed a ceiling on H-1B approvals in 1990, limiting them to 65,000. But as the dot-com economy took off, the cap was reached prematurely in 1997 and 1998. Even with the increase to 115,000, the numbers again topped the cap in 1999 and 2000.

    More than two-thirds of H-1B visa petitions approved in recent years have been for information technology workers and engineers. Dan Larson, director of government and media relations at Texas Instruments, says that high-tech firms have relied increasingly on H-1Bs as the number of electrical engineering graduates from U.S. universities has declined by some 50 percent since 1987. "The number of people who are foreign nationals getting these degrees is increasing," he notes. In testimony before Congress last year, Dickson said that Ingersoll-Rand would not have been able to fill plastics engineer and robotics engineer positions if not for H-1B visas.

    But now with the dot-com bust, the economic and political climate has changed. Trade organizations contend that the program is compounding the problem of unemployment among U.S. professionals. In the first quarter of 2003, the unemployment rate for electrical and electronics engineers reached an all-time high of 7 percent. The return to the cap of 65,000 was supported by trade groups such as the Institute of Electrical and Electronics Engineers but opposed by employer organizations, including the U.S. Chamber of Commerce.

    Some of this year’s quota may have been quickly swallowed up by applications that were rolled over from fiscal 2003. "Thousands of those cases were in the pipeline on October 1," says Cynthia J. Lange, an immigration lawyer at the firm Fragomen, Del Rey, Bernsen & Loewy in Los Angeles. "A number of them would not have been counted toward the [2003] cap." USCIS, however, does not release the exact number of rollovers, adding to the uncertainty for hiring companies.

    "Rollover is a perennial problem," notes Sandy Boyd, vice president of human resources policy at the National Association of Manufacturers. "But in a situation where you go from 195,000 visas to 65,000, the fact that 10,000 or so cases were rolled over is a real hit." So how can companies cope with the new H-1B reality? Lange and other experts say the key strategy is to take advantage of the premium-processing option. Last summer, regular processing of H-1B applications was taking as long as eight months; under premium processing, USCIS must respond within 15 days or refund the fee.

    Going the premium route means paying an additional $1,000 on top of the standard $130 filing fee. But because the $1,000 training fee for H-1B applications, which went toward processing costs and training programs for U.S. workers, also expired on Oct. 1, employers, in effect, come out even.

    "Just get it done, just get it filed," Rose advises. "Do premium processing."

    "There’s a certainty there," echoes Lange. "Do you want to be the very last case in line?"

    Ingersoll-Rand has been using premium processing to secure H-1B visas for foreign nationals enrolled in the company’s practical training programs. These employees came to the United States on F-1 (student) visas and, after completing their studies, received an Employment Authorization Document, valid for a year. But according to Dickson, those documents will expire in the spring. "We need to switch them to H-1B," she says. Because of the low cap, Dickson has told companies to file H-1B applications as soon as possible. Otherwise, the trainees might have to stop work while waiting until next October to apply. "Companies have had to identify anyone they could that needs [an H-1B] visa," says Lange. "That includes F-1 students."

    Premium processing will be suspended when USCIS believes it has sufficient cases approved or in the pipeline to reach the cap. Pending cases would then go to standard processing for adjudication. Once the H-1B cap is reached, experts say, there really is no other visa option available for highly educated workers. "If that’s the only visa around, and the numbers aren’t there, companies are not going to be able to bring these people to the United States," Boyd says. Many companies "have adjusted to using premium processing in advance of the cap being reached. But the bigger question is what do you do when you want to hire someone in April or May?"

    Human resources execs could be looking at "cap management" for some time to come. Dickson believes that members of the Senate Judiciary Committee were "kind of open" to her testimony last September in support of a higher cap. Sen. Saxby Chambliss (R-Georgia) "said they would look at the issue in 2004 if we hit the numbers." But she also acknowledges that "it’s not a very good climate right now" in Washington. "It’s a very anti-immigration climate."

    "I don’t think it’s politically viable to increase the cap right now," Rose says.

    Boyd would like to see the H-1B debate move beyond "the same old cap fight every year." She suggests coming up with creative ways to relieve the pressure of the cap. Among the possibilities:

  • Granting a cap exemption to foreign nationals who have obtained their degrees from U.S. universities.

  • Creating a separate immigration category for H-1B applicants who intend to seek permanent, green-card residency.

    "We need to make sure we continue to have access to the most talented foreign graduates of American universities," Boyd says. In some graduate schools, she notes, foreign nationals account for two-thirds or more of the student body. "If we can’t take these foreign nationals, the work [of some companies] is not going to get done."

Workforce Management, February 2004, p. 64-65 -- Subscribe Now!

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