Legal Precedent & Regulations
Cap-Exempt H-1Bs & Related Concurrent Employment
This page is intended to serve as a reference outlining and listing the legal rules underpinning The Parachute Project’s (TPP) innovative strategy of functioning as a nonprofit, cap-exempt entity in the realm of H-1B visa regulations.
Focusing on the nuances of cap-exempt and concurrent H-1B employment rules, established by memorandum and regulation in 2017, this outline is contextualized within the framework of the March 2024 final rule impacting H-1B visas rules for cap-exempt organizations.
TPP’s approach, which is entrenched in legal precedents and statutory provisions, seeks to clarify the foundations that substantiate our cap-exempt status and operational methodology.
Statutory Basis for Cap-Exempt H-1Bs
Section §214(g)(5) of the Immigration and Nationality Act (INA)
The cornerstone of TPP’s cap-exempt status is rooted in Section §214(g)(5) of the INA1. This statute explicitly excludes certain categories of employers from the annual H-1B visa cap, pivotal for cap-exempt organizations such as TPP. The statute’s language excludes institutions of higher education, nonprofit entities affiliated with higher education institutions (where TPP sits), nonprofit research organizations, and governmental research organizations. TPP’s alignment with this provision is clear through its collaborative initiatives and partnerships with our partnered institutions of higher education, thereby meeting the statutory criteria for cap-exemption.
Legal Citations
INA Section §214(g)(5) elaborates on the categories of cap-exempt employers and beneficiaries. This section of the Immigration and Nationality Act (INA) specifies the categories of employers and beneficiaries that are exempt from the annual H-1B visa cap.
The regulatory interpretation of this statute is further expanded in 8 CFR §214.2(h)(8)(iii)(F)(2) (Code of Federal Regulations), which provides detailed criteria for determining cap-exempt status2. Particularly relevant to The Parachute Project – a nonprofit entity is considered related to or affiliated with an institution of higher education if it meets any one of the following conditions:
Formal Written Affiliation Agreement
The Parachute Project, as a 501(c)(3) nonprofit entity has entered into formal written affiliation agreements with several institutions of higher education (nationally recognized and accredited universities, such as Case Western Reserve University, New York University and Soka University of America). This agreement establishes an active working relationship between the nonprofit entity, The Parachute Project, and the educational institution for the purposes of research or education.
Contribution to Research or Education Mission
A fundamental activity of The Parachute Project is to directly contribute to the research or education mission of the institution of higher education. We do this by developing and providing our mentorship platform to universities and their student populations on a gratis basis, with the principal aim of enhancing and furthering the university’s mission and educational objectives.
Our Qualifications
Our organization, through its affiliation with institutions of higher education, fulfills the criteria set out by INA Section §214(g)(5) and 8 CFR §214.2(h)(8)(iii)(F)(2). We have formal written affiliation agreements that create an active partnership for educational purposes. Additionally, a core component of The Parachute Project’s mission is to directly contribute to the educational and research objectives of these institutions. This involvement ranges from career development to educational program development, thereby integrating our activities with the institutional goals of our higher education partners.
These aspects of our operation and partnership with educational institutions align us squarely with the criteria set forth by INA Section §214(g)(5) and 8 CFR §214.2(h)(8)(iii)(F)(2), substantiating our status as a cap-exempt employer under H-1B visa regulations.
TPP’s Status Under the Internal Revenue Code
TPP’s classification as a 501(c)(3) nonprofit organization under the Internal Revenue Code solidifies our stance as a public service entity committed to educational advancement. This status is instrumental in reinforcing our eligibility for cap-exempt H-1B petitions. Being a 501(c)(3) entity, TPP is inherently aligned with public and quasi-public objectives, with our primary focus on educational efforts. TPP’s 501(c)(3) nonprofit classification meets the regulatory definition required for cap-exempt H-1B petitioners under 8 CFR §214.2(h)(19)(iv).
Legal Citations
Internal Revenue Code §501(c)(3) outlines the criteria and operational requirements for organizations seeking 501(c)(3) status. This section describes exemptions for corporations organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes.
TPP’s objectives strongly align with these requirements, substantiating our eligibility under Internal Revenue Code §501(c)(3). TPP adheres to the definition of nonprofit established under CFR §214.2(h)(19)(iv).
1 This section of the INA establishes the numerical limitations for H-1B visas and outlines exemptions for certain categories of employers and beneficiaries known as “cap-exempt” organizations. Specifically, it states that the numerical limits do not apply to nonimmigrant aliens who are employed at institutions of higher education, nonprofits affiliated with higher educational inspirations, such as TPP, nonprofit research organizations, or governmental research organizations.
2 This regulation provides detailed criteria for determining the cap-exempt status of H-1B beneficiaries. It expands on the statutory basis provided in INA Section §214(g)(5) by detailing the specific conditions and requirements for an organization to be considered cap-exempt.
Demonstrating Affiliation with University Partners
Nonprofit Affiliation With Higher Education Institutions
TPP’s strategy to establish itself as a cap-exempt entity under H-1B regulations hinges on demonstrating a robust affiliation with higher education institutions. This affiliation is manifested through various collaborative endeavors that directly contribute to the educational missions of these institutions. Our key strategies include:
Educational Content Co-Creation
TPP collaborates with university faculties to develop mentorship and career-focused programs. This initiative not only enriches the curriculum and career centers of the partner universities but also aligns with TPP’s mission of fostering professional development.
Co-Branding Initiatives
TPP and its university partners intend to engage in co-branding efforts, showcasing a united front in educational and research endeavors. This public display of partnership strengthens the perception of a bona fide affiliation.
Internship and Employment Opportunities
Through its professional network, TPP facilitates unique internship and employment opportunities for students and graduates of partner universities. This directly contributes to the career success missions of these institutions.
Legal Framework
The strategies employed by TPP are in line with United States Citizenship and Immigration Services (USCIS) policies and guidelines referenced in the appendix, as well as established case law3, which consider such collaborative efforts as evidence of a qualifying relationship with institutions of higher education for cap-exempt H-1B petitions.
3 A key case that clarifies the standards for nonprofit affiliation with higher education institutions is the 'Matter of Children’s Hospital, 2011-PER-01338 (BALCA Nov. 15, 2011).' This decision by the Board of Alien Labor Certification Appeals (BALCA) emphasized the necessity of a substantial and active working relationship between a nonprofit entity and an institution of higher education. In this case, the evidence of a joint statement of policies, shared resources, collaborative research initiatives, and public representation of affiliation played a crucial role in establishing the required connection for cap-exemption. This precedent is seen as guidance by TPP in demonstrating and substantiating our affiliation with our partnered educational institutions.
Case Law Addressing H-1B Visas and Cap-Exempt Eligibility4
Matter of Simeio Solutions, LLC (2015)
This case serves as a vital precedent for organizations like TPP in terms of compliance with H-1B regulations. The United States Citizenship and Immigration Services (USCIS) clarified the need for filing amended H-1B petitions when there is a material change in employment, including changes in the beneficiary’s work location. As a cap-exempt entity, TPP adheres strictly to these guidelines, ensuring compliance with all regulatory changes. This case law was formally integrated into immigration regulations via the March 2024 final rule.
ITServe Alliance v. Cissna (2018)
This significant ruling impacted IT consulting companies and by extension, all H-1B petitioners, such as cap-exempt organizations like TPP. This case emphasized the scrutiny of USCIS in approving H-1B petitions, particularly those involving third-party worksites. TPP’s model, while distinct, draws lessons from this case in maintaining rigorous adherence to USCIS policies.
Innova Solutions, Inc. v. Baran (2017)
This case highlights the importance of establishing that a beneficiary’s job qualifies as a specialty occupation. TPP’s strategy involves a careful emphasis on job duties and qualifications, for both the cap-exempt as well as the concurrent case, to ensure strict compliance with this criteria.
Defensor v. Meissner (2000)
Defensor v. Meissner serves as a caution against any attempts to circumvent the H-1B cap through inappropriate means. TPP’s approach is grounded in vigilant adherence to legal standards, avoiding any semblance of cap circumvention or misuse of the H-1B program. The government has re-emphasized this position in its final rulemaking (March 2024) where it established an accessible and more transparent H-1B visa lottery. The Parachute Project welcomes the government’s proposed regulations as it clarifies and further establishes the legitimacy of the cap-exempt H-1B as it relates to nonprofits affiliated with higher education establishments, such as ours.
Legal Citation
4 Brief case summaries provided below in the Appendix.
Applicable U.S. Citizenship and Immigration Services (USCIS) Regulations
Concurrent H-1B Employment Regulations
USCIS published regulations effective January 17, 2017, which modernize and improve aspects of certain employment-based nonimmigrant and immigrant visa programs. These regulations enable U.S. employers to hire and retain foreign workers waiting to become lawful permanent residents under approved employment-based immigrant visa petitions.
The 2017 regulations include provisions for cap-exempt H-1B nonimmigrants regarding portability, allowing them to start concurrent employment with their full-time employer upon filing a non-frivolous H-1B petition or as of the requested start date. You can click here to read more about the specific portability rules relating to concurrent employment leveraged by TPP.5
Definition of “related or affiliated nonprofit entity” for cap-exemption purposes was clarified, including various conditions under which a nonprofit entity can be considered affiliated with an institution of higher education for cap-exemption. Follow this link to see the references where the relevant definitions were updated as well as the related sections of the government code.
In late 2023, the Department of Homeland Security (DHS) promulgated new rules that significantly changed the H-1B visa program. This rulemaking aimed to modernize the H-1B specialty occupation worker program by streamlining eligibility requirements for cap-exempt organizations and employees, improving program efficiency, providing greater benefits and flexibilities, and strengthening integrity measures.
The final rulemaking includes amendments to the definition of specialty occupation, changes to the regulation for determining whether a position qualifies as a specialty occupation, and codification of policies related to H1B amendments for new work locations and other policies detailed in existing U.S. Department of Labor (DOL) regulations. These changes have been followed and accepted by the Agency after establishment of the case law cited above and are now formally codified into regulation.
5 While the legal framework permits concurrent H-1B employment, TPP is cognizant of potential challenges. To mitigate these risks, TPP ensures that job positions closely align with Department of Labor standards for specialty occupations and provides clear documentation about the nature and continuity of employment. Our proactive approach in addressing these potential challenges underscores our commitment to compliance and operational integrity.
Related Department of Labor (DOL) Regulations
Prohibition on Beneficiary Payment of Legal and USCIS Filing Fees
Regulatory Mandate: Under 20 CFR § 655.731(c)(10), the Department of Labor (DOL) strictly requires that employers remain responsible for all costs associated with the preparation and filing of H-1B petitions, which includes legal fees. This regulation is in place to ensure that U.S. workers are not disadvantaged and that H-1B nonimmigrant workers are treated fairly. The specific text of the government regulations, which outline the employer’s liability for certain H-1B visa fees and the prohibition on reimbursement from the beneficiary can be read here.
Legal Precedent
Established case law demonstrates that transferring certain H-1B costs to visa beneficiaries is not permissible. In Gupta v. Perez, the court affirmed that employers cannot pass on H-1B fees to employees, as this would violate the Immigration and Nationality Act (INA) and associated Department of Labour (DOL) regulations.
Conclusion
TPP’s cap-exempt, concurrent employment model is meticulously crafted to align with the legal frameworks established under the INA.
Through strategic affiliations with higher education institutions and strict adherence to USCIS guidelines, TPP holds a strong position as a cap-exempt H-1B sponsor. Our organization's commitment to compliance and transparency is a key component of our innovative approach, offering compliant and effective means for employing foreign nationals under the H-1B program.
Appendix
Brief Summaries of Relevant Case Law
Matter of Simeio Solutions, LLC (2015)
This decision by the Administrative Appeals Office (AAO) clarifies the requirement for H-1B petitioners to file an amended petition when there is a material change in the terms and conditions of employment, including a change in the place of employment.
ITServe Alliance v. Cissna (2018)
This case challenged certain USCIS policies regarding the approval of H-1B petitions, especially those involving third-party worksites.
Innova Solutions, Inc. v. Baran (2017)
This case set a clear standard and required criteria for establishing a job as a specialty occupation for H-1B visa purposes, particularly in third-party worksite scenarios. Adhering to these criteria ensures that TPP can effectively sponsor H-1B visas for positions that truly qualify as specialty occupations, thereby maintaining regulatory compliance and supporting our mission effectively.
Defensor v. Meissner (2000)
This case addressed the issues with filing multiple H-1B petitions as a means to circumvent the annual visa cap. It highlighted the strict regulatory stance against any attempts to exploit the H-1B visa system. The government has reemphasized this position in its final rule promulgated in March 2024 where it sought to establish a fair lottery system.
Gupta v. Perez (2016)
This case involved an H-1B employee (Gupta) and his employer (Wipro Limited) regarding reimbursement of visa and legal fees. The court upheld that requiring an H-1B beneficiary to reimburse their employer for such costs, when it reduces wages below the prevailing wage, is a violation of Department of Labor regulations. This decision reinforces that employers must bear the costs of filing and legal fees to ensure compliance with wage requirements.