H1B New Rules for 2025: H1B Modernization Final Rule Published

In October 2023, the US Department of Homeland Security(DHS) published a proposed rule in the federal register to modernize the H1B visa program with many changes. DHS published the final rule of the same proposed rule with changes in the federal register after reviewing comments submitted by the public on December 18th, 2024.

This article will summarize the new H1B rules effective January 17th, 2025, based on the final rule published in the federal register. We will elaborate more on each change in detail when the final rule is effective, and what the Trump administration can do after they take office.

Background: Proposed Rule for H1B Modernization, Lottery

DHS/USCIS initially proposed an agenda item to modernize the H1B program in June 2021 in their regulatory agenda. It continued to be in their subsequent five regulatory agendas, and finally, they published the proposed rule of the H1B modernization program in October 2023. You can read the full summary in the article: H1B Modernization Rule Proposed Rule, Changes

As part of the first H1B modernization efforts, DHS/ USCIS published in the federal register a final rule changing the H1B Lottery process for FY 2025 and also provided flexibility for the start date of certain H1B petitions. You can find the full summary of it in the article: New H1B Lottery Selection Process for FY 2025.

DHS/ USCIS published the final rule on December 18th, 2024, for the H1B modernization program, addressing the remaining changes in the original proposed rule after considering the public comments. Let’s look at these details in the upcoming sections.

If you prefer to watch the video summary of this article, watch it on YouTube at: Video of H1B New Rules 2025 – What is Changing?

Modernizing the H1B Visa Program: Final Rule Sections

The final rule published in the federal register to modernize the H1B Visa program is a massive document with 147 pages in the federal register (equal to 460 pages in a standard document. It is divided into three sections focused on areas of modernization like improving efficiency, providing benefits and increasing integrity. Below are three main sections or themes:

1. Clarify the requirements of H1B, improving the efficiency of the H1B program: This section focuses on changes to the H1B visa program aspects around specialty occupation, petition adjudication, and program-related definitions, and focusing on increasing the H1B program’s overall efficiency.
2. Provide benefits and flexibilities for H1B sponsors and Applicants: This section of the final rule provides various benefits and flexibilities to the H1B sponsoring companies and the applicants, including F1 visa holders, to effectively use the H1B program without impacting the business.
3. Strengthen the H1B program Integrity measures: This section is about putting checks in place to strengthen the H1B program and ensure its integrity. Topics addressed here mainly include employment offers, site visits, employer-employee relationships, entrepreneurs, etc.

Not all the changes in the final rule for H1B Program modernization are new. Some are new, some are modified, and some that are already in practice are codified(made official in regulatory documents). To make it easier for everyone, we have divided the total changes in the final rule into two categories:

1. New H1B Rules, Changes to the H1B Visa Program
2. Existing H1B Program Practices or Rules that are Codified

New H1B Rules, Changes to the H1B Visa Program

Below are the various changes and new H1B rules that are part of the final rule to modernize the H1B Visa Program

Change to the definition of Speciality Occupation

DHS is changing the definition of “specialty occupation” to ensure that the H1B job position requires relevant education in that specialized field. For example, under the new definition, an H1B job requirement that says a general MBA or general engineering degree will not be sufficient to qualify for an H1B specialty occupation. It should list specific degrees as a requirement.

The H1B job requirements can include multiple specialized degrees listed for it as a requirement, provided all of them directly relate to the position. For example, a job role can have a degree in electrical or electronics engineering requirements listed, provided the job needs either of these specializations or both.

Below is the screenshot of the final rule official regulatory text for the “Specialty occupation” definition:

F1 Visa Applicants Cap Gap to be extended until April 1st of Next Year

Currently, for F1 Students who apply for an H1B petition as a change of status(COS), instead of consular processing, the cap gap option that allows them to work until they get a decision on their H1B petition is given only until October 1st.

Due to delays in adjudication of the H1B petition, many students cannot work beyond October 1st due to the current rule. The final rule extends the cap-gap work authorization until April 1st of next year to avoid these issues.

For example, if you are filing for an H1B Visa petition for the FY 2026 season in June 2025 and availing of the cap gap, then under the new provision, you can continue to work beyond October 1st, 2025, until April 1st, 2026, while you wait for the decision on your petition from USCIS.

Below is the screenshot of the final rule official regulatory text for the automatic extension of work authorization until April 1st of the next fiscal year:

Someone with a Controlling Interest can sponsor their H1B, do Business tasks

In the past, due to employer-employee relationship clauses and historical policy guidance reasons, many were not able to sponsor H1B or run their own companies. The final rule of H1B modernization encourages entrepreneurship by enabling foreign nationality entrepreneurs with a controlling interest in the company(owning more than 50% of the company) to run their company as a founder while doing regular specialty occupation tasks required for the H1B.

As per the final rule, if a person owns more than 50% of a company, they must spend more than 50% of their time on specialty occupation-related duties. They are free to perform non-specialty occupation activities in the remaining time, like administration, hiring, etc. Basically, it means that if you are a Software Developer Founder and own over 50% of the company, then you must spend over 50% of your time doing Software Development Tasks.

Also, for beneficiary-owned entities, to ensure compliance and integrity, USCIS would only issue 18 months of initial approval for applicants who fall under the above criteria, including the first extension, which is limited to 18 months. After that, the subsequent extensions would be standard with 3-year extensions. Below is the screenshot of the official regulatory language in the final rule.

Inspections, Evaluations, Verifications: Site Visits No longer Voluntary

Participating in USCIS FDNS site visits was voluntary in the past. It was up to the employee to voluntarily participate or choose not to cooperate, and there was no impact of not participating or cooperating during the site visit.

As part of this final rule, DHS is changing voluntary participation to mandatory. Under the new changes, USCIS may conduct site visits on-site, at your home, at a client location, interview the managers, verify records, etc. Failure to cooperate or provide all the details as requested by the USCIS officer could result in consequences such as denial or revoke of your H1B petition.

Below is the screenshot of the regulatory text related to site visits, inspections, others:

Approval with Submitted Expired Documents, Extend Validity Period

Currently, in situations such as Request for Evidence(RFE) or Motion to re-open or reconsider, during the decision time due to processing delays, the requested dates of employment would have passed.

As part of this final rule, DHS may issue an RFE and allow employers to change or update the requested dates of employment allowing them to change the dates as needed. As needed, USCIS may request relevant updated documents such as updated H1B LCA, if the petition is eligible for approval. If no RFE is issued or the employer does not respond, USCIS will issue approval for the given dates in the petition.

See the below official regulatory text from the final rule for the same.

H1B Cap Exemption Flexibility for Universities, Research Organizations

DHS wants to give more flexibility to companies to utilize the H1B cap exemption petition under universities, non-profit research, or Govt. research institutions. As per the final rule, if an H1B applicant works for at least half of the time under the cap-exempt category sponsored entities such as universities or non-profit research entities, they can apply under the cap-exempt H1B category. It does not have to be 100% of the time to qualify for the cap-exempt category. Also, they revised some terms on the definition of the non-profit to give more flexibility.

For example, if someone has filed for H1B under cap exempt under a non-profit research organization, then they only need to work for at least 50% of their time for that non-profit research organization. For the remaining time, they can work in a for-profit company such as Hospital or any other company. Below is the screenshot of the official regulatory text for the same.

Deference to previous decisions for H1B approvals

During the first term of the Trump administration, the deference policy was removed. The current final rule adds the deference policy back to help with faster processing of approvals and save time.

The deference policy(consider previous approval for making a decision instead of reviewing it as a new petition) is for H1B approval when filing for extensions, where the same parties are involved, and the facts related to the petition remain the same as they existed in the past. In such cases, USCIS can use the deference policy to adjudicate the extensions without wasting too much time.

Below is the screenshot of the regulatory text related to the deference policy

Existing H1B Program Practices or Rules that are Codified

As part of the DHS’s final rule on modernization of the H1B Program, they have codified many practices that USCIS is currently practicing based on some policy alerts or memos based on some decisions from the court. Below is the list of the same:

• Amendments for H1B Petitions: This relates to codifying the changes on when an H1B amendment needs to be filed, LCA requirements for amendments, etc. This is based on the Matter of Simeio Solutions decision.
• Maintenance of Status Documents: When you file an H1B petition, you need to submit evidence proving the maintenance of the proper legal status of the applicant in the form of pay slips, tax returns, contracts, etc. to prove the same. This was always there, the final rule codifies the same.
• Removal of the need for Itinerary requirements: There is no need to submit a detailed itinerary related to the H1B-related work as it is already captured on H1B LCA. This is already followed; the final rule codifies the same.
• Bona Fide Job Offers, Contracts, Non-speculative Employment: As part of the final rule, DHS is codifying the requirements that the job offers need to be bona fide for the H1B petition. Also, the evidence, such as contracts, work orders, MSAs, etc., must be submitted to show the proper relationship and the work. The employment must be for a real position and cannot be speculative in nature.
• H1B LCA, Remove Employer-Employee Relationship: DHS is codifying in the final rule that the H1B LCA should correspond to the actual position, and they will adjudicated based on the DOL SOC Code, wage level, etc.. They are also removing the old employer-employee relationship definition based on Neufeld memo.
• Third-party placements: As part of the final rule, DHS is codifying the requirements for H1B at a third-party placement. They have added additional text to clarify that the work done at a third-party location has to be a specialty occupation in nature and cannot be some random work.

Effective Date, New edition of Form I-129

The DHS final rule for H1B Program modernization is effective from January 17th, 2025.

USCIS released a new version of Form I-129 to cater to the final rule on H1B modernization. It has a new edition number that reads “Edition 01/17/25”. Also, the expiration date for the form is now “12/31/2027”. You can see the screenshot below showing where to find these details.

Starting January 17th, 2025, all employers are required to use the new edition of the form I-129.

Who all does the new H1B Rules apply to?

The new H1B rules that are implemented as part of the H1B Modernization rule apply to all the H1B petitions filed with USCIS on or after Jan 17th, 2025. This applies to both the new H1B applications applying based on cap quota and also the extensions, transfers, and amendments.

Below is the screenshot of the exact guidance as it appears on the Federal Register regulation:

What can the Trump Administration do to the final rule?

Trump administration is set to take office on January 20th, 2025. Technically, they cannot cancel this final rule right away. They must go through the same regulatory process to make any changes.

In the first term of the Trump administration, they made it very hard for H1B applicants by introducing stricter norms and more paperwork for adjudicating H1B petitions. Many of these came as policy memos, and some as regulations. We do not know, at this point, if the Trump administration will act immediately to make changes to the H1B program or not.

High-skilled immigration is an important item for the Trump Administration based on Trump’s past interviews and views. But, we do not know at this point if they want to make H1B Program much stricter or create new regulations.

What do you think of the changes to the H1B Program? Are they really modernizing the H1B Program? Share your thoughts in comments section below

References: Official Final Regulation – H1B Modernization – on Federal Register and USCIS Press release