By Monica Singh, Esq., Business Immigration Department Chair
Prior to the finalization of the H-1B Modernization Rule, many foreign-born entrepreneurs had to sacrifice their start up endeavors to seek employment through entities in which they held less than a majority stake, or relocated abroad to pursue their start up and business ventures. The H-1B Modernization Final Rule, which became effective January 17, 2025, introduced significant changes to the H-1B program, particularly beneficial for entrepreneurs. Notably, the rule removes the common law definition of an employer-employee relationship, meaning USCIS no longer requires an H-1B petitioning entity to prove that it has the right to control the beneficiary’s work. In the past, when a beneficiary owned 51% or more of the petitioning entity, or possessed majority voting rights, it was nearly impossible to establish the necessary employer-employee relationship between the petitioning entity and the beneficiary unless the petitioning entity had a separate board of directors. Now, those beneficiary-owners who possess more than 50% ownership or have majority voting rights in the petitioning entity can apply for an H-1B visa so long as they can show there is a bona fide job offer for a specialty occupation position. The rule acknowledges that by providing beneficiary-owned businesses access to the H-1B program, business owners and start up founders will “promote innovation, job creation, and economic growth in the U.S.” The H-1B Modernization Rule explicitly encourages more beneficiary-owned businesses to participate in the H-1B program.
What is the right type of job classification for the beneficiary of the beneficiary-owned H-1B petitioning entity? Choosing the right classification for a beneficiary-owner’s role within the Department of Labor’s job classification scheme has become somewhat of an art form, in a world where most job profiles include hybrid duties from various Department of Labor classifications. Where the beneficiary-owner’s role will include a combination of occupations, the H-1B Modernization Rule states that the highest prevailing wage must be used.
The rule also permits a level of flexibility in what tasks a beneficiary-owner may engage. While the rule requires a beneficiary-owner to perform the specialty occupation duties authorized under the petition for the “majority of the time,” it also offers some leeway for beneficiary-owners to attend to “incidental duties” as well as “activities directly related to owning and managing the business.” The final rule provides a non-exhaustive list of examples of the types of activities beneficiary-owners may perform as a result of owning and managing the business: “negotiating contracts, developing a business plan, engaging with investors, or overseeing talent acquisition,” so long as the majority of time is spent performing specialty occupation duties.
What is the right type of educational degree for the beneficiary of the beneficiary-owned H-1B petitioning entity? The H-1B Modernization Rule acknowledges that beneficiary-owners and individuals in start-ups may need to seek positions in new or emerging fields that do not always require a single degree. The Rule allows for a broader range of degree fields to qualify for certain positions, as long as the petitioner demonstrates a direct relationship between the degree(s) and the job duties. A direct relationship translates to a showing of a “logical connection” between the degree or its equivalent and the job responsibilities.
The beneficiary-owned business that seeks to file a petition for its majority owner will receive an initial approval for an 18-month validity period, which can be extended for another eighteen months, and thereafter, extended in three-year increment(s).
It remains to be seen whether the Trump administration will attempt to rescind the H-1B Modernization Rule. For now, however, the American dream just got a little easier to file for entrepreneurs.
Please note that cap season is imminent (March 2025). Should you wish to discuss the H-1B Modernization Final Rule, or wish to understand more information about how a beneficiary-owner can file an H-1B petition, please contact Monica Singh or call our office at (610) 975-4599 to schedule a consultation with Monica today.
Be sure to mention this article when reaching out for your consultation.
Reviewed by Taylor S. Adams, Esq., Associate Attorney