USCIS announced it has completed the annual H-1B selection process (“lottery”) for Fiscal Year 2024, with early reports indicating a record number of registrations submitted. Each year, it becomes increasingly difficult to obtain one of the 85,000 H-1B visas allotted under the congressionally mandated quota or “cap.” In light of the news, employers and foreign-national employees are now reviewing their contingency plans for those whose registrations were not selected.

Employers must understand the duration and limitations of their employees’ current visa status and evaluate potential opportunities to retain these talented individuals. For instance, some employees may be able to remain in the United States on their current visa to retry the H-1B lottery next year. Others may be eligible to change to another limited type of visa – such as TN, E-3, O-1, or, possibly, L-1 – if they can meet the specific eligibility requirements for those categories. Still others may be able to remain in the United States, and even apply for employment authorization, through a dependent visa of a spouse.

While the limit on H-1B visas is meant to protect U.S. workers, the unanticipated consequence is work leaving the United States. When companies are unable to hire enough skilled workers in the United States, they often resort to “offshoring” (i.e., relocating) the work abroad, giving countries such as India, China, and Canada a competitive advantage over the United States. However, when companies offshore work abroad, in addition to decreasing the number of foreign-nationals working in the United States, they may also find negative, unintended outcomes. For instance, if certain processes are no longer handled in the United States, companies may be required to reduce their number of U.S. workers as well. The effect of lost foreign-national workers also negatively affects the U.S. economy, as consumers and income disappear from the supply chain.

Other countries have taken advantage of the limitations of U.S. immigration. They have expanded their visa offerings to include remote or nomad visa categories to attract foreign-national workers and individuals who do not “win” the H-1B lottery. Some countries, like Canada, have made it easier for highly skilled workers to obtain temporary work visas and even pursue permanent residence. Canada, Mexico, the United Kingdom, Germany, and Australia have increasingly become popular alternatives to the United States as they broaden their immigration horizons.

Another way other countries have capitalized on the pool of available foreign-national talent is the creation of digital nomad visas, which allow various periods of work authorization with attractive tax benefits and perks. Of course, these nomadic work arrangements raise other questions and implications. For example, employers must consider, among other things:

• Will having an employee abroad raise the risk of the employer becoming subject to local business taxation?
• How will the company handle local payroll requirements and comply with local employment laws?
• How will the company deal with the employee’s tax liabilities, workplace injuries, insurance and benefit plans?
• How will the company handle communications, data protection, and cybersecurity?
• What costs will the employee have to pay, and which will be borne by the company?