The Top Five H-1B Cap Post-Season Considerations for Employers

Congratulations, your company (literally) won the lottery! At this point, you have either filed your respective H-1B cap-subject petitions or are working to file those petitions recently selected in the second round of the FY 2025 H-1B lottery. Whether you’ve received an approval or are eagerly awaiting adjudication by U.S. Citizenship and Immigration Services (“USCIS”), employers must prepare to ensure a smooth transition to H-1B status.

Often, these H-1B cap-subject petitions are filed on behalf of individuals in F-1 status, currently working pursuant to their Curricular Practical Training (CPT), Post-Completion Optional Practical Training (OPT) or STEM OPT. In some cases, an H-1B approval will automatically change your employee’s status from F-1 to H-1B on October 1. There are several considerations employers should be aware of during this transitional period to ensure compliance with all federal regulations governing F-1 status, H-1B work authorization, as well as Form I-9 compliance. This article will highlight top employer considerations to keep in mind over the next several weeks for those employees currently in F-1 status including:

• Maintenance of status
• International travel
• H-1B compliance
• Tax treatment
• Strategies for those not selected in the lottery

Consideration #1: Maintenance of Status Between Now and October 1:

Even if the H-1B cap-subject petition has been approved, H-1B work authorization will not go into effect until October 1. Employers need to work with their employees to ensure the company’s Forms I-9 accurately reflect continued work authorization for their employees between now and October 1.

An F-1 student who is the beneficiary of a cap-subject H-1B petition and request for change of status that is timely filed may have their F-1 status and any current OPT employment authorization extended until the first day of the new fiscal year (October 1) under the “cap-gap” allowance. This cap-gap period starts when an F-1 student’s status and employment authorization expires and, unless terminated, ends on October 1.

1. If your employee’s OPT (or STEM OPT) work authorization expired/will expire after the H-1B petition has been filed but before October 1, 2024, their OPT work authorization is automatically extended through September 30. The employee should contact their Designated School Officer for an endorsed Form I-20 recommending the cap-gap extension. This documentation can be used for Form I-9 reverification purposes.
2. If an H-1B petition is still pending after October 1, a student may not continue working if they were working pursuant to cap-gap work authorization. In this scenario, the employer can upgrade the pending H-1B petition to premium processing to guarantee a government response within 15 business days.
3. If your employee’s student work authorization expired before you were able to file the H-1B cap-subject petition, they are ineligible for cap-gap work authorization and should stop working until the H-1B start date.
4. If USCIS approved your request to change your employee’s status from F-1 to H-1B on October 1, your employee may begin working pursuant to their H-1B work authorization starting on that date. You will need to re-verify their Form I-9 accordingly.

Consideration #2: International Travel

International travel is the most frequent post-H-1B cap filing inquiry we receive. International travel has the potential to significantly disrupt your employee’s ability to automatically begin working pursuant to H-1B work authorization come October 1.

As a general rule, an F-1 student may depart the U.S. and seek readmission to the U.S. in F-1 status during a cap-gap period (before October 1) if:

1. The student’s H-1B petition and request for change of status has been approved;
2. The student seeks readmission before their H-1B employment begins (normally at the beginning of the fiscal year on Oct. 1); and
3. The student is otherwise admissible.

Under these circumstances, the F-1 student’s status will still automatically change to H-1B on October 1.

If the H-1B petition requesting a change of status is still pending, it is advised not to travel. By departing the U.S. when an H-1B petition requesting a change of status is still pending, USCIS will consider the change of status request abandoned and the employee will need to take additional steps to assume H-1B status once the petition is approved. If an urgent need to travel arises, please consult your Quarles immigration attorney immediately so we can advise based on the employee’s specific circumstances.

When considering international travel, employees should also consider the unpredictability of visa processing at U.S. Embassies and Consulates. There is always an element of risk when traveling outside of the U.S. and applying for the necessary visa documentation to return.

Consideration #3: H-1B Compliance and Changes in Employment after October 1

Once an employee’s H-1B status becomes effective (generally on October 1), employers and employees must comply with the specific terms and conditions listed in the H-1B Petition and Labor Condition Application (LCA). If there are any changes in the approved circumstances – including changes to work location, wages, or job duties - as represented in the H-1B filing, additional action may be necessary for the employer and employee to remain compliant.

Wages – Employers must ensure that an employee’s base salary is equal to or greater than the salary listed on the LCA and the H-1B petition.

Worksite – Employers must ensure that H-1B employees are working from the location(s) listed in the LCA and H-1B Petition. Worksite locations, including home worksites, are subject to inspection by the Fraud Detection and National Security Directorate (FDNS). Employers should ensure that employees are working in compliance and inform employees of their rights in the case of inspection.

You must file an amended H-1B petition if your employee is going to work from a location outside of the metropolitan statistical area covered by the existing approved LCA and H-1B petition. This is important to keep in mind as your remote employees or recent graduates request changes in residential work location upon completion of their University studies.

Employers must file an H-1B amendment prior to making any material changes to the terms and conditions of employment for an H-1B employee.

Consideration #4: Tax Treatment

Pursuant to federal tax regulations, certain non-immigrants (e.g. those in F-1, J-1, M-1 status) are not subject to FICA tax withholding. However, once those employees are working pursuant to H-1B status, an employer must begin withholding FICA taxes. Employers should coordinate with payroll prior to the change in status so that FICA withholding can begin as of the effective date. Employers should also conduct an internal audit to ensure correct tax treatment for all non-immigrant employees, come October 1.

Consideration #5: Continuous Work Authorization for Employees Not Selected

Now that we have conclusive results for both the first and second rounds of H-1B cap selections, employers should ensure they have also evaluated all options for continued work authorization for those employees not selected in the H-1B lottery. Employers should review work authorization expirations and discuss alternative strategies considering lottery results to prepare and support employees requiring future sponsorship.