The H-1B modernization rule, effective January 17, 2025, allows entrepreneurs to self-petition for H-1B visa status even if they are the sole owner of their company. This change expands the definition of a "U.S. employer" to include beneficiary-owned companies, facilitating access to H-1B status for entrepreneurs and business start-ups.
The owner-beneficiary is permitted to perform tasks traditional of an owner running a business, such as signing leases, finding investors, negotiating contracts, developing a business plan, engaging with potential suppliers and other stakeholders, and talent acquisition. However, the H-1B employee must spend the majority of their time performing specialty occupation duties. A position can only be classified as an H-1B “specialty occupation” if it requires the theoretical and practical application of a body of highly specialized knowledge and requires at least a bachelor’s degree in a “directly related” specific specialty, or its equivalent. A “directly related” degree is defined as a degree having a “logical connection between the required degree . . . and the duties of the position.” Ex: a job in I.T. must require a computer science or related degree, and an engineering role must ask for a degree in engineering.
This flexibility acknowledges the dual role of entrepreneur-beneficiaries as both business owners, with specific responsibilities related to running, managing, and growing the business, and specialty occupation workers. To ensure compliance with this rule, the USCIS has indicated that H-1B petitioners must detail all duties the beneficiary will perform, ideally specifying the percentage of time spent on each. Non-specialty occupation duties must directly relate to owning and managing the business. Incidental duties – those that “occur by chance, are intermittent, and are of minor consequence,” such as answering phones, making copies and the like – are also permissible, provided they remain secondary to the specialty occupation tasks.
Under the previous rule, a U.S. employer eligible to file an H-1B petition was limited to a person, firm, corporation, contractor, or other association or organization in the U.S. which engages a person to work within the U.S., has an IRS tax identification number, and has an employer-employee relationship with its H-1B nonimmigrant employees. “Employer-employee relationship” was specifically defined as having the ability to “hire, pay, fire, supervise or otherwise control the work of any such employee.”
The new Rule, however, eliminates the employer-employee relationship language and expands the definition of a U.S. employer. The Rule requires a U.S. employer to have legal presence in the U.S., be amenable to service of process, and have an IRS tax identification number. This expands eligible petitioners to include beneficiary-owned companies, such as one owned by a H-1B worker. This change is intended to promote access to H-1B visas for entrepreneurs and start-up entities, among others.
The Rule also codifies existing USCIS policy that the employer have a bona fide job offer for the beneficiary. This job offer may include telework, remote work, or other off-site work within the U.S. The USCIS has authority to request contracts, work orders, or similar evidence to establish a bona fide job offer exists.
The updated regulations impose a limited validity period for H-1B petitions involving beneficiary-owners. More specifically, the initial filing and the first extension are limited to 18 months each. While this shorter duration requires more frequent filings, it reflects the intent of the USCIS to balance flexibility for entrepreneurs with “safeguards to prevent program abuse” and to ensure compliance.
Establish your company as a Limited Liability Company (LLC) or a S-corporation or C-corporation or other corporate entity and obtain a federal employer identification number. An accountant can advise on the best corporate structure for tax purposes. Sole proprietorships do not qualify because they do not separate the owner from the employee. The company should be setup in a location allowing for commercial activity. A home office will probably not suffice unless the zoning rules allow for business operations.
There is no minimum size requirement for the H-1B petitioner. Filing an H-1B petition successfully through a start-up or small company is possible if the company is capable of paying the offered salary. If the company currently has very little or no revenue, projected figures may be used. Alternatively, evidence may be submitted that the company is expected to grow on the basis of a marketable product or service, or that it is is well-capitalized, or that there is a specific project or client where the H-1B beneficiary will be assigned (thus assuring the H-1B petitioner a ready source of revenue to pay the offered salary), or that the principal of the company has substantial experience in the industry. It is also OK if the H-1B petitioner has not sponsored any candidate earlier, and there is similarly no requirement to show a shortage of qualified U.S. workers. The H-1B petition should emphasize that the position is a specialty occupation requiring a minimum of a suitable and specific bachelor’s degree to satisfactorily perform the job, and that the beneficiary possesses the required qualifications.
The updated H-1B regulations for beneficiary-owners represent a welcome and needed opportunity for foreign entrepreneurs to leverage their expertise while building businesses in the U.S. By meeting the regulatory requirements and carefully structuring their H-1B petitions, these individuals can secure H-1B status and contribute meaningfully to the American economy. This is a positive development for those seeking to combine their entrepreneurial aspirations with the benefits of the H-1B program.
This article provides only general information, and your own case may require specialized guidance. Please contact our law firm to discuss.
[Note: Please consult with an attorney specializing in Immigration & Nationality law for professional advice in specific situations.]
