Recommendations to Improve H-1B Lottery System by Arthur Lee, Esq.

As published in the Immigration Daily on April 14, 2022

The H-1B lottery selection system has proven to be a time and cost saver for employers trying to hire H-1B cap workers during a fiscal year, but it has room for significant improvement. On the numbers, in FY2022, USCIS received 308,613 H-1B registrations and initially selected 87,500 registrations in its first round of selections in March. The 87,500 was projected to be sufficient to meet the H-1B numerical allocations. Then, on July 29, 2021, USCIS announced a second selection of 27,717 resulting in a total of 115,217 selected registrants. This suggests that of the 87,500 initially selected, employers did not submit petitions or the petitions had irretrievable problems for 27,717 of the selected. It is difficult to imagine a vast quantity of defective petitions, so the bulk of the number would have been non-submitted petitions. This represents a rate of 31.7% of all selected registrants. Then on November 19, 2021, USCIS conducted a selection of 16,753 registrants, suggesting that 60.4% of registrants selected in the second round did not respond or petitions had irretrievable problems. These percentages might not factor every consideration that USCIS has taken or will take in conducting further lotteries, but are nonetheless illustrative of the non-response/problematic petition trends in the H-1B selection process.

While the current selection system makes much more sense than the past one of instructing petitioners to file full petitions for their prospective beneficiaries prior to selection, there are some frustrating flaws to the new system. Since it is much cheaper and less time-consuming to enter a potential H-1B employee into the lottery than submitting a full petition on his/her behalf, it stands to reason that there are much higher numbers of potential H-1B registrants to select from under the new system. In FY2022, USCIS received 308,613 registrants, as opposed to the 201,011 petitions to select from in FY2020—the year before USCIS switched to the H-1B lottery registration system—representing a 53.5% increase in the selection pool due in large part to what the author believes is the new system. After selections are made, non-response/problematic case rates are understandably high due to the relatively low level of investment employers made in registering their potential H-1Bs—all they needed to do was enter basic information into an online form and pay $10 per potential worker. Those who are not selected in the initial lottery must wait until a potential second or third lottery (July and November in FY2022). In FY2022, 72% of registrants were not selected in the initial lottery. Therefore, while approximately 31.7% of the initially selected registrants did not file or filed problematic petitions, the 72% that were not selected had to weigh their options as they would not find out if there would be a later round of selections until such happened in July. Many of the 72% were not in the fortunate situation where they could wait to be selected as some had expiring statuses and were compelled to take other legal measures to stay lawful, become illegal, or go abroad. A non-selection in the first round of H-1B lotteries often also has compelled employers to change their minds about sponsoring a beneficiary if he/she was selected in a future round, especially if expiring statuses or visas prevent H-1B candidates from working with their employers until the future selections are made. As such, by the 2nd selection round in July 2022, many registrants had already moved on, as evidenced by the approximate 60.4% non-response/problematic H-1B rate. This lack of response compelled USCIS to conduct a third lottery in November 2021 for 16,753 registrants—for a process that should in theory have allowed for adjudications of all H-1B cap workers for work beginning on October 1 of the same year.

Clearly, at the heart of the problem are the following: (1) the barrier for entry is too low for employers such that the bulk of approximately 31.7% of those selected choose not to file H-1B petitions; (2) registrants not selected in the first lottery round do not know whether they will be selected in a later round (or if there will be another round); (3) plans very often change for those who are not selected in the first round, especially if they would have to wait until July or later to see if they are later selected—a selection in July or November is not equal to a selection in March. While DHS notes that there may be monetary fines and criminal penalties under 18 USC 1001(a)(3) for employers who engage in a pattern and practice of submitting registrations for which they do not file petitions, the numbers show these penalties do not work as an effective deterrent for registering and failing to file.

Is there a solution? The author believes that fortunately, the H-1B lottery system can be significantly improved by implementing one or more of the following steps:

  1. Select more registrants on the initial lottery. In FY2022, USCIS selected 87,500 in the initial H-1B lottery. Even if all 87,500 properly filed H-1B petitions, it is unlikely that USCIS would have allocated the mandated 85,000 cap H-1B visas based upon that selection alone. Even with the post-Trump era H-1B denial rate of 4%, the expected number of H-1B approvals would have been 84,000 assuming that all 87,500 successful registrants submitted petitions. Therefore, in order to avoid having to conduct a second or third lottery where interest by a large percentage of the pool has waned, USCIS should allow more room for error. It is inevitable that a significant percentage of those initially chosen will not submit petitions or will submit problematic petitions. Looking at the above statistics, a number incorporating the first plus second rounds (115,217) or somewhere in that range would likely be a good number of registrants to select in the first round. Did USCIS do something like this in March 2022? Hopefully, lessons were learned from last year.

  2. Increase the H-1B registration fee. The $10 nominal rate is a big part of the problem. Employers submitting $10 per reservation simply do not have enough skin in the game and can decide not to file petitions without much consequence unless DHS finds that they are engaging in a pattern and practice of submitting fraudulent registrations. A payment of $100 per registration would be more appropriate and deter employers from submitting registrations unless they are serious about filing H-1B petitions. That is certainly cheaper than employers filing whole petitions before the advent of the registration system and would help with USCIS’ poor financial status. To soften the blow of the larger fee, USCIS can implement a system whereby it deducts the $100 from the I-129 filing fee for successful H-1B cap registrants, and/or returns a portion of the registration fee for unsuccessful registrants.

  3. Implement an “opt out” button on the registrants’ myUSCIS portal. Petitioners should be given the choice to opt out of their registrations if they choose not to move forward. The infrastructure to implement a button appears to be already mostly in place in the myUSCIS portal. A button to opt out can be programmed onto the myUSCIS page for H-1B registrants so that they can opt out at any time. A perfect place to implement a “withdraw registration” button is under the “view notice” button on each row for selected beneficiaries. A “withdraw registration” button should bring the H-1B registrant to a page listing all ramifications of withdrawing a registration and confirming whether the petitioner really wants to withdraw. Upon implementing this button, USCIS should run selections at the end of each month to make up for any shortfall. This solution should not come at a significant cost to USCIS, as much of it can be automated, and it would help USCIS reach its H-1B quota earlier by providing more selections to those who are truly interested in petitioning earlier, and while they are still interested in filing H-1B petitions. Implementing this solution would also greatly benefit H-1B employers and prospective employees as truly interested H-1B petitioners would have greater likelihood of being able to file an H-1B petition, and employers and prospective H-1B employees would have more clarity earlier in H-1B season as to whether they have been selected or may be selected in a more amenable timeframe.

The implementation of the above recommendations should in the author’s opinion improve the H-1B registration system.