H1B Higher Education CAP Exemption


h1b cap exemptThe number of available H1B visas in a fiscal year is capped at 65,000.1 However, H1B petition beneficiaries with employment offers from certain “institution(s) of higher education or affiliated nonprofit entity(s),” or from “nonprofit research organization(s) or “governmental research organization(s)” are exempt from the annual cap on H1B visas.2 Furthermore, under certain circumstances, an organization that would not qualify as an employer covered under this rule may nevertheless be eligible if it is seeking the H1B visa for an employee whose place of work will be at a qualifying institution or organization. This article will address rules for which institutions and organizations qualify as employers for the purpose of being exempt from the annual cap on H1B visas; the rules applicable when an employer itself does not qualify but the petition does on account of the beneficiary working at a qualifying organization or institution; guidance for filing an H1B petition that would qualify as a cap-exempt, and the rules for H1B beneficiaries of cap-exempt institutions or organizations seeking to work concurrently for a cap-subject employer.

Rules For Which Instititutions And Organizations Qualify

The statute containing the exemption from the annual cap on H1B visas states that qualifying organizations are:

  • An institution of higher education, or related or affiliated nonprofit entities;
  • A nonprofit research organization or governmental research organization3

Before looking at the categories in more detail, please note that “nonprofit entity,” which any qualifying organization must be, is defined in Department of Homeland Security (DHS) regulations as:

  • Qualification as a tax exempt organization under the Internal Revenue Code (IRS) of 19864
  • Having been approved as tax exempt for educational or research purposes by the IRS5

Of note is that in order to be a qualifying nonprofit entity pursuant to DHS regulations for the H1B cap-exemption, the organization must be qualified as a nonprofit for educational or research purposes and not be qualified as a nonprofit entity primarily for a different purpose.

Qualifying Institutions Of Higher Education And Related Or Affiliated Nonprofit Entities

“Institution of higher education” is a statutorily defined term. In order to be considered to be an “institution of higher education,” an institution must,

  • Only admit students who have a certificate of graduation from a secondary education school; students who have completed secondary education in a home-school setting recognized under state law, or students who have the recognized equivalent of a secondary school graduation certificate6
  • Be legally authorized by a state7 to provide education beyond secondary education8
  • Provide an educational program for which the institution awards a bachelor's degree, a program not less than 2 years that provides full credit toward a bachelor's degree, or a program for which the institution awards a degree that is acceptable for admission to a graduate or professional degree program9
  • Is a public or nonprofit institution that is accredited by a nationally recognized accrediting body or. if not accredited, has been granted preaccredidation status by a recognized accrediting body and has been recognized by the Secretary of Education as being on track to meet the requirements for accreditation within a reasonable time10

Most schools that provide post-secondary education qualify as “institutions of higher education” pursuant to statute. However, institutions and prospective H1B beneficiaries should note that for-profit post-secondary schools do not qualify as a “institutions of higher education” pursuant to the statute, and thus are not eligible employers for purpose of being exempt from the annual cap on H1B visas.11

Although the statute that defines “institution of higher education” does not include schools that only award professional degrees, current Department of Education regulations interpret them as being “institutions of higher education.”12 Thus, it is likely that a nonprofit institution that awards graduate or professional degrees will qualify as an employer that may be exempt from the annual cap on H1B statutes pursuant to current regulations, so long as it is accredited and non-profit.

The statute containing the H1B cap-exemption does not define what constitutes a “related or affiliated nonprofit entity” to an “institution of higher education.” However, the terms are by in regulations for exemption from the H1B training fee as a nonprofit entity connected to an institution of higher education by13:

  1. Shared ownership, or
  2. Control by the same board or federation, or
  3. Attachment as a member, branch, cooperative, or subsidiary14

Provided that the nonprofit institution meets any of these three criteria, it should qualify as an eligible employer for purposes of sponsoring H1B petitions exempt from the annual cap on H1B visas. However, any organization that believes it may be a qualifying employer should take care in filling out its application, such that it demonstrates one of the necessary associations to an institution of higher education.

In 2006, the Administrative Appeals Office considered if a school district that collaborated with institutions of higher education in order for university students teach as interns in the school district was a qualifying employer for purpose of being exempt from the annual cap on H1B visas.15 It held that the school district did qualify because it was attached to an institution of higher education under the third criteria for “relation or affinity to” an institution of higher education.16 That broad interpretation of “attachment” opens the door for many nonprofit entities that have similar relationships to institutions of higher education to demonstrate that they are eligible employers for purposes of cap-exempt H1B visas, despite not having the same ownership or being under the same control as an institution of higher education.

Qualifying Nonprofit Or Governmental Research Organizations

DHS regulations define a nonprofit research organization as “an organization that is primarily engaged in basic and/or applied research.”17 The same regulations define a governmental research organization as “a United States Government (federal government only under current interpretation18) entity with a primary mission of the performance or promotion of basic and/or applied research.”19 “Basic research” is defined as research that advances scientific knowledge, but does not have “specific immediate commercial objectives.”20 Applied research is defined as research to determine “the means by which a specific and recognized need may be met.”21

For both nonprofit and governmental research organizations, the distinction between basic research (research that does not have an immediate commercial objective) and applied research (research that does have an immediate commercial objective) is important to consider when filing a cap-exempt H1B petition. The research organization must carefully consider whether the research the petition is for is of a basic or applied nature in order to file an accurate petition.

Research must be the “primary mission” of the organization. While the organization seeking a cap-exempt H1B visa may engage in other activities besides research, none of those activities may surpass research in importance.22 Therefore, research organizations seeking cap-exempt H1B visas will be required to demonstrate that research is the primary mission of the organization, and that any non-research activities are secondary.

Rules For Having H1b Petition Considered Cap-Exempt If Employer Does Not A Qualifying Institution Or Organization

Someone who will be employed by a private employer that does not meet the requirements for cap-exempt H1B petitions may nevertheless be eligible for a cap-exempt H1B petition if he or she will work at, but not for, a qualifying institution or organization. A 2006 United States Immigration and Citizenship Services (USCIS) memorandum instructs immigration officials in this scenario to consider whether the H1B beneficiary would be “directly and predominantly [furthering] the essential purposes of the qualifying institution.”23 The memorandum clarifies this standard as requiring the petitioner to demonstrate that there is a “logical nexus” between the duties of the H1B beneficiary and furthering “the essential purpose, mission, objectives, or function” of the qualifying institution or organization.24

The “logical nexus” requirement precludes someone who would qualify for an H1B visa and work at a qualifying institution or organization, but who would not be engaging in work that would directly further one of the core objectives of the qualifying institution. The memorandum provided four scenarios to help guide H1B petitioners in this situation with regard to whether their petitions may be eligible to be considered cap-exempt. Let us take a look at the two most complicated scenarios, one where the H1B petition would be considered cap-exempt, and one where the petition would not be considered cap-exempt.

  • A non-qualifying for-profit hospital and research center that maintains a relationship with a qualifying nonprofit research organization dedicated to finding a cure for liver cancer (the relationship is that the hospital provides resources and data to the nonprofit in exchange for accessing the nonprofit's database on treating liver cancer) files an H1B petition on behalf of an oncologist who will spend a slight majority of his or her time working on-site for the non-profit research organization, conducting research on treating liver cancer that would not normally be conducted by employees of the nonprofit. In this case, the H1B petition would be considered cap-exempt because the oncologist would be furthering the primary mission of the nonprofit research organization.25
  • A non-qualifying for-profit market research firm seeks an H1B visa for a direct-employee who will conduct research onsite at a qualifying university. The research will be conducted at the university because the employee requires a research tool that can only be accessed from the university. The research is for the benefit of the for-profit market research firm. In this case, the H1B petition would not be cap-exempt because there is no “logical nexus” between the work that the beneficiary would be doing and the mission of the university.26

These scenarios illustrate that while working at a qualifying institution or organization is necessary for eligibility, it is not in and of itself sufficient. Non-qualifying entities that are filing H1B petitions they hope to have considered as cap-exempt should make sure that their petitions clearly explain the “logical nexus” between the work being performed by the H1B beneficiary and the core mission of the location he or she is will be working.

Guidance For Filing Successful Cap-Exempt H1b Petitions

It is important for any qualifying institution or organization, or non-qualifying employer of an H1B beneficiary who will be working at a qualifying organization or institution, to meticulously document the grounds for qualification for the cap-exemption. The petitioner should not assume that its reputation will lead to approval in the absence of copious evidence supporting eligibility.27 Of note for non-qualifying employers who are seeking cap-exemption for an H1B petition for a beneficiary who will work at a qualifying organization, the Form I-129 does not have this situation as an option Petitioners in this situation are advised to affirm that they are a qualifying institution or organization under the category of the qualifying organization or institution the beneficiary will work at, and then add a note stating that the beneficiary will be work at, but not for, said institution.28

Rules For Cap-Exempt H1b Beneficiaries Accepting Concurrent Work From A Cap-Subject Employer

Provided that an employee of a cap-exempt organization is still working for the cap-exempt organization, he or she may accept concurrent work at a cap-subject organization without having his or her H1B visa considered cap-subject.29 A May 2008 USCIS instructs immigration authorities to continue to count an H1B visa as cap-exempt so long as the beneficiary provides evidence that he or she is working for the cap-exempt employer, but if the beneficiary cannot prove that he or she is still working at a cap-exempt employer, the H1B petition by a cap-subject employer must be counted as subject to the annual cap on H1B visas.30

However, the H1B beneficiary must demonstrate that the concurrent employment arrangement is legitimate in order to still be considered cap-exempt. The burden will be on the H1B beneficiary to provide evidence documenting how he or she intends to work at both jobs concurrently in order to demonstrate to USCIS that he or she is still truly working for a cap-exempt employer or at a cap-exempt organization in an already approved arrangement.31


  1. INA § 214(g)(1)(A)
  2. AC21 § 103
  3. AC21 § 10
  4. 8 C.F.R. § 214.2(h)(19)(iv)(A), citing; 26 U.S.C. §§ 501(C)(3), 501(C)(4), 501(c)(6)
  5. 8 C.F.R. § 214.2(h)(19)(iv)(B)
  6. 20 U.S.C. §§ 1001(a)(1), 1091(d)
  7. Pelta and Vazquez-Azpiri 75, citing 34 C.F.R. § 600.2 which is a Department of Education regulation interpreting “state” for the purpose of this statute to include American Samoa, Puerto Rico, District of Columbia, Guam, U.S. Virgin Islands, Commonwealth of Northern Mariana Islands, Republic of the Marshall Islands, the Federal States of Micronesia, and the Republic of Palau
  8. Paraphrasing 20 U.S.C. § 1001(a)(2)
  9. Paraphrasing 20 U.S.C. § 101(a)(3)
  10. Paraphrasing 20 U.S.C. §§ 101(a)(4)&(5)
  11. Pelta and Vazquez-Azpiri 75, citing; 20 U.S.C. § 101(a)(3)
  12. Pelta and Vazquez-Azpiri 75, citing; 34 C.F.R. § 600.4(a) which includes programs that award “graduate or professional degree(s)” in the definition of “institution of higher education.”
  13. Pelta and Vazquez-Azpiri 76, citing; 8 C.F.R. § 214.2(h)(19)(iii)(B)
  14. 8 C.F.R. § 214.2(h)(19)(iii)(B)
  15. Pelta and Vazquez-Azpiri 78, citing; Matter of [name withheld], EAC 06 216 52028 (Sept. 8, 2006), published on ALIA InfoNet at Doc. No. 06091161 (posted Sept 11, 2006)
  16. Id.
  17. 8 C.F.R. § 214.2(h)(19)(iii)(C)
  18. Pelta and Vazquez-Azpiri 79
  19. 8 C.F.R. § 214.2(h)(19)(iii)(C)
  20. Id.
  21. Id.
  22. Pelta and Vazquez-Azpiri 79
  23. Pelta and Vazquez-Azpiri 81, citing; USCIS Memorandum, M. Aytes, “Guidance Regarding Eligibility for Exemption from the H1B Cap based on § 10 of the American Competitiveness in the Twenty-First Century Act of 2000 (AC21) (Public Law 106-313)” (June 6, 2006), published on ALIA InfoNet at Doc. No. 06060861 (posted June 8, 2006), at 3, included in appendix 4B
  24. Id.
  25. Id.
  26. Id. at 84
  27. See Pelta and Vazquez-Azpiri 87, explaining that evidence is required regardless of the stature of the organization
  28. See Pelta and Vazquez-Azpiri 88, providing guidance on filing a successful cap-exempt H1B petition in this situation
  29. See Pelta and Vazquez-Azpiri 85, discussing concurrent employment
  30. See Pelta and Vazquez-Azpiri 85, citing; USCIS Memorandum, D. Neufeld, “Supplemental Guidance Relating to Processing Forms 1-140 Employment-Based Immigrant Petitions and 1-129 H-IB Petitions, and Fonn 1-485 Adjustment Applications Affected by the American Competitiveness in the Twenty-First Century Act of 2000 (AC21). (Public Law 106-313), as amended, and the American Competitiveness and Workforce Improvement. Act of 1998 (ACWIA), Title IV of Div. C. of Public Law 105-277” (May 30, 2008), published on AILA InfoNet at Doc. No. 08060560 (posted June 5, 2008), at 7
  31. See Petla and Vazquez-Azpiri 87, providing advice for obtaining concurrent employment and marinating cap-exempt status

Resources and Materials:

Pelta, Elanor, and Vazquez-Azpiri, A. James. “Chapter 4: AC21 §103: Special Rule for H1B Beneficiaries Employed At Certain Universities and Research Facilities.” ALIA's Focus on Immigration Practice Under AC21. Washington, D.C.: ALIA Publications, 2009. 75-87. Print. ALIA's Focus Ser.