H-1B Visas: 6 Most Misunderstood Facts

The H-1B visa program has cooked up a hot stew of myths and misconceptions. Legal experts break down the facts on salaries, timing, and more.

It's just a couple of letters, one number and a hyphen. But say "H-1B" in IT circles and you're likely to get reactions from all over the map.

H-1B visas are issued by U.S. Citizenship and Immigration Services (USCIS) to foreign workers for "specialty occupations." They're commonly used by companies to fill in-demand technology jobs, though the visa isn't limited to IT professionals. Because immigration -- not to mention economic policy, the unemployment rate, and discussions of an IT skills shortage -- is a naturally contentious topic, H-1B visas are sometimes misunderstood by employers and employees alike.

We asked Ronald Rose, a partner with the law firm Rose Carson Kaplan Choi & White, and James Richards, CEO of Teleborder, to help us debunk some of the common myths surrounding H-1Bs. Rose's areas of specialty include immigration and technology law. Richards's firm makes cloud software that automates much of the paperwork and bureaucracy involved for employers that hire foreign workers. In separate interviews, they cleared up some common misconceptions about the H-1B process. Note that what follows applies to new H-1B applications, not renewals of existing visas.

Myth 1: You can apply for new H-1B visas at any time.

Reality: The window for new applications opens only once a year, on April 1. The window closes as soon as the cap for that year -- currently set at 65,000 visas, with an additional 20,000 reserved for people with advanced degrees -- is met. Once the window closes, that's it for the year -- USCIS won't accept any more new applications until the following April. Successful applicants receive their visas on Oct. 1 of the same calendar year, which is the start of the new federal fiscal year.

Takeaway: H-1B visas aren't often a good solution for immediate, short-term hiring needs. You need to plan ahead -- and be aware that even successful applications don't kick in for another six months.

[ Is there really an IT talent shortage? Read IT Talent Shortage Or Purple Squirrel Hunt? ]

Myth 2: H-1B applications remain static.

Reality: The volume of applications tends to reflect the overall US economy and job market. In 2013, the April application period lasted just five days, marking the first time since 2008 that the window closed in less than a week. USCIS received 124,000 applications for new H-1B visas for fiscal year 2014; visas were then granted based on a random lottery. Applications were lower in the years immediately following the 2008 financial crisis, as payrolls shrank and unemployment rose. In 2012, by comparison, the window didn't close until June 11.

"Right now, we're experiencing a boom in [the technology sector], and so there has been a corresponding boom in H-1B applications," Richards said.

Takeaway: The application process isn't for the meek. You need to have your paperwork ready to submit immediately on April 1 or risk missing the window altogether. "[That] really means starting the process by February," Richards said.

Myth 3: The application is the only the hurdle you need to clear.

Reality: Once the visa is issued, the real work begins for organizations with H-1B workers on their payroll. "A visa is just the start of an ongoing relationship that you have with your worker," Richards said, adding that visas come with considerable compliance requirements.

Richards and Rose both said that audits of businesses that employ foreign workers are on the rise. Both UCSIS and the Department of Labor are empowered to conduct such audits. "They can come knock on your door and ask to see all of your compliance files related to your H-1B workforce," Richards said. "If they don't exist, you're going to be hit with heavy, heavy sanctions."

According to Richards, a common misstep made by H-1B employers, especially smaller ones, is that they add the employee to payroll too soon or too late. Start them too late and "it looks like you're underpaying them, which is a [significant problem]," Richards said. "If you start someone on payroll before their visa starts, that's even worse -- because that means that you're employing someone who is not authorized to work in the United States."

Takeaway: Understand what you're getting into. Synchronize payroll with visa dates and other terms. Stay organized. Handle paperwork as if you'd welcome a government audit, not as if you're simply trying to avoid one -- or, worse, as if you assume it will never happen to you.

Myth 4: H-1B visas are the only option for hiring non-US citizens.

Reality: "That's actually not the case -- an H-1B is just one kind of visa," Richards said. "There are many, many different avenues for people to work in the United States."

Rose, too, pointed out the variety of visas that enable skilled foreigners to work legally in the US. Some are country-specific, such as the TN visa for Canadian and Mexican citizens, or the E-3 visa for Australian workers. Rose noted that free-trade agreements between the US and Chile and Singapore include unique visa provisions for workers from those countries, too.

Companies with international offices can apply for an L-1 visa for existing employees, a temporary permit for workers transferring within an organization. "That currently has no numerical restrictions on it, so that's another option that companies have," Rose said.

There's also the J-1 visa, which can be used to hire interns and trainees.

Last but not least, employers can look to recent or upcoming college graduates without pursuing the standard H-1B process. "Every student visa issued in the United States has a bundled one year of work credit," Richards said. "For [science, technology, engineering and math] graduates, we can actually get that extended to three years."

Takeaway: You've got options. Employers must invest the time to make the right choices when it comes to hiring foreign employees. Don't overlook current employees in international offices, new college graduates, and other talent pools.

Myth 5: You must first prove that can't find a qualified American worker.

Reality: That's simply not a requirement of the H-1B visa. It's a requirement of the green card process, Rose noted, and that causes the misunderstanding.

Takeaway: Make sure you're not confusing different types of immigration and visas. H-1B visas and green cards, for instance, are entirely separate things.

Myth 6: H-1B visas replace American workers with cheap foreign labor.

Reality: Employers must pay H-1B workers the "prevailing wage," or market rate, for their positions. That rate depends on geographical location and is often based on the Department of Labor's wage database, according to Rose. Unless an employer is breaking the rules -- reporting higher salaries than it's actually paying -- the "cheap labor" claim is typically off-target.

"That's a consistent misconception [about H-1B workers], that it's cheap foreign labor -- just bring cheap people in," Rose said. "The wages are not cheap, I don't think. Now, whether the person actually gets paid that amount by the company is the other issue, and that's where some fraud has come in."

Takeaway: Don't play reindeer games with H-1B employees, such as reporting a higher salary than you're actually paying. The penalties will be painful if you get caught. Both Rose and Richards said they expect the recent increase of H-1B-related scrutiny and audits to continue for the foreseeable future.

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