Dear Sophie: Should co-founders on OPT, STEM OPT pursue H-1Bs?

Question

Dear Sophie,

Me and my two co-founders are on OPT and STEM OPT. We’re all from India and are considering the H-1B lottery. How can we structure our immigration compliance? Any advice for planning?

— Tenacious Trio

Answer

Dear Tenacious,

Thanks for reaching out to me with your questions. Before I dive into them – and for a bit of context – here is some background on the annual H-1B lottery

 

H-1B lottery 101

In 2020, U.S. Citizenship and Immigration Services (USCIS) implemented a new electronic registration process for the H-1B. That began a new process in which employers register each H-1B candidate online and pay a $10 registration fee. Before 2020, employers were required to submit a completed H-1B petition for each candidate – a very costly and time-consuming process. 

The easier and less costly electronic H-1B lottery process is wonderful but has resulted in a dramatic rise in the number of lottery registrants. This year, USCIS received 483,927 registrations, a 57 percent increase from 2021! Every year, 85,000 H-1B visas are available in the lottery – 20,000 for individuals with a master’s degree or higher, and 65,000 for those with a bachelor’s degree. Given that Congress has not increased the number of H-1B visas available in the lottery, the chances of being selected in the lottery dropped to about 23% in 2022 from about 32% in 2019.

We have many clients who have defied these odds – so I don’t want to discourage you from putting yourselves in the H-1B lottery! However – we also devise backup plans for those clients. You should have one too. Consult an immigration attorney who can help you through the H-1B lottery and application process, timing, and identify backup options…just in case.

 

Timing is important!

Coordinating the timing for this process can become complicated. Your company’s ability to register you in the H-1B lottery will depend on when your OPT or STEM OPT is set to expire, so talk to an attorney about your individual situation. If anyone’s STEM OPT is set to expire before April 1, 2023, you will have to find another option. However, if OPT is set to expire before the lottery, your company can get a two-year STEM OPT if the individual graduated with a STEM degree and you meet the STEM employment requirements. You’ll have to make sure you meet the requirements for wage, the number of hours worked, and a proper supervisory relationship, as well as E-Verify, to qualify for the STEM extension.  Earlier this year, the Biden administration added 22 fields of study to the STEM Designated Degree Program List to retain more STEM graduates in the United States. (Yes, I am still quite excited about this!)

The H-1B registration period is usually open for a few weeks in early to mid-March. Submitting duplicate registrations for the same person will mean an automatic H-1B denial for that individual – so please only register once per person! The registrants who are selected in the random lottery are typically notified by April 1. Employers then have until June 30, to file an H-1B application on behalf of the selected registrant. The earliest date an individual can begin working on an H-1B would be Oct. 1, which is the start of the federal fiscal year. 

If anyone’s final year of F-1 OPT or STEM OPT work authorization expires after April 1 and before Oct. 1, those individuals may be eligible to continue working under a cap-gap extension. This extension bridges your work authorization between the end of your final year of OPT or STEM OPT until you start working by changing your status from an F-1 student visa to the H-1B. H-1B applications are eligible for premium processing, which guarantees USCIS will make a decision on the case or issue a request for evidence within 15 days for an additional fee. 

The H-1B can be challenging for some CEO roles or for people with the majority equity stake in a startup.  It requires an employer-employee relationship, and the petition must be signed by a signatory for the company.  Take a look at this previous Dear Sophie column for more info about the cap-gap extension and this one on what it takes to submit a strong H-1B application.

 

Plenty of other options

One visa option to consider is the O-1A extraordinary ability visa, which is also available with premium processing. We’ve had considerable success getting O-1As for our startup founder clients, particularly if:

1. they’ve received a PhD in a STEM field

2. their companies have received significant venture capital or other investments

and they meet a few more of the eligibility criteria. Check out this Dear Sophie column in which I describe how to qualify for each O-1A criteria. This is a particularly good option for CEOs as the H-1B for CEOs can sometimes feel too restrictive.

Alternatively, if you don’t have enough O-1A accomplishments yet, you could consider getting a cap-exempt H-1B, which does not require you to go through the lottery process and can be applied for at any time of year! Be aware that this option would require each founder to file two H-1B petitions -one from the cap-exempt employer and one from your company, which is a cap-subject employer. Taking this path for you and each of your co-founders could be costly – but is worth looking into – check out this Dear Sophie column for more details. 

More food for thought – if  your company has secured funding from U.S. investors, but you don’t otherwise qualify for an O-1A visa, and you have a lot of time ahead of you on Regular and STEM OPT, you can consider applying for International Entrepreneur Parole (IEP). IEP can be granted to up to three entrepreneurs for each startup company. To qualify:

1. Your startup must be less than five years old.

2. Each of you must own at least 10% of your company.

3. Each of you must play a central and active role in the company.

4. Your company must have received at least $265,000 from qualified U.S. investors or at least $106,000 in government awards or grants.

Based on the IEP cases my firm has filed, USCIS takes about a year to issue a decision on IEP applications, and Requests for Evidence (RFEs) are often issued, and there is no Premium Processing. So it’s good for qualifying founders who already have enough time runway.

Finally, you could consider applying for an EB-1A extraordinary ability green card. If you have at least a year left on your OPT or STEM OPT, you want to remain in the United States permanently – and you qualify – this could be another option. Although premium processing is not available for the adjustment of the status process, the second step in the green card process –  premium processing is available for the EB-1A application. Green card numbers are currently available in the EB-1 category for individuals born in India. That means you can file the I-140 EB-1A green card application and the I-485 adjustment of status concurrently.

Remember, each of you can structure your immigration path differently based on your goals, timing, and circumstances. You’ve got this!

— Sophie

Learn more about Alcorn Immigration Law here 

Contact Alcorn Immigration Law here

Table of Contents

Get the Ellis App

Made for international students, by international students
Download app