Clarification on Cap-Exempt Employers

The final rule clarifies the requirements associated with the cap-exempt employment of H-1B workers by nonprofit entities that are affiliated with or related to an institution of higher education or other cap-exempt institutions. The rule also adds another way for qualifying as a cap-exempt employer: demonstrating a formal written agreement between the entity and the institution of higher learning that establishes an active working relationship and that a fundamental activity of the nonprofit entity is to directly contribute to the research or  education mission of the institution. Furthermore, the new rule expands the definition of a "governmental research organization" to include state and local organizations as well. Previously only federal research organizations qualified.


In addition, a separate requirement was defined that is associated with H-1B beneficiaries who work "at" a cap-exempt qualifying organization. H-1B workers working at but not employed by a qualifying organization must spend the majority of their time performing job duties at the qualifying initiation and those duties must directly and predominately further the mission or purpose of the cap-exempt organization. Finally, the regulations will continue to allow concurrent employment with both a cap-exempt and cap-subject employer, as long as the cap-exempt employment is documented and maintained.

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