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Uncle Sam just overhauled the H-1B visa lottery, and that's good news for startups

Melia Russell   

Uncle Sam just overhauled the H-1B visa lottery, and that's good news for startups
  • The H-1B visa program is undergoing changes.
  • Under the new process, all individuals have the same chance of being selected in the lottery.

A new reform to the US H-1B visa program aims to ring out some of the uncertainty for migrant workers and employers.

The US Citizenship and Immigration Services recently said it finalized measures to make sure each applicant has the same chance of being selected for the H1-B visa program, the nation's largest temporary work visa program with over 600,000 workers across 50,000 employers.

Each year, tens of thousands of foreign nationals wind up at venture-backed companies through the employment-based visa program. Tech companies like Stripe, Plaid, and X, formerly known as Twitter, use the H-1B visa to fill labor shortages for jobs that require a college degree, by providing work authorization for migrant workers in fields like engineering, business admin, and mathematics.

However, obtaining an H-1B visa remains challenging due to high demand. The program gets more interest than it can meet — with the number of yearly visas capped at 85,000 — so the government uses a lottery process to decide who comes in.

The lottery has had a loophole that some have abused in past years to try to game the system. Nothing in the law had prohibited an individual from having multiple entries in the lottery if they can secure multiple job offers, said Jason Finkelman, an Austin immigration lawyer who specializes in work visas. In theory, having more registrations in the lottery gave migrant workers more chances to win a coveted visa.

Last year, the number of registrations filed on behalf of foreign nationals jumped to 780,000, a 61% increase over the previous year. Data shows much of the increase was due to a record-breaking number of employers submitting multiple H-1B registrations for the same person. They might have set up unique corporate structures or banded with other companies to try and get around the rules.

"This led to many individuals being entered into the lottery multiple times, through different companies, and ultimately decreasing the odds of being selected in the lottery," Finkelman said.

The new regulations aim to curtail this sort of behavior. Registrations will now be selected from a pool of unique individuals rather than the total number of entries. A software engineer in Hyderabad with one job offer has the same odds of being selected as the researcher in Beijing with a binder full of offers. USCIS said the new process takes effect in the lottery in April.

These changes are good news for startups and small businesses, says Sophie Alcorn, an immigration lawyer based in Silicon Valley. The reform makes it less attractive for applicants to secure multiple job offers, which should drive down the overall number of registrations. This improves the odds for startups that their applicant gets selected in the lottery.

"For a startup that's willing to sponsor, there's a higher likelihood that [an applicant] will go to work for that company that's willing to sponsor them," Alcorn said. "There's more predictability."

Even before the reform, Finkelman said he saw inquiries from startups tick up because of the proposed changes.

"We're seeing increased interest from startups, which are in desperate need of top talent and which oftentimes require visa sponsorship [to fill roles], to enter candidates into the lottery," Finkelman said. "They see the playing field will be evened out."

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