April 7, 2008 - Friday the U.S. Department of Homeland Security (“DHS”) released an interim final rule designed to extend the period of Optional Practical Training (“OPT”) for certain students currently in F-1 status in the United States. The proposal contains two different OPT extensions, including one provision designed to give certain F-1 students with degrees in science, technology, engineering, or mathematics (“STEM degrees”) an additional 17 months of work authorization and another provision designed to ensure that those students currently working with OPT whose H-1B petitions are selected for adjudication will receive an automatic extension of F-1 status to avoid any status gaps prior to the October 1 effective date on approved, cap-subject H-1B petitions.

The interim rule will not be effective until it is published in the Federal Register. Publication of the rule is expected to occur on April 8, 2008.

OPT extensions for students with STEM degrees: DHS has announced that the OPT expansion is geared toward meeting current U.S. labor shortages in various scientific and technical fields. With respect to students with STEM degrees, DHS is extending the period of OPT eligibility from 12 to 29 months if the students work for employers enrolled in the federal E-Verify program. Students may request the extension through the Designated Student Officer (“DSO”) for their school. Qualifying degrees include U.S. bachelors, masters, or doctorate degrees in actuarial science, computer science, engineering, engineering technologies, biological and biomedical sciences, mathematics, statistics, military technology, physical sciences, science technologies, and medical sciences. A complete list of STEM degrees and exceptions can be found on the Immigration and Customs Enforcement website at http://www.ice.gov/sevis.

Application requirements: If a student requests an extension and the DSO officer recommends the extension, the student must then file an application for a work permit on the Form I-765. A student who has properly filed a Form I-765 prior to completing his/her initial 12 months of OPT will then be authorized to work for an additional 180 days from the expiration of the original OPT period if the application for an extension of the work authorization is still pending.

Employer requirements related to expanded OPT eligibility: The new interim rule also encourages use of the federal E-Verify program by requiring students to work for E-Verify participants in order to qualify for the extension. An internet-based system operated by DHS in partnership with the Social Security Administration, E-Verify allows participating employers to electronically verify the employment eligibility of new hires. Currently, the E-Verify program is not federally mandated, although some states require universal participation for all employers and other states require selective participation for employers performing work under contracts with the state. However, through the interim rule, DHS is providing a distinct incentive to employers who participate in the E-Verify program and the employees they hire. The provision specifically restricts students from obtaining the additional 17 month extension where the student is not employed at the time that the extension is sought by an employer found by U.S. Citizenship and Immigration Services (“USCIS”) to be in good standing in the E-Verify program or does not have a qualifying job offer from such an employer.

E-Verify requirements: Employers who enroll in E-Verify are only required and allowed to use the program to validate work authorization for new hires. As a practical matter, students with OPT who seek STEM extensions would not be new hires, so although the employer would be seeking the extension based on its compliance with E-Verify, the employer would not be using the system to verify the student’s eligibility to continue working with the company. Moreover, the employer would be required to use E-Verify for all of its new hires, not just students employed with the company through a grant of OPT. Additionally, although the rule does not explicitly address this issue, it appears that if an employer operates in a number of states but only uses E-Verify in certain select states, the employer would be required to use E-Verify in any state where it intends to employ students seeking STEM extensions.

Student requirements related to expanded OPT eligibility: A student participating in the program must report to his/her school’s DSO within 48 hours if the student is terminated from or otherwise leaves his/her qualifying employment prior to the end of the authorized OPT period. The student must also report any of the following to the DSO: (1) name change, (2) change of residential or mailing address, (3) change of employer, and (4) change of address for the student’s employer. In addition, qualified students will be required to report to the DSO every six months to verify this basic information during the extension period. Likewise, employers will be required to report when students under this program leave or are terminated from OPT employment. Employers are also expected to report these changes to the student’s DSO within 48 hours.

H-1B cap extensions for students currently on OPT who are selected for H-1B petition adjudication: In addressing the “cap gap” problem, the DHS interim rule extends F-1 status for those students who are beneficiaries of H-1B petitions seeking a change of status that are ultimately selected for adjudication by USCIS. Currently, many students receive OPT for a period of 12 months from the completion of their studies through the spring or summer of the year following their graduation. Therefore, even with the 60-day grace period that student visa holders have, which begins upon completion of any OPT period if utilized, many students have a gap between mid-summer and October 1 when their H-1B petitions becomes effective.

Accordingly, the new DHS rule will provide for an automatic extension of F-1 status and work authorization for those students selected for H-1B petition processing whose employers sought a change of status. The F-1 status and work authorization will be extended through October 1 or the ultimate adjudication of the petition, if the petition is not adjudicated until after October 1. The provision also extends F-1 status and work authorization for students whose petitions are selected but denied. For students whose cases are ultimately denied or rejected, the 60 day grace period will begin when the denial or rejection is issued.

Limitations on student unemployment during OPT: Another significant provision in the interim rule defines when and under what conditions F-1 students will be considered out of status during the OPT period. For F-1 students who are unemployed for more than 90 days in the aggregate during a 12-month period of OPT, the student will be deemed to be out of status. For F-1 students with STEM extensions who are unemployed for more than 120 days in the aggregate, DHS will consider these individuals to have fallen out of status.

Changes to current OPT application procedures: Under this new rule, students may apply for an initial grant of OPT during a window beginning up to 90 days prior to the conclusion of their current program end date. The window remains open until 60 days after the candidate graduates.

Elimination of the public comment period: Due to the stated need by DHS to maintain skilled workers in the United States through this round of H-1B filings, DHS is implementing this initiative as an interim final rule without first providing notice and the opportunity for public comment under the “good cause exception” in the Administrative Procedures Act.

For more information: USCIS has published a guide to answer some frequently asked questions regarding the change on its web site at site at http://www.uscis.gov/files/article/OPT_FAQ_4apr08.pdf.

BAL Comment: BAL supports the actions taken by DHS to eliminate gaps in status encountered by many students changing from F-1 to H-1B status, as well as an expansion of the period of OPT for certain highly skilled workers with specialized scientific knowledge. Unfortunately, since the new regulation was announced after most 2009 fiscal year H-1B cap cases were filed, some companies and their potential future employees have already planned for a temporary period of travel abroad in light of the prior “cap gap” many of these students were facing. Additionally, E-Verify is a comprehensive program that places substantial burdens on enrolled employers and may expose these employers to certain liability, therefore, creating disincentives to some potential new enrollees. Thus, the provisions in the interim rule do not solve all of the labor shortage issues that face the United States at present, although the new rule does offer some relief.