On August 12, 2015, the U.S. District Court for the District of Columbia issued its decision in  Washington Alliance of Technology Workers v. U.S. Department of Homeland Security, Civil Action No. 14-529 (D.D.C. Aug. 12, 2015) (“Washington Alliance”). In this case, the Court found that the U.S. Department of Homeland Security (“DHS”) had failed to satisfy proper procedural requirements when the agency originally issued its April 2008 interim final rule (the “2008 Rule”) permitting F-1 foreign students who graduated with STEM (acronym for Science, Technology, Engineering, and Mathematics) degrees to apply for seventeen-month work authorization extensions of their Optional Practical Training (“OPT”) if, among other things, their employers were registered in the federal government’s E-Verify program. Due to this procedural irregularity, the Court in Washington Alliance found that all STEM extensions held by F-1 students were invalid.  However, realizing the potential of the decision’s draconian affects, the Court delayed implementation of its ruling until February 12, 2016 in order to allow DHS an opportunity to remedy the 2008 Rule’s defects. On October 16, 2015, DHS issued its regulatory proposals (the “Proposed Rule”) to address the Court’s concerns regarding the 2008 Rule. Public comments on the Proposed Rule are due by November 18, 2015. After reviewing the newly proposed regulations, we believe they can be broken-down into The Good, The Bad, and The Ugly.

The Good:

Unlike the 2008 Rule, the Proposed Rule extends the STEM OPT extension period from its current seventeen (17) months to twenty-four (24) months after the F-1 student completes the initial twelve (12) month OPT period. This will allow many F-1 students working in the U.S. multiple opportunities to apply for H-1B work authorization over the extended three-year OPT period. This will be important because it has become increasingly difficult to secure H-1B statuses for new foreign student graduates due to there being more H-1B applications filed each new fiscal year compared to the static number of H-1B visas available for that year. As an example, the recent 2015 fiscal year saw over 240,000 H-1B applications filed for the limited total of 85,000 available H-1Bs for that year.

The Proposed Rule also will allow any F-1 student that previously obtained an American academic institution-issued STEM degree to use that degree to qualify for the twenty-four (24) month STEM extension following any current OPT period based on a subsequent non-STEM degree. This is so long as the F-1 student has not received the benefits of a prior STEM OPT extension based on the earlier STEM degree. For example, suppose an F-1 student who previously obtained a STEM bachelor’s degree and thereafter completed only a one-year OPT program, chooses to return to a U.S. university to obtain an MBA. Under the Proposed Rule, that same F-1 student is eligible for a 24-month STEM extension in addition to the standard 12-month OPT period that normally follows graduation.

Finally, the Proposed Rule contains two other beneficial provisions. First, it will permit any F-1 student on a seventeen (17) month STEM OPT to request an extension of an additional seven (7) months to a total of twenty-four (24) month as long as they apply no later than 120 days before their current seventeen (17) month STEM OPT expires. Second, the Proposed Rule will extend the unemployment period that F-1 students are permitted under the STEM OPT from thirty (30) days to sixty (60) days, giving these students extra time to find employment should the need arise.

The Bad:

With the benefits, come additional burdens under the Proposed Rule that were not under the legacy 2008 Rule. One criticism of the 2008 Rule was that there was no oversight of F-1 students during their OPT periods. Specifically, DHS did not know what training the student received and was not required to confirm if the training was aligned with the student’s STEM course of study. The Proposed Rule requires employers to develop and implement a formal, customized Mentoring and Training Program (“MTP”) for each F-1 student whom it offers continued employment as part of the STEM OPT extension. The MTP also requires employers to ensure that the student engages only in activities that are consistent with the MTP and related to their STEM education.

The MTP required by the Proposed Rule must include the program goals, six month evaluations, and a final evaluation at the conclusion of the STEM OPT period that all must be submitted to and approved by the Designated School Official (“DSO”) at the student’s university before they can authorize the extended STEM OPT period. The MTP also requires the employer to execute a sworn statement indicating the F-1 student’s salary, hours, and benefits. The sworn signed statement must also confirm that the F-1 student’s compensation will be commensurate to what employees in similar positions receive; the employer will not layoff or terminate any U.S. worker in order to hire or retain the STEM OPT student; and the employer has sufficient resources to train the F-1 student under the terms laid out in the MTP.   Further, the Proposed Rule allows USCIS to request a copy of the MTP when the F-1 student applies for the STEM OPT extension.  In the event an F-1 student wants to change employers during the OPT STEM extension period, the Proposed Rule requires the new employer to prepare and submit a new MTP to the DSO to allow the employment transfer.

The Ugly:

The Proposed Rule includes several new policing provisions that will keep employers on their toes.  One requires employers to report to the DSO any STEM OPT student who terminated or departed within forty-eight (48) hours “after the F-1 student has left employment.”  A “termination” under the Proposed Rule not only occurs when the F-1 student quits or is fired by the employer, it also occurs when the F-1 student has not reported to the employer without any excused absences for five (5) consecutive business days.  Finally, the Proposed Rule allows the DHS to conduct onsite visits of the employer’s workplace to confirm that the F-1 student is performing the work outlined in the MTP.

The Proposed Rule gives F-1 students additional opportunities to extend their employment in the United States, but simultaneously burdens employers with substantial additional responsibilities to plan for, monitor, and evaluate their STEM OPT F-1 student employee population.  This is only a proposed rule and DHS is requesting public comments.  All comments must be received by DHS no later than November 18, 2015.