Both F-1 students and employers have been following the litigation over the F-1 OPT (optional practical training) program.  The government was sued by tech workers in Washington, D.C. regarding a part of this program, the STEM OPT extension, claiming that the rules for it were not promulgated correctly.  We had good news in March that the government published regulations complying with the judge’s order to implement the STEM OPT program.  The rule will take effect May 10, 2016.

The new STEM OPT rules provide good news for students with science, technology, engineering, or math majors and for employers who need such talent – especially in light of the grossly inadequate supply of H-1B visas.  However, the new rules carry with them some challenges.  We are providing an overview of the major points of the new STEM OPT rules so you will have time to prepare for the May 10 effective date.

Background

The OPT program allows F-1 students to work for 12 months after graduation (in most situations).  Several years ago, USCIS added the STEM OPT extension to allow F-1 students with U.S. degrees in science, technology, engineering, and math to obtain an additional 17-months in OPT status so long as the employer was registered with E-Verify (an optional program for I-9 compliance). The STEM OPT also included some reporting obligations.

To apply for a STEM OPT, the F-1 student must first qualify for regular OPT and receive an employment authorization document (EAD).  The STEM OPT application must be filed before the end of the regular OPT EAD.  The employer must also be registered with E-Verify for the STEM OPT (which is not required for the regular OPT).  STEM OPT is only available to students with qualifying degrees in a STEM field. Immigration & Customs Enforcement (ICE) is the agency that regulates the OPT program, including determining qualifying degrees.  However, U.S. Citizenship & Immigration Services (USCIS) adjudicates the EAD application (Form I-765).

Note that students may continue to apply under the current 17-month rules for STEM OPT until May 9, 2016.  However, if the application has not been adjudicated before May 10 they will receive a request for evidence to show that they qualify under the new 24-month rules.  This may be an option if the student, employer or Designated School Official (DSO) would like more time to prepare or review a training plan.  However, please keep in mind that the authorized employment extension is only valid for 180 days after the regular OPT EAD expires.  If the request for evidence results in a longer processing time, the student may have to stop work.

Major changes

The new program includes some major changes detailed below.

The most important changes are:

• The duration of training will be 24 months rather than 17 months.  Also, the lifetime STEM OPT eligibility was increased to two (2) training periods from one (1).  However, the student would have to complete a higher level STEM degree after the first STEM OPT to qualify for the second period of training.
• The list of qualifying STEM degrees has been expanded (but still only contains those related to science, technology, engineering, or math).
• A STEM degree earned in the last 10 years from an accredited school may be used to qualify for the STEM OPT. However, the training would have to relate to the STEM degree not the most recent non-STEM degree.
• A formal training plan is now required to be completed and signed by both the student and the employer and submitted to the student’s school before the STEM OPT application is made.
• The employer certifies to several facts, including that the student is not replacing a U.S. worker and that the “terms and conditions” of the student’s training will be “commensurate” with the employment of similarly-situated workers.
• The student certifies to several facts, including that the training directly relates to the STEM degree.
• The student and the employer commit to reporting requirements that must be tracked, including the requirement to report any “material change” in the training program to the school.
• Certain situations will not be considered appropriate for STEM OPT. While not in the rule, the rule preamble notes that volunteering, entrepreneurial situations, start-up companies, multiple employers, sole proprietorships, temp work and consulting firms placing employees at third party sites may not qualify due to the practicalities of the program (and concerns about fraud).

Duration of STEM OPT:

The first big change is that STEM OPT is now available for 24 months rather than 17 months.  This is in addition to the 12 months of regular OPT, for a total of 3 years. 

In certain situations, students currently in the 17-month STEM OPT period may apply for an additional 7 months (which we refer to as the “+7” application).  To qualify for the +7 application, the student must have 150 days of STEM OPT remaining on the date the application is filed.  The first filing date is May 10, so the STEM OPT must be valid through October 6, 2016, or later for the student to qualify.  +7 filings must be received by August 8, 2016 (but note that an OPT would need to be valid through January 5, 2017 – 150 days from August 8, 2016 – to qualify to file on the last date).

Also note that the SEVIS system used by DSOs will not be able to issue an I-20 for the STEM OPT 24-month program before May 23, 2016.  A student can file the I-765 without an I-20 if necessary before this date with a specified statement to confirm this fact.  A request for evidence will then be issued for the I-20.

Students with 17-month STEM OPT extensions may continue to work as before.

Students with a pending STEM OPT application under the 17-month program (which may be filed until May 9) will receive a request for evidence to determine if they qualify for the 24-month program.  If not, the STEM extension will be denied.

Prior STEM majors may be used:

The new program allows students to use a previous degree (not the most recent degree) to qualify for STEM OPT.  The degree must have been granted by an accredited school within the last 10 years.  Some other limitations apply. 

Even if the student is using a past degree to qualify, the most recent degree-granting school would be responsible for recommending STEM OPT and keeping the required records.

Most importantly, the training would have to be directly-related to the STEM degree, not the more recent non-STEM degree.

Training plan:

To qualify for STEM OPT, Form I-983 must be completed and signed by the student and the employer and given to the DSO who will authorize the STEM OPT.  The form is not sent to the government at that time.  The DSO must have the form in time to recommend OPT and provide an updated I-20.  Please note that the form linked above is still a draft and may change.  We are not sure when the final form will be available.

Students should contact their DSOs now to determine the filing process and turn-around time for requesting the I-20. The STEM OPT extension request cannot be filed without a signed I-20 from the DSO.  Note, however, that the SEVIS system will not be able to issue I-20s for the new program until May 23, as noted above.

The instructions for Form I-983 provide information about completing the form.  The basic idea is to document the “training” nature of the employment and to commit the employer and the student to compliance with the new rules and certain reporting obligations.

If the employer already has a formal training program, many of the questions on the form incorporate this information.

Even if no formal training program is in effect, a STEM OPT student is in entry-level employment, which involves training by its very nature.  The form requires the employer to describe the training that happens on the job and how it meets the student’s expectations for career development.

The training plan involves compliance and reporting obligations, recordkeeping and other provisions that an employer must consider when deciding whether to sponsor STEM OPT.

Compliance and reporting requirements:

The student commits under penalty of perjury to report to the DSO “at the earliest available opportunity”:

1. If the employer is not providing the training described in the plan; or
2. Any “material changes or deviations” from the plan.

The student also is confirming under penalty of perjury by signing the plan that the training opportunity is “directly related” to the STEM degree and that he/she:

-          Has read the plan; and

-          Understands that the STEM OPT may be revoked for noncompliance by the student or the employer.

The employer commits under penalty of perjury to report to the DSO:

1. “[A]t the earliest available opportunity” regarding any material changes to the plan; and
2. Within five (5) business days the termination of the student’s employment or if the student does not report for work for five (5) business days without consent of the employer*.

*This is a change from two (2) business days previously.

The employer is also confirming several facts and making several representations under penalty of perjury by signing the form.  Before explaining those, however, it is important to understand the two different parts of the form that the employer must sign.

The “Employer Certification” (Section 4 of the form) is signed by an “employer official with signatory authority” who is familiar with the student’s goals and performance, and who has the authority to make certain representations (described below).

The “Employer Official Certification” (Section 6 of the form) may be signed by the same person who signed Section 4, but could be signed by another employer official with signatory authority.  The difference is the nature of the representations made in Section 6 compared to Section 4.

Section 4 certifications are that the person who is signing:

• Has read and understands the plan;
• Will ensure that the “supervising official” follows the plan;
• Will make all required notification (described above);
• Will adhere to all regulatory provisions, which include ensuring that:

• The training is directly related to the student’s STEM degree;
• The student will receive on-site supervision and training by experienced and knowledgeable staff;
• Sufficient resources and personnel are available to provide the training;
• The employer is prepared to implement the plan;
• The location identified in the plan is available for the training program;
• The student will not replace a full- or part-time, temporary or permanent U.S. worker;
• The terms and conditions of the training program are “commensurate” with the terms and conditions of similarly-situated U.S. workers*;
• The training will comply with all applicable federal and state requirements related to employment.

*See additional information below.

Section 6 certifications are that the person who is signing:

•  Has read and understands the plan;
• Will follows the plan;
• Will conduct the required evaluations of the student;
• Will adhere to all regulatory provisions that govern the program (although they are not listed as in Section 4); and
• Will notify* the DSO regarding material changes in the plan; and
•  Will notify* the DSO if the student is not receiving appropriate training as described in the plan.

*Notification at the “earliest opportunity.”

In certain situations, particularly in a smaller organization, it is possible that the same person will sign in both sections.  In other organizations, it may be that the direct supervisor of the student would sign Section 6 but a department manager, for example, would sign Section 4. It could also be possible that an HR manager would sign Section 4.  But unless the HR manager is conducting evaluations of the student, the HR manager would not sign Section 6.

Besides the reporting requirements mentioned on Form I-983, additional reporting requirements apply:

 Students must send to the DSO:

• Within 10 days, a report of a change of legal name, residential or mailing address, employer name, employer address, and/or loss of employment;
•  Every six (6) months, a “validation report” confirming that the above information has not changed (within 10 days of the 6-month reporting date)
•  Two evaluations:

• One “within 12 months of the approved starting date” (but the rules also say that it must be submitted within 10 days of the conclusion of this “reporting period” – so it could be submitted 10 days after the first anniversary of employment)
• One “prior to” the conclusion of the training (but again the rules allow for reporting within 10 days of the conclusion of the training).

The evaluations must be signed by the “Employer Official with Signatory Authority” (it is unclear whether this is the Section 4 or Section 6 official).

If the evaluations are not delivered to the DSO in time, the student is considered not to be authorized for employment.  Therefore, even if the evaluations are the student’s responsibility, the employer must track the evaluation dates and be sure they are submitted timely.

Material changes:

Besides simply keeping track of reporting requirements, employers and students will need to be aware that almost any change will require a report and probably an updated I-983 form.

Although not clear from reading the form, the rule says that “any change or deviation that renders an employer attestation inaccurate, or renders inaccurate the information in the Form I-983  . . . on the nature, purpose, oversight, or assessment of the student’s practical training opportunity” (in addition to the other named changes, such as new federal employer identification number) will trigger the requirement to sign an amended I-983 and submit it to the DSO.

Examples could include a new supervisor for the training, a change of job title in a department restructuring, a change in the job duties being performed, a change in job location, the retirement or termination of the employer official who signed the form.

To assist in compliance, the training plan should be written to encompass likely variations that can be anticipated at the time of initial submission.

Finally, with regard to material changes, a change in employer would require a new I-983.  It would also require a new DSO recommendation.  A new I-765 would not be required, however

“Commensurate” Employment:

 Another major change to the STEM OPT program is the requirement that the terms and conditions of the training be “commensurate” to the terms and conditions of similarly situated U.S. workers, specifically regarding duties, hours and compensation.

While the rule in many ways encourages employers to distinguish STEM OPT as “training” rather than employment – such as by requiring a formal training plan – in this context the government is saying that the student is to be treated like a U.S. worker doing a similar “job”.

The point, of course, is to make sure that U.S. companies are not using STEM OPT students to undercut the wages of U.S. workers.  The STEM OPT does not have the wage requirements that an H-1B visa would, for example.

The requirement to pay at “commensurate” rates in a sense applies an “actual or prevailing” wage requirement to the STEM OPT.

Employers who have sponsored H-1Bs are familiar with these concepts.  The “actual” wage is what is paid to other workers in similar jobs in your organization. The “prevailing” wage is what a valid survey (by the Department of Labor or other reliable source) determines is paid to workers in similar jobs with other employers in the geographic area.

If an employer has more than two (2) U.S. workers employed in positions similar to the position being offered to the student as training, the internal pay scale may be used to determine the student’s wage. This is similar to the “actual wage” required for the H-1B.  We suggest that documentation of the “actual wage” be created at the time the training plan is signed. 

If an employer does not currently have or has not recently employed more than two (2) workers in similar jobs, then the terms and conditions of the training must be commensurate with those of other “similarly situated” workers in the geographic area.  This is like the “prevailing wage” required for H-1B. Again, we recommend that documentation of the “prevailing wage” be created at the time the plan is signed.

Unlike the H-1B context, we do not have guidance yet about how an employer should determine or document the “actual” or “prevailing” terms or conditions of employment.  This is an area we will need to consider with each application and also one of which we will ask for clarification from the government.

As a starting point, we recommend that the Department of Labor rules be used as guidance for these determinations.  However, from the H-1B program, we know that these rules entail certain challenges in themselves.  The STEM OPT requirements do not mandate use of the DOL rules. Some differences from the DOL rules are already apparent, such as the ability to consider the size and industry of the employer in determining whether a worker in another organization is “similarly situated.”  Additionally, compensation can include housing, tuition waivers, transportation costs, or other items that are not always allowable in DOL calculations of “prevailing wage.”

Please note that the “commensurate” requirement applies to “terms and conditions,” which include duties and hours in addition to compensation.

Recordkeeping:

The rule directs that all Forms I-983 will be kept by the DSO for now.  Later, the government plans to have them entered in the SEVIS system that tracks foreign students.

We strongly recommend that copies of all documents submitted to the DSO be kept by both the employer and the student.

Compliance with the training plan will now potentially be a subject of inquiry if the student later immigrates and the government is reviewing his or her status. The DSO is required to keep the forms for three (3) years only.  A status inquiry could arise years after the DSO has appropriately discarded the forms

Even when the form is uploaded to SEVIS, having a copy will be a defense against a data error or misidentification of a record – or failure to find a record – in SEVIS.

The employer should keep the I-983 as long it employs the student. The student should keep the I-983 until the immigration process is complete (“green card” or naturalization).

Site Visits:

The new rules provides for on-site validation of the training plan by the government upon 48 hours notice or with no notice if the visit is to investigate a complaint of noncompliance.

As part of signing up for E-Verify, the employer has already agreed to a site visit for E-Verify compliance without warrant.  However, in this type of visit, the auditor would likely be looking for evidence of compliance with the STEM OPT requirements discussed above.  This is another reason to document and keep records of STEM OPT students and have a policy for compliance.

As with all government investigations, an attorney should be notified and present if at all possible.

Filing and automatic extension of employment

Some parts of the program are the same or similar to the current rule.  The same form (I-765) is used. A DSO recommendation and signed I-20 is required. The training must be at least 20 hours per week, but can (and usually is) full-time.

As with the current program, with[DBLF1]  a timely filing of the STEM OPT extension, the student is provided a 180-day extension of the regular OPT EAD. 

Except in the +7 application situation, the I-765 may be filed (received by USCIS) up to 90 days (a reduction from the 120 days currently in the program) in advance of the regular OPT EAD expiration date (but no more than 60 days after the DSO enters the recommendation – which is a change from the 30 days allowed for regular OPT).

The 24-month period for the STEM extension begins on the day after the regular OPT EAD expires regardless of the date of approval.

Additional STEM OPT periods possible

If a student gains another STEM-eligible degree at a higher level after completing a STEM OPT training period, another regular OPT and STEM OPT extension is available.  However, only two STEM OPT periods are allowed per student.  A 17-month STEM OPT counts as one of the two allowable STEM OPT periods.

Unemployment

A student unemployed for too long cannot maintain F-1 status even if the EAD has been issued.  For regular OPT the allowable unemployment period is 90 days.  For the 17-month STEM OPT the period is 120 days.  For the 24-month STEM OPT the period is 150 days.  However, these days are counted in the aggregate.  Any unemployment during the regular OPT counts toward the total 150 days for the new STEM OPT program.

Conclusion

We do recommend that specialized immigration attorney assistance be sought to comply with these new requirements. 

Remember that except with a small exception described above for +7 applications filed before May 23, the DSO must issue a new signed I-20 – which requires a training plan – before we can file the STEM OPT extension and the extension must be received by USCIS before the due date or it will be denied.