Benefits and Burdens of the New STEM OPT Rules

The new STEM OPT rules became effective May 10, 2016, authorizing students pursuing programs listed in the Designated Degree Program List for 24-month STEM OPT Extensions. This is a significant increase from the 17-month OPT Extension. Additionally, students will also be able to obtain an additional 24-months STEM OPT based on a prior degree, explained in more detail below.

During this transition period, from May 10, 2016 through August 8, 2016, those with more than 150 days left of their 17-month STEM OPT may file the I-765 for an additional seven months of OPT, provided that they have complied with all the requirements of the 24-month STEM OPT Rule mentioned below.

1. Wage and Hours Must be Commensurate With Other Similarly Situated Workers

The new 24-month STEM OPT Extension requires that the employer establish a clear employer-employee relationship with the student. Volunteering and other unpaid opportunities under the new STEM OPT is no longer allowed. The student's duties, hours and compensation must be "commensurate with those provided to the employer's similarly situated U.S. workers."

What type of wages would be "commensurate" with other similarly situated U.S. workers? Similar to the filing of H-1B petitions, immigration attorneys working on STEM OPT Extensions should obtain prevailing wage determinations (PWD) for the particular position held by the student and submit this information to the DHS along with the STEM OPT Extension. However, the DHS has also stated that alternative compensation schemes may be allowed, so long as they are "commensurate" with the compensations of other simularly situated employees.  This is significant for start-up companies with insufficient funding to pay their employees. These companies may offer the international student a percentage of ownership in the company, so long as the companies' U.S. employees are compensated in the same manner.

2. Employer Must Provide A Professional Training Opportunity 

With the 24-month STEM OPT Extension, the DHS has implemented the Form I-983, which both the student and the employer must complete.This form requires that employers work out a formal training plan with the student, which also includes evaluations of the student's progress during the two-year training period.


Through this form, the employers providing the STEM OPT Extension must attest to the DHS that:

1. They have the sufficient resources and personnel available to provide appropriate training in connection with the specified opportunity;
2. The STEM OPT student will not replace a full- or part-time, temporary or permanent U.S. worker; and
3. The opportunity assists the student in attaining his or her training goals. 

The more formal training program seems to be geared towards readying the student for an H-1B petition in the future. If the employer is required to compensate and rigorously train the student, it is more likely that the employer will sponsor the student for an H-1B petition and subsequently, EB-2 or EB-3. This is good news for the students.

However, this imposes a much greater burden on the employers than the original rule, as employers now must decide before hiring the student whether they have the resources to (1) compensate the student and (2) provide formal training to the student. Employment of the STEM OPT student also opens the employer up to site visits by the DHS, which could be unannounced if it is the result of complaints of noncompliance with the new rule.

All of these could dramatically deter employers from hiring STEM OPT students, for fear of the consequences of non-compliance. As a result, the students could be adversely affected by this new rule.


How these requirements will affect employers' decisions to hire a student on STEM OPT Extension remains to be seen. In many industries, such as high tech or biotechnology industries, employers may have no choice as there is a shortage of U.S. workers. However, keep in mind that if you are a startup company, you have more options, at least in terms of compensation to the STEM OPT student.

ADDITIONAL 24-MONTH STEM OPT

Despite the burdens on employers, the new rule is favorable to students that were not chosen in the lottery to have their H-1B petitions adjudicated or were chosen but subsequently denied H-1B. Previously, these students would have to return to their home countries and apply for the H-1B through consulate processing, provided that their current employer is still willing to sponsor them.

Under the new rule, in addition to being able to apply for an extension of their current 17-month STEM OPT if they have more than 150 days left of their term, they can also apply for a new 24-month STEM OPT, after the first extension, based on a previously-obtained degree. This leads to a total of SIX years of potential OPT for STEM students.

Timeline for a Hypothetical 2 STEM OPT Student

However, the rule gets a bit complicated if the student chooses to obtain a second 24-month STEM OPT Extension. (See Hypothetical to the right). This second extension cannot be immediately after the first 24-month STEM OPT Extension but MUST immediately follow another 12-month OPT. This second extension may relate to an earlier STEM degree, for which they have not used the STEM OPT, but it does not
have to relate to the degree on which the immediately preceding 12 month OPT is based. In terms of training, reporting, compliance through Form I-983, this second STEM OPT job would need to relate to that prior STEM degree, providing even more burden to the employers to contact the DSO of the school where the student received his degree many years ago.

If you want to hire a student for STEM OPT, consult Zhang-Louie, Immigration Legal Counsel and we will make sure that you follow the compliance and reporting requirements to hire and retain that valuable STEM OPT employee, so you can focus on your business's growth and profits.