Tech Startups Seek Solutions to Avoid Trump’s $100,000 H-1B Fee

Startup industry stakeholders are pressing the Trump administration to maintain smaller firms’ access to specialty occupation visa workers, arguing that relief like an exemption to the newly implemented $100,000 H-1B entry fee will allow them to continue critical work in the national interest.

The industry is warning the White House that the country’s most innovative new companies will be handicapped without relief from steep new costs imposed on hiring through the H-1B visa program that’s critical for filling tech and engineering roles. The cascading effect goes well beyond the chief users in big tech, as new firms developing technology in space exploration, artificial intelligence, and other fields could be locked out of the program entirely, startup supporters say.

That would mean fewer innovations that drive economic growth, according to the industry’s backers, among them members of Congress.

Small tech firms say the talent pool in the US isn’t deep enough to meet their hiring demand. The fee, which employers were able to pay online starting this month, further squeezes those companies.

That charge applies to new petitions, putting private employers on the hook for those costs after the upcoming visa lottery next spring. It’s already had a chilling effect on startups raising funds with hiring plans in mind, said Morgan Reed, president of ACT | The App Association, a tech industry trade group.

“The only organizations that can afford to pay $100,000 are really large companies,” Reed said. “My small members, if they’re doing H-1Bs at all, are doing it to hire that one person who solves a key problem.”

Health care providers, schools, and religious employers have said the fee blocks them from filling critical openings with no alternative to hire from within the US. But the Trump administration has so far shrugged off calls for blanket exemptions for a given occupation or type of employer.

The fee “gives certainty to American businesses who actually want to bring high-skilled workers into our great country but have been trampled on by abuses of the system,” White House spokeswoman Taylor Rogers said.

National Interest

A surprise proclamation from President Donald Trump on Sept. 19 added the $100,000 charge for new H-1B workers as a condition of entry to the US, roiling the tech sector and other employers that rely on those employees for critical positions.

The Trump administration said the fee, which came amid other measures to overhaul the H-1B program, would address abuses of the specialty occupation visas.

Critics say the president doesn’t have legal authority to impose fees beyond the costs of administering the H-1B program. And they’ve noted that countries including the United Kingdom, Germany, and China have sought to lure skilled workers in response to the $100,000 fee or have rolled out their own visa programs for foreign tech talent.

The administration should recognize the role technology startups play in national security by granting them a “national interest” exemption from the fee, a coalition of startups and venture capital groups told David Sacks, chair of the President’s Council on Science and Technology, in an Oct. 23 letter.

Ideally, the administration would push reforms to the International Entrepreneur Parole Program or back the creation of a startup visa geared toward founders that have an interest in a US company, said Emma Kortebein, policy manager at Engine, a nonprofit group that advocates for pro-startup policies.

The fee, combined with a Department of Homeland Security proposal to overhaul the H-1B lottery, shifts the program from “one that’s difficult to use to one that can’t be used at all, Kortebein said.

ACT’s Reed said an exemption based on companies’ size would be more workable, noting the tax code and patent system already have specific requirements for small employers.

Asked about possible exemptions based on occupation or employer, a White House spokesperson referred to the text of the proclamation, which gives the Department of Homeland Security discretion to grant waivers in the national interest.

DHS has set up an email account for exemption requests, but so far the agency has indicated they’ll only be considered on a case-by-case basis.

Fee Impact Clarified

Separate lawsuits, including one led by the US Chamber of Commerce, have challenged the legality of the Trump fee proclamation. The Chamber’s suit said the fee’s impact on innovative start-ups and small businesses, as well as research universities, would dampen innovative capacity in the US.

That same theme was taken up by a bipartisan group of House lawmakers who warned in a letter to the White House last week that the fee would squeeze recruiting at start-ups, “imperiling our nation’s technological leadership and global competitiveness.”

The lawmakers said the White House should change course entirely on the fee and negotiate H-1B reforms with Congress.

Health-care software firm Rimidi Inc. has recruited multiple employees from nearby Georgia Tech University in Atlanta, including one currently working on an H-1B visa.

The company, located outside of major hubs for tech talent, has enough difficulty finding the right workers that it doesn’t limit searches to candidates based on visa status, said Jennifer Ide, Rimidi’s chief administrative officer.

“We certainly don’t go looking for people who are going to require sponsorship,” Ide said.

US Citizenship and Immigration Services has clarified that workers present in the US when H-1B petitions are approved—including recent graduates working on F-1 student visas—wouldn’t be hit with the $100,000 fee.

That was a relief to many companies, but anxiety remains high for startups, said Tahmina Watson, an immigration attorney in Seattle.

They’re still blocked from recruiting needed talent from overseas, and circumstances could dictate that graduates of US college graduates leave the country or go through consular processing before petitions are approved.

“Startups are nowhere near financially able to afford this,” Watson said. “It’s going to be a huge problem for the innovation ecosystem.”