Everything You Need to Know About Cap-Exempt H-1B in 2026

Cap-exempt H-1B status is granted to employees of organizations that have been excluded by federal law from the annual H-1B limit. Cap-exempt H-1B petitions can be filed any time of year and are not subject to the yearly H-1B lottery. Qualifying cap-exempt employers include universities, nonprofits affiliated with universities, and nonprofit or governmental research organizations.

For U.S. companies, this matters now more than ever. The cap-subject lottery is now weighted by wage level, and a proposed six-figure fee would apply to cap-subject petitions. Private companies can't file cap-exempt petitions on their own, but many don't realize they can still benefit from cap exemption through an employee's concurrent employment. This guide explains how.

What Is a Cap-Exempt H-1B Visa?

An H-1B visa, or H-1B status, is granted to individuals in "specialty occupations," meaning jobs that require at least a bachelor's degree, or its equivalent, in a specific field. Most new H-1B petitions count against an annual limit, known as "the cap," set by Congress.

That limit is 85,000 new H-1Bs each fiscal year: 65,000 under the regular cap and 20,000 reserved for holders of U.S. advanced degrees (the "master's cap"). Demand far exceeds supply, so U.S. Citizenship and Immigration Services (USCIS), the agency that adjudicates H-1B petitions, runs a selection process each spring to decide who may file.

A cap-exempt H-1B does not count against that 85,000 limit. If an employer qualifies for a cap exemption, it can file an H-1B petition with no registration window, no lottery, and no waiting for an October 1 start date.

Think of the cap as a once-a-year raffle for a fixed number of tickets. Cap-exempt employers don't need a ticket at all.

Who Are Cap-Exempt Employers?

Under federal regulations at 8 CFR 214.2(h), four categories of employers can file H-1B petitions outside the cap.

1. Institutions of higher education. These are accredited U.S. colleges and universities.
2. Nonprofit entities related to or affiliated with a university. This can include a nonprofit that has a formal written affiliation agreement with a university. A fundamental activity of the nonprofit must be to directly contribute to the university's research or education mission.
3. Nonprofit research organizations. These are nonprofits that conduct basic or applied research.
4. Governmental research organizations. These are federal, state, or local government entities that conduct research.

Not every nonprofit qualifies. For example, a charity, advocacy group, or social services organization is generally not cap-exempt unless it can prove that it aligns with one of these categories.

Effective January 17, 2025, the Department of Homeland Security (DHS) updated how nonprofit and governmental research organizations qualify, defining them by whether research is a "fundamental activity" rather than by stricter earlier criteria. For a deeper look at the legal framework, see our legal analysis of H-1B cap exemptions.

Who Is Eligible for a Cap-Exempt H-1B?

H-1B eligibility for a cap-exempt role is determined in two parts: the person and the position.

The person must meet the standard H-1B requirements. That means they must hold a U.S. bachelor's degree or higher in a related field, a foreign equivalent, or an equivalent combination of education and experience.

The position must be a specialty occupation, and it must connect to the cap-exempt employer's mission. There are two main ways to qualify:

• Direct employment. The person is employed directly by a qualifying university, affiliated nonprofit, or research organization.
• Third-party placement / Off-site work. The person is employed by a cap-subject company (private firm) but spends most of their work time performing job duties at the qualifying institution. Those duties must directly further the qualifying institution's education or research mission.

Evidence matters. USCIS typically expects documentation such as accreditation records, IRS tax-exemption letters, affiliation agreements, and a clear description of how the role supports the institution's mission. Weak documentation is one of the most common reasons cap-exempt petitions receive a Request for Evidence (RFE), which is a USCIS notice asking for more proof of eligibility before a decision.

Cap-Subject vs. Cap-Exempt H-1B: Key Differences

For a broader overview of the standard H-1B process, see Mastering the H-1B Visa: A Comprehensive Guide.

How Concurrent Employment Opens Cap-Exempt H-1B Opportunities at Private Companies

Concurrent employment means one person holds two H-1B jobs at the same time, with a separate H-1B approval for each employer. Immigration law treats each job as its own case.

Concurrent employment is how private companies can access the cap-exempt model. Once someone holds a qualifying cap-exempt H-1B, a private company can file a second, concurrent H-1B petition for that same person. That concurrent petition is not subject to the annual H-1B lottery.

Here is what that looks like in practice. A software engineer works part-time in a qualifying cap-exempt role, such as leading hands-on technical training at a university. They also work full-time for a U.S. startup on a concurrent H-1B. Both employers file their own petitions, and both jobs must stay in compliance.

One important rule: the concurrent private-sector H-1B depends on the continuation of the underlying cap-exempt role. If the cap-exempt employment ends, the person generally becomes subject to the cap for that private-sector job, unless they were previously counted against the cap. Planning for continuity in the cap-exempt role is essential.

We cover this in more detail in Understanding Concurrent H-1B Visas.

How the Cap-Exempt H-1B Process Works (Step by Step)

The H-1B petition process for a cap-exempt role follows the same core steps as any H-1B petition. It just skips registration and selection. When a private company is involved through concurrent employment, there are two parallel tracks.

1. Begin the process with a cap-exempt employer. The cap-exempt employer gathers proof of its status, such as accreditation, IRS determination letters, or an affiliation agreement. This is the foundation of the petition.
2. Define a qualifying role. The role must be a specialty occupation and must connect to the employer's education or research mission. A clear, specific job description reduces RFE risk.
3. File a Labor Condition Application (LCA). The employer files an LCA with the U.S. Department of Labor (DOL). The LCA confirms the wage and working conditions for the role.
4. File Form I-129 with USCIS. Form I-129 is the H-1B petition. The cap-exempt employer files it any time of year, with evidence supporting the exemption.
5. File the concurrent petition, if applicable. Once the cap-exempt H-1B petition is approved and the individual begins working for the cap-subject employer, the private company files its own concurrent H-1B petition for the same person, with evidence of that person's cap-exempt H-1B approval and employment.
6. Choose change of status or consular processing. Someone already in the U.S. in valid status, such as an F-1 student on Optional Practical Training (OPT), can often change status without leaving the country. Someone abroad must get a visa at a U.S. consulate. This choice can affect fees, as explained below.
7. Maintain compliance in both roles. Each employer must pay the required wage, comply with all terms of their respective LCA, and file an H-1B amendment if there are any material job changes. If the cap-exempt role ends, address the concurrent role right away with counsel.

Premium Processing, a paid USCIS service that expedites decisions, is generally available for H-1B petitions.

What 2026 Fee Changes Mean for Cap-Exempt H-1B

Two separate six-figure H-1B fees have recently made news, and they are easy to confuse. As of October 5, 2026, here is where each one stands. Both are changing quickly, so check for updates before relying on this section.

The $100,000 H-1B proclamation fee (blocked by two federal judges as of October 8, 2026)

In September 2025, The White House issued a Presidential Proclamation requiring employers to pay an additional $100,000 per H-1B petition for certain beneficiaries. USCIS guidance clarified that change-of-status petitions filed for people already in the U.S. were not subject to the fee.

That fee did not exempt cap-exempt employers. New petitions for beneficiaries outside the U.S. were subject to the fee, including petitions from universities and research organizations.

The litigation history so far:

• December 2025: A federal court in Washington, D.C., upheld the proclamation in a case brought by the U.S. Chamber of Commerce.
• June 8, 2026: A federal court in Massachusetts vacated the fee policy, finding it amounted to an unauthorized tax imposed without congressional approval.
• July 24, 2026: The First Circuit Court of Appeals refused to reinstate the fee while the government's appeal continues.
• September 18, 2026: A new proclamation extended the fee for another year, through September 21, 2027. Practitioners noted that the extension keeps the policy alive on paper but does not appear to override the court order.
• September 30, 2026: A federal court in California temporarily blocked the agencies from implementing the fee under both the original proclamation and its extension until formal notice-and-comment rulemaking is completed.

Bottom line as of October 8, 2026: the fee remains blocked by two separate court orders. Litigation is ongoing and could reach the Supreme Court. Check current USCIS guidance before filing any petition for someone outside the U.S.

The proposed $103,265 cap-subject fee (proposed, not final, as of October 8, 2026)

On August 25, 2026, DHS published a proposed rule that would add a $103,265 fee to every H-1B cap-subject petition, including master's cap petitions, on top of all existing fees. A proposed rule is a draft regulation published for public comment before it can take effect.

The proposed fee would not apply to cap-exempt petitions from universities, affiliated nonprofits, or nonprofit and governmental research organizations, nor to extensions, amendments, or change-of-employer petitions.

Employers do not currently pay this fee. DHS must review public comments and issue a final rule before it can take effect. The comment period closed September 24. If finalized, the fee could apply to cap petitions as early as April 1, 2027, unless litigation blocks it.

Why this matters for hiring leaders

The cap-subject route is getting more competitive and potentially far more expensive. The FY 2027 cap season was the first to use a weighted, wage-level-based selection process, under a DHS rule effective February 27, 2026. USCIS reported 211,600 registrations for FY 2027, about 38.5% fewer than the 343,981 eligible registrations for FY 2026, and confirmed there would be no second selection round. FY means fiscal year, the federal government's October-to-September year.

Cap-exempt pathways sit outside the lottery entirely. As proposed, they would also sit outside the new $103,265 fee. That makes the H-1B cap exemption a central part of many companies' 2026 hiring strategy.

Where Build Fellowship Fits

Most private companies can't build a qualifying cap-exempt role on their own. It takes a real university or nonprofit partnership, a role that genuinely serves an education or research mission, and ongoing compliance. Build Fellowship, a program of Build Talent Labs, is designed to provide that infrastructure.

Here is how the Build Fellowship model works:

• Nonprofit and university partnerships. Build Fellowship partners with qualified nonprofits that have mission-aligned collaborations with accredited U.S. universities.
• A real education role. Fellows commit about 5 to 8 hours a week to leading hands-on, experiential learning programs for U.S. students in their field of expertise. That part-time role is the basis for the cap-exempt H-1B.
• Full-time work at your company. The Fellow's full-time employer then files a concurrent H-1B petition so they can continue working for both the Fellowship and the full-time employer.
• Managed compliance. Build and its nonprofit partners manage the administrative and programmatic work so the Fellowship role meets statutory criteria. A full-time employer's immigration attorney guides the case, and we work alongside them.

The model has a long track record. In 2014, Build co-founder Jeff Goldman helped develop the legal infrastructure for one of the first cap-exempt H-1B programs, the Global Entrepreneur in Residence program, which has evolved steadily ever since. In 2025, Fellowship programming served more than 1,300 students at nearly 20 partner institutions through more than 230 Fellows.

Eligibility is determined case by case. Every Fellowship begins with an eligibility review by our immigration team alongside a prospective Fellow's full-time employer's attorney. For more on the model, read our cap-exempt H-1B comprehensive guide.

Frequently Asked Questions

Can a private company get a cap-exempt H-1B?

A private, for-profit company generally can't file a cap-exempt petition on its own. It can file a concurrent H-1B for someone who already holds a qualifying cap-exempt H-1B, such as a role with a university or affiliated nonprofit. That concurrent petition is not subject to the lottery.

Is cap-exempt H-1B a legitimate pathway?

Yes. Cap exemption is written into federal law at INA §214(g)(5) and defined in USCIS regulations. Congress created it so universities and research institutions could hire global talent year-round.

What happens if I'm not selected in the H-1B lottery?

Not being selected in the cap-subject selection does not prevent someone from qualifying for a cap-exempt H-1B. A qualifying cap-exempt employer can file at any time of year. If that person also works for a private company, the company can then file a concurrent H-1B petition.

Does the $100,000 H-1B fee apply to cap-exempt employers?

As written, the 2025 proclamation fee applied to certain new petitions for people outside the U.S., including cap-exempt petitions. As of October 5, 2026, the fee is blocked by two federal court orders while litigation continues. Petitions for people already in the U.S. changing status were not subject to it.

Would the proposed $103,265 fee apply to cap-exempt H-1B?

As proposed, no. The rule would apply only to cap-subject petitions and expressly excludes cap-exempt petitions from universities, affiliated nonprofits, and research organizations. It is not final as of October 5, 2026.

Does time on a cap-exempt H-1B count toward the six-year limit?

Yes. H-1B status generally has a six-year maximum, and time in cap-exempt H-1B status counts toward it. Certain green card steps and milestones can allow extensions beyond six years, so talk to counsel about long-term planning.

Can someone on a cap-exempt H-1B get a green card?

Yes. An H-1B employee can be sponsored for permanent residence by an employer, and cap-exempt status doesn't prevent that. The right green card strategy depends on the person's qualifications and the employer, so plan it carefully with an immigration attorney.

What This Means for Your Hiring Strategy

The cap-exempt H-1B option gives employers and employees a year-round, lottery-free H-1B pathway, as long as the employer, employee and role meet certain criteria. For private tech and innovation companies, the route runs through concurrent employment with a qualifying cap-exempt employer. With wage-weighted selection now in place and a proposed $103,265 cap-subject fee pending, building that pathway now gives your team more predictable access to the talent it needs.

Want to build a year-round H-1B pathway for your team? Join an upcoming Build Fellowship info session to see how companies work with Build and their immigration attorneys to put cap-exempt H-1B infrastructure in place.

Register for our next info session: https://webinars.buildfellowship.com/global-talent

About the authorMichael CruseImmigration Program Co-Director

Michael Cruse is an Immigration Program Co-Director at The Build Fellowship where he develops and directs, as well as guides Fellows through, the organization’s immigration lifecycle, including working closely with its legal team. Prior to joining The Build Fellowship, Michael served as an Immigration Lawyer for over 15 years at large, corporate firms in New York City, a boutique law firm in Minneapolis, and a nonprofit organization in Washington, DC. Michael holds a B.A. from the University of Arizona and a J.D. from Mitchell Hamline School of Law.

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