What employers are exempt from the H-1B cap?

As the H-1B filing season approaches, I see many questions about exempt organization, such as what employers are exempt from the H-1B cap, and how a person can change from a cap-exempt to a cap-subject employer.

When is an employer not subject to the H-1B cap?

An employer is exempt from the H-1B cap if it is:

1) an institution of higher education; or

2) a  non-profit entity that is affiliated with an institute of higher education; or

3) a nonprofit research organization; or 

4) a governmental research organization.

My employer in non-profit, is it subject to the H-1B cap?

Maybe. Not all non-profit entities are exempt from the H-1B cap.  The exemption only covers non-profits that are research institutions, or are formally affiliated with an exempt educational institution.

Am I subject to the H-1B cap if I change from a cap-exempt to a cap-subject employer?

Yes. You could not start working for the new employer until you had H-1B status for that employer, unless you can use H-1B portability.  There is a CIS letter from May 2007 stating that portability applies even when a foreign national is moving from a cap-exempt to a cap-subject employer, so that the foreign national can start working for the new employer, even if no H-1B numbers are available. However, the letter refers to a situation where the cap-subject H-1B was filed after 4/1 that year, so that theoretically the petition could be approved, just for a 10/1 start date. I don't think portability would apply if the cap-subject H-1B was filed at a time that it would be rejected as too early, like now.

What if I work for a cap-subject and cap-exempt employer concurrently?

Good question.   Normally, an employee who is subject to the H-1B cap cannot get H-1B approval if there is no H-1B visas available. However, it is possible to to get approval of concurrent employment with a cap-subject employer, even if no cap number is available. There is a CIS memo from 2008 (Neufeld Memo) that specifically states that 

USCIS does not require that an alien who is cap-exempt...be counted towards the [H-1B cap] if they accept concurrent employment with a non-exempt employer.

If the employee stops working for the cap-exempt employer, any subsequent H-1B petitions by the cap-subject employer will be denied unless there are H-1B numbers available.

What if I work for in Guam or CNMI?

If your work is performed only in Guam or the Commonwealth of the Northern Mariana Islands (CNMI), you are not subject to the cap.  You must only work in CNMI or Guam, you cannot work elsewhere under this rule. See here for details.