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Thank you for your answer. Yes, she used the portability provision for the new H1B. This is one way of using it that not many people know about. At that time I asked 3 lawyer firms and they all confirmed it can be used legally.

Here is the situation: My wife was on H4 since OCT 2001. She applied for a H1-B visa through employer A and it was approved on 29th August 2003. She worked part-time for employer A until December 2003 and she received the last paystub on December 15th. INS has not been informed about...