Information Bulletin

 USCIS Collaboration Session Details

Collaboration Session Determining Employer-Employee Relationships for Adjudication of H-1B Petitions

(Prepared by Emily Neumann, Attorney at Law, Reddy & Neumann, PC. www.rnlawgroup.com - [email protected])

February 18, 2010

Purpose of collaboration session:

Allow stakeholders to express their concerns regarding the Memo

Clarify the intent of USCIS in issuing the Memo

Dispel any myths about the Memo

Possible additional consideration of issues raised

500-600 people attended by phone, 45-50 attended in person

The author of the memo was in attendance for USCIS along with their Chief Counsel, Director of the AAO, and others

Comments were as follows:

• Former Congressmen (I believe it was Bruce Morrison of CT) who was involved with the writing of the H-1B statute raised concerns about the impact on staffing companies and the healthcare industry. H-1B was modeled after H-1A for Nurses which specifically provided for staffing companies. Supreme Court has already expounded on the definition of Employee versus Independent Contractor, no new guidance was needed. PERM regulations make specific provisions for staffing companies.
• AILA attorney explained the business reason for having employees available on bench. It is a normal business practice to hire additional employees in anticipation of a major project. This should be allowed as long as the employees are being paid properly. The DOL already enforces the wage and hour provisions to ensure that illegal benching is not done, therefore there is no need to address the issue of speculative employment in the H-1B adjudication process.
• AILA attorney expressed concern over the publishing process of the Memo in that it did not comply with the Administrative Procedures Act (i.e. no Notice and Comment period). Also concerned about the seeming restriction on self-employment for H-1B workers who own a portion of the sponsoring company, coined the term entrepreneur beneficiaries. Memo discourages economic growth, should be withdrawn in its entirety.
• NJ business owner who came to the US on an H-1B and eventually became a citizen: Many major companies use H-1B workers for their temporary projects, if H-1B workers are not available because of this Memo, it will lead to an increase in outsourcing the projects and a decrease in tax revenue to the government.
• Requested USCIS to consider the H-1B employee perspective of this Memo. The H-1B adjudication process is already not transparent, this is a huge shift away from prior practices, thousands of H-1B workers are left uncertain about their status in this country, many of whom have started the green card process, purchased homes and cars, etc.
• Small Business Owner: USCIS is treating H-1B employers as enemies, upset that there was never an attempt by USCIS to speak with the business owners and understand the consulting industry and business model. Also complained about inconsistent adjudications, you can never be sure if your case will get approved even if you provide the exact same documents.
• RFEs themselves are confusing, repetitive, and boilerplate. Ex. USCIS always requests proof of wages paid to establish maintenance of status but then says at the same time that wages alone do not establish that the petitioner is the employer. Also pointed out that many H-1B employees must sign confidentiality agreements with the clients and therefore cannot provide updates to their H-1B employers about the project details in order to establish supervision.
• AILA member echoed previous point and stated that the Memo is not consistent with current policy or law and is anti-entrepreneur.
• Immigration attorney / healthcare staffing company owner: IRS definition of employee is sufficient, no need to alter that definition through USCIS. If the IRS considers them to be employees then USCIS should not say otherwise.
• Attorney representing universities: the Regulations regarding cap-exempt H-1B petitions allow petitions to be cap-exempt where the employee will be employee at or by a nonprofit research organization or governmental research organization. This clearly contemplates third-party placement and allows it for a cap-exempt H-1B.
• Attorney representing physicians: many states (including Texas) bar hospitals from directly employing doctors. Doctors are therefore required to form various practice groups and are then placed at the hospitals. The practice group sponsors the H-1B for the physician to work at the hospital and only the hospital controls the employment. Therefore, physicians in these states cannot obtain H-1B visas and we are in a major healthcare shortage. Furthermore, in rural areas physicians are often self-employed. The J-1 waiver for physicians allows H-1Bs for physicians who will work in rural areas. Yet, the self-employment provisions of the memo will basically mean that these J-1 physicians will not be eligible for an H-1B. This will lead to increased healthcare cost which is in direct opposition to the current administrations goals.
• The legal authorities cited in the Memo as supporting USCIS view do not actually support that view. One of the legal authorities references the EEOC compliance manual and states that it provides an excellent overview of the common law definition of employee. The EEOC manual provides various examples in which the employer-employee relationship exists under the common law and the very first example is a staffing company and the EEOC concluded that the person was in fact an employee of the staffing company. Also argued that the APA Notice and Comment procedure was not followed. Also noted the rise in the number of RFEs that seem to use the same template. The Paperwork Reduction Act prohibits the use of data collection documents that have not been approved by the OMB if the document is to be used more than 10 times per year. Clearly the issuance of hundreds of the same RFEs over and over violates the Paperwork Reduction Act.
• Immigration attorney pointed out the cost to clients of denial and appeals, questioned whether fraud fee was used to pay for the development of the Memo
• Speaker stated that the H-1B was the greatest talent acquisition program in the world, yet this Memo has shut down companies out of fear. Staffing companies create jobs, bring money into the economy, ensure that knowledge remains in the US. The lack of H-1Bs will negatively impact Universities that depend on foreign student tuition because fewer masters students will want to study in the US where there is little likelihood of a job upon graduation.
• Member of an immigration reform organization applauded the Memo because millions of Americans are harmed by the H-1B program. The H-1B allows companies to bring in fresh, inexpensive workers and Americans are losing jobs.
• Speaker commented on the retroactive nature of the Memo in that they are looking to the previous petition validity period to determine whether the proper employer-employee relationship existed.
• Because of the H-1B cap, it may be months before an H-1B can be filed yet the opportunity for a new project may be immediate. The cap necessitates that the employer maintain a string of available H-1B workers who will be ready when the project becomes available.
• Business owner stated that if USCIS wants to eliminate the staffing model, they should just do it explicitly rather than issuing this memo that now creates so much uncertainty. The people being harmed by the memo are the employees.
• False premise: the right of control issue precludes employee investors. In response to the individual who commented that H-1B workers are inexpensive, hiring H-1B workers costs employers more than hiring US workers.
• Immigration attorney commented that this memo is un-American and that it was worked on in private for one year with absolutely no input from the business world
• Another attorney commented that the memo is impossible for doctors to adhere to
• Owner of a small staffing company commented that larger companies have more choices to complete their work in that they can send projects to their offshore offices if they are unable to hire H-1B workers. Small businesses cannot compete and these are the businesses that are the life-force of the economy. The Memo is contrary to the administrations stance on helping small business
• Immigration attorney noted additional unintended consequences of the memo: 1) denials have been issued where the employer indicates that the employee will work only on internal project with complete project documentation. Adjudicator assumed that the employer might send the employee to a client site at some time in the future because the employer also provides consulting services. 2) CBP seems to be using the Memo to deny admission.
• Business owner commented that USCIS has a lack of understanding of the consulting business model
• Representative of American tech workers claimed that the H-1Bs are displacing American workers
• New Jersey business owner commented that he has invested in the US and created jobs, but eventually had to terminate US workers because he could not obtain approvals to hire H-1B workers and therefore lost business. His downsizing lead to reduced rent, other vendors lost his business, chain reaction
• One commenter stated that the Defensor v. Meisner case is a great obstacle to H-1Bs and includes a harsh interpretation of specialty occupation
• Another commented on the incredulity of RFEs constantly challenging the specialty nature of Systems Analyst positions
• Individual commented on the application of the memo that is now leading to boilerplate RFEs, 2 and pages in length. It appears that the petitions are not even reviewed, all are sending RFEs with language from the memo and they specifically state that the right to control is the factor given the most weight. There is no need for new or additional factors. If the employer can establish hire, fire, pay, and at least some element of control, that should be sufficient
• Individual noted that he is receiving RFEs on every H-1B application, even with client letters, contracts, and work orders are submitted with the petition. RFEs are even asking for 3 years of tax returns, organizational charts, etc for huge companies, killing trees!
• Another commented that reliance on end client documentation is too burdensome. The current business practice of many of the end clients is to pass all project details to a vendor to take care of (VMS) and the vendor handles everything. Therefore, in the real world, USCIS should consider the project details coming from the vendor and not require documentation from the end client.
• An attorney commented on the fact that USCIS is more frequently cutting the duration of the H-1B validity to coincide with the duration of the project. This will only lead to an increase in the number of extension applications filed repeatedly, wasting time, money, and resources. Also noted that there is no such thing as a three-year project in the real world.
• Business owner commented on the lack of consistency in adjudications. The same client letter was used in several H-B petitions and some were approved and some were denied. The employer ended up losing 5 valuable employees because they chose to work directly for the client.

Additional information provided by USCIS:

We were informed that the Memo was a one-year long undertaking, the Memo was not intended to affect the Port of Entry/CBP. The intention of the Memo was to memorialize existing practices and provide consistency in RFEs and adjudications. Also, because of the limited number of visas available, they want to ensure that the visas are going to the right people. USCIS is now requiring supervisory review before any H-1B can be denied after the Memo was issued. After receiving some of the comments, USCIS indicated that it would consider requiring supervisors to review the RFEs before they are sent out in order to ensure that the requests are not overly burdensome. There was mention of some sort of precertification of certain employers to avoid requesting documents establishing the legitimacy of the business. USCIS stated that the Memo is not expected to expand into the L-1 visa area but many practitioners pointed out that they have already received denials which use language from the memo. USCIS mentioned that pressure from Capitol Hill and Senator Grassley was a part of the motivation for issuing the Memo.