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Is There A Hidden Agenda? Suspension of Premium Processing for All H-1B Petitions

In one move that we did not see coming, USCIS has announced that, starting April 3, 2017, it will temporarily suspend premium processing service for all H-1B petitions. Petitioners will not be able to file Form I-907, Request for Premium Processing Service, for a Form I-129, Petition for a Nonimmigrant Worker which requests the H-1B nonimmigrant classification. This includes cap-subject H-1B petitions, petitions for H-1B extensions or amendments and petitions for change of H-1B employer. This suspension may last up to 6 months and USCIS will notify the public before resuming premium processing for H-1B petitions. The temporary suspension will not apply to other eligible nonimmigrant classifications filed on Form I-129.

As background, premium processing service provides expedited processing for a specific list of employment-based immigrant and nonimmigrant petitions. This list has always included the H-1B petition. The request is submitted on Form I-907 which carries a fee of $1,225. Upon receipt of this request, USCIS guarantees 15 calendar day processing or USCIS will refund the fee. Within the initial 15 days, USCIS will issue an approval or denial notice, a notice of intent to deny (NOID) or a request for evidence (RFE). If a NOID or RFE is issued, a new 15 calendar day period will begin upon USCIS’ receipt of a complete response. Premium processing service is also quite desirable because it allows petitioners and attorneys to communicate directly with USCIS officers via telephone or email. USCIS also issues an email notification when the case has been received and when it is approved.  Also, rather than having to wait for snail mail to arrive, petitioners receive RFE’s and denial notifications via fax.

Each year, thousands of petitioners request premium processing service for their H-1B petitions filed under the H-1B cap. The initial email notification and the 15 day adjudication period can go a long way toward providing peace of mind for anxious H-1B petitioners and beneficiaries. For petitions filed under regular processing, USCIS receipt notices are sometimes not received until May or even June and the petition can remain pending for months, even past the October 1 employment start date. Cap-subject H-1B petitions are accepted during the first five business days of April. This year, since April 1 falls on a Saturday, cap-subject H-1B petitions for the 2018 fiscal year (FY18) will be accepted from Monday, April 3 to Friday, April 7, 2017. The suspension will therefore apply to all petitions filed for the FY18 H-1B regular cap and master’s advanced degree cap exemption (the “master’s cap”). USCIS will reject any Form I-907 filed with an H-1B petition. Therefore, if the petitioner submits one combined check for both the Form I-907 and Form I-129 H-1B fees, USCIS will reject both forms.

USCIS has stated that the suspension will help the agency to reduce its overall H-1B processing time and allow it to process long-pending petitions which it has been unable to process due to the high volume of incoming petitions and the significant surge in premium processing requests over the past few years. USCIS also claims that the suspension will allow the agency to prioritize the adjudication of H-1B extension of status cases that are nearing the 240 day mark. Under 8 CFR § 274a.12(b)(20), an H-1B worker is authorized to continue working for the same employer for up to 240 days beyond the expiration of the current immigration status (i.e. beyond the date listed on their most recent Form I-94) if the employer files an H-1B extension request in a “timely” manner.  In recent times, the processing times for H-1B petitions have come close to or even moved beyond 240 days. This is probably attributable to increased filings as a result of the decision in Matter of Simeio Solutions, LLC, 26 I&N Dec. 542 (AAO 2015) which mandates the filing of H-1B petitions for amendment whenever there is a change in the H-1B work location. Once the 240 day period has passed, the employee may remain in the US awaiting the adjudication of the petition but will no longer be authorized to work. If the H-1B worker works past the 240 days, not only will he or she be in violation of status, but will lose the tolling exception to unlawful presence too. According to USCIS guidance, unlawful presence is tolled when a timely extension request is filed, but that tolling will be lost if the foreign national engages in unauthorized employment either before or after the timely extension has been filed. Thus, working beyond 240 days will result in the loss of the tolling protection to unlawful presence.

We hope that we can trust in USCIS’ stated intent and that there is nothing more sinister behind the suspension. It is no secret that some people in charge of immigration policy in the Trump administration do not like the H-1B visa as it is perceived, albeit erroneously, to be taking away jobs that should go to American workers. There are ongoing efforts within Congress to change how the H-1B system works. One bipartisan bill, H-1B and L-1 Visa Reform Act of 2017, proposes to reform the program by instructing officials to grant visas on merit, rather than through a lottery. Is the stoppage of premium processing for 6 months really just a way to slow down the H-1B program and thus make it more difficult for employers to retain skilled H-1B workers? Is this in keeping with Bannon’s goal for the endless deconstruction of the administrative state? Granted, this is not the first time that premium processing service has been suspended. Last year, USCIS announced that in order to prioritize data entry for cap-subject H-1B petitions, while they would still accept Forms I-907, they would actually begin any requested premium processing for H-1B cap-subject petitions by May 16, 2016. That suspension applied only to cab-subject H-1B petitions and was implemented for a very short-term with a firm end-date indicated. It was therefore not only understandable but moreover, believable, as a means to cope with an expected influx of petitions. This time, the timeline could be indefinite, as USCIS vaguely states that the suspension may last up to 6 months, and USCIS has applied the suspension across the board on all H-1B petitions, a move that will most likely lead to an increase in the very backlogs that they are allegedly seeking to eliminate.

The suspension of premium processing service could also result in very serious complications for H-1B employees. The inability to upgrade the petition to premium processing will mean that H-1B employees might be unable to travel outside the US. An H-1B worker with a pending petition whose immigration status has expired will need to apply for and obtain a new H-1B visa at a US Consulate abroad if he travels outside the US. Such an employee would be ill-advised to embark on an international trip when there is no indication as to when the pending H-1B will be adjudicated. Also, some states require an H-1B approval notice in order to extend driver’s licenses. If the H-1B worker needs to drive to work every day, the inability to obtain an expeditious H-1B approval could mean that he is unable to work.

An H-1B worker who is porting to a new employer may begin working for the new employer upon the filing of a nonfrivolous H-1B petition on his behalf provided, inter alia, that this petition was filed before the end of his period of authorized stay. It has always been advisable to obtain an approval of the new H-1B petition and the security that comes along with that before making the leap to new H-1B employment. The suspension of premium processing service means that more H-1B workers will be forced to take a chance and port to the new employer before the H-1B petition is approved. If the H-1B petition is ultimately denied, they do have the option to return to the first H-1B employer but, realistically, not only is it most likely that those bridges will have burnt but that initial H-1B employer is also obligated to notify USCIS when the H-1B worker is no longer employed. If USCIS has already been notified then that initial H-1B would no longer be viable even if the employer were willing to rehire the H-1B worker.

Also, where an H-1B worker has ported to new H-1B employment based on a pending petition timely filed by employer B, the worker may port again to employment with employer C while the petition filed by employer B is still pending but provided that the H-1B worker’s initial period of authorized stay, as indicated on his Form I-94, has not yet expired. The suspension of premium processing service will likely increase the processing time for all H-1B petitions and therefore significantly increase the likelihood that H-1B workers will no longer be able to take advantage of such privileges.

USCIS has indicated, however, that it will continue to accept requests for expedited processing during the suspension period. Petitioners may submit a request to expedite an H-1B petition if they meet the criteria on the Expedite Criteria webpage. It is the petitioner’s responsibility to demonstrate that they meet at least one of the expedite criteria, which include severe financial loss to company or person​; emergency situation; and humanitarian reasons. USCIS has stated that it will review all expedite requests on a case-by-case basis and that requests will be granted at the discretion of the office leadership.

If the H-1B visa system is gummed up in this manner, US employers will not be able to attract the best global talent. Some of the employers that will be hit the hardest will be technology companies seeking to attract the best talent before their competitors do. It is already difficult to do so given the H-1B annual cap of a measly 65,000 visas with an additional 20,000 for master’s degrees. The United States is no longer the only game in town. Frustrated workers will leave for more hospitable countries. The H-1B system is already a mess. Why the need to mess it up even more?

Brexit and Xenophobia vs. Immigration and Innovation

In the backlash against globalization, as seen in the vote in favor of Brexit, there is an even more insidious backlash against immigration. The world has prospered because of the expansion of trade and technology, and also due to the free movement of capital and people. Millions of the world’s poor people have been lifted from poverty as a result of globalization. In turn, people in richer countries have been able to buy products and services at lower cost. Businesses have also been able to sell goods and services outside beyond national boundaries, thereby becoming more profitable and hiring more people.

Politicians like Donald Trump do not see it this way, who wish to tear up trade deals such as the North American Free Trade Agreement. So does Bernie Sanders, who while speaking with a softer voice, appears to be in harmony with Trump in his critic of globalization and trade deals. While Hillary Clinton is probably in favor of trade deals, she back tracked on the Trans-Pacific Partnership, after being attacked by Sanders during the primaries. It is true that globalization does not always have winners. Those who get displaced need to land on a safety net so that they can re-train and develop new skills. The safety nets, unfortunately, are not keeping up with the enormous changes in technology that increase productivity through innovative technologies, which include rapid strides in robotics and artificial intelligence. During this transition that promises a better future for all in the long run,  politicians exploit this shortcoming to lash out against immigrants in their countries and foreign-based workers outside who are paid less, when the true disrupter is technology and innovation.

As Fareed Zakaria so succinctly puts it:

“Manufacturing as a share of all U.S. jobs has been declining for 70 years, as part of a transition experienced by every advanced industrial economy. All other developed countries from Australia to Britain to Germany — which is often seen as a manufacturing powerhouse — have seen similar declines over the past several decades. Even South Korea, which has tried many kinds of protectionism, has experienced a drop in manufacturing as it has become a more advanced economy. This shift is partly a result of free trade, but serious studies show that the much larger cause is technology. One steelworker today makes five times as much steel per hour as he or she did in 1980.”

Immigration lawyers know first- hand how free trade and immigration has been beneficial for America. It is due to NAFTA that Canadians and Mexicans can enter the United States on TN visas to work for US employers who seek them out even while the H-1B visa, the main workhorse nonimmigrant visa, has hit the annual numerical cap. Singaporeans and Chileans can enter the United States on H-1B1 visas that ensue from trade deals and so can Australians on an E-3 visa. Nationals of many countries that have treaties with the United States can come here on E-1 and E-2 visas as investors and traders. While the L-1 visa does not ensue from a treaty, it too is premised on the needs of multinational corporations, big and small, in a globalized world. Intra-company transferee managers, executives and specialized workers can work for a US branch, subsidiary, parent or affiliate of a foreign company on L-1 visas. Despite there not being H-1B visas, the fact that other visas are still available, allow US companies to remain globally competitive by tapping into skilled and professional foreign workers. If it were not for these visas, the entry of skilled workers into America would be at a standstill.

We need to embrace immigrants, and view them as an asset, rather than as people who steal jobs and work cheaply. Immigration not only provides a complimentary workforce, but also generates innovation that will create the next generation of jobs that require new skills. If we have a robust and welcoming immigration system that would not shackle the worker to one employer, but would allow mobility and a quick pathway to permanent residency, then there would be no suppression of wages. Everyone would be on a level playing field, and market forces would ensure that wages remain competitive. Indeed, by encouraging more movement of people to America and other richer countries, it would have the effect of wages increasing worldwide and potentially a convergence in wages for highly skilled people. With the advent of technology that has increased productivity manifold times, manufacturing would be based in places not where the wages are lower, but where there is an abundant supply of skilled workers, technology and innovation.  If the free movement of people is restricted, employers will be forced to move operations to other countries, thus perpetuating wage disparity.

This brings us to the H-1B visa program that has a mere 65,000 visas, plus an additional 20,000 for those who have graduated with advance degrees. Due to the well publicized layoffs of US workers at companies like Disney by H-1B workers, there appears to be no appetite by Congress to increase H-1B visa numbers even though there is a dire need to do so. By continuing to limit and stifle the H-1B program, US employers will remain less competitive and will not be able to pass on the benefits to consumers. We need more H-1B visa numbers rather than less. We also need to respect H-1B workers rather than deride them, even if they work at IT consulting company, as they too wish to abide by the law and to pursue their dreams in America.  The best way to reform the H-1B program is to provide more mobility to H-1B visa workers. By providing more mobility, which includes being able to obtain a green card quickly,  H-1B workers will not be stuck with the employer who brought them on the H-1B visa, and this can also result in rising wages within the occupation as a whole. Mobile foreign workers will also be incentivized to start their own innovative companies in America, which in turn will result in more jobs. This is the best way to reform the H-1B visa program, rather than to further shackle it with stifling laws and regulations, labor attestations and quotas. Market forces can better control the H-1B program from abuses and distortions than labor attestations!

As we meditate over yet another July 4th weekend celebrating America’s independence, we should note that the world faces a stark choice today. Should countries be more open or less open? The ideological line between left and right is blurring as another more distinct line is being drawn between open and closed nations. America was founded on principles of openness and its ability to embrace people from all over the word, but that may change if the proponents for a closed and isolated world have their way.  If America becomes closed, just like Britain will likely be after Brexit, there will be fewer opportunities for businesses to sell outside national borders, and they will be further stymied and unable to grow if they cannot gain access to the best talent. Moreover, innovation will get stifled if the best people from around the world cannot cluster together to develop new products and change paradigms. Immigration is what fuels these advances, which in turn promises more growth and prosperity. Do we want to revive the industries of the past to bring back those illusory jobs, such as steel manufacturing or coal mining,  after technology has already marched on, or do we want to imagine about autonomous vehicles (notwithstanding the recent Tesla car setback), nanotechnology that will automatically repair our cells and space travel through a wormhole?  Brexit and xenophobia go hand in hand. Will America buck this trend in favor of immigration and innovation when it goes to the polls in November 2016?

NEW L-1B VISA GUIDANCE: WILL THERE BE FEWER DENIALS OR MORE OF THE SAME?

By Gary Endelman and Cyrus D. Mehta

If there is one visa uniquely suited to advance America’s competitive position in the global marketplace, it is the L-1B intra-company transferee visa for specialized knowledge employees.  In an increasingly specialized economy where expertise should trump nationality, the notion of “specialized knowledge” as it affects L-1B adjudications has become increasingly contentious. For many years, the L-1B visa, created in 1970 as Congress warmed to the realization that American business had become international, sailed along in tranquil waters unburdened by controversy. In recent years, much as its companion H-1B visa has become embroiled in bitter dispute, immigration restrictionists have tended to focus on the L-1B visa as a threat to domestic employment, thus ensuring that the climate of adjudications would become rigid and restrictive. In response to the resulting criticism from business and immigrant advocates, the Administration promised a new and improved philosophy to guide L-1B adjudicators. U.S. Citizenship and Immigration Services (USCIS) issued interim policy guidance on L-1B “specialized knowledge” adjudications that supersedes and rescinds certain prior L-1B memoranda. USCIS said it is issuing this memorandum now for public review and feedback. USCIS will finalize the guidance effective August 31, 2015. It provides guidance on how L-1B petitioners may demonstrate that an employee has specialized knowledge. In the case of off-site employment, it also clarifies how to comply with the requirements of the L-1 Visa (Intracompany Transferee) Reform Act of 2004. The question is whether this new guidance will bring clarity and common sense into the morass of L-1B jurisprudence or simply result in more of the same excessive inconsistency that has so plagued it in the recent past.

When President Obama announced his executive actions on November 20, 2014, there was acknowledgment in the memo entitled “Policies Supporting U.S. High Skilled Business and Workers” that the “L-1B visa program for ‘intracompany transferees’ is critically important to multinational companies.”  It was recognized as “an essential tool for managing a global workforce as companies choose where to establish new or expanded operations, research centers, or product lines, all of which stand to benefit the U.S. economy.” The memo, however, acknowledged that there was “vague guidance and inconsistent interpretation of the term “specialized knowledge” in adjudicating L-1B visa petitions created uncertainty for these companies.”  As the applicable L-1B regulation defining “specialized knowledge”, 8 CFR 214.2(l)(1)(ii)(D),  dates back to implementation of the Immigration Act of 1990, and merely parrots the statute,  the lack of updated regulatory guidance in the face of constantly changing business practices has created a vacuum that the USCIS has attempted to fill with a series of memoranda promulgated without the notice and comment opportunity afforded by the Administrative Procedures Act. The law has not changed, Congress remains silent, but the legal standards applied by the USCIS evolve according to its own initiative.

Contrary to what critics may say, the L-1B visa guidance is not some new allegedly unconstitutional program that will allow hundreds of thousands to immigrate to the United States via the backdoor. The absence of an artificial numerical cap seized upon by L-1B visa critics ignores the basic yet universal reality, noted below, that all L-1B beneficiaries are existing international employees of the same corporate group or organization and it is the perceived business needs of these companies, completely divorced from immigration considerations, that explains the interest in L-1B sponsorship. When the commercial realities change, the desire to retain or attract L-1B employees also changes. What critics of the L-1B visa do not seem to realize or appreciate is that L-1 petitions are a business decision. The L-1B visa guidance only seeks to clarify the statutory definition of “specialized knowledge:

[A]n alien is considered to be serving in a capacity involving specialized knowledge with respect to a company if the alien has a special knowledge of the company product and its application in international markets or has an advanced level of knowledge of processes and procedures of the company

See Immigration and Nationality Act (INA) 214(c)(2)(B).

The L-1B visa guidance starts off by reminding USCIS adjudicators the very basics, which is that a petitioner seeking L-1B classification must establish that it meets the “preponderance of the evidence” standard. This is a lower standard than the “clear and convincing evidence” or the “beyond a reasonable doubt” standard. Under the “preponderance of the evidence” standard, even if an examiner has some doubt about the claim, the petitioner would have satisfied this standard if after presenting all the evidence it leads to the conclusion that the claim is “more likely than not” or “probably” true. Ever too often examiners have had the tendency to apply the “beyond a reasonable doubt” standard, which is the standard that the prosecution has to meet in a criminal case to prove the guilt of a defendant. There is no place for such an onerous standard in an administrative law setting relating to L-1B visa petition adjudications. USCIS adjudicators do not have to be “convinced” of the specialized knowledge claim; it should be enough that a reasonable basis for this claim exists. Preponderance does not require nor should it be conditioned upon a showing of absolute truth or complete faith.

Among other things, the L-1B visa guidance notes that a beneficiary must possess either special or advanced knowledge, or both. Determining whether a beneficiary has “special knowledge” requires review of the beneficiary’s knowledge of how the company manufactures, produces, or develops its products, services, research, equipment, techniques, management, or other interests. Determinations concerning “advanced knowledge,” on the other hand, require review of the beneficiary’s knowledge of the specific employing company’s processes and procedures, the L-1B visa guidance states. While the beneficiary may have general knowledge of processes and procedures common to the industry, USCIS’s focus is primarily on the processes and procedures used specifically by the beneficiary’s employer. With respect to either special or advanced knowledge, the petitioner ordinarily must demonstrate that the beneficiary’s knowledge is not commonly held throughout the particular industry or within the petitioning employer. As discussed in detail in the L-1B visa guidance, however, such knowledge need not be proprietary in nature or narrowly held within the employer’s organization.

The L-1B visa guidance notes the following non-exhaustive list of factors USCIS may consider when determining whether a beneficiary’s knowledge is specialized:

  • The beneficiary is qualified to contribute to the U.S. operation’s knowledge of foreign operating conditions as a result of knowledge not generally found in the industry or the petitioning organization’s U.S. operations.
  • The beneficiary possesses knowledge that is particularly beneficial to the employer’s competitiveness in the marketplace.
  • The beneficiary has been employed abroad in a capacity involving assignments that have significantly enhanced the employer’s productivity, competitiveness, image, or financial position.
  • The beneficiary’s claimed specialized knowledge normally can be gained only through prior experience with that employer.
  • The beneficiary possesses knowledge of a product or process that cannot be easily transferred or taught to another individual without significant economic cost or inconvenience (because, for example, such knowledge may require substantial training, work experience, or education).
  • The beneficiary has knowledge of a process or a product that either is sophisticated or complex, or of a highly technical nature, although not necessarily unique to the firm.

The L-1B visa guidance notes that specialized knowledge cannot be easily imparted to other individuals.

The L-1B visa guidance sets broad and flexible parameters to establish specialized knowledge, and comes as a breath of fresh air a few days after the release of a studyissued by the National Foundation For American Policy, which confirmed that Indian nationals face the highest refusal rates in the L-1B visa program. The L-1B visa facilitates the transfer of a specialized knowledge employee from an overseas entity to a related US entity. This visa should allow US companies to quickly transfer employees in order to remain globally competitive. Instead, the overall denial rate, according to NFAP report, was 35%. Prior to 2008, the overall denial rate was under 10%. Alarmingly, the denial rate for employees coming from India was 56% in 2014 while the denial rate for employees transferred from all other countries was only 13%. As expressed in Cyrus Mehta’s blog,  The Real Reason For L-1B Visa Denial Rates Being Higher For Indian Nationals, the NFAP report is a damming indictment of USCIS’s discriminatory adjudicatory practices towards Indian national applicants. How does it advance US national interests to frustrate the controlled migration of human capital across national boundaries from an increasingly important trading partner precisely at a time when we seek to create more enlarged and reliable channels of transmission for all other forms of capital? Presumably it does not, yet it seems equally obvious that this is not the USCIS’ concern since this new guidance, like its predecessors, focuses far more on what should be allowed than what can be made possible. External opportunities are subordinated to domestic anxieties. Immigration in the L1B context is or should be aligned with our overall economic strategies as they affect our key bilateral relationships. If trade and investment between the US and India are to benefit both countries, as surely they are intended to and must do, then US immigration policies must treat Indian nationals on an equal footing and not employ a double standard animated by a climate of suspicion and a predisposition to deny.

While the L-1B visa guidance endeavors to clarify how a petitioner can establish specialized knowledge on behalf of an employee in various ways, it is hoped that it is implemented fairly. It is certainly salutary that the guidance insists that eligibility for other classifications like the H-1B visa should not preclude one from classifying for the L-1B visa. Critics have often tried to unjustifiably portray the L-1B visa as an end run around the H-1B cap, and thus falsely portray an employer’s use of the L-1B visa after the H-1B cap has been met as an example of visa abuse. The L-1B visa guidance recognizes that “[o]fficers should only consider the requirements for the classification sought in the petition, without considering eligibility requirements for other classifications.” Id. at 11.  The USCIS should look for ways to approve L-1B petitions that merit approval, not for ways to deny those whose claims are not accepted.

On the other hand, despite its positive features, there is enough ambiguity in the guidance that would allow an examiner who is in the habit of saying “No” to an L-1B request to continue to continue to say “No.” For example, even the earlier 1994 Puleo memo listed as a factor that the beneficiary is qualified to contribute to the U.S, operation’s knowledge of foreign operating conditions as a result of knowledge not found in the industry. However, the most recent memo goes on to add that such knowledge must also not be found in “the petitioning organization’s U.S operations.” Id. at 8. This may be an impossible standard to meet if there are other employees who also possess similar specialized knowledge. Indeed, in a business climate where almost all projects rely upon a pooling of talent, a cadre of expertise must be built up for meaningful work on a substantial scale to be accomplished with great planning and significant expense. While the guidance appropriately cautions that the specialized knowledge need not be narrowly held within the petitioning organization, it provides the following ammunition to an examiner who is already predisposed to denying the L-1B visa petition:However, in cases where there are already many employees in the U.S. organization with the same specialized knowledge as that of the beneficiary, officers generally should carefully consider the organization’s need to transfer the beneficiary to the United States.

Id. at 10.

One wonders where this standard comes from. If this is what Congress intended, USCIS’ references to it in the legislative history of the L-1B seem conspicuously absent. If, as seems to be the case, Congress did not mandate or even suggest the adoption or such criteria, or even endorse its relevance, whether directly or by implication, where and why does the USCIS find justification for its inclusion? Indeed, this is all too typical of the USCIS approach to the L-1B, and other work visas as well, whereby a standard is announced and becomes justified largely because of its repeated invocation. This indeed is the heart of the matter, namely that L-1 adjudicatory standards change not when external realities or Congressional dictat require such a change but when the USCIS for its own reasons shielded from public information and discussion decides to make a change. As the L-1B becomes more distant from the economic facts that gave rise to it in the first place, the value of the visa diminishes just as the degree of difficulty in gaining an approval rises. When a work visa such as the L-1B ceases to function the way the economy functions, the underlying logic behind the visa becomes increasingly cloudy and subject to challenge.

Other language that has been introduced in this memo, which was not in the Puleo memo, is the demonstration that that the knowledge cannot be easily transferred to or taught to an individual. The Puleo memo stopped there, but the new guidance adds that such transfer of knowledge cannot be done “without significant economic cost or inconvenience (because, for exampl.e, such knowledge may require substantial training, work experience, or education).”

While on first brush, showing economic inconvenience in the transfer of knowledge may seem more onerous, the logic behind may be derived from the recent decision from the DC Circuit Court of Appeals reversing an L-1B visa denial  of a Brazilian gaucho chef.  Fogo De Chao (Holdings) Inc. v. DHS, 769 F.3d 1127, 1142 (D.C. Cir. 2014). Noteworthy in Fogo  was  the government’s  dismissal of  the relevance of the economic hardship the restaurant  would suffer if it had to train another employee to perform the gaucho chef’s proposed duties. The Fogo Court disagreed, emphasizing that economic inconvenience is sometimes the most concrete evidence that can be used to determine whether knowledge is specialized. According to the Fogo Court: “Consideration of evidence of this type provides some predictability to a comparative analysis otherwise relatively devoid of settled guideposts….That specialized knowledge may ultimately be a ‘relative and empty idea which cannot have plain meaning’…is not a feature to be celebrated and certainly not a license for the government to apply a sliding scale of specialness that varies from petition to petition without explanation. Suddenly departing from policy guidance and rejecting outright the relevance of Fogo de Chao’s evidence of economic inconvenience threatens just that.” Id. at 28 (citations omitted).

It is further noted that some language on page 14 of the guidance could still snare L-1Bs working at third-party clients, and this will continue to plague Indian-heritage IT companies. While offsite employment is not prohibited, INA 214(c)(2)(F)(i) requires the petitioner to ultimately exercise control over the beneficiary’s employment and this can be best demonstrated if L-1B workers at third-party sites must be implementing the specialized knowledge of the petitioner’s unique products or services. But the guidance adds that specialized knowledge derived from customized products or services rendered to the client may complement but cannot substitute for specialized knowledge of the petitioner’s products, services, or methodologies. Sometimes the specialized knowledge is intertwined. For example, the petitioner customized the product or application for the client, and the L-1B is being sent to the United States to upgrade it. Even though the product or application was rendered to the client, the beneficiary possesses specialized knowledge of the product that was customized for the client. This fact pattern could potentially cause problems. If the petitioner has customized a product for a third party client, the employee should still be considered to possess specialized knowledge of the petitioning company’s product, especially if the business model of the petitioning company is to provide customized products or solutions for third party clients.

We do hope that the L-1B visa guidance is implemented in a spirit that is consistent in the way it was intended, which is to provide more clarity on the definition of “specialized knowledge” pursuant to INA 214(c)(2)(B).  Indeed, the guidance can be improved to reflect the view of the DC Circuit Court in Fogothat scolded the USCIS for applying a rather wooden interpretation of specialized knowledge. The Fogo Court held that there was nothing in INA section 214(c)(2)(B) which precludes culturally acquired knowledge as a form of specialized knowledge for a Brazilian goucho chef. Although Fogo applied to a chef of a particular ethnic cuisine, it can arguably be applied to other occupations involving specialized knowledge. Skills gained through certain cultural practices may be relevant in determining specialized knowledge in other settings, such as Japanese management techniques. Similarly, acquiring deep knowledge in a particular software application through another employer can equip the L-1B visa applicant with specialized knowledge that can stand out in comparison to others.

The L-1B visa should indeed be encouraged to make US corporations more globally competitive in the face of Congress not taking any action to increase the H-1B cap. Even if there is no requirement for the payment of a prevailing wage to an L-1B visa holder as distinct to the H-1B visa, that does not justify the unfounded criticisms against the L-1B visa as it is a completely different creature. Only employees who have been working for a related overseas entity of the US company for 1 or more years, and who possess specialized knowledge, can be admitted on the L-1B visa to enhance the employer’s competitiveness. A visa system that imposes artificial limitations on H-1B visa numbers is already flying on one engine and is in distress. If we abruptly shut down the L-1B visa too, the plane will crash. This guidance ought to come as a life saver for US companies in order to remain globally competitive. Let’s keep our fingers crossed!

(Guest author Gary Endelman is the Senior Counsel of Foster)

AMERICA CANNOT BE OPEN FOR BUSINESS THROUGH AN H-1B VISA LOTTERY

By Gary Endelman and Cyrus D. Mehta

In America, the best day of the week has always been tomorrow except, it seems, when it comes to immigration. On April 1, 2015, U.S. Citizenship and Immigration Services (USCIS) will begin accepting H-1B petitions subject to the fiscal year (FY) 2016 cap. U.S. businesses use the H-1B program to employ foreign workers in occupations that require highly specialized knowledge in fields such as science, engineering, and computer programming.

The congressionally mandated cap on H-1B visas for FY 2016 is 65,000. The first 20,000 H-1B petitions filed for individuals with a U.S. master’s degree or higher are exempt from the 65,000 cap.

USCIS expects to receive more petitions than the H-1B cap during the first five business days of this year’s program. The agency will monitor the number of petitions received and notify the public when the H-1B cap has been met. If USCIS receives an excess of petitions during the first five business days, the agency will use a lottery system to randomly select the number of petitions required to meet the cap. USCIS will reject all unselected petitions that are subject to the cap as well as any petitions received after the cap has closed. USCIS used the lottery for the FY 2015 program last April. It is anticipated that USCIS will also use the lottery again for the FY 2016. The very existence of the H-1B lottery speaks most eloquently to the economic illiteracy of the current H-1B cap. Perhaps more than any other visa, the H-1B is viewed by those in charge as a problem to be contained, not an asset to be maximized. In a political system that has an almost mystical faith in the market, the inflexibility that characterizes the H-1B cap is eloquent testimony to an absence of imagination and a refusal to let the market set the level of H-1B demand.

A few days back, President Obama addressed the SelectUSA Investment Summit, and these were his words:

So the bottom line is this:  America is proudly open for business, and we want to make it as simple and as attractive for you to set up shop here as is possible.  That is what this summit is all about.  I hope you take full advantage of the opportunities that are here.

These words sound hollow if employers who desire to hire foreign talented workers on the H-1B visas have to depend on a lottery. If an H-1B visa petition is selected, the foreign worker can only start employment on October 1, 2015. If the H-1B visa petition is not selected, the employer has to try again in April 2016, with the hopes that the employee will come on board on October 1, 2016. It is self evident that the cap hinders the ability of a company to hire skilled and talented workers in order to grow and compete in the global economy. The hiring of an H-1B worker does not displace a US worker. In fact, research shows that they result in more jobs for US workers. The notion of a nonsensical quota reminds us of Soviet era central planning, and then to inject a casino style lottery into the process, just rubs salt into an oozing old wound. The lack of flexibility that robs our H-1B policies of any notion of flexibility reflects a bedrock belief, as wrong as it can possibly be, that immigration is only for the benefit of the immigrants. It is about them, we seem to be saying, not about us. Our self-interest is not at stake. Not only is this economically incoherent but it ignores the moral integrity of allowing an employment-based immigration system to function in harmony with the economy that it is supposed to serve. It will not only fail to prepare American workers for the future; it will fail utterly to protect them against the present. That is the most telling indictment of our current H-1B approach, namely it does nothing to benefit those who are presumably its intended beneficiaries. So long as this Maginot line of defense persists, those in charge of H-1B policy will have no incentive to look for anything better.

This absurd situation can be remedied quite quickly. The Immigration Innovation Act of 2015 (S. 153) (“I-Squared” Act) was introduced by  Senators Hatch (R-UT), Klobuchar (D-MN), Rubio (R-FL), Coons (D-DE), Flake (R-AZ), and Blumenthal (D-CT). When partisan rancor is the norm in Congress, the I-Squared Act is genuinely bipartisan, and endeavors to provide critical reforms needed in the area of high-skilled immigration. The I-Squared Act will raise H-1B numbers so as to avoid these unnecessary scrambles for the H-1B visa. What is unique is that the H-1B numbers will not be the subject of an arbitrary cap just picked from a hat, but will fluctuate based on actual market demand. The cap will not go above 195, 000, but not below 115,000. In essence, for the first time, the H-1B allotment will be infused with the lubricant of capitalism, rising and falling in concert with the needs of the American economy.

Among the bill’s provisions are the following, although we refer readers to Greg Siskind’s detailed summary:

  •  Increases the H-1B cap from 65,000 to 115,000 and allows the cap to go up (but not above 195,000) or down (but not below 115,000), depending on actual market demand.
  • Removes the existing 20,000 cap on the U.S. advanced degree exemption for H-1Bs.
  • Authorizes employment for dependent spouses of H-1B visa holders.
  • Recognizes that foreign students at U.S. colleges and universities have “dual intent” so they aren’t penalized for wanting to stay in the U.S. after graduation.
  • Recaptures green card numbers that were approved by Congress in previous years but were not used, and continues to do so going forward.
  • Exempts dependents of employment-based immigrant visa recipients, U.S. STEM advanced degree holders, persons with extraordinary ability, and outstanding professors and researchers from the employment-based green card cap.
  • Eliminates annual per-country limits for employment-based visa petitioners and adjusts per-country caps for family-based immigrant visas.
  • Establishes a grant program using funds from new fees added to H-1Bs and employment-based green cards to promote STEM education and worker retraining.

Unfortunately, the prospects of this bill’s passage are not too strong. Senator Grassley chairs the Judiciary Committee in the Senate and he will likely not consider the bill. Nor will Senator Jeff Sessions who chairs the Immigration Subcommittee. Both of them are arch foes of positive skilled immigration reform. They also do not see that passing the I Squared Act will indeed benefit rather than harm the United States. They also have allies on the left such as the AFL-CIO and think tanks like the Economic Policy Institute who oppose the H-1B visa. The reason that they do not know how to use immigration to create economic opportunity is that they do not think of immigration in this fashion. They have a static view of the economy where the focus is on not letting foreigners steal the jobs that do exist rather than examine how employers or entrepreneurs can use immigration to create new economic opportunity. Indeed, the odd marriage of the left and the right in opposition to a rational H-1B program reflects a shared belief that immigration is bad for American workers, that no new wealth can be created, that opportunity is gone, that we have to protect what now exists rather than seek to invent that which has yet to be imagined. The H-1B illustrates the Luddite pessimism of its opponents who believe that America’s best days are behind it. At a time when change is the only constant, those who want to place a straightjacket around the H-1B vainly seek to hold back the future. Operating from these misplaced assumptions, it is not at all surprising that the United States ranks near the bottom among major economies in terms of policies to allow hiring highly skilled immigrant workers, according to a study.

IT consulting employers who hire professional workers from India unfortunately seem to be getting more of a rap for indiscriminately using up the H-1B visa. However, it is this very business model has provided reliability to companies in the United States and throughout the industrialized world to obtain top-drawer talent quickly with flexibility and at affordable prices that benefit end consumers and promote diversity of product development. This is what the oft-criticized “job shop” readily provides. By making possible a source of expertise that can be modified and redirected in response to changing demand, uncertain budgets, shifting corporate priorities and unpredictable fluctuations in the business cycle itself, the pejorative reference to them as “job shop” is, in reality, the engine of technological ingenuity on which progress in the global information age largely depends.  Such a business model is also consistent with free trade, which the US promotes vehemently to other countries, but seems to restrict when it applies to service industries located in countries such as India that desire to do business in the US through their skilled personnel.

While Senator Grassley and his cheerleaders may gloat, decent people should feel bad for all the rejected foreign national prospective employees who would have otherwise qualified to work in a specialty occupation, as defined under the H-1B visa law. More people will get rejected than selected, and their hopes and dreams will be dashed.  Many who are in the United States after graduating from American universities may have to leave. Others won’t be able to set foot into the United States to take up their prized job offers. Imagine if all of these rejected folks could actually come and work in the United States. Their employers would benefit and become more globally competitive – and could have less reason to outsource work to other countries. They would have also been productive workers, and spent money in the US economy, including buying houses and paying taxes. The H-1B cap will once again rob the economy of this wonderful cascading effect.

We have said this before and it is worth repeating again. What we are dealing with is a global battle for talent. More than any other single immigration issue, the H-1B debate highlights the growing and inexorable importance of a skilled entrepreneurial class with superb expertise and a commitment not to company or country, but to their own careers and the technologies on which they are based. They have true international mobility and, like superstar professional athletes, will go to those places where they are paid most handsomely and given a full and rich opportunity to create. We are no longer the only game in town. The debate over the H-1B is, at its core, an argument over whether the United States will continue to embrace this culture, thus reinforcing its competitive dominance in it, or turn away and shrink from the competition and the benefits that await. How can we, as a nation, attract and retain that on which our prosperity most directly depends, namely a productive, diverse, stable and highly educated work force irrespective of nationality and do so without sacrificing the dreams and aspirations of our own people whose protection is the first duty and only sure justification for the continuance of that democracy on which all else rests? This is the very heart of the H-1B maze. The H-1B has become the test case for all employment-based immigration. If we cannot articulate a rational policy here that serves the nation well, we will likely not be able to do it anywhere else.

The ongoing H-1B debate is really about the direction that the American economy will take in the digital age and whether we will surrender the high ground that America now occupies. History teaches us that those who shrink from new challenges rarely achieve greatness. In the 15th century, vast Chinese armadas with ships far larger than Columbus’ fleet crossed the Chinese sea venturing far west to Ceylon, Arabia and East Africa. Seven times from 1405 to 1433, Chinese traders sailed to the Persian Gulf and beyond, bringing vast new trading areas under Chinese imperial control. Yet, precisely at a time when China was poised to create this global commercial empire, they drew back. Less than a century later, all overseas trade was banned and it became a capital crime to sail from China in a multi-masted ship. This was one of history’s great turning points. The high ground in the information age global economy of the 21st century will belong to those who dare to dream. Maybe a rational H-1B policy would be a good place to start.

(Guest Author Gary Endelman is the Senior Counsel of Foster)

WHY WE SHOULD ALL BE MAD ABOUT THE H-1B VISA CAP

The USCIS announced today, April 9, 2014, that it had received 172,500 H-1B visa petitions for the 65,000 H-1B regular cap and the  20,000 additional cap for graduates with advanced degrees from US universities. This is much more than the 124,000 H-1B visa petitions the USCIS received in 2014. The H-1B cap makes no sense, and here are 10 good reasons why we should all really be more upset about it this year for the simple reason is that we face the cap each year, and nothing ever changes. Enough is enough!

The first reason to be mad about the H-1B cap is that it forces employers to scramble way before the start of the 2015 fiscal year, which is October 1, to file for H-1B visas, only to get rejected by a randomized lottery. This is no way to treat US employers who pay thousands of dollars in legal and filing fees, along with all the steps they need to take in being in compliance. The whole concept of a nonsensical quota reminds us of Soviet era central planning, and then to inject a casino style of lottery into the process, just rubs salt into an oozing old wound.

Second, one can only feel for all the foreign national prospective employees, who all need to qualify to work in a specialty occupation, as defined under the H-1B visa law. Out of the 172,500 H-1B cases received, 87,500 people will get rejected. That is 87,500 hopes and dreams dashed. Many who are in the United States after graduating from American universities may have to leave. Others won’t be able to set foot into the United States to take up their prized job offers.

Third, imagine if all of these 87,500  who will be rejected could  actually come and work in the United States. Their employers would benefit and become more globally competitive – and could have less reason to outsource work to other countries. They would have also been productive workers, and spent money in the US economy, including buying houses and paying taxes. The H-1B cap has robbed the economy of this wonderful cascading effect.

Fourth, the USCIS has taken pains to encourage entrepreneurs to establish startups in the United States because of the potential of creating new technologies resulting in more jobs,  and keeping the country competitive. The entrepreneur portal encourages entrepreneurs to use the H-1B visa to sponsor themselves through their own startups. What a pity to lose out on that entrepreneur who could create the next Google or Tesla electric car.

Fifth, immigration attorneys and their staff who toiled away hard for the past few weeks will feel really bad for their clients, and also for themselves that their labor will not come into fruition.

Sixth, people who have lost the lottery will try to come to the United States under other options, which are much harder. They may also resort more to the B-1 business visa, and although the business visa is ambiguous enough to cover activities that go beyond a business meeting, many will fall afoul of the visa wittingly or unwittingly. Using the B-1 visa when the H-1B visa is not available is like engaging in risky unprotected sex. People will get into trouble at some point in time and the party will be over.

Seventh, the While House very recently announced that it would allow a limited number of spouses on H-4 visas the ability to work. The whole purpose is to encourage highly skilled people to work in the United States on H-1B visas. What is the purpose of such an announcement when the cap eliminates the ability of people to enter the United States on H-1B visas in the first place. It all feels like a joke, rather like flatulence, on this day when it was announced that 172,500 people applied for a meager 85,000 visas.

Eight, even the lucky ones who have gotten selected are by no means guaranteed that their H-1B cases will get approved. The USCIS applies rigidly impossible standards, and also reviews the cases unevenly, the California Service Center being far more cruel than the Vermont Service Center. And even those whose H-1B visa petitions get approved may not be issued visas at the US Consulates overseas, especially consuls in India who use the visa process as a trade barrier to curb the flow of Indian IT professionals from making it to the United States.  Then, those who finally make it will also likely get subjected to oppressive green card quotas down the road.

Ninth, one should also really be incensed at Congress for not doing anything about the 65,000 cap since 2003.

Tenth and lastly, even when Congress does get into the act of doing something, it may make things worse rather than better. The H-1B proposals in the Senate bill, S. 744, make the H-1B visa far more difficult to use and have an outer limit of 180,000. In other words, Congress may not be capable of fixing the problem.

Postscript:  I am actually an optimist, but the only way we can bring about positive change to the H-1B visa cap problem, is to collectively get mad about it!

SHUTTING DOWN GLOBAL BUSINESS IN AMERICA: WHY THE H-1B CAP HURTS US ALL

By Cyrus D. Mehta

The USCIS announced that November 22, 2011 was the final receipt date for accepting H-1B petitions under the 65,000 cap of FY2012. The 20,000 advanced degree cap was reached even earlier on October 19, 2011. Any H-1B petitions filed after that date will get rejected. The new fiscal year started only on October 1, 2011 and the H-1B cap was reached less than 2 months later.

If a company now wishes to hire a badly needed engineer from abroad, it will need to wait till October 1, 2012 before this person can come on board. It is self evident that the cap hinders the ability of a company to hire skilled and talented workers in order to grow and compete in the global economy. The hiring of an H-1B worker does not displace a US worker. In fact, research shows that they result in more jobs for US workers.

What is particularly counterintuitive with the H-1B cap is that it completely negates the recent Administration’s policy to encourage foreign entrepreneurs to create startup companies, resulting in job growth. On August 2, 2011, the Department of Homeland Security Secretary Napolitano Secretary Napolitano and United States Citizenship and Immigrant Services Director Mayorkas made dramatic announcements advising that foreign entrepreneurs could take advantage of the existing non-immigrant and immigrant visa system to gain status and permanent residency. According to the DHS press release, these administrative tweaks within the existing legal framework would “fuel the nation’s economy and stimulate investment by attracting foreign entrepreneurial talent of exceptional ability.” In the H-1B Question and Answers accompanying the August 2, 2011 announcement, the USCIS appears to reaffirm the existence of the separate corporate entity, and its ability to sponsor its owner or investor on an H-1B visa so long as an employer-employee relationship can be demonstrated between the company and the beneficiary. This may be established by creating a separate board of directors, which has the ability to hire, fire, pay supervise and otherwise control the beneficiary. There is nothing preventing such a board constituting foreign nationals or family members of the beneficiary.

In the experience of this author, the August 2, 2011 announcement fired the imagination of lots of entrepreneurs who had dreams of making it big in the US, notwithstanding the sluggish economy and the stubbornly high unemployment rate. With the convergence of social media, wireless technology and the cloud, it has never been easier for anyone anywhere to be an entrepreneur and also have access to the best infrastructure. Foreign students while still in their dorms have dreamed of starting Facebook-style ventures and being able to work for them under an H-1B visa. Many inquiries came in from people in other parts of the world with bold new ideas about how to go about this, and while the August 2, 2011 policy may yet not have seeped down into the rank and file of the immigration bureaucracy, it was possible to outright win the occasional H-1B visa for a client who was part of an interesting startup. All these entrepreneurial dreams have now been dashed with the announcement of the H-1B cap being reached on November 22, 2011 – and that too just before Thanksgiving. The August 2, 2011 policy will never be able to take fruition, at least until October 1, 2012, and allow entrepreneurs to thrive in the US and create jobs. While there are other options for entrepreneurs, using a startup for an H-1B visa did not require huge sums of money or a close affiliation with a foreign entity. Unlike the Treaty Investor Visa, which only applies to nationals of countries that have a treaty with the US (and the dynamic BRIC countries are excluded), the H-1B visa was open to all nationals.

Mr. Mayorkas has also been receptive to initiating changes in the USCIS Adjudicators Field Manual and training manuals for the USCIS, based on suggestions by Vivek Wadhwa and other entrepreneurs. These suggestions intend to make USCIS examiners aware of some unique features of startups, especially those in stealth mode, which may lack extensive promotional materials and the like. The lack of an organizational structure in a startup ought not to dissuade the USCIS from granting an H-1B visa. While entrepreneurs may be able to avail of other green card categories, such as the National Interest Waiver, the H-1B visa allows the entrepreneur to quickly enter the US and be able to work through his or her startup. After the announcement of the H-1B cap, unless one has been the subject of a prior approved H-1B petition, and thus been counted before in the past 6 years, the H-1B visa will not be available until Ocotber 1, 2012, and a person brimming with bright ideas may be better off setting up the startup in another country even if Mr. Mayorkas is willing to make changes in the AFM.

It is obvious that we need more H-1B numbers, but will Congress, which is in a stalemate, rush to the rescue of US employers and startups? Other factors have also contributed to the cap being reached so soon this year. Perhaps, certain parts of the economy have been ticking again, and employers were scrambling to fill positions with badly needed foreign skilled workers. Business immigration lawyers, after all, tend to see upticks and downturns in the economy faster than others! The wholesale denial of L-1B visas at the US Consulates in India may have probably forced companies to rely on the H-1B visa more than necessary. Note, though, that many prefer the L-1B to the H-1B since the spouse of an L-1 worker can also work in the US. The H-4 spouse, by contrast, is not allowed to partake in any activities that have the semblance of work, even if it is selling a work of art that was created as part of a hobby. The H-4 spouse has to obtain his or her own H-1B. Clearly, the decline in L-1 approvals in India has sucked up more H-1B numbers this year. Finally, the B-1 in lieu of H-1B visa was also placed under a lot of scrutiny this year, which robbed those who were assigned to the US on short term assignments easy flexibility and also forced them to use the H-1B visa.

AILA President Eleanor Pelta sums it all up very nicely, “During a time when job creation is the nation’s number one priority, why are we still fiddling around with an outmoded quota system that ignores the importance of immigrants to the economic engine? The marketplace dictates the pace and type of demand by business for specialized workers. To be more competitive globally, we really should be smarter about our high skilled visa distribution so that it is related to market needs instead of pinned to a static limit that was determined by Congress in the last decade. Congress needs to be working on ways to make the visa system work for fueling the economy. The status quo is no longer acceptable.”