Tag Archive for: B-1 Visa

Cyrus Mehta

The B-1 Visa: Trap for the Tailor, Bricklayer and Tesla Motors

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Many have gotten embroiled by the B-1 business visa in different ways. A tailor from Hong Kong who was accused of engaging in unauthorized work successfully argued that taking measurements on behalf of customers was a permissible business activity. Some years later,  a union of bricklayers successfully challenged a policy that allowed foreign construction workers to enter the United States on B-1 visas to install equipment purchased from abroad. Very recently,  electric car maker Tesla Motors got snared in a B-1 visa quagmire. The innovative company contracted with a German construction company, Eisenmann, which in turn sub contracted with a Slovenian company, ISM Vuzem,  to build a new paint shop at Tesla’s plant in Fremont, California. Vuzem  in turn facilitated the entry of a Slovenian worker, Gregor Lesnik,  on a B-1 business visa to help build Tesla’s new paint shop.  This would have gone unnoticed, but for the fact that Lesnik unfortunately suffered a serious injury.  It then came to light that he had no qualifications to oversee American workers, despite paperwork that said the contrary.

Although Tesla has not taken responsibility as it contracted with another company to build its paint shop, one frequently sees US businesses embarrassingly stumbling and tripping on the B-1 visa, which is not actually a visa that allows one to work or be employed in the United States. These stumbles also reflect the broken nature of the US immigration system that does not have pathways for businesses to legitimately and expeditiously use the skills of foreign nationals in an increasingly global economy.

The B-1 business visa remains one of the “most ill-defined” visas but still plays a crucial role in providing flexibility to businesses. While the B-1 visa is associated with visiting the United States to participate in meetings and negotiate contracts, it can have broader purposes. For instance, under 8 CFR 214.2(b)(5) and 22 CFR 41.31(b)(1), a foreign national can enter the US on a B-1 visa for “the purpose of supervision or training of others engaged in building or construction work, but not for the purpose of actually performing any building or construction work for themselves.” Lesnik availed himself of the B-1 visa under these regulatory provisions, although he did not come to the United States to supervise, but rather, simply install pipes and welding parts.

The reason why the current regulation insists that the foreign national only enter the United States on a B-1 visa to supervise and train other workers in building and construction work has its genesis in International Union of Bricklayers and Allied Craftsmen v. Meese, 616 F. Supp. 1387 (1985). In that case, the plaintiffs, a union of bricklayers and allied craftsmen, challenged the predecessor to 8  CFR 214.2(b)(5) and 22 CFR 41.31(b)(1). The predecessor was INS Operating Instruction 214.2(b)(5), which permitted a foreign national to come to the United States to “install, service, or repair commercial or industrial equipment or machinery purchased from a company outside the U.S. or to train U.S. workers to perform such service.” This B-1 visa holder under OI 214.2(b)(5) could not receive a salary from a United States sources, except for an expense allowance or other reimbursement of expenses incidental to the temporary stay.  The plaintiffs challenged OI 214.2(b)(5) on grounds that it violated 101(a)(15)(B) of the Immigration and Nationality Act (INA), which excluded an alien who is “coming for the purpose of ….performing skilled or unskilled labor.” The plaintiffs alleged that foreign workers in Bricklayers were German nationals coming on B-1 visas to complete the installation of a gold ore processing system that was purchased from a  then West German manufacturing company, and thus violated INA 101(a)(15)(B). The plaintiffs also claimed that OI 214.2(b)(5) violated INA 101(a)(15)(H)(ii), which allowed H-2 temporary workers to come to the United States only if unemployed persons capable of performing such service or labor could not be found in the country. The Bricklayers court agreed with the plaintiffs that the OI violated both 101(a)(15)(B) and 101(a)(15(H)(ii) of the INA, and struck it down, notwithstanding the fact that the temporary construction work was incident to installing equipment purchased by a US business from a German company.

After the decision, and after another lawsuit by the Bricklayers Union in the DC Circuit Court of Appeals became moot,  legacy INS and the Department of State proposed 8 CFR 214.2(B)(5)  and 22 CFR 41.31(b)(1), which restricted B-1 entries relating to construction to only supervisory personnel, and noted the reaction of foreign countries and corporations to the Bricklayers decision:

Following the District Court’s order, which precluded the admission of even the most highly specialized technicians, the Service and the Department of State received communications from U.S. industries and foreign governments which indicated a problem of crisis proportions. Industry predicted that equipment under warranty would not be repaired or serviced, with resultant losses of investment and lay-offs of American workers, and that access to state-of-the-art foreign technology would be limited with resultant losses of competitive position. Foreign governments generally viewed this new restriction as a constraint on trade and hinted at reciprocal action.

The Bricklayers case stands in direct contrast to the Board of Immigration Appeals decision in  Matter of Hira, 11 I. & N. Dec. 824. There the BIA  held that the term “business” does not include ordinary labor for hire, but is limited to intercourse of a commercial character. The BIA concluded that a Hong Kong based tailor, Mr. Hira,  entering with a B-1 visa to “study the US business market”, who on behalf of his employer (a Hong Kong based manufacturer of custom made men’s clothing), took orders from, and the measurements of, prospective customers in the United States whom he did not solicit; and who then sent the orders, together with the purchase price, to his employer overseas, was engaged in “intercourse of a commercial character,” and was eligible for B-1 visitor for business classification. The BIA specifically stated that Hira’s sojourn in the US was of a “temporary character” and he clearly intended to continue his foreign residence at the termination of his authorized stay. The profits of Hira’s B-1 activities also accrued to the foreign entity. The BIA, however, also clarified that the nature of the business activity itself need not be temporary. The BIA held that for B-1 purposes, the business relationship may be of a continuing or long standing nature. The only condition in this respect is that each visit be temporary in duration.

Thus, in Matter of Hira, so long as the performance of skilled or unskilled labor was incident to intercourse of a commercial character, and the labor was tied to and benefitted a foreign business, it was a permissible activity under the B-1 business visa. Still, there is not much of a dividing line between Matter of Hira and the Bricklayers case. In Bricklayers, the labor was tied to and incident to  a foreign employer,  which had sold equipment to a gold mine in the United States. Matter of Hira clearly appears to be the better decision, and provides a more realistic test of dealing with the short term needs of businesses with global operations. However, with respect to foreign nationals coming to the United States for construction work, they have to be supervisors and must adhere  to 8 CFR 214.2(B)(5)  and 22 CFR 41.31(b)(1).

The B-1 visa categories, and its many variants, play an important role in filling a gap in the available visa categories for short-term, skilled and professional workers.  In addition to permitting supervisors and trainers short term entry into the United States for construction work, other versions like the “B-1 in lieu of the H-1B, “B-1 in lieu of the H-3” and the “B-1 in lieu of the J-1”  also provide for short term flexibility for professionals and trainees, and obviate the need for a US employer to file a lengthy petition that is more suitable for longer term employment in the United States. Under all of these B-1 variations, the foreign national has to remain employed by the overseas employer and cannot be paid from a US source, except for expenses. A consul will deny a B-1 visa to one who does not have an intention to return to a foreign residence outside the United States.  Critics of the B-1 visa complain that the wages paid to these workers in foreign countries is nothing compared to the wage of a comparable American worker. However, the B-1 visa is meant for very short term assignments while the foreign worker is employed overseas. Longer term employment is only possible under the H-1B or H-2B visa, which mandates that the foreign worker be paid the prevailing wage. If we do not allow such flexibility through the B-1 visa, other countries will retaliate and will not permit US workers the same flexibility in other countries, where US corporations have subsidiaries or export their products and services. At the same time, US companies that contract with foreign firms for foreign labor must perform due diligence to ensure that the foreign workers are properly using the B-1 visa, and if construction work is involved,  B-1 visa holders must be providing supervision or training rather than  performing any building or construction work themselves.

Despite the Tesla stumble with the B-1 visa, and the unfortunate injury of Lesnik, the visa should be retained and the baby ought not to be thrown out with the bath water. There are laws that exist outside the INA that protect people from being injured at a worksite,  and if they do get injured, parties responsible for the injury can and should be held liable.  Indeed, the more realistic test under Matter of Hira  rather than Bricklayers be adopted so that so that the United States can remain globally competitive by allowing business to be conducted in a seamless and flexible manner. The notion of walling off the United States from the rest of the world, which has become fashionable in many quarters these days and eerily consistent with the Bricklayers case,  will ultimately diminish the country’s ability to do business with the rest of the world.

Cyrus Mehta

Phantom Visa Statuses

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While life is fortunately not always so dull and single dimensional, a rigid immigration system may force you into a straightjacket. Is there any leeway in the US visa system that might enable foreign nationals to pursue interests outside the narrow purpose of their entry without jeopardizing their visa status?

One who comes on an H-1B visa to work for a specific employer as a software engineer may not be prevented from also pursuing activities that are permissible under a tourist visa – such as participating in a community orchestra as an amateur violinist or taking rock climbing lessons in Yosemite national park. Similarly, someone visiting the United States on a tourist visa should not be prevented from also participating on a business conference call relating to one’s occupation in his home country.  I for one have furiously sent business e mails back and forth in relation to my law practice in the United States while waiting in an immigration line of another country’s airport to enter as a tourist. Even before the age of smart phones and Skype, nothing prevented a tourist in the United States from jotting notes on a yellow pad in preparation for a business meeting that would take place in his or her home country after he returned.

There is nothing in the Immigration and Nationality Act that prevents one from engaging in activities in what I call a “phantom” status, provided they do not constitute unauthorized unemployment.  This is recognized in the State Department’s Foreign Affairs Manual (FAM) at 9 FAM 41.11 N3.1, which states that “[a]n alien desiring to come to the United States for one principal, and one or more incidental, purposes should be classified in accordance with the principal purpose.” The FAM note provides the example of a student who prior to entering an approved school wishes to first make a tourist trip of not more than 30 days. The FAM instructs that the person should receive the F-1 or M-1 student visa rather than a B-2 tourist visa.

The H-1B employee in the above example while working for her employer as a software engineer may decide to invest in a startup company. Preparatory activities such as meeting with corporate lawyers to incorporate the company and to market the business idea to venture capitalists would arguably be permissible under the B-1 business visa. Since one cannot hold H-1B and B-1 status at the same time, she can potentially engage in permissible business activities through this phantom B-1 status even while actually being in H-1B status. One must be careful, though, not to cross the line.  Once the startup is established and the H-1B worker manages its day to day affairs, she may engage in activities that would not be permissible under the B-1 visa and this would constitute unauthorized employment.

There is a clear prohibition against unauthorized unemployment. 8 CFR 214.1(e) provides:

Employment. A nonimmigrant in the United States in a class defined in section 101(a)(15)(B) of the Act as a temporary visitor for pleasure, or section 101(a)(15)(C) of the Act as an alien in transit through this country, may not engage in any employment. Any other nonimmigrant in the United States may not engage in any employment unless he has been accorded a nonimmigrant classification which authorizes employment or he has been granted permission to engage in employment in accordance with the provisions of this chapter. A nonimmigrant who is permitted to engage in employment may engage only in such employment as has been authorized. Any unauthorized employment by a nonimmigrant constitutes a failure to maintain status within the meaning of section 241(a)(1)(C)(i) of the Act.

The question is when does one cross that line so that it constitutes unauthorized employment? This is hard to tell, but the best way to gauge this is whether the activity would be permissible under the B-1 visa for businessor the B-2 visa for pleasure. Thus, our H-1B employee may regularly participate as a violinist in an amateur orchestra as such an activity would be permissible under the B-2 tourist visa. If the H-1B worker was also a professional violinist, and was paid to play in a professional philharmonic orchestra in the United States while on an H-1B visa, that would be an impermissible activity as it would constitute unauthorized employment. The most appropriate visa for a performer would be an O-1 visa (an H-1B visa claim for a violinist was turned down a few years ago, see Louisiana Philharmonic Orchestra v. INS). When there are two competing work activities that can only be done under different visa statuses, the person must choose to either be in the United States on an H-1B visa or an O-1 visa. It is unfortunate that our visa policy cannot accommodate a renaissance woman like our H-1B employee and violinist. On the other hand, if the work activities can be done under the same visa, the H-1B worker who is employed as a software engineer can also potentially be employed concurrently in H-1B status through her startup entity.

The ability to engage in activities under a phantom status is especially crucial in light of the USCIS policy to attract entrepreneurs to the United States under the existing visa system, and in the absence of a specific startup visa. One encounters many students who desire to establish startups while still in F-1 student status, or H-1B workers too who have dreams of leaving their existing jobs for the companies they have founded So long as their activities are preparatory in nature and otherwise permissible under the B-1 visa, they have arguably not violated their F-1 status. The USCIS Entrepreneur Pathway Portal provides a good explanation of activities permissible under the B-1 visa that could arguably be undertaken even while in another nonimmigrant status such as an F-1 or H-1B:

The B-1 visa is intended only for business activities that are a “necessary incident” to your business abroad. This covers a wide range of activities such as attending meetings, consulting with associates, engaging in negotiations, taking orders for goods produced and located outside the United States, attending conferences, and researching options for opening a business in the United States (such as locating or entering into a lease for office space). Generally speaking, you cannot engage in any activity or perform a service that would constitute local employment for hire within the United States. What constitutes local employment for hire will depend on the circumstances of each case, but generally speaking, any activity you perform in the United States must be directly connected with and part of your work abroad. 

If you are coming to secure funding for a new business, you cannot remain in the United States after securing the funding to start actual operations or to manage the business, unless you change status to another classification that authorizes employment in the United States.

In Garavito v. INS, the First Circuit shed further light on activities that might not constitute unauthorized employment in the context of one who had established a gas station in contemplation of later applying for an E-2 visa:

The INS nowhere explains, however, what law would prevent a business visitor from making phone calls, giving employees instructions, or taking clients to their cars. Indeed, were the INS regulations to make such activity unlawful, it is difficult to see how foreign businessmen could conduct business within the United States, and it is equally difficult to see how any such regulation could fall within the lawful scope of the relevant statute.

Once the line is crossed from starting to managing the business, the individual in F-1 status must change to H-1B visa status through the startup, or if already in an H-1B status must file a concurrent H-1B visa through the startup. There are other reasons why it is good policy to permit activities under a phantom status. A person admitted on a B-1 visa to participate in business meetings should also be permitted to engage in tourism. Likewise, someone who primarily enters the United States to visit family members should be permitted to participate in an incidental one hour business meeting without having to switch status from B-2 to B-1. In the same vein, it would be preposterous to penalize a tourist who engages in communications through her iPhone relating to professional activities outside the United States while rock climbing in Yosemite!

Cyrus Mehta

The Ambiguous B-1 Visa: Lessons Learned From the Infosys Settlement

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Infosys is one of India’s most storied IT companies with a roster of impressive clients in the US, including named Wall Street Banks, Silicon Valley companies, retail chains, insurance companies and manufacturers. With a footprint all over the world and known for its integrity and probity, it thus came as a surprise that the United States accused Infosys of malfeasance in procuring visas for its foreign national employees to come to the US.

The US Attorney’s Office for the Eastern District of Texas, in conjunction with the Department of Homeland Security, launched an investigation in 2011 into Infosys’s alleged misuse of B-1 business visas. The investigation was spurred by a whistleblower’s law suit that made similar allegations, which got dismissed. On October 30, 2013, Infosys reached a settlement agreeing to pay a civil fine of $34 million to the US government, the biggest fine ever paid for an immigration case, but did not admit to the allegations of fraud and malfeasance.

There are plenty of lessons one can take away from the Settlement Agreement upon an objective review. Despite the seriousness of the allegations, Infosys did not incur any criminal liability. For instance, the government accused, among other things, the IT giant for bringing its employees on B-1 business visas to the United States to actually perform work. The government further accused Infosys of generating invitation letters to US consular officials indicating that their purpose of travel was for “meetings” and “discussion” when the true purpose was to work in the US, which can only be performed under the more onerous H-1B visa, such as coding and programming. Infosys, on the other hand, countered that it has always used the B-1 visa for legitimate purposes and not to circumvent the H-1B visa. Infosys also stated that the Department of State’s Foreign Affairs Manual permits other activities under the B-1 visa provided that they are incident to international trade or commerce, including those alleged by the US to be improper, such as coding and programming. The government also accused Infosys of directing its employees to misrepresent that they would be performing work at the location stated on the Labor Condition Application (LCA) underlying the H-1B visa petition, when they would actually be going to work at another location. Infosys also denied this accusation. Infosys, however, admitted to violations concerning its obligations to verify employees on form I-9. Still, despite the denial of any fraud or malfeasance, Infosys paid a humongous fine of $34 million.

It was indeed the ambiguity in the B-1 rules that snared Infosys and it was the same ambiguity in the B-1, which ultimately saved it from criminal liability. This is evident in the statement of the lead prosecutor in the case, Shamoil Shipchandler, who is quoted in a Wall Street Journal article:

“It’s not 100% clear what someone who holds a B-1 visa can actually do,” he said. For example, placing someone within a company for six months to do in-house tech support is an improper use of a B-1 visa. But if a consultant helps refine software during a meeting with a client, as part of a larger project, that could be seen as an appropriate use of a visitor visa, Mr. Shipchandler said. “It’s a murky area, but for our purposes they misled consular officials.”

As we noted in a prior blog on the B-1 category, the B-1 business visa remains one of the “most ill-defined” visas but plays a very important role in providing flexibility to business travelers. While the B-1 visa is associated with visiting the US to participate in meetings and negotiate contracts, it can have broader purposes. For example, the “B-1 in lieu of H-1B” was created to facilitate travel to the US of individuals who would otherwise qualify for an H-1B visa, but only needed to come to the United States for a limited period of time. In the current controversy over the B-1 visa, scant attention has been paid to the “B-1 in lieu of the H-1B,” which permits broader activities than the regular B-1 visa, albeit for a short period of time. Indeed, many of the activities that have been alleged to be outside the scope of the B-1 may be permissible under the “B-1 in lieu of the H-1B.” The case law with respect to business visitors only adds to the confusion over the definition of “business” in the US.  In Matter of Hira, 11 I. & N. Dec. 824, the Board of Immigration Appeals (BIA) held that the term “business” does not include ordinary labor for hire, but is limited to intercourse of a commercial character. The BIA concluded that an alien entering with a B-1 visa to “study the US business market”, who on behalf of his employer (a Hong Kong based manufacturer of custom made men’s clothing), took orders from, and the measurements of, prospective customers in the United States whom he did not solicit; and who then sent the orders, together with the purchase price, to his employer overseas, was engaged in “intercourse of a commercial character,” and was eligible for B-1 visitor for business classification. The BIA specifically stated that Hira’s sojourn in the US was of a “temporary character” and he clearly intended to continue his foreign residence at the termination of his authorized stay. The profits of Hira’s B-1 activities also accrued to the foreign entity. The BIA, however, also clarified that the nature of the business activity itself need not be temporary. The BIA held that for B-1 purposes, the business relationship may be of a continuing or long standing nature. The only condition in this respect is that each visit be temporary in duration. While applicants can make their best case under the ambiguous standards of the B-1 visa in a forthright manner, deception and malfeasance can never be tolerated.

Even though Infosys is allowed to continue to access US visas in the future under the settlement, which also expressly ensures that past investigations  or alleged wrongful conduct will not be used to prejudice future applications, this episode is a wakeup call for others to ensure that corporations exercise good governance with respect to immigration matters. There is bound to be stricter scrutiny in the future of all applicants, and there is little doubt that Congress in future legislation may also use the Infosys example to tighten the ability for IT consulting firms to access business and work visas, as it has already accomplished in S. 744. Still, this episode can prove to be a valuable teaching moment for Infosys and other IT consulting firms. One of the conditions under the settlement agreement is that Infosys will provide more detailed description of the activities that will be performed when an applicant applies for a B-1 visa. As the B-1 visa allows a wide range of permissible activities, a best industry practice can evolve to specify the proposed activities in some detail, and the legal basis for them, when applicants apply for a B-1 visa or at the time of seeking admission at a port of entry. As a quid pro quo, it is hoped that the government will also seriously adjudicate such applications on their merits.

The work location indicated in the LCAs of H-1B workers in the IT consulting industry are also bound to change after the initial filing. Interestingly, the settlement agreement does not suggest that the employer file an amended H-1B petition, and instead, only alleged that Infosys did not submit a new LCA covering the new location. In the future, employers should immediately file new LCAs to cover the new locations after the original location has changed, and make disclosure at the time of applying for a visa or at the port of entry. It may also be prudent for the employer to proactively file LCAs in future anticipated locations, whenever feasible, in case there is a change in the work location, thus obviating the need to submit one after the H-1B petition is already approved. It is further hoped that the government will not insist on the more cumbersome and expensive H-1B amendment, which was not suggested in the settlement agreement.

It goes without saying that employers must also be compliant with their I-9 obligations. While there have been no dearth in enforcement actions for I-9 violations, the action against Infosys was novel as it involved allegations of misuse of the B-1 visa in addition to the I-9 violations, while Infosys countered by saying that its use of the B-1 was proper. Despite the settlement, the scope of the B-1 visa continues to remain ambiguous, although it would behoove employers to articulate the reasons for the B-1 visa in an application and then to have their employees abide by the terms and conditions upon visiting the US.

As noted in a prior blog, it is important too for the end user client company to be vigilant to ensure that foreign national workers assigned to the company are working under the appropriate visa categories. In the event that the end user client has knowledge or encourages activities not authorized under these visa categories, there is potential for the company to be ensnared in criminal liability.  Even short of criminal liability, it is important to make sure due diligence has been done to avoid being caught up in an embarrassing investigation against a partner company. If the end user company urgently needs software engineers through its IT contracting company for a project, a manager within the end user company may be requested to write a let­ter as a client of the contracting compa­ny to justify the need for its employee overseas to visit the US on a B-1 visa. If this letter indicates that the software engineer is required for meetings, or to conduct an analysis of the project to be subsequently worked on overseas (an obviously per­missible B-1 activity), but the actual pur­pose is for the engineer to actually par­ticipate in programming and working on the solution in the U.S., it may come back to haunt the end user company if there is a criminal investigation against the IT contracting company. Therefore, when drafting such a letter, it is important to ensure that the proposed activities discussed in the letter are per­missible B-1 activities, and when the foreign national arrives, he or she engages in activities that are consistent with the listed activities.  Of course, if the foreign national is assigned to perform work at the client company, the end user must ensure that the worker has an appropriate work visa such as the H-1B visa. End user clients must cooperate with the sponsoring employer to post the LCA at their sites.

Some years ago Wal-Mart was criminally investigated for engaging janitors as independent contractors when it knew that they were not authorized to work in the US. The investigation ended with a consent decree in 2005 where Wal-Mart like Infosys did not also acknowledge any wrong doing,  although the practices that have emerged from that episode with respect to ensuring that even employees of independent contracting companies have I-9s have become the gold standard. While its reputation has taken a beating – not to mention that Indian heritage IT firms even if compliant have borne the brunt of intense governmental scrutiny in recent years – Infosys also has the opportunity to develop gold standard best practices in the B-1 and other arenas (such as tracking work sites of their employees under the LCA) to not only comply with the terms of the settlement but to also assure its prestigious clients who must be anxious after the settlement.

Infosys should consider itself fortunate that it did not go down in flames like Enron or Anderson, and has been given another chance. It must seize this opportunity to redeem itself by elevating standards and best practices, which others will follow and which the government will hopefully honor.  In conclusion, the following quotefrom US Attorney for the Eastern District of Texas is worth noting:

“Infosys persuaded me and our partners that they could be fully fledged legal participants in the immigration process of the United States, so we’ll see,” Bales said. He added that Infosys hired American workers and was valuable to the American economy, and “we’re not in the business of putting people out of business when they provide value.”