Tag Archive for: H-1B Visa

Cora-Ann Pestaina

The AAO on H-1B Visa Credential Evaluations and the ‘Three-For-One” Rule

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As immigration practitioners, we file H-1B visa petitions all the time. We know that in each petition, the employer must demonstrate that the position requires a professional in a specialty occupation and that the foreign national – the intended employee – has the required qualifications. It’s become common knowledge that progressively responsible work experience may substitute for any deficiency in the foreign national’s education and everyone is pretty comfortable with the equivalency ratio of three years of work to one year of college training (the “three-for-one” rule). Under this rule, a foreign national with twelve years of work experience could be deemed to possess the equivalent of a four-year US baccalaureate degree and therefore qualified to hold a specialty occupation.Going forward on new H-1B petitions and especially as we gear up for the upcoming H-1B cap season, a recent non-precedent decision by the Administrative Appeals Office (AAO) discussing USCIS’ recognition of any years of college-credit for a foreign national’s training and/or work experience is worthy of some careful review as it provides detailed analyses that can help us ward off nasty Requests for Evidence (RFE) from the USCIS upon the filing of H-1B petitions.

The case involved an H-1B visa petition filed by a software solutions provider to employ a foreign national in the position of Senior Associate, Solution Architect. The petitioner based its beneficiary-qualification claim upon a combination of the beneficiary’s foreign coursework (a three-year Bachelor of Commerce degree) and the beneficiary’s work experience and training. The USCIS Director denied the H-1B petition and the AAO subsequently dismissed an appeal of the denial, both on the grounds that the petitioner failed to demonstrate that the beneficiary was qualified to perform the duties of the specialty occupation-caliber Software Developer position.In its decision to dismiss the appeal and deny the petition, the AAO cited language at 8 C.F.R. § 214.2(h)(4)(iii)(C)(4) and at section 214(i)(2)(C) of the Immigration and Nationality Act (INA). Section 214(i)(2) of the Act, 8 U.S.C. § 1184(i)(2), states that an alien applying for classification as an H-lB nonimmigrant worker must possess:

(A) full state licensure to practice in the occupation, if such licensure is required to practice in the occupation,

(B) completion of the degree described in paragraph (1)(B) for the occupation, or

(C) (i) experience in the specialty equivalent to the completion of such degree,and(ii) recognition of expertise in the specialty through progressively responsible positions relating to the specialty.

8 C.F.R. § 214.2(h)(4)(iii)(C), Beneficiary qualifications, provides for beneficiary qualification by satisfying one of four criteria. They require that the evidence of record establish that, at the time of the petition’s filing, the beneficiary was a person either:

(1) Hold(ing] a United States baccalaureate or higher degree required by the specialty occupation from an accredited college or university;

(2) Hold(ing] a foreign degree determined to be equivalent to a United States baccalaureate or higher degree required by the specialty occupation from an accredited college or university;

(3) Hold[ing] an unrestricted state license, registration or certification which authorizes him or her to fully practice the specialty occupation and be immediately engaged in that specialty in the state of intended employment; or

(4) Hav[ing] [(A)] education, specialized training, and/or progressively responsible experience that is equivalent to completion of a United States baccalaureate or higher degree in the specialty occupation, and hav[ing] [(B)] recognition of expertise in the specialty through progressively responsible positions directly related to the specialty.

The AAO pointed out that the clear, unambiguous language at both 8 C.F.R. § 214.2(h)(4)(iii)(C)(4) and at section 214(i)(2)(C) of the Act, stipulates that for classification as an H-1B nonimmigrant worker not qualifying by virtue of a license or qualifying degree, a beneficiary must possess TWO requirements – the experience in the specialty equivalent to the completion of such degree; AND recognition of expertise in the specialty through progressively responsible positions relating to the specialty.The petitioner submitted three sets of credentials evaluation documents, each an evaluation of a combination of the beneficiary’s foreign education and his work experience and training. Regarding the documentation of the beneficiary’s work experience, the evaluations relied heavily upon an experience letter which indicated that the beneficiary had been employed full-time “from June 2008 through the present” and that he “currently serves in the position of Sr. Associate, Solution Architect.” The letter provided a list of the beneficiary’s current job duties. The AAO found the experience letter deficient in that it did not establish any progression in the beneficiary’s duties and responsibilities or any progression through increasingly responsible positions that would meet the requirement, at 8 C.F.R. §214.2(h)(4)(iii)(C)(4), to show recognition of expertise in the specialty through progressively responsible positions directly related to the specialty in question. In other words, the AAO found that the experience letter did not indicate the position in which the beneficiary had initially been hired and whether the beneficiary still held that same position or whether the beneficiary’s current position represented a promotion or a series of promotions. The AAO found that the letter identified only the beneficiary’s current job duties in “relatively abstract terms of generalized functions” and did not state how long the beneficiary was performing in that current job. Because the letter failed to recount the beneficiary’s prior positions with the employer and the duties and responsibilities of those prior positions, it therefore did not establish that the beneficiary had achieved progressively responsible positions to indicate recognition of expertise in the pertinent specialty, as the provisions at 8 C.F.R. §214.2(h)( 4)(iii)(C)( 4) include as an essential element for establishing a beneficiary’s qualifications through a combination of education, training, and/or experience. The AAO held that the letter provided an insufficient basis for the evaluators to make any conclusions about the nature and level of college-course-equivalent knowledge that the beneficiary gained throughout his employment.

The AAO also took issue with what it described as a “misinterpretation and misapplication of the so-called “three-for-one” rule” which evaluators use to recognize any three years of work experience in a relevant specialized field as equivalent to attainment of one year of college credit in that specialty. The AAO stated that only one segment of the H-lB beneficiary-qualification regulations provides for the application of the three-for-one ratio, and that is the provision at 8 C.F.R. §214.2(h)(4)(iii)(D)(5), which reserves the application exclusively for USCIS agency-determinations and moreover, that portion of the regulations requires substantially more than simply equating any three years of work experience in a specific field to attainment of a year’s worth of college credit in that field or specialty. The AAO pointed out that evaluators seem to have adopted as their standard of measure only the numerical portion of the ratio segment of the regulation at 8 C.F.R. §214.2(h)(4)(iii)(D)(5), that is, “three years of specialized training and/or work experience must be demonstrated for each year of college-level training the alien lacks” and neglected to recognize the rest of the test which limits application of the “three-for-one” rule to only when USCIS finds that the evidence about the “the alien’s training and/or work experience” has (1) “clearly demonstrated” that it included the theoretical and practical application of specialized knowledge required by the specialty occupation; (2) “clearly demonstrated” that it was gained while working with peers, supervisors, or subordinates who have a degree or its equivalent in the specialty occupation; AND (3) “clearly demonstrated” that the alien has recognition of expertise in the specialty evidenced by at least one type of documentation such as:

(i) Recognition of expertise in the specialty occupation by at least two recognized authorities in the same specialty occupation;

(ii) Membership in a recognized foreign or United States association or society in the specialty occupation;

(iii) Published material by or about the alien in professional publications, trade journals, books, or major newspapers;

(iv) Licensure or registration to practice the specialty occupation in a foreign country; or

(v) Achievements which a recognized authority has determined to be significant contributions to the field of the specialty occupation.

Finding that the beneficiary’s experience letter failed to meet these three criteria, the AAO held that such evidence did not qualify for recognition of any years of college-level credit.

The decision also points out that under 8 C.F.R. §214.2(h)(4)(iii)(D)(3), only a “reliable credentials evaluation service that specializes in evaluating foreign education credentials” can evaluate a foreign national’s education. In the instant case, the AAO therefore dismissed two evaluations prepared by individuals and not by credentials evaluation services as having no probative weight.

The AAO also found fault with one evaluation of the beneficiary’s experience/training since the proof of the evaluator’s own credentials qualifying him to provide the evaluation included an endorsement letter from the Chairman of the Department of Computer Science at the education institution where the evaluator was employed, dated four years prior to the evaluation and a letter from the Registrar which stated that the evaluator had the authority to “recommend college-level credit for training and experience” and did not state that he had the power to “grant” college-level credit or go into any detail as the specific extent of his authority in this regard. The letter from the Registrar was also dated a year prior to the evaluation.

The AAO decision also touched on the fact that two evaluations mentioned that the beneficiary had completed “professional development programs in a variety of computer technology and accounting-related subject[s]” and provided no concrete explanatory information about the substantive nature of those programs and what their completion may have contributed in terms of equivalent U.S. college-level coursework.

With regard to any use of a foreign national’s resume as evidence of his work experience, the AAO decision pointed out that  a resume represents a claim by the beneficiary, rather than evidence to support that claim.

This is one non-precedent decision and the AAO seems to be taking a very hard line in denying a case where the beneficiary provided evidence of his work experience. Immigration practitioners who file H-1B petitions may feel that USCIS has not been taking such an extreme stance in previous petitions. It is up to each practitioner to discuss the issue with the prospective H-1B employer and decide on whether to submit a wealth of documentation with the initial H-1B petition or take the chance that the USCIS could issue an RFE. So what can we take away from this AAO decision?

    • Most importantly, the “three-for-one” rule cannot be taken for granted. It is important that the foreign national obtain extremely detailed experience letters from former employers, which describe each position that the foreign national has held such that the progressively responsible nature of the positions is evident and indicates the foreign national’s level of expertise in the specialty. The description of the foreign national’s duties and responsibilities should make it clear that his work included the theoretical and practical application of specialized knowledge required by the specialty occupation. The letters should also mention the foreign national’s peers, supervisors and subordinates who have degrees in the specialty occupation. The H-1B petitioner must also demonstrate that the foreign national has recognition of expertise in the specialty evidenced by at least one type of a list of five types of documentation described above. This can be accomplished by submitting two expert opinion letters from two college professors along with contemporaneous evidence of their ability to grant college-level credit.
    • Only a foreign credentials evaluation service may evaluate a foreign national’s education. Accordingly, if the foreign national has a combination of education and work experience, the submission to the USCIS cannot contain only expert opinions from professors but must also include an evaluation from a foreign credentials evaluation service.
    • Any evidence of the foreign national’s training must be accompanied by transcripts and a discussion about the nature of the program and what each program is worth in equivalent U.S. college level coursework. Again, if relying on a college professor to do an equivalency, the evaluation must be corroborated with evidence from the college authorities that the professor has the authority to grant credits and must provide further details under what circumstances this professor is authorized to grant those credits.
    • The foreign national’s resume should never be used as documentation of his experience.
Michelle S. Velasco

CHALLENGES IN FILING H-1B VISA PETITIONS FOR UNCOMMON SPECIALTY OCCUPATIONS

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The U.S. Department of Labor (DOL) regularly releases statistics on the H1B – the top occupations and the top employers that file Labor Condition Applications (LCA) for these nonimmigrant worker petitions. As of the Fourth Quarter of FY 2014, six of the top ten certified positions were computer-related occupations.  The rest of the positions in the top ten are Accountants/Auditors, Management Analysts, Financial Analysts, and Electronics Engineers who do not work on computers.  Altogether they make up about 77% of all LCAs submitted to the DOL for certification.

The USCIS last released an H-1B report in July 2013 for FY 2012.  USCIS reported that approximately 59.5% of approved H-1B petitions were for computer-related occupations, and the rest of the top five were occupations in architecture, engineering, and surveying; administrative specializations; education; and medicine and health.

But, what of the other H-1B occupations?  Such uncommon H-1B occupations may include food service managers and music managers, among others.  These nontraditional H-1B “specialty occupations” are less often processed by USCIS and often pose a greater challenge for attorneys and their clients because they do not fit neatly with other “specialty occupations” that USCIS officers commonly see.  This is also part of a growing trend where the USCIS is viewing such occupations more skeptically, even if the record contains evidence favoring an approval.  It is helpful here to first define this doozy of a term.

8 CFR 214.2(h)(4) defines “specialty occupation” as one in which:

…requires theoretical and practical application of a body of highly specialized knowledge in fields of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts, and which requires the attainment of a bachelor’s degree or higher in a specific specialty, or its equivalent, as a minimum for entry into the occupation in the United States.

To hire a foreign worker under the H-1B category, the employer must show in its petition that the proffered position meets at least one of the following criteria:

  1. A baccalaureate or higher degree or its equivalent is normally the minimum requirement for entry into the particular position;
  2. The degree requirement is common to the industry in parallel positions among similar organizations or, in the alternative, an employer may show that its particular position is so complex or unique that it can be performed only by an individual with a degree;
  3. The employer normally requires a degree or its equivalent for the position; or
  4. The nature of the specific duties are so specialized and complex that knowledge required to perform the duties is usually associated with the attainment of a baccalaureate or higher degree.

8 CFR 214.2(h)(4)(iii)(A)

Practitioners may find that despite efforts to indicate to the USCIS that the complexity and specialized nature of the proffered position meets the definition of an H-1B specialty occupation, the USCIS will nonetheless issue Requests for Evidence (RFEs) or denials. This is because the USCIS is unwilling to issue H-1B approvals for positions that do not are dissimilar to common H-1B occupations, such as computer programmers or analysts, and are unwilling to consider evidence of the complexity of occupations as evidence. RFEs often request information such as:

  • Documentation describing the business, such as business plans, reports, presentations, promotional materials, newspaper articles, website printouts, etc.
  • Detailed description of the proffered position, including approximate percentages of time for each duty that the beneficiary performs
  • Copies of contracts or work orders from every company that will utilize the beneficiary’s services to show the beneficiary will be performing duties of a specialty occupation
  • Documentation of how many other individuals in the employer’s organization are currently or were employed in the same position, along with evidence such as employees’ degrees and evidence of employment in the form of paystubs or tax forms

Yet, despite providing such evidence, the employer may nevertheless, receive a denial of the petition even after carefully responding to an RFE. Attorneys are left scratching their heads at some of the frustrating reasoning posited by USCIS that often ignores regulation and precedent.

One problematic course that USCIS continues to take is overly relying on the DOL’s Occupational Outlook Handbook (OOH) when determining whether a bachelor’s degree is a normal requirement for an occupation.  The OOH may guide the USCIS, but it does not in and of itself define what is a specialty occupation – only the regulations can do this. Moreover, the OOH should not be the only source USCIS should use when determining whether a bachelor’s degree is a normal requirement for a proffered position.  The USCIS should not ignore the employer’s statements and evidence of its normal practice of requiring a bachelor’s degree for a proffered position.   USCIS should analyze the proffered position based on the definition provided in 8 CFR 214.2(h)4)(iii)(A) instead of relying heavily on the OOH.  See Fred 26 Importers, Inc. v. DHS, 445 F. Supp.2d 1174, 1180-81 (C.D. Cal. 2006)(court reversed AAO where it failed to address expert and other evidence and simply asserted that a small company did not require specialized and complex duties); The Button Depot, Inc. v. DHS, 386 F Supp.2d 1140, 1148 (C.D. Cal. 2005)(court reversed AAO decision and found AAO had abused discretion when it applied unrelated regulatory provisions and failed to provide a basis for its conclusion that “it does not agreed with the opinion evidence submitted by the petitioner); Matter of – (AAO unpublished decision, Aug. 15, 2006, WAC 0417253199)(AAO reversed, finding that although OOH does not state a baccalaureate level education is the normal minimum requirement, the duties of the position are so specialized and complex that knowledge required to perform them is usually associated with the attainment of a bachelor’s degree or higher).

Second, the USCIS ignores expert opinions that determine the proffered position is a specialty occupation by virtue of its complex and unique nature.  In Matter of Chawathe, 25 I&N Dec. 369, 376 (AAO 2010) the AAO directs the USCIS to examine each piece of evidence for relevance, probative value, and credibility, individually and in the context of the entire record according to the “preponderance of the evidence” standard.  The USCIS may reject an expert opinion letter or give it less weight if it is not in accordance with other information in the record or if it is questionable.  See Matter of Caron Int’l, Inc., 19 I&N Dec. 791, 795 (Comm’r 1988).  However, if “the expert testimony [is] reliable, relevant, and probative as to the specific facts in issue” then the USCIS must not ignore it.  See Matter of Skirball Cultural Center, 25 I&N Dec. 799, 805-806 (AAO 2012).  In Matter of Skirball, the AAO reversed the USCIS’s denial of a P visa petition for a musical group, finding that the USCIS erroneously rejected expert opinion even though it did not question the credentials of the experts who provided opinions, take issue with the experts’ knowledge of the group’s musical skills, or find any reason to doubt the truthfulness of the testimony.  The reasoning in Matter of Skirball must be applied to the adjudication of H-1B nontraditional specialty occupations where often the employer must rely on expert opinion and atypical evidence to support their assertion that the duties of the position are so complex and unique that a bachelor’s degree is required to execute those duties. Thus the USCIS should not ignore or reject expert opinions especially if they are submitted in conjunction with other supporting evidence when the USCIS has no reason to doubt the veracity of the testimony.

Although it may be daunting to file H-1B petitions for nontraditional or uncommon specialty occupations, attorneys can overcome or avoid the USCIS’s sometimes inconsistent and wrong application of the standards in place in 8 CFR 214.2(h)(4)(iii)(A). When preparing the H-1B petition, attorneys should research the occupation thoroughly and have a full understanding of the job duties, the nature of the organization, and the position’s standing within the company. The explanation of the duties should be detailed and, if possible, include the approximate percentage of time spent on each.  Evidence to support the petition should include information about the company, the nature of the industry, the complexity of the position, and proof that the beneficiary has obtained the education and/or experience level required for the position.  There may be times when the proffered position may fall within a category of occupation that the OOH has determined does not normally require a bachelor’s degree to perform. If this is the case, the employer should ensure that the appropriate occupation is used for the LCA and the employer should also consider submitting an expert opinion evaluating both the job duties of the proffered position and the education and experience of the beneficiary. Lastly, the employer may explain how its proffered position is analogous to similar jobs that either the OOH or case law has found to be specialty occupations. If one uses job postings by other employers requiring the same bachelor’s degree, USCIS can discount such evidence if the employers who posted such notices were not similar in size as the H-1B petitioning employer.

Until USCIS properly applies the standards for H-1B specialty occupations determined by the regulations and case law, employers of uncommon or nontraditional H-1B occupations must remain vigilant in their petition filings.  They must keep in mind that when faced with a nontraditional H-1B occupation, the USCIS may look only to the OOH for guidance.  Lastly, attorneys should provide adequate advice and warning regarding the filing of H-1B petitions for such nontraditional occupations and to prepare employers for fickle and nonsensical RFEs. Finally, attorneys must advise their clients that they must be prepared to seek administrative and even judicial review of erroneous denials.

Cyrus Mehta

Work Authorization for Some H-4 Spouses Liberates Them From the Tyranny of Priority Dates

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By Gary Endelman and Cyrus D. Mehta

All the forces in the world are not so powerful as an idea whose time has come.

Victor Hugo

Sometimes it takes a while for a sound idea to gain acceptance. Granting employment authorization to H-4 spouses of H-1B visa holders is a good example. It is in line with the policies of other countries, and if the United States wishes to attract the brightest and the best, such an individual may be dissuaded from coming to the United States if the spouse is not allowed to work.  This is especially true if the H-1B workers have to wait for several years before they and their families can apply for permanent residency.

Almost 4 years ago, then USCIS General Counsel Roxanna Bacon, Service Center Operations Head Donald Neufeld and Field Operations Chief Debra Rogers recommended that H-4 spouses  be granted employment authorization to USCIS Director Alejandro Mayorkas, but only for those “H-4 dependent spouses of H-1B principals where the principals are also applicants for lawful permanent residence under AC 21.” Memorandum, Administrative Alternatives to Comprehensive Immigration Reform. The memo was leaked by those who wanted to defeat any administrative initiatives and they did so. There matters stood until January 31, 2012 when the Department of Homeland Security brought this idea back to life.

On May 6, 2014, the Department of Homeland Security (DHS)   announced that it would allow certain H-4 spouses to obtain employment authorization. The proposed rule provides that an H-4 spouse may apply for employment authorization if  the principal H-1B spouse is the beneficiary of an approved I-140 immigrant petition; or, if the H-1B spouse  been granted an extension of beyond the 6-year limitation pursuant to section 106(a) of the American Competitiveness in the Twenty-first Century Act of 2000 (AC21). Under section 106(a) of AC 21, the filing of a labor certification or employment-based immigrant visa petitions 365 days prior to the sixth year allows the H-1B worker to apply for an additional year be yond the sixth year.

In Tyranny of Priority Dates and subsequent articles, we pointed out the long delays befalling skilled immigrants due to the backlogs in the priority dates, and proposed remedial measures, including the ability of an H-4 spouse to work. Our prior analysis of H-4 spousal employment and earlier indications that the USCIS recognized the problem and intended to do something about it provide a helpful context against which the importance of this latest development can be measured. .

The proposed rule to grant work authorization to H-4 spouses is much welcomed recognition of this problem. It acknowledges the contributions of foreign born immigrants, especially in the tech industry, and cites the findings of Vivek Wadhwa that in 25% of tech companies founded between 1995-2005, the chief executive or lead technologist was foreign born.  Indeed, the preamble to the proposed rule acknowledges that certain beneficiaries of I-140 petitions under the India EB-3 preference may have to wait over 10 years to obtain permanent residence. In the meantime, the H-4 spouse cannot seek employment, and is also prohibited from other work related activities such as engaging in self-employment through a home based business. While only Congress could create new visa categories, we argued that the Executive under section 103(a) of the Immigration and Nationality Act was charged with the administration and enforcement of the INA. Also, the Executive had authority to grant work authorization to any aliens under INA section 274A(h)(3). Under these provisions, we had proposed that the Executive could provide relief for beneficiaries, including spouses, of approved I-130 and I-140 petitions through the grant of employment authorization who were caught in the crushing backlogs. After all, these people were in the pipeline for the green card, but for the backlogs in the priority dates.  The H-1B visa also allows for “dual intent,” as it permits one to apply for permanent residency even though it is technically a nonimmigrant visa.

The proposed rule now recognizes, as we did in The Tyranny of Priority Dates, the ability of the Executive to pass ameliorative measures in the face of crushing delays for those in the green card queue.  While Congress has still not been able to pass a reform of the broken immigration system, the proposed rule  further acknowledges that the Executive has the legal authority to authorize spousal employment pursuant to INA sections 103(1) and 274A (h)(3) Resting on this foundation, the proposed rule further relies on INA sections 214(a)(1), which authorizes the Executive to prescribe regulations setting forth terms and conditions with respect to the admission of nonimmigrants into the United States.  Recognizing that H-1B workers and their spouses would be green card holders but for the backlogs in the priority dates, Commerce Secretary appropriately stated, “These individuals are American families in waiting.”

The granting of work authorization to H-4 spouses if the principal spouse has applied for an AC 21 extension also resolves the conundrum when both spouses are on H-1B visas and are reaching the sixth year on their H-1B visas. Under this situation, the spouse who was not the subject of a labor certification was generally forced to switch to H-4 status, and was then prohibited from continuing employment.  In Two H-1B Spouses: One Labor or Certification we advocated how both spouses could take advantage of the labor certification filed on behalf of one of the spouses in order to get a seventh year extension. While there is a sound basis to argue that AC 21 would benefit the spouse who was relying on the labor certification filed on behalf of the labor certification, since this is the basis for their adjustment of status,  the USCIS did not always interpret AC 21 section 106(a) broadly to benefit both spouses. Now, thankfully, this uncertainty will no longer exist. The spouse who is not the subject of the labor certification can switch to H-4 status and can still apply for work authorization. At the same time, we still advocate that a spouse on an H-1B visa be able to rely on the other spouse’s labor certification or I-140 to seek an H-1B extension beyond the sixth year limitation. There will be occasions when it is more expeditious for the spouse to file an H-1B extension and continue working, rather than file for a change of status to H-4 and then apply for an employment authorization document before re-starting work again. This is an excellent illustration of how doctrinal clarity by the USCIS can promote robust operational flexibility by aliens and their advocates.

The proposed rule also resolves another uncertainty. H-4 spouses who were able to file an I-485 adjustment of status application for permanent residency could always apply for work authorization by virtue of filing the I-485 pursuant to 8 CFR 274a.12(c)(9). What was not clear is whether such H-4 spouses forfeited their right to remain in H-4 status if they engaged in work pursuant to an employment authorization under 8 CFR 274a.12(c)(9) while their I-485 applications remained pending. The proposed rule in footnote 13 appears to suggest that they did not violate their status. The rule will create  8 CFR 274a.12(c)(26) as a basis for H-4 spouses to apply for work authorization, and suggests that H-4 spouses who previously availed of work authorization under 274a.12(c)(9) can also avail of work authorization under 274a.12(c)(26). If the spouse lost H-4 status by engaging in employment pursuant to 274a.12(c)(9), it would not be possible for the H-4 spouse to now take advantage of new 274a.12(c)(26).  As with the H-1B  itself, the proposed H-4 rule recognizes and diffuses the tension between the constraints of nonimmigrant visa categories, such as the H-1B which is employer-specific or the H-4 that  hitherto was not allowed to sustain employment, and the adjustment of status provision in INA Section 245 that grants open market employment.

Many advocates feel that the rule did not go far enough and could have granted work authorization for all H-4 spouses without condition.  After all, the L-1 and E visas, allow dependent spouses to apply for  work authorization immediately upon being admitted under those statuses. On the other hand, the authorization to grant spouses of L and E nonimmigrants work authorization stems from Congress, although J-2 spouses who do not support the principal J-1 exchange visitor work solely through regulation Congress has not specifically authorized work authorization for H-4 spouses, although there is authority in the INS, as discussed, which still provides such authority to the DHS. While this is fair criticism, the Administration also faces withering opposition from anti-immigration advocates, including the likes of Senator Charles Grassley (R-IA), who question whether there is any authority at all to grant work authorization. Hence, the middle ground to grant work authorization benefits to H-4 spouses who are already on the pathway to permanent residence but are caught up in the backlogs. The proposed rule also acknowledges that this ameliorative measure is consistent with AC 21, which was enacted so that the principal H-1B spouses could continue to remain in the United States beyond the sixth year, and thus avoid disruption to US employers. Limiting work authorization to H-4 spouses who are on the pathway to green cards can also more easily insulate such a rule from challenges in federal court.

Still, even under this logic, it would be preferable if H-4 spouses are able to apply for work authorization as soon as a labor certification is filed on behalf of the principal spouse. There is no need to pre-condition the grant of employment authorization upon the approval of the I-140 petition, given the delays in the PERM labor certification process, which can take two years if the application is subject to an audit or to supervised recruitment. The rule also recognizes that an H-4 can apply for employment when a labor certification is filed, but only when it is used to obtain an H-1B extension beyond the six years under AC 21. It is illogical to only allow the H-4 to apply for a work permit when the principal spouse relies on the labor certification to seek an extension beyond six years, and not otherwise. Furthermore, while the majority of H-1B visa holders may be sponsored by employers through I-140 petitions, some H-4 spouses may also be sponsored by prospective employers in their own right. H-4 spouses who are directly sponsored by employers under an I-140 petition should also be allowed to apply for employment authorization. And why limit this to only I-140s? Some H-1Bs or H-4s are also sponsored by qualifying family members through an I-130 petition. They too are Americans in waiting.

Finally, children in H-4 status have been left out and do not have the ability to apply for work authorization. Children of L-1 and E-1 visa holders are also not allowed to work, although children of J-1 visa holders can work. On the other hand, H-4 children can obtain work authorization benefits if they switch to F-1 student visa status.

We continue to call upon Congress to enact comprehensive immigration reform, including the expansion of H-1B visa numbers.  Any administrative initiative, however meaningful or positive, and this one is both, is, by its very nature, both tentative and subject to reversal. Only an INA worthy of the many difficult but exciting challenges that America must confront and master in the 21st century can provide the nation with the vision that it needs and deserves. Yet, until that happy day comes, the USCIS can and must do justice with the law that we all have. That is what has finally happened with H-4 spousal employment. Not a full and complete step certainly, but a stride forward towards a better day.

Something else needs to be said before we go. What we in the United States are dealing with is a global battle for talent. More than any other single immigration issue, the H-1B visa 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. No decision on H quotas can or should be made separate and apart from an answer to a far more fundamental question: 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.

An immigration system that restricts the importation of human capital hurts American competitiveness every bit as much as high tariffs or artificial subsidies. In each case, the controlled but predictable flow of capital across national boundaries is the lubricant of economic activity. Preserving the H-1B as an instrument of job creation for Americans while enhancing the ability of foreign professionals to make our cause their own is an essential and irresistible component of comprehensive immigration reform. Allowing some, though not all, H-4 spouses to work is a key step in this direction. The DHS estimates that 100,600 H-4 spouses will apply for work authorization in the first year and 35,900 will initially apply in subsequent years. For those concerned about the impact on the US labor market, these H-4 spouses would in any event be able to work once the principal H-1B spouse applied for adjustment of status. They will also be able to contribute to the US economy, and the incentive provided to them will also encourage the H-1B spouse to stay on in the United States. We have every good hope that is will lead to ever more confident strides in the days to come. It is in the very nature of reform in the liberal tradition for progress to be incremental.  If the Chinese maxim that “the journey of a thousand miles begins with a single step,” retains its power to teach,  as we believe it surely does, we who legitimately want much more than the H-4 spousal regulation offers should not, even for a single moment, divert our eyes from the very real progress that has now been taken.

(Guest writer Gary Endelman is the Senior Counsel of FosterQuan)
 
Cyrus Mehta

Hey Boss, I Need Premium Processing: Can An H-1B Employee Pay The Premium Processing Fee?

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By Cyrus D. Mehta and Myriam Jaidi

An employer is in the process of preparing an H-1B extension for an employee.  The employer is preparing the petition several months before the expiration of the employee’s current H-1B status, and therefore has determined to file without premium processing. Moreover, pursuant to 8 CFR § 274a.12(b)(20), the employee can continue working for the same employer for a period not to exceed 240 days after the expiration of the H-1B status provided a timely request was filed.   The employee, however, has approached the employer, expressing a need for premium processing because of upcoming travel plans or other personal reasons.  If the employer does not need premium processing for its own business reasons, and premium processing would be only for the employee’s benefit, may the employee pay the premium processing fee, which is currently $1225? (Please note that this blog post addresses the premium processing fee in the H-1B context only; payment of the premium processing fee by a beneficiary of an I-140 immigrant petition is allowed without question.)

This is a gray area, like so many things in immigration law, because there is no clear rule on the issue and, believe it or not, different government agencies have taken different stances on the issue over time, and of course, no one approach is clearly definitive. Anecdotal data provides some guidance, as so much in our practice comes from cumulative experience on issues like the one here, i.e., whether a beneficiary may pay the premium processing fee.  Although no agency has opined on the issue since 2009, allowing the H-1B beneficiary to pay the premium processing fee may be defensible where the benefit inures solely to the employee, the employer has no need for the premium processing, and the payment of the premium processing fee does not drop the H-1B beneficiary’s wage below the required wage.  

In 2001, legacy INS (the agency that was dissolved in 2003 and reconstituted as three agencies within the Department of Homeland Security, specifically US Citizenship and Immigration Services (USCIS), US Immigration and Customs Enforcement (USICE), an US Customs and Border Protection (USCBP)) confirmed with AILA (American Immigration Lawyers Association) liaison that “there is no bar to employees providing the Premium Processing fee checks.”  See ISD Liaison Report for 8/9/01 (AILA InfoNet Doc. No. 01082431 (posted 8/24/01)).  On August 12, 2009, the Vermont Service Center (one of the Service Centers of USCIS) issued a practice pointer prepared by their Adjudications Branch that made the following statement on page 12: “The petitioner, attorney, or beneficiary can pay $1000 Premium Processing fee.” See Adjudications Branch, Vermont Service Center, VSC Helpful Filing Tips (August 12, 2009; AILA InfoNet Doc. No. 09112363 (posted 11/23/09)).  No restrictions on the beneficiary paying the premium processing fee were noted by legacy INS or USCIS.  

Interestingly, also in August 2009 the Department of Labor, Wage and Hour Division issued a Fact Sheet that conflicts somewhat with the USCIS position on the premium processing issue, but does not prohibit the employee from paying it.  That Fact Sheet states that an H-1B employee, “whether through payroll deduction or otherwise, can never be required to pay the following. . . .  Any deduction for the employer’s business expenses that would reduce an H-1B worker’s pay below the required wage rate (20 CFR § 655.731(c)(9)), including . . . any expense, including attorney’s’ fees and the premium processing fee (INA § 286(u)) directly related to the filing of the Petition for Nonimmigrant Worker (Form I-129/I-129W) (20 CFR §655.731(c)(9)(ii) and (iii)(C).” Other things included in that list were tools and equipment, travel expenses while on employer’s business, and any expenses, including attorney’s fees, directly related to the filing of the Labor Condition Application (LCA).  

The only other statement from the DOL was a decision by an Administrative Law Judge (ALJ) in 2008 where the ALJ cited the regulation provision referring to the then $1000 training fee to find that the regulation requires that the employer pay the premium processing fee.  See Toia v. Gardner Family Care Corp., 2007-LCA-00006 (ALJ Apr. 25, 2008) at page 20.  This was clearly an erroneous decision because the ALJ was confusing the premium processing fee, which the regulations do not  specifically prohibit payment by the H-1B beneficiary, and the training fee, which the regulations specifically state must not be paid by the H-1B beneficiary, because both happened to be $1000 at the time of the decision.  The DOL Fact Sheet is in fact more amenable to the idea that a premium processing fee could be paid by a Beneficiary because unlike the ALJ decision purporting to ban that practice, the DOL Fact Sheet leaves room to allow a beneficiary to pay a premium processing fee if doing so does not drop the wage below the required wage. 

The immigration law treatise, Buffenstein & Cooper, Business Immigration Law & Practice, Volume 1, Nonimmigrant Concepts (AILA 2011), confirms this is a gray area, and provides no conclusive answer.  The discussion in the treatise supports the argument that where premium processing is pursued at the insistence of the beneficiary, it could be considered the individual’s expense.  

The crux of the matter is whether the premium processing fee would be viewed as a “business expense” of the employer under the DOL regulations governing the H-1B LCA, in which case the DOL could view it as a wage & hour issue and analyze whether the deduction of the premium processing fee worked an impermissible dropping of the H-1B employee’s wage below the required wage (the higher of the actual or prevailing wage). This is something of a distinction without a difference because in any cases where you have more than one similarly situated employee in a position (i.e., where the position is not unique) the deduction of the premium processing fee would always drop the wage below the actual wage.  In positions that are unique, whatever is paid to the unique employee is the actual wage so the premium processing fee would not necessarily drop the wage below the prevailing wage.  

There is anecdotal evidence, based on surveying attorneys on a private list serve, that the DOL in at least two LCA investigations did not consider the premium processing fee to be an employer’s expense where the employee has requested premium processing for the employee’s benefit.  Many attorneys on the AILA list serve seemed to agree that premium processing should not be considered an employer expense, but this thread has not been updated since 2007. 

One interesting question is whether the premium processing fee could be deducted from a benefit such as a performance bonus.  Cash bonuses are considered a “benefit” under the DOL regulations.  The regulation states as follows: 

Benefits and eligibility for benefits provided as compensation for services (e.g., cash bonuses; stock options; paid vacations and holidays; health, life, disability and other insurance plans; retirement and savings plans) shall be offered to the H-1B nonimmigrant(s) on the same basis, and in accordance with the same criteria, as the employer offers to U.S. workers.

Thus, a company is required to *offer* H-1B employees the same benefits as US workers. However, another section of the regulation makes clear that the H-1B employee may choose to turn down benefits: 

The benefits received by the H-1B nonimmigrant(s) need not be identical to the benefits received by similarly employed U.S. workers(s), provided that the H-1B nonimmigrant is offered the same benefits package as those workers but voluntarily chooses to receive different benefits (e.g., elects to receive cash payment rather than stock option, elects not to receive health insurance because of required employee contributions, or elects to receive different benefits among an array of benefits)

The upshot is that there is a strong argument to be made for the conclusion that where an employee demands premium processing of an H-1B petition solely for the employee’s benefit, that premium processing fee should not be deemed an “employer business expense” such as to trigger a wage/hour analysis of the offered wage that could result in a finding against the employer.  In addition, the fee could be deducted from the performance bonus so long as the employee has been offered benefits on the same basis and using the same criteria as offered to US workers, but opts for a different benefit.  If an employer takes this approach it would likely be best to get the employee’s agreement in writing that they are opting out of the full bonus because of their own need for premium processing on an H-1B petition to accommodate their personal circumstances, and that the premium processing is not done for the employer’s benefit. 

Obviously, given the conflicting positions taken by USCIS and the DOL regarding premium processing fees, this remains a gray area and the most risk adverse and cautious approach would be to avoid any question of the employer paying the appropriate wage by having the employer pay the premium processing fee.  However, as noted above, it is defensible to have the employee pay the premium processing fee where it inures solely to the employee’s benefit.

What are the risks?  The regulations provide for various penalties relating to LCA violations.  A DOL action would only likely come to pass in the event of an employee filing a wage and hour complaint with the DOL, and based on a single complaint on any LCA issue, the DOL could audit all of the LCA files of an employer.  

If an employee complains and the DOL determines that the premium processing fee worked a reduction in the required wage, the employer would be required at the very least to reimburse the employee for the premium processing fee.  Assuming in the worst case that the DOL misconstrues the premium fee to be like the training fee, which is what the ALJ did in the 2008 decision noted above, the DOL may also impose a $1,000 fine per violation.  As a practical matter, an employee may first make a demand for reimbursement or back wages before complaining to the DOL, and under those circumstances, it would be advisable for the employer to reimburse the employee for the premium processing fee.  The regulations provide for enhanced penalties for “willful” failure to pay the required wage such as fines up to $5,000 and debarment from filing new H-1Bs.  However, this is truly a worst case scenario speculation, based on collective experience with DOL investigations where DOL auditors have taken the position that the fee was not an employer’s business expense and have not required the employer to reimburse the employee for payment of the premium processing fee.  The expectation would be that an employer would be able to present a strong argument that this is a gray area and there was no willful failure here.  

We hope that the DOL and USCIS will coordinate their positions on premium processing in H-1B cases and recognize that it is often employees, not employers, who truly need premium processing on their H-1B cases, and thus should be able to make the payment in those cases to facilitate their own personal plans.  Moreover, premium processing is not directly related to the filing of an H-1B petition.  It only expedites the petition, which has in any event been filed, and the employee often then desires that the H-1B petition be expedited for personal reasons.  In such cases the premium processing fee should not be viewed as an employer’s business expense, thus allowing both the employer and employee the best outcome.

Cyrus Mehta

US MISSION IN INDIA EXPANDS INTERVIEW WAIVER PROGRAM: DOES THIS BODE WELL FOR H-1B AND L VISA APPLICANTS?

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The U.S. Mission in India has announced expansion of the Interview Waiver Program (IWP), launched in March 2012, which allows qualified individuals to apply for additional classes of visas without being interviewed in person by a U.S. consular officer. The U.S. embassy in New Delhi expects this expansion to affect thousands of visa applicants in India.
Under the current IWP, Indian visa applicants who are renewing visas that are still valid or expired within the past 48 months may submit their applications for consideration for streamlined processing, including waiver of a personal interview, within the following visa categories:
  • Business/Tourism (B-1 and/or B-2)
  • Dependent (J-2, H-4, L-2)
  • Transit (C) and/or Crew Member (D) – including C-1/D
  • Children applying before their seventh birthday traveling on any visa class
  • Applicants applying on or after their 80th birthday traveling on any visa class
Under the expanded IWP, the following Indian applicants may also be considered for streamlined processing:
  • Children applying before their 14th birthday traveling on any visa class
  • Students returning to attend the same school and same program
  • Temporary workers on H-1B visas
  • Temporary workers on individual L-1A or individual L-1B visas
The renewal application must be within the same classification as the previous visa. If the previous visa is annotated with “clearance received,” however, that applicant is not eligible for a waiver of a personal interview.
Not all applications will be accepted for streamlined processing. As always, consular officers may interview any visa applicant in any category. Applicants who are renewing their visas may still need an appointment for biometrics (fingerprint and photograph) collection. All applicants must submit all required fees and the DS-160 application form.
It remains to be seen whether the expanded IWP will improve the processing of H-1B and L visa applications. For over two years, US Consulates in India have routinely held up the processing of H and L visa renewal applications. Many of these applications are re-adjudicated even after the H-1B or L visa petition has been approved by the USCIS, and that too after the petitioner overcame objections by responding in detail to a Request for Evidence (RFE) or a Notice of Intent to Deny (NOID).  The visa applicant is often requested to provide further proof of the bona fides of the job opportunity or the petitioning company. This is done mainly for visa applicants who are employees of IT consulting companies. Even if the visa applicant is able to overcome any suspicions about the employer or the bona fides of the job opportunity at the US consulate, it could take several months before the visa is re-issued and this delay could cause extreme hardship to the applicant, including the loss of the job. As a result, many beneficiaries of H-1B and L petitions have not traveled outside the US, even for a vacation, out of an abundance of caution. First time H-1B and L visa applicants may still be subjected to a vigorous re-adjudication of their petitions, but it is hoped that the expansion of the IWP to H-1B and L applicants will eliminate further delays caused due to re-adjudications. If every H-1B or L renewal applicant is subjected to the same vigorous scrutiny as before then it would defeat the objective of the expansion of the IWP.
Still, applicants for renewals of their H-1B and L visas should not take for granted that they will be accepted for streamlined processing under the expanded IWP, especially if there have been changes to the terms of the employment. For example, if the H-1B petition was approved based on the beneficiary working at a client site in Philadelphia, and the client site has now been changed to San Francisco, the US Consulates in India do not take too kindly to this change after the approval of the petition. The US consul may want to see an amendment to the H-1B petition reflecting the new job site. Otherwise, there is a likelihood that the consul could recommend to the USCIS that the petition be revoked, leading to even further delays. Although petitioners may appropriately rely on USCIS guidance that an amended petition is not required if the job site changes, so long as a Labor Condition Application (LCA) is certified for the new site prior to the employee’s move there, US consuls in India may not honor this guidance.  It is therefore recommended that a petitioner continue to amend the H-1B petition if there is a change in the job site after the approval of the petition.
The U.S. embassy in New Delhi said that this is “one of many steps the Department of State is taking to meet increased visa demand in India.” The embassy explained that in 2011, consular officers in India processed nearly 700,000 nonimmigrant visa applications, an increase of more than 11 percent over the previous year. Currently, applicants generally wait fewer than 10 days for visa interview appointments and spend less than one hour at U.S. consular facilities in India. In September 2012, the U.S. Diplomatic Mission to India implemented a new visa processing system throughout India that further standardizes procedures and simplifies fee payment and appointment scheduling through a new website at http://www.ustraveldocs.com/in. For more details about procedures for submitting a renewal application, see http://www.ustraveldocs.com/in/in-niv-visarenew.asp
Cyrus Mehta

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

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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.”

Cyrus Mehta

VISA OPTIONS FOR FOREIGN ENTREPRENEURS IN THE US – WHILE KEEPING AN EYE ON THE POTENTIAL TRAPS AND PITFALLS

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By Cyrus D. Mehta

On paper, there are many attractive options for foreign entrepreneurs to live and work in the US temporarily without investing large sums of money. This blog takes the reader through these options, but will also make one aware about the many traps that may befall him or her on the way to achieving fame and fortune in the land of opportunity. This may sound a bit cliché as the US economy remains sluggish and the unemployment rate hovers over 9%, along with the fact that immigration bureaucrats have been tending to restrictively apply the rules. Yet the Administration, at the highest levels, has welcomed entrepreneurs and investors. 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.” Many were left wondering whether this was simply hot air or whether it represented an attitudinal shift to encourage a surge of entrepreneurs into the US.

H-1B Visa

The DHS announcement acknowledged that the H-1B visa, which is the workhorse nonimmigrant work visa, could be used by entrepreneurs who formed their own entities and were even the owners of these entities.The H-1B visa requires the employer to demonstrate that the position normally requires a bachelor’s degree is a specialized field, regardless of the size of the company or the investment. Prior decisions have recognized the existence of the separate corporate entity as being able to petition for the beneficiary, even though it may be solely owned by him or her. However, in recent times, this concept got somewhat muddied by the insistence that the sponsoring entity also control the H-1B worker’s employment, and such a sponsorship could not be possible when the H-1B worker owned the sponsoring entity. In the H-1B Question and Answers accompanying the August 2, 2011 announcement, the USCIS appears to still hold the line about the need to demonstrate an employer-employee relationship, but has conceded that this can nevertheless be demonstrated even when the owner of the company is being sponsored on an H-1B visa. This may be established by creating a separate board of directors, which has the ability to hire, fire, pay supervise and otherwise control.There is nothing preventing such a board constituting foreign nationals or family members of the beneficiary.

Yet, despite this announcement, USCIS officers in the field still appear to display an anti-small business attitude. Take the example of Amit Aharoni, an Israeli citizen who graduated with an MBA from Stanford University. He founded a hot startup, www.cruisewise.com, and received over $1.65 million in venture capital funding. The H-1B visa that was filed on his behalf by the company got denied and he was forced to leave the US and run his company from Canada. It was only after ABC news reported the story that the USCIS changed its mind and reversed the denial.Since the H-1B visa requires a bachelor’s degree in a specialized field, be aware that when one is managing a small company as its CEO, the USCIS may absurdly view the position based on old administrative decisions as too generalized and not requiring a specialized bachelor’s degree. See Matter of Caron International Inc., 19 I&N Dec. 791 (Comm. 1988). While Mr. Aharoni was fortunate that the USCIS relented because the media shone a bright light on his case, one wonders how many similar deserving cases that have not received media attention have been denied, resulting in the loss of so many jobs here. The H-1B visa is also subject to a 65,000 annual cap, which gets exhausted well within the fiscal year.

L-1A Visa

If the entrepreneur has been running a company in his or her home country as a manager or executive, the L-1A visa also readily lends itself to a foreign national who wishes to open a branch, subsidiary or affiliate in the US, but it is important that the beneficiary must still be able to establish that he or she will work in an executive or managerial capacity. The source of the salary can come from the foreign entity. Matter of Pozzoli, 14 I&N Dec. 569 (RC 1974). A sole proprietorship can also qualify as a qualifying entity for L purposes. Johnson-Laid v INS, 537 F.Supp. 52 (D. Or. 1981). If the beneficiary is a major stockholder or owner, then “the petition must be accompanied by evidence that the beneficiary’s services are to be used for a temporary period and evidence that the beneficiary will be transferred to an assignment abroad upon the completion of the temporary services in the United States.” 8 CFR § 214.2(l)(3)(vii). The purpose of this regulation is to ensure that the beneficiary will maintain the qualifying foreign entity, which is a pre-requisite for the L visa. The entity in the US must generally be the subsidiary, parent or affiliate of the foreign entity.

Yet, in recent years, the USCIS has come down on L-1A petitions by small businesses with a heavy hand. Denial decisions often argue, albeit erroneously, that the manager in a small business would also be involved in day to day operations, which are considered disqualifying activities. Despite the salutary amendment to the L-1A definition by the Immigration Act of 1990 to also include one who manages an essential function, INA § 101(a)(44)(A)(2), as opposed to people, the USCIS appears to have read this provision out of the INA by insisting that such a manager still cannot perform the duties of the function. There have also been credible reports that the US Consulates in India have been denying L visa applications in what is thought to be an unofficial trade war against India, although these also include employees of established global companies who are applying for L-1B specialized knowledge visas.

E-1 and E-2 Visas

The E-1 and E-2 visa categories lend themselves readily to foreign entrepreneurs, but they are only limited to nationals of countries that have treaties with the US. This category thus disqualifies entrepreneurs from dynamic BRIC countries – Brazil, Russia, India and China. For the E-1 visa, the applicant must show substantial trade principally between the US and the foreign state. For the E-2 visa, the applicant must demonstrate that he or she has made a substantial investment in a US enterprise. While there is no bright line amount as to what constitutes a substantial investment, it must be weighed against the total cost of purchasing the enterprise and whether the investment will lead to the successful operation of the enterprise. However, based upon the proportionality test in the Foreign Affairs Manual,the lower the cost of the enterprise, the investor under the E-2 will be expected to make a higher proportion of investment. 9 FAM 41.51 N.10. Note that the E-2 visa will be denied if the enterprise is marginal – if it does not have the present or future capacity to generate more than a minimal living for the investor and family.

Conclusion: The Importance of Foreign Entrepreneurs

These three options, if applied consistent with the true intent under their respective statutory statute provisions, provide wonderful opportunities for foreign entrepreneurs, including students graduating out of a US university, to implement their business ideas in the US. Unfortunately, in recent times, immigration adjudicators have become the self-appointed guardians of US economic well being by assuming that the entry of foreign nationals in the US would eliminate US jobs. In fact, it is quite the opposite as such individuals through their innovations will generate more jobs for Americans. New York City Mayor Bloomberg has categorically called the failure to bring in foreign entrepreneurs and skilled workers as being akin to committing “national suicide.”There also exists the Employment-based Fifth Preference (EB-5) pursuant to INA §203(b)(5) resulting in permanent residency, which is specifically designed for investors, but this involves an investment of $1 million (or $500,000 in targeted areas with high unemployment or that are rural) and the creation of 10 jobs. Investments in designated regional growth centers allow the showing of the indirect creation of 10 jobs and also allow passive investment. The H-1B, L and E categories can offer speed and flexibility to a foreign entrepreneur who may not be able to afford a $ 1 million or $500,000 investment, and the need to immediately create 10 jobs. Also, the EB-5 option is fraught with risks if the investor cannot show his or her own source of funds and if the 10 jobs are not created directly or indirectly at the end of the two year conditional residency period. Another important bill, the Startup Visa Act, remains stuck in Congress as a result of partisan stalemate, which would allow the investor to demonstrate that he or she has obtained funding or created jobs to a lesser degree than the EB-5. While we wait for the Startup Visa, an enlightened interpretation of the already existing H-1B, L and E visa categories for entrepreneurs will surely benefit the US at this point of time and be consistent with the Administration’s August 2, 2011 announcement.