Tag Archive for: H-1B

Cyrus Mehta

The H-1B and L-1 Punitive Super Fee Rears its Ugly Head Again

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By Cyrus D. Mehta and Michelle S. Velasco

Last December, Congress passed the Consolidated Appropriations Act (Public Law 114-113) (“Omnibus Bill”) that set up the government’s budget until October 2016.  It is one of Congress’s basic tasks to create the budget for the government – something it has failed to do without rancorous debate, shutdowns, threats of shutdowns, and political rigmaroles in the past five years.  The passage of the recent bill was not immune to controversy as it only passed after close-to-deadline negotiations with new House Speaker Paul Ryan.  And as is par for the course in large spending bills, lurking within the nearly 1000 page bill were pork barrel projects and controversial amendments.  The full text of the bill is available here, but what concerns us lies at Section 411, entitled “9-11 Response and Biometric Entry-Exit Fee,” and which includes the following language:

  • TEMPORARY L-1 VISA FEE INCREASE.—Notwithstanding section 281 of the Immigration and Nationality Act (8 U.S.C. 1351) or any other provision of law, during the period beginning on the date of the enactment of this section and ending on September 30, 2025, the combined filing fee and fraud prevention and detection fee required to be submitted with an application for admission as a nonimmigrant under section 101(a)(15)(L) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)(L)), including an application for an extension of such status, shall be increased by $4,500 for applicants that employ 50 or more employees in the United States if more than 50 percent of the applicant’s employees are nonimmigrants admitted pursuant to subparagraph (H)(i)(b) or (L) of section 101(a)(15) of such Act.
  • TEMPORARY H-1B VISA FEE INCREASE.—Notwithstanding section 281 of the Immigration and Nationality Act (8 U.S.C. 1351) or any other provision of law, during the period beginning on the date of the enactment of this section and ending on September 30, 2025, the combined filing fee and fraud prevention and detection fee required to be submitted with an application for admission as a nonimmigrant under section 101(a)(15)(H)(i)(b) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)(H)(i)(b)), including an application for an extension of such status, shall be increased by $4,000 for applicants that employ 50 or more employees in the United States if more than 50 percent of the applicant’s employees are such nonimmigrants or nonimmigrants described in section 101(a)(15)(L) of such Act.

In essentials, this confusingly worded section boils down to an increase in the H-1B and L-1 petition fees for certain employers who have 50 or more employees, more than 50% of whom are in H-1B or L-1 status.  The provision not only reintroduces the super fee from Public Law 111-230 that sunset on September 30, 2015, but it doubled that super fee!  However, unlike Public Law 111-230, These extra fees will be used to fund healthcare for 9/11 first responders and a new system to track entries and exits using travelers’ biometric data.  What left many immigration attorneys and businesses scratching their heads was the bill’s language that left many things unclear: Should employers should pay the super fee right away because the statute says “beginning on the date of the enactment of this section…”?  Would the super fee apply to extensions of status because the statute says “including an application for an extension of such status”?  Are fraud fees now also required in extension of status petitions?

It took nearly a month, but on January 12, 2016 USCIS finally issued its interpretation of the statute in a website announcement that as of January 12, 2016 USCIS began accepting the super fee for eligible H-1B and L-1 petitions.  The announcement included some helpful clarifications:

  • The fee is applicable only for initial or transfer filings, not to extensions of status.
  • The super fee was not required for petitions filed prior to January 12, 2016.
  • The fraud fee is not required in extensions.

However, as of writing this blog, USCIS has yet to revise the Form I-129 and Form I-129S.  Outside of this announcement there are no other instructions on the USCIS website, and its page on H and L filing fees has not been updated.  Nevertheless, USCIS provides only a 30-day grace period post the January 12 announcement where USCIS will merely RFE for missing fees.  After February 11, 2016, USCIS will reject petitions with missing fees.

We accordingly provide the following practice pointers for employers affected by the new super fee to minimize the likelihood of RFEs and rejections or other processing delays:

  • Employers should carefully complete the Form I-129, in particular Section 1, Numbers 1.d. and 1.d.1 of the H-1B and H-1B1 Data Collection and Filing Fee Exemption Supplement (page 19 of the 36-page I-129 form) and Numbers 4.a and 4.b of the L-1 supplement (page 22 of the 36-page I-129 form).
  • Employers ought to make a careful count of their employees and their nonimmigrant statuses.
  • When possible, employers should send filing fees in separate checks. In the event USCIS has received extra fees, it will simply return those extra checks to the employer without delaying the process.  This way, employers can avoid RFEs or rejections of their petitions.

Given the severe increase in fees, employers affected by the change will have to reevaluate the business costs of filing these petitions.  Once totaled, the filing fees can be exorbitant.  An initial or transfer H-1B filing for affected employers will total $6325 in filing fees alone: ($325 basic filing fee; $500 fraud fee; $1500 ACWIA fee; $4000 super fee).  Tack on the premium processing fee and the filing fees alone will total $7550!  For initial L-1 filings, the total filing fee would be $5325 in regular processing ($325 basic filing fee; $500 fraud fee; $4500 super fee).  Meanwhile, other employers would pay anywhere from $825 to $2325 for initial H-1Bs and only $825 for initial L-1 petitions.  The difference in costs is striking.  Indeed, by enacting this super fee targeted at larger companies with nonimmigrant workforces, the U.S. has cemented its anti-immigrant and anti-business stance particularly with respect to India-based technology companies who are disproportionately affected by the punitive fees.  Though it is a nation built on the backs of immigrants and their entrepreneurial spirit, the U.S. can’t seem to reconcile its claim as the greatest country in the world with the spread of hypocritical and unjustifiable fear of foreign worker takeovers.

It is clear that this severe increase in fees has been aimed against India-based companies to punish them, without giving any thought to the fact that most of corporate America relies on them to run business efficiently, which in turn benefits the American consumer.  It is this very business model that has provided reliability to companies in the United States and throughout the industrialized world to obtain top-drawer talent quickly with flexibility and at affordable prices that benefit end consumers and promote diversity of product development. This is what the oft-criticized “job shop” or “body shop” readily provides.  By making possible a source of expertise that can be modified and redirected in response to changing demand, uncertain budgets, shifting corporate priorities and unpredictable fluctuations in the business cycle itself, the pejorative reference to them as “job shop” is, in reality, the engine of technological ingenuity on which progress in the global information age largely depends.  Such a business model is also consistent with free trade, which the U.S. promotes vehemently to other countries (including the protection of intellectual property rights of its pharmaceutical companies that keep lifesaving drugs high), but seems to restrict when it applies to service industries located in countries such as India that desire to do business in the United States through their skilled personnel.

It is not necessarily the case that H-1B employees who work in the United States through these IT firms are taking jobs out of the United States.  That has been the prevailing rhetoric, but the benefits that IT consulting firms and their H-1B workers provide by way of productivity gains, resulting in an increase in jobs elsewhere and a lowering of costs to the consumer, is often overlooked.  As a recent Times of India editorial put it bluntly:

These workers are not feeding off the American economy, they are contributing to its innovation and productivity.  Jobs are no nation’s monopoly; if Indians work hard and well they are not breaching any globally mandated caste system.  Indian companies pay taxes and create jobs in the US too.  These controversies are not new.  But an effective counter to America’s Indophobia remains to be found.

The current rhetoric ultimately results in disparaging H-1B workers from India who are also here to work hard and pursue the American dream.  It also affects H-1B adjudications, resulting in extra scrutiny, and denials of H-1B extension visa requests that hitherto were easily granted.  While many recognize and justifiably condemn the absurd anti-immigrant rhetoric of Donald Trump, punitive efforts against India-based companies, resulting in stricter H-1B visa adjudications of individual workers who are waiting for years in the crushing India employment-based second and third preference backlogs, must also be recognized as xenophobic.  It is only then that anti-immigrant rhetoric, in the guise of protecting U.S. workers, will be acknowledged and the media, politicians and others who currently freely engage in this will get less of a free pass.

(This blog is for informational purposes only, and should not be relied upon as a substitute for legal advice)

Cora-Ann Pestaina

How One Employee’S Complaint Can Lead to a Full Blown Investigation of an H-1B Employer’S LCA Records

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A recent U.S. Court of Appeals decision in Greater Missouri Medical Pro-Care Providers, Inc.ARB Case No. 12-015, ALJ Case No. 2008-LCA-26 (2014), is worth noting as it addressed the issue of how much latitude the DOL has to investigate an H-1B employer’s H-1B documents and records.

As background, an employer seeking to employ a temporary foreign worker in H-1B (also H-1B1 or E-3) nonimmigrant status must, as the first step in the petition process, file a Labor Condition Application (LCA) with the Department of Labor (DOL) and receive certification. The LCA is completed on electronic Form 9035 and submitted through the DOL’s iCERT system. The LCA collects information about the occupation including the occupational title, the number of immigrants sought, the gross wage rate to be paid, the starting and ending dates of employment, the place of employment, and the prevailing wage for the occupation in the area of intended employment. The LCA contains special attestation requirements for employers who previously committed willful violations of the law or for employers who are deemed to be H-1B dependent. The employer must also state that its employment of nonimmigrants will not adversely affect the working conditions of workers similarly employed in the area of intended employment. An employer is permitted to file the LCA no more than six months before the initial date of intended employment. See 8 U.S.C. § 1182(n)(1)ID); 20 C.F.R. §§ 655.730-733.

Once the LCA is filed, the DOL must approve it within 7 days unless the application is incomplete or obviously inaccurate. 20 C.F.R. §§ 655.740(a)(1)-(2). Within one day of the LCA filing, the employer must maintain a public access file accessible to interested and aggrieved parties. The file must be available at either the principal employer’s place of business or at the employee worksite. 20 C.F.R. § 655.760(a). An aggrieved employee has 12 months after the latest date on which an alleged violation was committed to file a complaint with the DOL Wage and Hour Division (WHD). 20 C.F.R. § 655.806(a)(5).

In Greater Missouri, the employer hired numerous physical and occupational therapists from the Philippines on H-1B status. As required, the employer filed LCA applications for the desired workers. One H-1B employee, a physical therapist from the Philippines, filed a complaint alleging that she had personally paid all the fees, including attorney’s fees, to file and to extend her H-1B status and that the employer failed to pay her during a nonproductive period of over one year when she was reviewing for her licensing exam. The employee also questioned whether the H-1B employer was legally permitted to charge her a fee for “breach of contract” due to her early termination of her employment.

Upon review of the employee’s complaint (forwarded to the DOL by the Missouri state regulators), the DOL treated it as an “aggrieved party” complaint and the DOL investigator concluded that there was “reasonable cause” to investigate the charge that the H-1B employer had attempted to require the employee to pay a penalty for ceasing her employment early. Based only on the determination that this one charge was worth investigating, the DOL investigator launched a full scale investigation and sent a letter to the H-1B employer requesting all of its H-1B documents and records. The DOL investigator also interviewed the aggrieved employee and the employer’s other H-1B workers.

Based on its investigations, the DOL found that the employer improperly failed to pay wages to employees who it had placed in nonproductive status (benched); made improper deductions from employee wages for H-1B petition fees; and required or attempted to require improper penalty payments from some employees for early termination. The employer was ordered to pay over $380,000 in back wages to 45 employees.

The employer fought back by requesting a hearing before an Administrative Law Judge (ALJ).  The employer argued that the applicable statute and regulations limited the DOL’s investigation to the specific issues of the complaint that was filed and only to that aggrieved party’s LCA. The employer also argued that the statute and regulations impose a 12 month time limit for investigating violations. However, the ALJ held that the 12 month time limit only refers to when a complaint can be filed and does not refer to the scope of remedies that can be meted out. The ALJ issued a decision ordering the employer to pay back wages, fees for illegal fee deductions and amounts to employees for illegally withholding paychecks.  When the ALJ failed to hold in the employer’s favor, the employer petitioned for review before the Administrative Review Board (ARB).

The ARB held that the DOL indeed had the authority to investigate alleged violations involving H-1B workers who did not file complaints but also held that violations that occurred outside of the 12 month period prior to the filing of a complaint are not actionable.  However, the ARB affirmed the order for employer to pay awards. The employer took the case up to the District Court which affirmed the ARB’s decision and payment of awards. The employer then appealed to the US Court of Appeals. The DOL did not appeal the District Court’s ruling that violations that occurred outside the 12 month period are not actionable.

In the end, the Court of Appeals held that the DOL’s initial investigatory authority is limited to the complaint that was filed and to those specific allegations and the DOL was not authorized to launch a comprehensive investigation of the employer based only on a single allegation by one employee. The Court of Appeals recognized that additional violations could come to light in the course of the DOL’s investigation of a single complaint and that the DOL may need to modify or expand its investigation based on reasonable cause. However, the Court of Appeals found that this was not how the investigation proceeded in the instant case. The Court of Appeals held that the awards cannot stand because the ARB’s finding of violations and the resulting awards were based entirely on the DOL’s unauthorized investigation of matters other than the allegation in the aggrieved party’s complaint. The US Court of Appeals reversed the judgment of the District Court.

While this was ultimately a victory for the H-1B employer and it is good to note that the DOL does not have sweeping authority to investigate allegations of violations that fall outside of the 12-month statute of limitations, this case is nevertheless a cautionary tale for all H-1B employers. Even a single complaint from one disgruntled employee could lead to a comprehensive investigation of the employer’s H-1B practices. Even though the Court of Appeals in Greater Missouri found that the DOL had overstepped in its initial investigation, the court also pointed out that the DOL may modify its investigation of a single complaint if other violations come to light.   Greater Missouri also highlights the fact that once allegations are made, the employer bears the burden of proof to prove that it has complied with the LCA attestations. Therefore, the importance of excellent record keeping cannot be overstated.

Going into 2016, it would be a good idea for any H-1B employer that is not 100% confident in its LCA records, and its ability to withstand a DOL audit of those records, to conduct a self-audit on behalf of the employer and bring to light any issues that the employer can immediately correct and ensure that it is in compliance. Such a self-audit will give the employer the confidence that it needs should the DOL ever launch an investigation and will help the employer to avoid the potential financial and reputation damage that could come from such an investigation. When it comes to DOL investigations, the proactive approach is always best.

Cyrus Mehta

Meet Our New Friend: Who Is An “H-1B Skilled Worker Dependent Employer” In Senate Immigration Bill, S. 744?

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By Gary Endelman and Cyrus D. Mehta

Since we last wrote about the H-1B visa provisions in Senate Immigration Bill, S. 744, Workable Or Unworkable? The H-1B And L-1 Visa Provisions In BSEOIMA, S. 744, there have been several changes to this portion of the bill. The amendment proposed by Senator Hatch (after reaching a compromise with Senator Schumer), which passed the Judiciary Committee, sought to water down some of the restrictions that would otherwise make the H-1B visa program unworkable. Seeking to advance the interests of the many high tech companies that have settled in Utah, an accommodation with Senator Hatch implicitly held out the promise of attracting other GOP Senators to vote for the bill when it reached the Senate floor. A bi-partisan Senate bill that passed with 70 votes might serve to provide political cover for embattled Speaker John Boehner to maneuver around the objections of Republican obstructionists and pass CIR with the aid of Democratic votes.

The main concern of many technology companies in Silicon Valley was that the new recruitment requirement would make it impossible for them to use the H-1B visa program, despite the increase in the H-1B visa cap. Under the bill’s original provision, the employer would first have to offer the job to any US worker who applied, who is equally or better qualified than the nonimmigrant H-1B worker. It was feared that this would allow the Department of Labor (DOL) to micromanage the employer’s recruitment processes, and also determine who an equally or better qualified US worker would be rather than leave it to the employer’s best judgment. To the extent that the Hatch amendment shifted power over the H-1B away from the DOL in favor of more market-oriented forces, it represents a significant attempt to rely upon such influences rather than direct federal regulation as the operating principle of protection for US workers in the immigration context.

As a result of the Hatch amendment, an employer who is not an H-1B Skilled Worker Dependent Employer (SWDE) or a Dependent Employer (DE), which we will explain below,   is required to use recruitment procedures that meet industry wide standards and offer compensation that is at least as great as that required to be offered to H-1B nonimmigrants. It no longer requires such an employer to offer the job to an equally or better qualified US worker. Still, it is hard to determine how this would be interpreted by the DOL  Does the employer need to establish that there were no qualified US workers who applied or does the employer only need to demonstrate that it does normally also recruit US workers for the same position? We believe that the latter interpretation is more consistent with the language of the Hatch amendment. An employer that is not a SWDE and not a DE will not be subject to the  non-displacement  attestation unless it files the petition with the intent or purpose of displacing a specific US worker for the position to be occupied by the beneficiary, or workers are displaced who provide services at worksites owned, operated, or controlled by a Federal, State, or local government entity that directs and controls the work of the H-1B worker, or workers are displaced who are employed as public school kindergarten elementary, middle school or secondary school teachers.

But here’s the catch. The Hatch amendment also creates a new concept – the SWDE. The SWDE is different from the H-1B dependent employer (DE) as we have known it under the existing law. An SWDE is “an employer who  employees H-1B nonimmigrants in the United States in a number that in total is equal to at least 15 percent of the number of its full time equivalent employees in the United States employment in occupations contained within Occupational Information Network Database (O*Net) Job Zones 4 and Job Zones 5.” Under this definition, many employers will be SWDE even if they are not dependent employers. Even if they hire thousands of US workers at lower skill levels, one needs to count how many workers are hired at Job Zone 4 and 5, and if the number of H-1B workers exceed 15% of that number, the employer becomes a SWDE. One can imagine the kind of intricate investigations and calculations that an immigration attorney may need to make on behalf of an employer client to find out how many people it hires at Levels 4 and 5 so as to determine whether the employer is a SWDE or not. As long as an employer employs even one US worker at a Level 4 or 5 positions, the hiring of an H-1B worker will render this employer a SWDE (as the hiring of this one H-1B worker will be more than 15% of the number of employees hired in Level 4 or 5). Once the employer is a SWDE, such an employer would  be required to have offered the job to any US worker who applies and is equally or better qualified for the job than the H-1B worker..

The SWDE is not based on a gradation like the traditional Dependent Employer (DE) as defined in Section 212n)(3) of the Immigration and Nationality Act:

  • An employer is considered H-1B-dependent if it has: 25 or fewer full-time equivalent employees and at least eight H-1B nonimmigrant workers; or
  • 26 – 50 full-time equivalent employees and at least 13 H-1B nonimmigrant workers; or
  • 51 or more full-time equivalent employees of whom 15 percent or more are H-1B.

To qualify as an SWDE, you do not have the less than 25, 12-50 and 50+ to do the calculation.  Under the new SWDE definition where you need 15%, even if you have 1 employee in Job Zone 4 or 5, and hire one H-1B, you become a SWDE. This never happened under the DE definition, as you needed to have 7 H-1Bs if less than 25, or 12 H-1Bs if between 25 and 50, or 15% after that. Unlike the DE category, which was supposed to be the exception rather than the norm, the SWDE is more easily satisfied precisely.

Our colleague David Isaacson properly points out that, because of the different rules for small numbers, it will be relatively easy for a small employer to be a SWDE but not a DE.  If an employer has 20 or 25 full-time equivalent employees (FTEEs), and 5 of them are H-1Bs who are not intending immigrants, then that employer will be a SWDE even if all of its U.S. workers are in Job Zone 4 or 5, because the 5 H-1Bs are necessarily more than 15% of however many of the 20 or 25 total FTEEs are in Job Zones 4 or 5, but that employer won’t be a DE because it has fewer than 7 non-intending-immigrant H-1Bs and one must have more than 7 to be a DE.  It is also possible to be a SWDE and not a dependent employer as a large employer, if your total number of H-1B employees who are not intending immigrants is more than 15% of your total “number that in total is equal to at least 15 percent of the number of its full-time equivalent employees in the United States employed in occupations contained within Occupational Information Network Database (O*NET) Job Zone 4 and Job Zone 5” but is less than 15% of your overall FTEEs, because of your employees in Job Zones 1 through 3 who count towards the denominator of the DE calculation but not the denominator of the SWDE calculation.

Is a dependent employer in a more advantageous position than a SWDE after the Hatch amendment? As a practical matter, it would be very difficult for an employer to be a dependent employer without being a SWDE. So long as an employer hires at least one US worker in a Job Zone 4 or 5 positions, as noted earlier, the hiring of even one H-1B worker would make this employer a SWDE. But there may exist a company that does not hire anyone in a Level 4 or 5 Job Zone. Although Level 4 or 5 Job Zones generally require bachelor’s degrees, or higher, there are many Level 3 occupations in O*Net that may require bachelor’s degrees some times, but not all of the time. For instances, Business and Operations Managers,  Lodging Managers or Food Service Managers are in Zone 3, which can qualify under the H-1B visa,  and one can conceive of a hotel establishment hiring both US workers and  H-1Bs for such positions that are only in Zone 3.

Has the SWDE made the traditional H-1B employer definition redundant? That might be an incautious overstatement for notable differences still remain. The SWDE has to attest that for 90 days before and after the filing of the Labor Condition Application, it has not and will not displace a US worker. By contrast, an employer who is a dependent employer but not a SWDE, will have to attest that for 180 days before and after the filing of the Labor Condition Application, it has not and will not displace a US worker. Also, strangely, the bill as it exists in its current form, does not require a dependent employer to first offer the job to an equally or better qualified US worker. Is this an oversight where a dependent employer is exempt from the more onerous recruitment procedures that SWDE have to go through, but is still subject to a more vigorous anti-displacement attestation?  Only a dependent employer, but not a SWDE,  is  prohibited from  outplacing H-1B workers to third party sites.

The SWDE definition was introduced to catch US-based tech companies than the Indian IT companies, as the latter are in any event dependent employers.  In a twist of fate, while the Indian IT companies have been most affected by the H-1B provisions in the bill, the SWDE concept may wind up most severely affecting the very IT giants in this country who looked to Senator Hatch for legislative relief. The end result may well be to subject them to recruitment obligations that would otherwise not have applied under the traditional H-1B dependent employer definition. Such are the unintended consequences of a compromise that Senator Hatch had to make with other Gang of 8 members, such as Senator Durbin, who have been vehemently opposed to the H-1B visa program. In exchange for a more liberal recruitment regime, the law will make more employers SWDEs and subject them to the restrictive recruitment procedures. Not only may Facebook and Google, to name but two of many such companies, have to adjust to this unwelcome and rude surprise, but it is likely that many IT start-ups, the very entrepreneurs that the Obama Administration claims to want to encourage, will find their growth stymied by the SWDE recruitment obligations that likely were never intended by Senator Hatch to apply to them at all.

This bring us finally to the definitions of “covered employer” and “intending immigrant.” A SWDE will not be subject to the more onerous recruitment requirement, and a DE as well as an SWDE will not be subject to the anti-displacement attestations if they fall under the definition of “covered employer” and are filing an H-1B visa for an “intending immigrant.” The Hatch amendment slightly modified the definition of a “covered employer,”  in fact making it easier for a SWDE or DE to get out of the more restrictive requirements. An “intending immigrant” is one who intends to live and work permanently in the US as demonstrated by a pending or approved labor certification that was filed by a “covered employer.” An intending immigrant can also be the beneficiary of a pending or approved I-140 petition  A “covered employer,” as amended by Hatch,  is an employer who during the year before filing the labor certification on behalf of the intending immigrant, has filed an immigrant visa petition for 90 percent of current employees who were beneficiaries of approved labor certifications during the one year ending six months before the petition in question is filed.

How does this work? The employer who is filing an H-1B on behalf of an “intending immigrant” (for whom a labor certification or an I-140 petition has been filed or approved) needs to look back six months. If the employer had approved labor certifications during the one year period ending six months prior to filing the H-1B petition,  and filed immigrant visa petitions for 90% of them during that look back period six months prior, the employer qualifies as a covered employer. One can conceivably argue that if the employer did not have any approved labor certifications during that look back period, it might still qualify as a covered employer. The covered employer definition applies only to approved labor certifications, out of which 90% have I-140s filed on their behalf. So, if there are no approved labor certifications or no labor certifications even filed, the employer may still be a covered employer, provided the beneficiary of the H-1B petition currently has an approved or pending labor certification or I-140 petition filed on his/her behalf.

The Senate Judiciary Committee’s report on BSEOIMA has some alarming language regarding the “covered employer” definition:

“Intending immigrants are not counted as H-1B or L nonimmigrants for the purposes of determining whether an employer is an H-1B dependent company or a L visa dependent company.  Intending immigrants are defined as persons for whom their employer has started the green card process, including those for whom an Immigrant Petition for Alien Worker (Form I-140) or Application to Register Permanent Residence or Adjust Status (Form I-485) has been filed. However, employers may only take advantage of this counting rule if the employer has actually filed immigrant status petitions for not less than 90 percent of current employees for whom the company filed labor certifications in the previous year.”

Despite this language in the report, it can still be argued that Congress has intended that an employer who has approved labor certifications in the “look back” period follow through with the green card process (as opposed to nominally only filing labor certifications), and thus the requirement that the employer has filed I-140 petitions for not less than 90% of the relevant approved labor certifications.  Congress just does not want an employer to push paper and file labor certifications, but to actually carry through with the green card process for its employees.  However, if there is no filed or approved labor certification during the relevant period, an employer should still be treated as a “covered employer.”  If interpreted literally, only a covered employer can invoke the “intending immigrant” exception. Because the Hatch-Schumer amendment narrowed the definition of “covered employer” to require a labor certification as a condition precedent to an I-140 submission, the eligibility of any I-140 petition that does not  depend on a labor certification approval is suddenly and surprisingly called into question. Thus, outstanding researchers, persons of extraordinary ability, beneficiaries of approved national interest waivers, multinational managers, and advanced US degree STEM holders,  may never be considered as “intending immigrants” as no labor certifications need to be filed on their behalf.   The very people we need to keep most will not benefit.   At a time when there are more green card routes around PERM, can it possibly be that H-1B status will be withheld, or made more difficult, from those who take advantage of these new options?  Surely this cannot be the intended result of such imprecise drafting.  The most vociferous critics of the H-1B programs, such as the IEEE, claim to favor unlimited green cards for advanced US STEM degree holders.  Will it be necessary for them to forego, or so drastically curtail, the H category entirely in order to arrive the finish line? Despite this, as explained above, we believe that an employer who files no labor certifications can still seek protection under the chimera of “covered employer.” Moreover, despite not having to file a labor certification for the priority worker, the employer may have filed labor certifications for other sponsored employees so that the mantle of “covered employer” does not have to be alien centered so long as it applies generally to the employer in question. Doubtless, it may take a technical amendment to simplify the matter and to bring clarity to the perplexed.

Notwithstanding the exception that has been created for employers to get out of the more restrictive H-1B requirements, it would not be easy for an employer to file a labor certification in order to create an intending immigrant. It takes 60+ days of recruitment before an employer can file a PERM labor certification. An employer who wishes to quickly hire an H-1B worker, may not be able to wait for that long to file a labor certification before filing an H-1B petition, and may rather go through the recruitment requirement for an SWDE under the H-1B provision. Moreover, for a permanent labor certification, the employer has to demonstrate that there were no minimally qualified US workers who applied for the job, which is even more onerous than the recruitment requirement for a SWDE, where the standard is equally or better qualified. On the other hand, a SWDE would not have a choice and may be compelled to file a labor certification to establish that the worker is an “intending immigrant.” For instance, an employer whose business model relies on outplacement of employees to client sites will need to first have an “intending immigrant” before it can file an H-1B visa petition.

While an employer may ultimately desire to file for green cards on behalf of their employees,  the H-1B visa, like dating before marriage,  allows time for both the employer and employee to try each other out before making a commitment to sponsor the worker for permanent residence and expend resources, including considerable governmental resources to process and adjudicate a labor certification application. BSEOIMA will turn this logical progression upside down. Employers will be forced to start the green card processing for potential H-1B workers even before they have come on board under the H-1B visa, where they can be tested out first.  BSEOIMA is transformational as it gives more emphasis to green card sponsorship than temporary sponsorship. Employers will look to ways to avoid the H-1B process altogether, as well as the PERM labor certification process. They will be able to directly sponsor STEM advanced degree students on an F-1 visa for a green card without even having to go through the labor certification process. A merits based point system will kick in four years after BSEOIMA takes effect, which will also allow employers to bypass the H-1B and PERM labor certification.  Even for those employers who must resort to the H-1B visa, they may not have to depend on the H-1B visa for too long as one of the provisions in the Hatch amendment will allow a foreign national to apply for adjustment of status even before the priority date becomes current. If the foreign national gets an employment authorization after filing for adjustment of status, it may obviate the need to apply for a renewal of the H-1B status. Finally, BSEOIMA may have unintended consequences for the Indian heritage IT firms, which it seeks to disrupt and put out of business. These firms, besides being forced to file for more green cards, will change their business models and will hire more US workers or will merge with firms that would reduce their dependence on H-1B workers. Thus, in the long run, these firms may be more competitive in the US rather than weakened.

If BSEOIMA does take effect, how will it impact existing H-1B workers? The new recruitment and displacement provisions won’t kick in for existing workers. So, even if an employer files an extension for existing employees, these new provisions will not apply even after enactment. On the other hand, the ban on outplacement will take effect even for existing employees with respect to any application filed after enactment. It would thus be incumbent on employers to start planning in advance and file labor certifications on behalf of H-1B employees they were in any event planning to file in the future. This would allow a SWDE to become a covered employer and thus be able to file H-1B visas under the more liberal provisions. Still, BSEOIMA has made the H-1B visa, which was already complex, even more maddeningly difficult. The whole idea of a temporary visa is to provide employers with flexibility to bring in much needed foreign skilled workers. BSEOIMA utterly and completely fails in this department, and it remains to be seen whether employers will be able to cope with this new temporary visa regime, or whether the drumbeat for further reform will begin soon after the law’s enactment.

Cora-Ann Pestaina

The H-1B Process Gets Even Harder: DOL Proposes Dramatic Changes to the LCA Form

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I still think longingly of the days when certification of a Labor Condition Application (“LCA”) could be obtained within seconds. Three years ago, the Department of Labor (DOL) mandated that all LCA filings must be filed through its iCERT portal (http://icert.doleta.gov/) and that each application form, also changed to request additional, new information, would be manually reviewed prior to certification. This change increased the official LCA processing time from a few seconds to 7 business days. Human error and other systemic problems at the onset of the change resulted in filings taking three weeks or longer to process which led to late filings on H-1B petitions, a public outcry and US Citizenship and Immigration Services (USCIS) temporarily allowing employers to file H-1B petitions without certified LCAs! The new iCERT system forced H-1B employers to change their approach to filing H-1B petitions. The LCA process is about to change again.

As a background, an employer seeking to employ a temporary foreign worker in H-1B, H-1B1 or E-3 nonimmigrant status must, as the first step in the petition process, file an LCA with the DOL and receive certification. The LCA is completed on electronic Form 9035 through the DOL’s iCERT system. The LCA collects information about the occupation and there are special attestation requirements for employers who previously committed willful violations of the law or for employers who are deemed to be H-1B dependent. An employer is permitted to file the LCA no more than six months before the initial date of intended employment.

The DOL now seeks to once again revise the scope of the information collected on the LCA citing, in its LCA supporting statement, a desire to improve its integrity review and ensure the accuracy and completeness of the information. On July 9, 2012, the DOL published a Notice in the Federal Register announcing a 60-day comment period (to end on September 7, 2012) on its proposed changes to the form ETA-9035. In a process that is likely to take several months, the changes must be approved by the federal Office of Management and Budget before they can be implemented.

Changes include requiring more detailed information about the prevailing wage; requiring more detailed information regarding how the employer determined whether it is H-1B dependent and whether the nonimmigrant worker is an exempt employee or if not exempt, specifying the employer’s recruitment efforts to recruit US workers; and requiring the employer to list the address where the employee’s public access file is kept.

Some of the changes are even more significant.

Identification of Intended Beneficiaries

The current LCA does not require any information identifying the intended beneficiaries. The new form will collect information on the nonimmigrant(s) including name, date of birth, country of birth, country of citizenship and current visa status. If a PERM labor certification application was filed on behalf of the intended beneficiary, the PERM application number must be listed.

In its LCA supporting statement, the DOL states that this new information will allow its Wage Hour Division (WHD), which was created with the enactment of the Fair Labor Standards Act (FLSA) and is responsible for the administration and enforcement of a wide range of laws which collectively cover virtually all private, State and local government employment, to more efficiently gather information during its enforcement activities and to find beneficiaries who may be entitled to back wages after an investigation. The DOL claims that this change will cause little extra burden because employers “generally know who the beneficiaries are before filing the LCA except possibly for the 2.6 percent of employers who file LCA’s for more than 10 employees.” Because iCERT saves much of the information on an LCA which can later be used to fill out other LCAs, the DOL states that it will not be overly burdensome for an employer to complete more than one LCA. The DOL also refers to its “relatively quick turnaround on LCA approval” as another reason why employers do not need to complete one LCA for large numbers of beneficiaries.

The DOL makes some valid points.  The majority of employers do not need to complete an LCA for more than 10 workers at a time. iCERT indeed saves most of the information and it may not be overly burdensome to complete multiple LCAs.  However, since employers are required to make LCAs available for public inspection, privacy and identity theft concerns are easily justifiable. The DOL ought to address this.

In addition, what the DOL has not addressed is the flexibility that will be lost because employers will no longer be able to use an existing, certified LCA to file a nonimmigrant petition for a new hire. The new identification requirement may be hard on large employers who file numerous H-1B petitions. The current annual cap on the H-1B category is 65,000. Each year, on April 1, USCIS begins accepting cap-subject H-1B petitions for employment to commence in the new fiscal year, on October 1. Employers typically scramble to prepare and file cap-subject H-1B petitions before the cap closes. For large employers, especially those with branches abroad, it is may be difficult to come up with a list, in March or April, as to who will be transferred to the US to work in October. These hiring decisions are ongoing and employers rely on the flexibility of the LCA which allows them to quickly file an H-1B petition using an existing, certified LCA provided it lists the correct information such as visa category, job classification, etc. This way, employers are not always forced to spend 7 business days waiting for the LCA to be certified and watching existing H-1B visa numbers dwindle.

What about that H-1B worker who just received notice from his current employer and has luckily found a new employer willing to file an H-1B on their behalf? How significant would it be if the new employer is able to use an existing, certified LCA and file an H-1B transfer petition before that worker falls out of status? What the DOL describes as a “relatively quick turnaround on LCA approval” can seem interminable in the case of an emergency. The DOL must bear in mind that no matter the emergency, it provides no expedite procedures for the LCA. Flexibility is therefore very important.

Interestingly, the new LCA would require listing the beneficiaries’ PERM application numbers. At this time, the possible acceptable responses to this question are not clear. But, since the PERM application is filed by the employer, a new employer of an H-1B transfer might not have this information. But this requirement suggests that the DOL may begin to cross reference the job opportunities in the nonimmigrant and immigrant cases as well as match the wages in both the cases.

Limiting the LCA to only 10 workers

Currently, a single LCA may be filed for up to hundreds of workers. An employer may use a single LCA to request multiple positions where they are in the same visa category and job classification and are either all part-time or all full-time positions.

The DOL now seeks to limit the number of workers to 10 per LCA explaining that it has found enforcement of LCA obligations difficult when an LCA is for 50 or 100 job opportunities and it would be a significant expenditure to build an electronic form to accept more than 10 names.

The issue, as discussed above, may not be with the limit of 10 names, but with naming requirement itself and the limitations that come from that.

Worksite Identification

The current LCA form requires the employer to identify the place(s) of intended employment. This entails listing the complete address and county where the beneficiary will work. The proposed new LCA will require significant additional detail.

The employer will have to indicate whether the intended worksite is the employer’s business premises; the employer’s private household; the worker’s private residence; or other business premises which type must then be inserted on the form. The employer must state whether the employee placement is at an end client location. If yes, the form then requires the name of the end client.

In its LCA supporting statement, the DOL stated simply that the additional information is needed for “clarification on actual worksite to enable employer to demonstrate regulatory compliance regarding changes in worksite.” This requirement could cause serious problems.

Again, the employer’s flexibility may be taken away. Currently, the employer has the flexibility to send employees to new worksite locations without filing a new LCA provided the new location is in the same area of intended employment listed on the certified LCA. See 20 C.F.R. §655.731(a)(2) which states that the wage on an LCA is valid for the area of intended employment. If each LCA has to list the end client information, will the employer be required to complete a new LCA each time it moves an employee even if it is within the intended area of employment?

Also, in cases where the employer is filing a change of status petition on behalf of the beneficiary or the beneficiary is abroad and will obtain an H-1B visa to enter the US, until the beneficiary is lawfully present in the United States in valid H-1B status and is thereby authorized to accept employment in the United States, the employer cannot hold him out as an employee.  See 8 C.F.R § 274a.1(c) and (f). Therefore, the employer may not be able to obtain that end client agreement prior to preparing the LCA.

Business immigration practitioners may already know that cases involving telecommuting and roving employees are currently being given increased scrutiny by the DOL. In light of that, the proposed changes to the LCA form are not surprising and seem to stem from some concern on the part of the DOL, with regard to LCA compliance and the bona fides of the offer of employment. Following the request for end client information on the proposed form is the irrelevant and possibly offending question, “Is this a bona fide job opportunity?” The DOL’s makes no effort to hide its blatant mistrust of the employer who places its employee at an end client site.

In recent times, the US government has taken small steps to attract foreign workers and to show that they are an asset rather than a liability. The changes to the LCA will again add more burdens on the employer by eliminating flexibility. On March 12, 2012, the USCIS issued revised guidance indicating that the failure to obtain an end client letter would not be fatal to an H-1B petition. The DOL is now insisting on exactly that by requiring that the precise worksite be listed on the LCA. We need less regulation rather than more in order for US companies to attract global talent.  In addition to the proposed changes to the LCA, there is proposed legislation in the form of HR 3012 (following the compromise between Senators Grassley and Schumer) that will grant the DOL draconian powers in denying LCAs based on undefined indicators of suspected fraud and thus hold up the processing of H-1B petitions.    Are the proposed changes to the LCA form taking two steps back?

Cyrus Mehta

Stop the Assault on Employment Immigration to the USA

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At the behest of Senator Grassley (R-IA), the DHS Office of Inspector General recently issue a controversial report, The Effects of USCIS Adjudication Procedures and Policies on Fraud Detection by Immigration Service Officers. I wonder about the intentions of Senator Grassley who put a hold on the Fairness For High Skilled Immigrants Act, which passed the Republican controlled House of Representatives by a landslide on November 29, 2011. More recently, Senator Grassley also put a hold on the Startup Visa Act, which has also received bipartisan support. Is he truly concerned about the integrity of the system or is there a deeper hidden agenda. Mind you, he has also been a foe of immigration from India with his recent opposition to the use of the H-1B and B-1 visas by Indian IT professionals. It is amazing how one Senator, who has only one vote among 100 Senators, can have so much influence over immigration policy. It is time to speak out.The report stems from a pet concern of Senator Grassley, as expressed by Judiciary Committee Chairman Lamar Smith in a February 15, 2012 hearing  before the House Subcommittee on Immigration, about whether “senior [USCIS] leaders are putting pressure on employees to approve more visa applications, even if the applications might be fraudulent or the applicant is ineligible.”

The Inspector General interviewed 147 managers and staff, received 256 responses to an online survey, and reviewed USCIS policies related to the effort to detect benefit fraud. The report was based on testimonials, not empirical data. The report recommended process improvements, such as instituting more training and collaboration to improve the fraud referral process; developing additional quality assurance or supervisory review procedures to strengthen identification of names and aliases of those seeking an immigration benefit; performing nationwide onsite outreach efforts to discuss the performance management system with Immigration Service Officers (ISOs); developing standards to permit more time for an ISO’s review of case files; revising policy on requests for evidence (RFEs) to clarify the role that the requests play in the adjudication process; and developing a policy to “establish limitations for [USCIS] managers and attorneys when they intervene in the adjudication of specific cases.” The report stated that “special treatment of complainants fosters a sense among ISOs that USCIS inappropriately grants benefits in certain cases.”

The report noted that “[t]here may be a basis for clarifying adjudication policy for O visa petitions. A low approval rate is not one of them.” The Inspector General found that O visa petitions are granted at a high rate. “Quality assurance information we examined demonstrates that excessive O visa approvals are more likely than denials.” The report stated, “From January 2008 through March 2011, the California and Vermont service centers approved 40,719 of 44,386 O visa petitions (91.7%). This approval rate exceeds the approval rate for many other nonimmigrant worker petitions. During the same time period, the two centers approved 78.5% of H-1B (specialty occupations) and 76.1% of L-1B (specialized knowledge worker) petitions.”

The Inspector General’s report noted, however, that: (1) the testimonial evidence shared by interviewees may not represent views shared by other employees; (2) USCIS has taken action to diminish threats to the immigration benefits system; (3) general employee concerns about the impact of production pressure in the quality of ISO decisions “do not mean that systemic problems compromise the ability of USCIS to detect fraud and security threats; (4) “[n]o ISOs presented us with cases where benefits were granted to those who pose terrorist or national security threats”; and (5) “[e]ven those employees who criticized management expressed confidence that USCIS would never compromise national security on a given case.”

The report concluded, however, that “[e]ven with the additional security checks and process improvements USCIS has made in the past several years, national security and fraud concerns may require more thorough review of immigration applications and petitions.” The OIG noted that “[a]dditional documentation, or further insight gained through more interview questions, would ensure that ISOs have greater confidence before making a decision.” Also, the report suggests that “Congress may wish to raise the standard of proof for some or all USCIS benefit issuance decisions.”

As an immigration practitioner, the Inspector General’s conclusions about applications being granted  too easily have no bearing with reality.  A filing of an H-1B or L petition, especially in certain industries such as IT consulting, results in a lengthy and detailed RFE asking for every aspect of the job duties, elaborate itineraries and unrealistic work schedules (such as the percentage of time performing each duty)  and other unnecessarily and trivial information about the employer and the employment. This is true even if the USCIS has been approving an H-1B petition previously on the exact facts for the very same worker who must be now be on his 10th year in H-1B status. Also, in the case of an H-1B worker in an IT consulting company who is placed at a third party client, the employer has to repeatedly demonstrate that it has a right of control  under the Neufeld Memo over this worker’s employment even if the employer demonstrated this in great detail when it last filed a request for an H-1B extension.

Senator Grassley, I ask you to put yourself in the shoes of this H-1B worker who has an approved I-140 immigrant visa petition for the green card, but is still waiting endlessly for it, along with his family, only because of the long waits in the EB-2 or EB-3 for India. If you did not put a hold on the Fairness for High Skilled Immigrants Act, this H-1B worker may have received a green card by now or close to receiving one. He now needs to wait nervously each year for an approval, with the fear that the H-1B may be denied this time around even though it got approved under the same facts the year before and the year before that. If the H-1B gets denied this time under some arbitrarily invented heightened scrutiny standard,  he and his family will fall out of status and will have to most likely need to leave the US after working in the US legally for 10 years, paying taxes and otherwise contributing to the productivity of his employer and clients. He will also be forced to yank his brilliant children out of school disrupting their lives and causing great turmoil in their young  impressionable minds.

If the OIG report becomes USCIS policy, it will kill and stifle a US employer’s ability to bring in skilled foreign national workers on H-1B, L-1 and O-1 visas. Despite Senator Grassley placing a hold on the Startup Visa Act, the DHS in August 2011 announced initiatives for entrepreneurs who founded their own startups to be able to have the company file for an H-1B visa on their behalf. This initiative too will get killed because if the government wants to look for fraud for the sake of satisfying certain statistical requirements, it will find it by shifting the goal posts. Look how many times over the past 10 years the USCIS has redefined what it means by the US equivalent of an Indian bachelor’s degree or equivalent education, thus blowing apart I-140 petitions approved after the employer meticulously but unsuccessfully tested the US labor market. Or look how the Neufeld Memo has been aimed against a very successful business model that has served the needs of Fortune 500 US corporations. If we see stricter adjudications, the US will be deprived of the talents and vision of foreign entrepreneurs who have a burning desire to set up startups in the US even in the absence of the Startup Visa Act, which have the potential to do brilliantly well like Google, E-bay or Yahoo.

At the February 15, 2012 Congressional hearing, the testimony of Bo Cooper, former General Counsel of the Immigration and Naturalization Service, is worth noting. Summaries of other witnesses at this Congressional hearing can be found in our forthcoming March 2012 Immigration Update.  Mr. Cooper said that USCIS has released official data since the report came out. He noted that recent analysis shows that the data refute concerns “that USCIS may be institutionally biased toward unjustified approvals and that the agency observes policies that would suppress RFE issuance.” The data tell the opposite story, he said: “Particularly with respect to the key nonimmigrant categories for foreign professionals, denial rates and RFE rates have risen very sharply in recent years.”

The “most startling example,” Mr.Cooper said, appears in the L-1 program, which is used by multinational corporations to transfer managers, executives, and specialists into the United States. Noting that such visas “are an essential component of a huge range of productive economic activity in this country,” he said that L-1 visas are critical to attracting foreign investment that supports the creation of jobs for U.S. workers and are critical when U.S. companies acquire companies based oversees and need to have the acquired company’s specialists come to the United States to integrate their expertise and processes. L-1 visas are also critical to companies who need to bring specialists from their overseas affiliates into their research centers and operations in the United States, he noted. “Without predictable, reliable access to these visas, employers find themselves having to move jobs and projects to other countries.”

The data for employees with specialized knowledge in the L-1B program “shows a steep rise in denials and requests for evidence beginning in 2008,” he said, noting that the denial rate for L-1B petitions more than tripled in 2008 and is now at nearly quadruple the pre-2008 rate, at 27 percent in 2011. The RFE rate change is even starker, he said. From 2005 to 2011, the rate soared from 9 percent to 63 percent of L-1B cases.

He also noted that in the L-1A program for managers and executives being transferred within multinational corporations, the RFE rate rose from 10 percent in 2005 to 51 percent in 2011. Denial rates rose 75 percent over five years, from 8 percent in 2007 to 14 percent in 2011. In the H-1B program for professionals in specialty occupations, the denial rate increased from 11 percent in 2007 to 17 percent in 2011. Over a quarter of all H-1B filings generated an RFE in 2011.

Seen in the light of this data, Mr. Cooper said “there is no basis for the concern expressed in the OIG report that USCIS has an institutional bias in favor of approvals or against RFEs.” In fact, he said, the data show the opposite trend. Noting that USCIS said in its response to the OIG report that it is reviewing its RFE policy and aims to issue new RFE guidance this year, Mr. Cooper recommended that the new policy reflect “the needs of today’s business environment and the innovation economy,” and that it be monitored carefully once put into practice.

Finally, the Inspector General’s report asks that the standard for adjudicating visa petitions be raised from the “preponderance of evidence standard” to something higher, such as the “clear and convincing evidence” standard or the even higher standard used in criminal proceedings, which is “beyond a reasonable doubt.” Under the preponderance of evidence standard, applicants have to demonstrate that the facts in their case are slightly more true than not true. Even though the preponderance of evidence standard requires a lesser degree of proof than the clear and convincing standard, this does not mean that it provides an invitation for fraud. The preponderance of evidence is the common standard used in civil proceedings, and allows the USCIS examiner to fairly evaluate very nebulous criteria while giving the benefit of doubt to the application, for instance, whether an O-1 visa applicant is extraordinary or not or whether an L-1B worker has specialized knowledge. If the applicant provided patently fraudulent documentation, he or she can be charged with the fraud ground of inadmissibility under INA § 212(a)(c)(6) and there also exist tough criminal sanctions.  In any event, it does not seem that the USCIS is faithfully adhering to the preponderance of evidence standard even today, and officially raising the bar will surely serve as an invitation for USCIS officials to arbitrarily deny even more case without fairly weighing the evidence. This would further undermine the ability of US employers to use our employment-based immigration system in an effective and rational manner to benefit them and simultaneously make the US prosper.

Cyrus Mehta

What a Company Needs to Know That Hosts but Does Not Employ Skilled Nonimmigrant Workers

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I would like to share my article, Due Diligence Considerations For Companies Contracting With Vendor Service Providers, which appeared in the New Jersey Lawyer, October 2011 issue. This is an emerging area and it behooves corporations that contract with companies for skilled nonimmigrant workers on H-1B, L-1 or B-1 visas to know more about whom they are getting on board. Indeed, exercising greater due diligence can be a win-win for all the parties involved – the petitioning company, the end user client company and the nonimmigrant worker. In addition to protecting itself from potential liability, the client company by cooperating with the petitioning company on a number of fronts can also ensure a swift and more firm approval of the visa.

Many corporations in need of specialized skilled workers who are in short supply do not sponsor foreign nationals for their work permits. Instead, these companies contract with other entities that employ skilled workers, who in turn are then assigned to the client company for a specific project. This is especially true with information technology (IT) services, where foreign nationals on temporary visas predominate. While the obligations for a sponsoring employer are onerous, it is important for the end user client company to be vigilant to ensure that foreign national workers assigned to a 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.

Here are a few examples of how an end user company can get unwittingly caught up with liability. 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 U.S. 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 (a 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.

Similarly, under a January 8, 2010, USCIS guidance memorandum by Donald Neufeld, concerning employer/employee relationship in H-1B petitions, especially where an H-1B employer places employees at a third-party site, it is important for the sponsoring employer to demonstrate that it exercises the right of control over its non-citizen employee if he or she is placed at a third-party client site. In order to win an H-IB approval, the petitioning employer generally requests confirmation from its client company about the H-IB worker’s assignment arrangement at its location, and that it is the employer who actually exercises the ultimate control over the employment. The end user client company, often through lay­ers of middlemen vendors, must take care that the letter accurately describes the arrangement. On the one hand, the issuance of such a letter confirms that the company is not the employer, thus eliminating a situation where it may be held liable as an employer for wages and benefits. On the other hand, there may be situations where the petitioning enti­ty exercises no control over the H-IB worker’s employment, and the person reports directly to a manager with the client company rather than the petitioner. In the post Neufeld Memo era, client companies may also want to cooperate with the petitioning company to allow a representative to visit the client location to evaluate its employee’s performance and to provide regular assessments and feedback of the nonimmigrant worker’s performance to the petitioning employer even while the immediate supervision lies with the client company.

Care should, therefore, be taken not to inadvertently misrepresent the nature of the assignment at the company.  Moreover, the petitioner must demonstrate that the position being filled by the H-1B worker at the company requires a bachelor’s degree or higher in a specialty.  Here too, the client must take the utmost precautions to not misrepresent the minimum requirements of the position.  Some end user companies choose not to issue letters as they are not obligated to do so. If however they really need the services of the skilled nonimmigrant worker for a project, it would be more prudent for them to cooperate with respect to such a letter – as well as confirming who exercises immediate supervision and ultimate control – as that would allow the nonimmigrant to win the visa approval while giving the client company an opportunity to also conduct due diligence regarding the hosting of such an individual.

Moreover, if an H-1B worker is assigned to a client location, DOL regulations require that the petitioning employer must have posted notice at two conspicuous places where the work is actually performed informing about the occupational classification, wages offered, period of employment and the work location, among other things. While the petitioner is solely responsible for posting the notice at the physical location, it would behoove the responsible officer at the client company to cooperate with the posting in order to ensure that its contractor is fully compliant with the attestation requirements.

Finally, the USCIS’s fraud detection national security division may also pay a “friendly” surprise visit to the client company to ensure that the work location and other terms of employment are consistent with the H-1B petition. Similarly, specialized knowledge workers on L-1B visas at client locations must satisfy the FDNS investigator that they are under the “control and supervision” of the petitioning company, and this person should also be implementing a product or application of the contracting company or deploying a methodology that is unique to the petitioning company. Moreover, any letters issued by the client company can also be verified via a surprise call from the State Department when the foreign national applies for the nonimmigrant visa at the US consulate.

By exercising due diligence, a client company can avoid an investigation, which even if not targeted against it can still generate bad publicity, as well as potential liability. More important, by cooperating with the petitioning company, the nonimmigrant visa petition can withstand scrutiny while it is being processed, and can potentially result in a quicker and surer approval, resulting in the skilled nonimmigrant worker being able to come on board to work on a critical project for the client company.

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

The LCA in the Age of Telecommuting

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By Cyrus D. Mehta and Myriam Jaidi

An H-1B employee has a job with a company based in New Jersey. Her job can, however, be performed remotely from virtually anywhere in the United States or the world. So long as she has good internet access, she can sign in to her employer’s server and perform her work as if she were in the office. She usually works at her office, but has decided to work from home in Pennsylvania for two months. When her boyfriend’s mother, who lives in California, becomes ill, she and her boyfriend go out to care for her, staying for six weeks. She then goes on a cruise in US waters, still telecommuting to work. She has no work-related duties in Pennsylvania or California (or out in US waters during the cruise), such as working with clients there, and will be effectively telecommuting to the New Jersey office. What would her employer need to do in order to comply with the Department of Labor’s regulations for H-1B workers, specifically with regard to the Labor Condition Application (LCA) rules?

As a background, the LCA is to an H-1B worker like a leash is to a dog. The LCA ensures that notice is provided to US workers about the fact that an H-1B worker is being sought, the occupational classification, the wages offered, the period of employment, locations at which the H-1B worker will be employed, and that the LCA and accompanying documents are available for public inspection. See 20 CFR § 655.734.

Telecommuting (or “telework” as labeled by the US government) has become more and more prevalent. (See studies here, http://tinyurl.com/6jcc7ww.) Telecommuting employees raise important questions and issues in the immigration context, especially with regard to the Labor Condition Application required for H-1B nonimmigrant workers.

The first issue raised under the facts above is whether a new LCA is required for each location, and if so, whether the posting should be done in the employee’s home and in her boyfriend’s mother’s home.

These situations raise interesting concerns about how (and where) work is “actually” performed (as stated in the regulations) in a global economy increasingly characterized by telecommuting. Can it be argued that because the employee is logging into the employer’s system in New Jersey, the work is actually being performed in New Jersey? Not likely given the structure of the regulatory scheme, but it is something that should be considered in the global economy.

The laws governing the LCA and H-1B processes are out-dated. They do not recognize, and in fact guidance issued by USCIS in 2010, available at http://tiny.cc/z3ZU8, makes clear that some government agencies view with skepticism, the global economy and the increasing frequency of telecommuting.

The LCA and the attestations an employer makes when submitting one were developed as a means to protect wages and working conditions, and to ensure that US workers are made aware of the hiring of H-1B professionals (which makes the concept of posting an LCA in someone’s home or vacation hotel room somewhat absurd). The regulatory scheme is largely location-oriented. Violation of the regulatory framework may result in fines, debarment from participation in the LCA (and thus H-1B) process, and further investigations. Thus, even where a company pays the required wage for any location and has no intent of violating the procedures, a failure to comply with the specific technical requirements, even where compliance seems absurd, may result in penalties.

USCIS has become more location-oriented in its analysis of H-1B petitions. USCIS now examines worksite issues more closely and, with the recently issued Form I-129, has begun to request greater detail on worksites and itineraries for all H-1B petitions. The agency’s interest stems in part from its concern with the existence of a proper employer-employee relationship to support an H-1B petition. (For more information, see From Problem to Springboard: Tips on Using the Neufeld Memorandum in Support of H-1B Petitions, available at http://tinyurl.com/33t7fkz.) Such a relationship is defined in part by where an employee is working and whether the employer has control over the employee’s work at that location. The companies currently subjected to the highest scrutiny are those that place workers at end client sites (i.e., work locations not controlled by the petitioning employer) to perform services/work. But the concerns raised in that category may spread to other circumstances, such as the employee telecommuting from home.

The definitions addressing where an H-1B employee works were developed originally with a focus on the worker’s actual physical location, assuming that the job duties would need to be performed in a particular location. Gathering statistics and issuing prevailing wage determinations require pinpointing a particular city or geographic area. The entire prevailing wage framework is place-based. 20 CFR 655.715 provides the following definitions:

Area of intended employment means the area within normal commuting distance of the place (address) of employment where the H–1B nonimmigrant is or will be employed. …

Place of employment means the worksite or physical location where the work actually is performed by the H–1B, H–1B1, or E–3 nonimmigrant.

These definitions are vague and do seem to leave room to argue that an H-1B worker who can be anywhere but works through the employer’s location via the internet (thus the work arguably “actually is performed” at the employer’s location), is always within “normal commuting distance” so long as the employee has proper internet access. If all that the worker needs is a computer and an internet connection to perform the work, then it would be most logical to post the LCA where the employer’s server is located! To go back to our hypothetical and show how absurd it can be, imagine our H-1B telecommuter embarking on a voyage on a cruise ship for more than 30 days from San Francisco, CA to Anchorage, Alaska. Each time the ship enters a location, which is not within commuting distance from the original location posted on the LCA, a new LCA will need to be posted on the cruise ship. So, her employer, who is a stickler about compliance, posts an LCA with a San Francisco, CA location, which is where the ship starts its voyage. By the time, the cruise ship sails up the waters adjoining Oregon and Washington, new LCAs will need to be obtained and posted on the cruise ship. Once the cruise ship is in Canada, we can assume that the DOL’s LCA regulations do not apply in foreign territories, but with the DOL you can never tell as it passionately attempts to expansively interpret its rules. Once the ship reaches Alaska, more rounds of LCA’s will need to be posted (as Alaska is a huge territory) until its final destination in Anchorage, Alaska.

Nevertheless, using the employer’s address even where the employee telecommutes because the work is being done virtually at the employer’s location has not been tested. This problem does not arise in the PERM labor certification process with roving employees, because an employer can obviate the problem by using headquarters as the base from which to conduct recruitment. See Cora-Ann Pestaina’s article PERM and the Roving Employee, available at http://tinyurl.com/64dhcv5. A DOL auditor who reviews a company’s LCA public access files may not accept this 21st century application of the policies and definitions. Therefore, however absurd it may sound, it might still be advisable to file an LCA for the worker who telecommutes, and have the worker post the LCA in two conspicuous locations in his or her home or the location from which he or she is telecommuting. In the alternative, the LCA notice provision may be satisfied by an electronic posting directed to employees in the relevant occupation classification. Pursuant to 20 CFR 655.734(a)(ii)(B), such electronic posting may be accomplished:

by any means [the employer] ordinarily uses to communicate with its workers about job vacancies or promotion opportunities, including through its “home page” or “electronic bulletin board” to employees who have, as a practical matter, direct access to these resources; or through e-mail or an actively circulated electronic message such as the employer’s newsletter. Where affected employees at the place of employment are not on the “intranet” which provides direct access to the home page or other electronic site but do have computer access readily available, the employer may provide notice to such workers by direct electronic communication such as e-mail ( i.e., a single, personal e-mail message to each such employee) or by arranging to have the notice appear for 10 days on an intranet which includes the affected employees (e.g., contractor arranges to have notice on customer’s intranet accessible to affected employees).

The benefit of electronic posting is that it may protect an employer in situations where the employee is working remotely from various locations (not office sites, but locations such as a relative’s home or vacation spot) for more than 30 days per year, based on the argument that the electronic posting covers all potential locations. There are some general problems with electronic notification – it does not obviate the need to obtain a new LCA when the H-1B telecommutes, nor does it obviate the need to pick an address to indicate on the LCA. Electronic posting only obviates the absurd situation of having an employee post the LCA in his or her home. Furthermore, the rules governing electronic posting are quite vague and thus fraught with risk. The rules do not make clear who has to be notified – all employees everywhere and anywhere who fall within the same “occupational classification” (and the rules do not indicate how narrowly or broadly that should be interpreted) or only those in the “area of intended employment.” Where is that in an economy increasingly characterized by telecommuting?

The DOL’s framework is location-focused, and gives no clear guidance on whether the work a telecommuting employee does is “actually is performed” at the employer’s address as listed on the LCA, and not where the telecommuting employee is located. What is clear is that one who works remotely for less than 30 days (or in some limited circumstances, up to 60 days, see 20 CFR 655.735((c)) in a one year period need not have a new LCA to cover that employee’s new location.

Even if the DOL has not taken a position on the issue, it is hoped that the DOL auditor who wishes to rigidly apply this 20th century rule on work locations in the 21st century may exercise discretion in not imposing a penalty if the employer has complied in every other aspect. The DOL auditor may decide that given the lack of clarity in this area, the employer took a good faith position. However, to ensure against such risks, employers may wish to prepare a new LCA indicating the address from which the individual will be telecommuting, and have the individual post the LCA in two locations at that address. Until the regulations catch up with reality in the 21st century, this would be the appropriate course of action.