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U.S. Immigration Service Adds New Requirements to H-1B Employees Working Off-Site

Immigration Law Update Grant Sovern, Lisa D. Duran, Eric D. Ledbetter, Maria F. Kallmeyer

The Citizenship and Immigration Services ("CIS") has issued a memorandum (called the Neufeld Memo because it was issued by Donald Neufeld who, at the time, was the Associate Director of Service Center Operations for the CIS) to its adjudicating officers, giving them new guidance on how to evaluate whether an acceptable employer-employee relationship exists for immigration sponsorship. The Neufeld Memo will surely effect the adjudication of H-1B petitions filed by placement agencies or "body-shops." Yet, it will also require more traditional employers to examine their practices and H-1B petitions for any employee who is placed to work at a client site.

This update will not address the specific legal basis for the Neufeld Memo. While we believe the Memo may constitute rulemaking outside the bounds of the Administrative Procedures Act, H-IB petitioning employers will still need to deal with the requirements, at least in the short-term.[1] The Memo requires employers to prove they have a "sufficient level of control over the employee…" as well as "the right to control" (not necessarily the actual control) over when, where, and how the beneficiary performs the job. USCIS will consider the following to make such a determination:

  1. Does the petitioner supervise the foreign worker and is such supervision offsite or onsite?

  2. If the supervision is offsite, how does the petitioner maintain supervision?
  3. Does the petitioner have the right to control the work of the foreign worker on a day-to-day basis if such control is required?
  4. Does the petitioner provide the tools or instrumentalities needed for the foreign worker to perform the duties of employment?
  5. Does the petitioner hire, pay and have the ability to fire the foreign worker?
  6. Does the petitioner evaluate the work product of the foreign worker?
  7. Does the petitioner claim the foreign worker for tax purposes?
  8. Does the petitioner provide the foreign worker any type of employee benefits?
  9. Does the foreign worker use proprietary information of the petitioner in order to perform the duties of employment?
  10. Does the foreign worker produce an end-product that is directly linked to the petitioner's line of business?
  11. Does the petitioner have the ability to control the manner and means in which the work product of the foreign worker is accomplished?

The Memo also lists the types of evidence a petitioning employer may use to establish it has the level of control over H-IB employees working at client sites, including an itinerary of services or engagements, the employment agreement or offer letters that clearly describe the employer-employee relationship, contracts between the petitioning employer and the client, etc.

It has been reported that Customs and Border Protection ("CBP") officers at Newark Airport used the Neufeld Memo to prescreen airline passengers for H-1B employees, who were then questioned about their work at client sites and how they were supervised. Several of the H-1B workers were reportedly deported for providing answers that were unsatisfactory to CBP officers. Reports of this caused great concern among H-1B workers and employers. However, subsequent reports indicate CBP may have acted against those employees because it was conducting a specific investigation of their employer. Nevertheless, it gives employers a glimpse into how the U.S. government could use the provisions of this Memo.

The Memo does give employees a good map to follow in cases where the employer has sufficient control. Great care and exhaustive evidence for H-1B filings should be considered for first-time H-1B petitions and even extension petitions where the H-1B employment was already approved for the same employer. The Memo also purports to limit or even eliminate the options for the owner of a company to obtain H-1B status. Any employer that asks H-1B employees to work outside of an employer's own office or facility must pay careful attention to these issues in addition to the already existing regulations about proper Labor Condition Application ("LCA") filings and postings. It is very important for these employers to make an accounting of their compliance efforts where employees work at different locations or client sites. The Neufeld Memo is just another reminder to employers that CIS and other parts of the government are taking compliance issues very seriously. In fact, CIS plans to initiate 25,000 site visits in 2010 to audit employer compliance, five times the number of such visits in 2009.

Quarles & Brady attorneys have been assisting employers with LCA and public inspection file audits and I-9 audits as the government has stepped up enforcement efforts. Please call your Quarles & Brady attorney or Grant Sovern at 608-283-2668 / grant.sovern@quarles.com if you would like to discuss the Neufeld Memo's effect, or performing self-audits or outside compliance audits.


[1] The American Immigration Lawyers Association has already explained the flawed legal basis of the memo and parties may prepare litigation, depending on how CIS implements the Memo.