Finnan, Fleischut & Associates

New USCIS Memo on H-1B Employment

            The U.S. Citizenship and Immigration Services (USCIS) issued a memorandum from its Associate Director for Service Center Operations – the ‘Neufeld Memo’ – on January 8, 2010.  In this policy memorandum, Mr. Neufeld attempts to clarify the USCIS’ policies regarding the necessary employer-employee relationship that must exist for most H-1B petitions to be approvable, with particular emphasis on guidelines that apply in H-1B cases where the beneficiary employee will be placed or provide consulting services to third-party clients or customers. 

Background

 An H-1B nonimmigrant is a professional degree-holder, seeking temporary employment in a specialty occupation as defined by the Immigration and Nationality Act (INA, or the Act), and corresponding Federal regulations.  The H-1B category allocates 65,000 new H-1B numbers annually to foreign nationals, with another 20,000 set aside specifically for those holding advanced degrees (Master’s degree or higher) earned from U.S. universities.  These annual numerical limits are commonly known as "the H-1B cap."   New ‘cap-subject’ H-1B petitions are for persons seeking H-1B status who have not previously held such status within the past six years (unless that person would be eligible for a full new six years of H-1B status).  Foreign workers who already hold H-1B status in the U.S. are not subject to the cap; these include extensions of stay, amendments, and change of employer H-1B petitions (unless the previous employer was a ‘cap-exempt’ entity, such as a university). 

The "Right to Control"

 The point of departure for the discussion is the requirement in the government’s H-1B regulations that a proper H-1B petitioner must have an "employer–employee relationship" with the H-1B beneficiary (employee).  The Neufeld Memo states that the lack of a clear definition on what constitutes a valid employer-employee relationship has been problematic for USCIS when faced with common third-party placement scenarios; that is, when an H-1B beneficiary (employee) is placed at a worksite operated by some third party other than the petitioner (employer) of the H-1B worker.  According to longstanding legal precedents, the primary determinant of an employer–employee relationship is whether the ‘employer’ has the right to control the means and manner in which the ‘employee’ carries out his/her work.  According to the Neufeld Memorandum, "Petitioner control over the beneficiary must be established when the beneficiary is placed into another employer’s business."

The Neufeld Memo outlines eleven factors that USCIS may consider in determining whether a petitioner has established a "right to control" the beneficiary’s work.  These include:

1)      Does the petitioner supervise the beneficiary and is such supervision off-site or on-site?

2)      If the supervision is off-site, how does the petitioner maintain such supervision?

3)      Does the petitioner have the right to control the work of the beneficiary on a day-to-day basis?

4)      Does the petitioner provide the tools or instrumentalities needed for the beneficiary to perform the duties of the employment?

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