What does the new memo regarding third-party worksites mean for the H-1B program?
The H-1B program allows U.S. employers to bring foreign workers (professionals) to the U.S. on a temporary basis (generally up to 6 years). The employers must demonstrate that the job offered requires at least a bachelor’s degree and that the foreign worker holds such a degree. In addition, the employer must pay a salary which is either the prevailing wage established by the Dept. of Labor, or the actual wage paid by the employer to other workers with the same education and experience, whichever is higher. There are 85,000 H-1B visas available each year and roughly 200,000 petitions filed by U.S. employers. As a result, USCIS created a lottery system in which petitions are selected randomly by a computer before they are assigned to an officer for adjudication.
Who are the H-1B employers?
Foreign students, graduates of U.S. universities, often decide to remain in the U.S. for an additional year (some qualify for up to 3 years) to work in their area of study. The program is called OPT (Optional Practical Training) and the job performed must relate to the student’s major. So, if you graduated with a degree in Engineering, you are not allowed to work in a restaurant, medical office or something unrelated to your major. While in OPT, many foreign students prove themselves and their U.S. employers wish to hire them for a longer period of time. These are H-1B direct employers. If the petition is selected and approved, the H-1B worker could stay in the U.S. for 6 years. During this period of time employers may sponsor them for a green card and extend the H-1B beyond the 6-year limit.
A significant player is represented by H-1B staffing agencies, most of them operating in the IT industry. These companies called “vendors” or “consulting companies” often have an established relationship with U.S. companies and are in charge of various IT projects. They hire foreign workers and sell their services at a premium price to U.S. employers who need it. Because an H-1B petition involves a lot of paperwork, U.S. companies prefer to hire a consulting company for a short-term project rather than file H-1B petitions themselves. As such, thousands of H-1B petitions are filed annually by these staffing agencies to bring foreign workers to the U.S., people who are often placed at third-party sites (the end-client).
What’s the new memo about?
The memo entitled “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party worksites” released a couple of days ago doesn’t alter the H-1B program. The number of H-1Bs, the selection of petitions and the eligibility criteria are the same. However, the memo directs USCIS officers to review more carefully those petitions that are filed by the staffing agencies.
USCIS claims that significant employer violations—such as paying less than the required wage, benching employees (not paying workers the required wage while they wait for projects or work) and having employees perform non-specialty occupation jobs—may be more likely to occur when petitioners place employees at third-party worksites.
According to the new memo, when a foreign worker will be placed at one or more third-party worksites, the staffing agency must demonstrate that it has specific and non-speculative qualifying assignments in a specialty occupation for the worker for the entire time requested on the petition. Evidence of actual work assignments may include (1) technical documentation, milestone tables, marketing analysis, cost-benefit analysis, brochures, and funding documents (2) copies of relevant, signed contractual agreements between the petitioner and all other companies involved in the beneficiary’s placement, if the petitioner has not directly contracted with the third-party worksite (3) copies of detailed statements of work or work orders signed by an authorized official of the ultimate end-client company where the work will actually be performed by the beneficiary (4) a letter signed by an authorized official of each ultimate end-client company where the beneficiary will actually work showing a description of the specialized duties the beneficiary will perform, the qualifications required to perform those duties, the duration of the job, salary or wages paid, hours worked, benefits, a detailed description of who will supervise the beneficiary and the beneficiary’s duties, and any other related evidence.
This memo is intended to be read together with the January 8, 2010, USCIS memorandum entitled “Determining the Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements” (Employer-Employee Memo). This Employer-Employee Memo provides guidance on the requirement that a petitioner establish that an employer-employee relationship exists and will continue to exist with the beneficiary throughout the duration of the requested H-1B validity period. When a beneficiary is placed into another employer’s business, the petitioner must establish that it continues to maintain an employer-employee relationship with the beneficiary. USCIS looks at a number of factors to determine whether a valid relationship exists, including whether the petitioner controls when, where, and how the beneficiary performs the job. Finally, the Employer-Employee Memo clarifies that the petitioner must submit an itinerary in compliance with current regulation at 8 CFR 214.2(h)(2)(i)(B), if the beneficiary will be performing services in more than one location. See also Matter of Simeio Solutions, LLC, 26 I&N Dec. 542, 548 n.9 (AAO 2015).This memorandum
What is the memo’s impact?
In the short term, we are likely to see more RFEs (Requests for evidence) and NOIDs (Notice of Intent to Deny) issued by USCIS and more petition denials for lack of sufficient evidence. In case of petition approvals, USCIS will certainly increase the number of audits at the work site to determine if the statements and documentation provided in the H-1B petitions are true.
In the long term, the high cost of legal representation with filing H-1B petitions and responding to RFEs and NOIDs corroborated with risks related to sanctions due to employer violations, will determine staffing agencies to file fewer H-1B petitions. Fewer petitions filed in the next years may mean higher chances for OPT students and others to be selected during the H-1B lottery.