USCIS memo on determining employer-employee relationship for H-1B Petitions – Part I

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By Michael Phulwani

The Associate Director, USCIS Service Center Operations, Donald Neufeld issued a memorandum on January 8, 2010, which provides guidance, in the context of H-1B petitions, on the requirement that a petitioner establish an employer-employee relationship exists and will continue to exist with the beneficiary throughout the duration of the requested H-1B validity period. The con

tents of this memorandum will be discussed in details in this article as well as in the next two articles.

The Immigration and Nationality Act (INA) defines an H-1B nonimmigrant as an alien:

Who is coming temporarily to the United States to perform services……in a specialty occupation….who meets the requirements of the occupation specified in section…

The Code of Federal Regulations (C.F.R.) provides that a “United States employer” shall file an H-1B petition. The term “United States employer,” in turn, is defined in C.F.R. as follows:

United States employer means a person, firm, corporation, contractor or other association or organization in the United States which:

* Engages a person to work within the United States;

* Has an employer-employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise or otherwise control the work of any such employee; and

* Has an Internal Revenue Service Tax identification number.

In support of an H-1B petition, a petitioner must not establish that the beneficiary is coming to the United States temporarily to work in a specialty occupation by the petitioner but the petitioner must also satisfy the requirement of being a US employer by establishing that a valid employer-employee relationship exists between the US employer and the beneficiary throughout the requested H-1B validity period. To date, USCIS has relied on common law principles and two leading Supreme Court cases in determining what constitutes employer-employee relationship.

The lack of guidance clearly defining what constitutes a valid employer-employee relationship as required by 8 C.F.R. has raised problems, in particular, with independent contractors, self-employed beneficiaries, and beneficiaries placed at third-party worksites. The placement of the beneficiary/employee at a work site that is not operated by the petitioner/employer (third-party placement), which is common in some industries, generally makes it more difficult to assess whether the requisite employer-employee relationship exists and continues to exist.

While some third-party placement arrangements meet the employer-employee relationship criteria, there are some instances where the employer and beneficiary do not maintain such a relationship. Petitioner control over the beneficiary must be established when the beneficiary is placed into another employer’s business and expected to become a part of that business’s regular operations. The requisite control may not exist in certain instances when the petitioner’s business is to provide its employees to fill vacancies in businesses that contract with the petitioner for personnel needs. Such placements are likely to require close review in order to determine if the required relationship exists.

Furthermore, USCIS must ensure that the employer is in compliance with the Depart-ment of Labor regulations requiring that a petitioner file an LCA specific to each location where the beneficiary will be working. In some situations, the location of the petitioner’s business may not be located in the same LCA jurisdiction as the place the beneficiary will be working.

Field guidance Employer-employee relationship
An employer who seeks to sponsor a temporary worker in an H-1B specialty occupation is required to establish a valid-employer-employee relationship. Therefore, USCIS must look at the number of factors to determine whether a valid employer-employee relationship exists. Engaging a person to work in the United States is more than merely paying the wage or placing the person on the payroll. In considering whether or not there is a valid “employer-employee relationship”, for the purposes of H-1B adjudication, USCIS must determine whether the employer has sufficient level of control over the employee. The employer must be able to establish that it has the right of control over when, where and how the beneficiary performs the job and USCIS will consider the following to make such a  determination (with no  one factor being decisive):

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

* If the supervision is off-site, how does the petitioner maintain such supervision, i.e. weekly calls, reporting back to the main office routinely, or site visits by the petitioner?
*Does the petitioner have the right to control the work of the beneficiary on a day-to day basis if such control is required?
* Does the petitioner provide the tools or instrumentalities needed for the beneficiary to perform the duties of employment?
* Does the petitioner hire, pay and have the ability to fire the beneficiary?
* Does the petitioner evaluate the work-product of the beneficiary i.e. progress/performance reviews?
* Does the petitioner claim the beneficiary for tax purposes?
* Does the petitioner provide the beneficiary any type of employee benefits?
*Does the beneficiary use proprietary information of the petitioner in order to perform the duties of employment?
*Does the beneficiary produce an end-product that is directly linked to the petitioner’s line of business?
* Does the petitioner have the ability to control the manner and means in which the work product of the beneficiary is accomplished?

The common law is flexible about how these factors are to be weighed. The petitioner will have met the relationship test, if, in the totality of the circumstances, a petitioner is able to present evidence to establish its right to control the beneficiary’s employment. In assessing the requisite degree of control, the officer should be mindful of the nature of the petitioner’s business and the type of work of the beneficiary. The petitioner must also be able to establish that the right to control the beneficiary’s work will continue to exist throughout the duration of the beneficiary’s employment term with the petitioner.

To be continued

Michael Phulwani is a prominent attorney admitted to practice law in New York, New Jersey and India. He practices immigration and nationality laws and visa matters in the USA and abroad. He is a frequent lecturer on immigration laws and co-hosts several TV and radio programs on immigration. In this column, Phulwani will discuss frequent problems relating to immigration legislation and answer questions from our readers. All questions should be forwarded to Michael Phulwani, 888 Maywood Avenue, Maywood, NJ 07607.

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