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

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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. This is the second part of the three-part article on this memorandum.

Valid employer-employee relationship would exist in the following scenarios:

Traditional employment

The beneficiary works at an office location owned/leased by the petitioner, the beneficiary reports directly to the petitioner on a daily basis, the petitioner sets the work schedule of the beneficiary, the beneficiary uses the petitioner’s tools/instrumentalities to perform the duties of employment, and the petitioner directly reviews the work-product of the beneficiary. The petitioner claims the beneficiary for tax purposes and provides medical benefits to the beneficiary.
(Exercise of actual control scenario)

Temporary /occasional off-site employment
The petitioner is an accounting firm with numerous clients. The beneficiary is an accountant. The beneficiary is required to travel to different client sites for auditing purposes. In performing such audits, the beneficiary must use established firm practices. If the beneficiary travels to an off-site location outside the geographic location of the employer to perform an audit, the petitioner provides food and lodging costs to the beneficiary. The beneficiary reports to a centralized office when not performing audits for clients and has an assigned office space. The beneficiary is paid by the petitioner and receives employee benefits from the petitioner.
(Right to Control Scenario)

Long-Term/Permanent off-site employment
The petitioner in an architectural firm and the beneficiary is an architect. The petitioner has a contract with a client to build a structure in a location out of state from the petitioner’s main offices. The petitioner will place its architects and other staff at the off-site location while the project is being completed. The contract between the petitioner and client states that the petitioner will manage its employees at the off-site location. The petitioner provides the instruments and tools used to complete the project; the beneficiary reports directly to the petitioner for assignments, and progress reviews of the beneficiary are completed by the petitioner. The underlying contract states that the petitioner has the right to ultimate control of the beneficiary’s work.
(Right to control is specified and actual control is exercised)

Long term placement at a third party work site
The petitioner is a computer software development company which has contracted with another, unrelated company to develop an in-house computer program to track its merchandise, using the petitioner’s proprietary software and expertise. In order to complete this project, petitioner has contracted to place software engineers at the clients’ main warehouse where they will develop a computer system for the client using the petitioner’s software designs. The beneficiary is a software engineer who has been offered employment to fulfill the needs of the contract in place between the petitioner and the client. The beneficiary performs his duties at the client’s company facility. While the beneficiary is at the client company’s facility, the beneficiary reports weekly to a manager, who is employed by the petitioner. The beneficiary is paid by the petitioner and receives employee benefits from the petitioner.
(Right to control is specified and actual control is exercised)

The following scenarios would not present a valid employer-employee relationship
Self-employed beneficiaries

The petitioner is a fashion merchandising company that is owned by the beneficiary. The beneficiary is a fashion analyst. The beneficiary is the sole operator, manager and employee of the petitioning company. The beneficiary cannot be fired by the petitioning company. There is no outside entity which can exercise control over the beneficiary. The petitioner has not provided evidence that the corporation and not the beneficiary herself will be controlling her work.
(No Separation between Individual and Employing Entity; No independent Control Exercised and No Right to Control Exists)

Independent contractors
The beneficiary is a sales representative. The petitioner is a company that designs and manufactures skis. The beneficiary sells these skis for the petitioner and works on commission. The beneficiary also sells skis for other companies that design and manufacture skis that are independent of the petitioner. The petitioner does not claim the beneficiary as an employee for tax purposes. The petitioner does not control when, where or how the beneficiary sells its or other manufacturer’s products. The petitioner does not set the work schedule of the beneficiary and does not conduct performance reviews of the beneficiary.
(Petitioner has no right to control and No exercise of control)

Third -party placement/job-shop
The petitioner is a computer consulting company. The petitioner has contracts with numerous outside companies in which it supplies these companies with employees to fulfill specific staffing needs. The specific positions are not outlined in the contract between the petitioner and the third-party company but are staffed on an as-needed basis. The beneficiary is a computer analyst. The beneficiary has been assigned to work for the third-party company to fill a core position to maintain the third-party company’s payroll. Once placed at the client company, the beneficiary reports to a manager who works for the third-party company. The beneficiary does not report to the petitioner for work assignments, and all work assignments are determined by the third-party company. The petitioner does not control how the beneficiary will complete daily tasks and no propriety information of the petitioner is used by the beneficiary to complete any work assignments. The beneficiary’s end-product, payroll is not in any way related to the line of business of the petitioner’s line of business, which is computer consulting. The beneficiary’s progress reviews are completed by the client company, and not the petitioner.
(Petitioner has no right to control and No exercise of control)

The following is an example of a regulatory exception where the petitioner is not the employer:
Agents as petitioners

The petitioner is a reputable modeling agency that books models for various modeling jobs at different venues to include fashion houses and photo shoots. The beneficiary is a distinguished runway model. The petitioner and beneficiary have a contract between one another that includes such terms as to how the agency will counsel, advise and promote the model for fashion runway shows. The contract between the petitioner and the beneficiary states that the petitioner will receive a percentage of the beneficiary’s fees when the beneficiary is booked for a runway show. When the beneficiary is booked for a runway show, the beneficiary can negotiate pay with the fashion house. The fashion house (actual employer) controls when, where and how the model will perform her duties while engaged in the runway shows for the fashion house.
(Agent has no right to control; fashion House has and exercises right to control)

to be concluded

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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