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H-1B Employers Must Prove Employer-Employee Relationship

As of April 22, 2011, the USCIS has accepted approximately 8,000 petitions subject to the 65,000-cap and 5,900 out of the 20,000 H-1B master’s cap. If the trend for this fiscal year follows that of 2008 and 2009, 25-30% of these H-1B petitions will be the subject of a request for evidence (RFE). This is double the RFE rate for 2007.

An RFE is sent when an adjudications officer needs additional information on the pending petition or application. One of the main reasons for the increase in RFEs is the January 2010 guidance on employer-employee relationships issued by Donald Neufeld, USCIS Associate Director for Service Center Operations.

The Neufeld Memorandum requires an H-1B petitioner to show not only that the foreign national will work in a specialty occupation, but also that a valid employer-employee relationship will exist between the petitioner and beneficiary during the H-1B validity period.

An employer-employee relationship exists when the employer has the right to control the manner in which the services are to be performed by the employee. In the H-1B context, such a relationship may be lacking in certain instances where the beneficiary performs work at off-site locations or for third parties.

The memorandum lists eleven questions that must be addressed in order to establish an employer’s right to control, including whether or not the petitioner will supervise the beneficiary on-site; hire, pay and have the ability to fire the beneficiary; provide employee benefits; and evaluate the beneficiary’s work product.

The USCIS analyzes the evidence with a view to the “totality of circumstances”. The H-1B petitioner will pass the employment relationship test if it can prove its right to control the beneficiary’s employment, if not the actual exercise thereof.

The Neufeld Memo illustrates through different scenarios which types of relationships would be valid or approvable and which ones would not be eligible for H-1B status. The first type of valid relationship pertains to a traditional employment scenario where the petitioner exercises actual control over the beneficiary’s employment. In this scenario, the beneficiary works at a location owned or leased by the petitioner, is given benefits and compensated as an employee by the petitioner for tax purposes.

The three other examples of valid relationships involve placement at off-site or third-party work locations and vary according to whether the placement is short- or long-term. In these situations, the petitioner must clearly show its right of control through documentary evidence such as the employment agreement, contracts with its clients, pay stubs, and proof that petitioner reviews the beneficiary’s work product.

The memorandum also lists examples of situations where the employer-employee relationship is absent. Self-employment – where there is no employing entity that can exercise control over the beneficiary’s work – is not approvable for H-1B employment. Independent contractors do not have the status of employees and are not subject to the control of the petitioner.

Third-party placement or “job shops”, under which most staffing scenarios fall, also fail the control test and do not qualify for H-1B status, according to the USCIS memo.
Even when the I-129 petition is for an extension and not for initial H-1B employment, the USCIS requires evidence that the petitioner continues to have the right to control the beneficiary’s work.

The latest version of Form I-129 contains revisions that reflect this stricter policy. The employer must make additional attestations if the beneficiary is assigned off-site and include an itinerary with the petition.

The USCIS issued the Neufeld Memo after Congressional scrutiny in response to a 2008 report that showed that 21% of H-1B petitions contained either fraud or technical violations.

Since its release, the memorandum has drastically changed the way certain types of H-1B petitions and extensions are adjudicated. The Neufeld Memo particularly impacts IT staffing and consulting companies but has been shown to result in unintended consequences for other types of employers.

Senators Urge Obama to Grant Relief to DREAM Act Students

Twenty-two U.S. Democratic senators recently wrote a letter to President Obama asking him to take executive action in light of the DREAM Act’s failure in the Senate four months ago.

The Senators, headed by Majority Leader Harry Reid of Nevada, urged the President to defer immigration enforcement proceedings for students who may benefit from the DREAM Act. Under the proposal, these students must meet requirements necessary to be eligible for cancellation of removal or a stay of removal under the DREAM Act.

The letter, dated April 13, 2011, reminded the President that he may exercise prosecutorial discretion in light of the government’s law enforcement priorities and limited resources. The Senators also noted that both the Bush and Obama administrations have granted deferred action to a number of students on a case-by-case basis.

In asking for deferred action for eligible students, the Senators called the President out on his position at his last State of the Union Address, where he asked Congress to “stop expelling talented, responsible people … who could be further enriching this nation”.

The senators said that they would also support other measures short of granting deferred action on all DREAM Act students, such as establishing a formal process for applying for deferred action, creating a reporting and tracking mechanism for DREAM Act cases, and granting deferred action as early as possible in each individual case.

It may be remembered that last year, the House of Representatives passed the DREAM Act (less commonly known as the Development, Relief, and Education for Alien Minors Act). It garnered the majority support of 55 votes at the Senate but was unsuccessful in overcoming a Republican filibuster.

Deferred action is a type of relief granted in the exercise of prosecutorial discretion not to pursue the removal or deportation of an alien for a specific period of time. It is a purely administrative act which may not be reviewed by courts.

While it does not confer immigration status, deferred action prevents the immigration authorities from seeking removal during the period of effectivity and makes the alien eligible for work authorization.

The USCIS grants deferred action on a case-by-case basis. Years ago, I was involved as an attorney in securing deferred departure status for hundreds of nurses – most of them from the Philippines – who were facing deportation for failing their licensure exams or changing employers without authorization. After several meetings with the INS Commissioner and other top INS officials, we obtained an agreement giving the nurses deferred departure status in 6-month increments up to a maximum of 3 years, and they were restored to lawful status after passing their licensure exams.

The USCIS has allowed deferred action for Haitian earthquake victims and foreign academic students impacted by Hurricane Katrina. It also grants deferred action in U visa cases which involve substantial physical or mental abuse.

It is estimated that 65,000 undocumented students finish high school each year. However, because they lack immigration status, many of these students are not able to attend college, and even when they do, they are unable to find work after graduation. The DREAM Act aims to address their plight by giving them a path to permanent resident status.

Passage of the DREAM Act by Congress is the humanitarian response to the hardship faced by these blameless immigrant students. Failing that and in the interim, deferred action by the Obama administration is a commendable alternative.

Switching Jobs Amidst the Visa Retrogression

Immigrant workers facing significant backlogs in their adjustment of status applications (I-485) because of the visa retrogression may change jobs when certain eligibility requirements are met.

These requirements are spelled out under the American Competitiveness in the 21st Century Act (AC21) which was passed in 2000. The I-485 application must have been pending for 180 days or more and the new job is in the “same or similar occupational classification” as the job for which the employment-based immigrant visa petition (EB1, EB2 or EB3) was filed.

The 180-day period refers to calendar days and begins from the date the I-485 application was received by the USCIS according to the receipt notice.

The “same or similar occupational classification” condition is a little less black and white. A recent guidance from the USCIS dated April 7, 2011, clarified that in determining whether this requirement is met, the USCIS will look at the totality of the circumstances and compare several factors. These factors include but are not limited to the job duties of both positions, the SOC codes for the position in the I-140 petition and for the new position, and the wages associated with each position.

The SOC code pertains to the Standard Occupational Classification system used by the Department of Labor in grouping and classifying jobs and occupations. Occupations are generally categorized on the basis of type of work performed, as well as the skills, education and training required to perform the job. There are currently 840 detailed occupations under which all workers fall. These are categorized into 461 broad occupations, 97 minor groups and 23 major groups.

As an example, a physical therapist position is assigned the SOC code of 29-1123. The first two digits [29] represent the major group of healthcare practitioners and technical occupations (which group includes health technologists and technicians); the third digit [1] represents the minor group health diagnosing and treating practitioners (which includes physicians, pharmacists and dentists); the fourth and fifth digits [12] refer to the broad occupation of therapists (which includes occupational therapists and speech pathologists) ; and the last digit [3] represents the detailed occupation of physical therapists.

The USCIS has said that it will analyze the SOC codes of the two jobs without necessarily matching any particular order of digits in the two codes.

According to a 2005 USCIS Memorandum on AC21, a “substantial discrepancy” in the wages of the two jobs may be a contributing factor in a denial when the evidence is considered in its totality, but officers are advised not to deny a case solely on the difference in wages.

Where the employee did not change employers but accepted a different position or received a promotion or demotion, the guidance states that the job duties must be sufficiently similar. The USCIS said that it will evaluate these situations on a case-by-case basis and with consideration to the totality of the circumstances.

Sometimes, both the I-140 petition and I-485 application remain pending for 180 days or more after they are concurrently filed. In such a case, the worker is not automatically entitled to portability. The USCIS must first review the I-140 petition and see if it is, or would have been, approvable, before adjudicating the I-485 application to determine if the new position is the same or similar occupational classification.

Arizona-Style Immigration Laws Lose Steam

April 23rd marks the first year anniversary of the passage of Arizona’s controversial anti-immigration law, SB 1070. One year ago, election campaign was under way and anti-immigrant sentiment was running high as many politicians made stricter immigration laws a battle cry.

Immigrant advocacy and civil rights groups criticized SB 1070 as legalizing racial profiling, while restrictionists and anti-illegal immigration groups lauded the State’s draconian initiative. The fate of SB1070 will be determined once a federal appeals court issues a ruling, although many predict that regardless of the decision, the legislation will likely reach the U.S. Supreme Court.

Lawsuits have prevented the most controversial parts of the Arizona law from being enforced but this has not prevented other states from proposing legislation mimicking it. Arizona-style bills have been proposed in many states in the past year.

Recently however, in at least ten states these legislative proposals have failed. The legislatures of Colorado, Iowa, Kansas, Kentucky, Nebraska, New Hampshire, South Dakota, Virginia, Wyoming and, most recently, Mississippi, have all rejected similar anti-immigration legislation, at least for the time being.

One of the more closely-watched of these states was Mississippi, where the package of about 30 immigration bills advanced included proposals imposing an English-language requirement in obtaining a state driver’s license and denying public benefits to the undocumented population. The most contentious of these bills is SB 2179 which would allow stop-and-search enforcement and criminalize failure to carry an alien registration document, provisions not unlike the ones in the Arizona law. This bill quietly died in the legislature recently after failing to meet a deadline.

Even within Arizona, it seems that the anti-immigrant bug has failed to catch on as a new slew of immigration bills was killed at the state Senate. Some of the proposals in these unsuccessful bills would require the eviction of anyone on public housing who lives with an illegal immigrant, criminalize driving by an undocumented immigrant, and require medical practitioners to report undocumented immigrants.

Many believe that Arizona’s SB 1070 and copycat legislation would not survive at the Supreme Court. One of the strongest legal arguments against these laws is the doctrine of “preemption” which is rooted in the U.S. Constitution’s supremacy clause.

Essentially, this means that when it comes to immigration policy, federal law takes precedence over state-enacted regulation. The 14th Amendment also presents a significant legal hurdle to nativist legislation denying birthright citizenship.

Many immigrant supporters also raise the economic case against anti-immigrant laws, aside from the obvious potential civil rights violations that may arise from their enforcement. It is estimated that Arizona suffered a loss of more than $250 million from the economic boycotts in the wake of SB 1070, in addition to the government’s litigation costs in the seven lawsuits challenging the legislation. The mayor of Phoenix predicts that SB1070 would cost the city at least $90 million over 5 years.

In 2008, the economic analysis firm Perryman Group found that that if all of the country’s 8.1 million undocumented immigrants left the U.S., the economy would lose about $2.8 trillion in annual spending.

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