A long-awaited guidance memorandum from U.S. Citizenship and Immigration Services (USCIS) imposes enhanced evidence requirements on employers filing H-1B petitions and takes strict new positions on when and whether the H-1B category may be used for foreign workers who will be placed at client worksites, self-employed individuals, business owners, and independent contractors.
In brief, the new USCIS guidance emphasizes that an H-1B petitioner must show a valid employer-employee relationship will exist between itself and the foreign beneficiary throughout the petition validity period and that the petitioner has the right to control the beneficiary’s employment. This will mean that petitioners will need to provide detailed documentation of the employment relationship and the foreign beneficiary’s work itinerary, especially if the beneficiary will be placed at client sites during H-1B employment. The guidance will also mean that petitions for the self-employed, individuals with an ownership interest in the petitioner, independent contractors, and pure staffing or “job shop” arrangements may no longer qualify for the H-1B classification because the necessary employer-employee relationship cannot be demonstrated.
Click here for the new guidance memo; click here for USCIS’s Frequently Asked Questions on the memo.
Third-Party Placements, Self-Employed Workers and Independent Contractors
The guidance memo announces strict new positions on the kinds of work arrangements that can qualify for the H-1B classification. In some cases, these new positions are a reversal of previous agency policies and practices.
USCIS takes the position that an H-1B worker may be placed at a client site for short-term or long-term placements, provided that the petitioner – and not the client – has the right to ultimate control of the foreign national’s work and can document this right (discussed below). But if a foreign national will be placed at a third-party site simply to fulfill a staffing contract and he or she will be managed and directed by the client, the requisite employer-employee relationship would not exist and the H-1B category would not be appropriate.
The agency also takes the position that, in cases where the H-1B beneficiary is self-employed or has an ownership interest in the petitioning entity, the petition must demonstrate that the petitioning entity is distinct from the beneficiary such that the necessary employment relationship and control exists. USCIS will look closely at cases in which the H-1B beneficiary is also the petitioner and reports to no one but himself or herself. Where there is no separation between the petitioning company and the beneficiary and no evidence that the business entity – and not the individual – will control the H-1B work, the foreign national may not be eligible for H-1B classification. Similarly, where the beneficiary is an independent contractor whose work will not be controlled by the petitioner, USCIS takes the position that the requisite employment relationship does not exist and the H-1B category is not appropriate.
Documenting the Employment Relationship
Under the new memorandum, employers will see an increase in the kinds of documentation they will need to provide in H-1B initial petitions and extensions.
In all cases, the petition must include clear documentation that the petitioner and the foreign beneficiary will have a valid employer-employee relationship and that the petitioner will have the right of control over the foreign national’s work. This will be especially important in cases where the foreign national will work at client sites during the H-1B validity period. In such cases, the employer must document that it, and not the client, will have the right to supervise, direct and review the foreign national’s work and terminate his or her employment.
Evidence of the employment relationship and right to control can include:
- An employment agreement between the petitioning employer and the foreign national, detailing the terms and conditions of employment;
- An employment offer letter that describes the nature of the employer-employee relationship between the petitioner and the foreign beneficiary, as well as the services the foreign national will perform;
- Extracts from contracts between the petitioning employer and its client that show the petitioner will have the right to control its employees that are placed at a client site;
- Copies of contracts, work orders, letters between the petitioner and client, or other similar documents that describe the duties of the H-1B worker, the qualifications required to perform the job duties, and who will supervise the H-1B worker;
- A description of the performance review process; and/or
- A copy of the petitioner’s organizational chart showing the beneficiary’s chain of supervisors.
When an H-1B employer files an H-1B extension petition for an existing employee with no material changes in the employment, USCIS will look closely at whether the necessary employer-employee relationship existed during the previous H-1B period and whether it will continue for the extension period. Evidence to document the ongoing relationship can include:
- The H-1B beneficiary’s paystubs and W-2 forms for the initial H-1B period;
- Time sheets and work schedules;
- Examples of work product that the beneficiary created during the initial validity period;
- Dated performance reviews; and/or
- Other employment records, such as documentation of the date of hire, job changes, promotions, transfers, layoffs, pay changes and the like.
USCIS will not require this evidence in change-of-employer petitions that also seek extensions.
Documenting Multiple Employment Locations
If the foreign national will be placed in multiple locations over the course of the H-1B validity period, the employer will need to provide a complete itinerary of the foreign national’s engagements, including the dates of each engagement, the names and addresses of the actual employers, and the names and addresses of the locations where the foreign national will be placed. Though this requirement has existed for some time, the agency had previously taken a flexible approach to it. The employer must also include a labor condition application (LCA) certified by the Department of Labor that covers each employment location.
Fragomen, along with the American Council on International Personnel and the American Immigration Lawyers Association, continues to engage in advocacy efforts on these issues. We will be closely monitoring the implementation of the new guidance memo and its effect on H-1B adjudications. If you have specific questions about the memo, please contact your designated Fragomen professional.