On February 17, 2009, President Obama signed the stimulus bill into law, which contained the Employ American Workers Act (EAWA). This law stops U.S. employers from displacing U.S. workers when hiring H-1B workers if the employer received funding through the Troubled Asset Relief Program (TARP).

If an H-1B employer received TARP funding, the employer must make attestations on its Labor Condition Application (LCA) filed with the Department of Labor (DOL), including attesting to good faith recruitment efforts and having hired any qualified US workers, prior to filing an H-1B petition. Any company that received TARP funding and seeks to hire H-1B workers is considered to be an “H-1B dependent employer” under EAWA.

H-1B dependent employers, including all TARP recipients with outstanding obligations, make these additional attestations on an LCA:

• The employer has taken or will take good faith steps meeting industry-wide standards to recruit U.S. workers.
• The employer will offer compensation that is at least as great as those offered to the H-1B worker.
• The employer has offered or will offer the job to any U.S. worker who applied and is equally or better qualified for the job.
• The employer will not displace any similarly employed U.S. worker within the period beginning 90 days before and ending 90 days after the date of filing the I-129 petition.
• The employer will not place an H-1B worker at another employer unless it has inquired whether the other employer has displaced or will displace a U.S. worker within 90 days before or after the placement of the H-1B worker. This is called the “secondary displacement inquiry.”

What if your company received TARP Funding?

H-1B employers first must identify if they have received TARP funding, as USCIS contacts the Department of the Treasury, the Federal Reserve and other relevant agencies to identify employers who have received TARP funding. Employers must accurately complete Form I-129W, H-1B Data Collection and Filing Fee Exemption Supplement, which asks the employer if it is H-1B dependent. You should alert your Klasko Law attorney if your company received TARP funding, as additional recruitment steps may be necessary before you file an H-1B petition for a new H-1B employee. This is particularly important in light of the approaching April 1, 2010 deadline for filing new H-1B petitions with an October 1, 2010 start date.

If your company has received TARP funding, EAWA applies to any H-1B petition filed on or after February 17, 2009 for employment by a “new employer.” Any TARP recipient seeking to hire a new H-1B employee with no prior employment relationship is subject to EAWA. This includes “concurrent employment,” where an employer hires a new employee who continues work with another employer in H-1B status. EAWA also applies even if you filed the H-1B petition prior to February 17, 2009, but the new H-1B employee commences employment after February 17, 2009.

EAWA does not apply to H-1B extension petitions for a current employee with the same employer. It also does not apply to an H-1B petition to change the status of a current U.S. work-authorized employee to H-1B status with the same employer. For example, if the employer has an employee in L-1 status, and the employer wishes to change the employee’s status to H-1B, EAWA would not apply.

EAWA remains in effect until February 17, 2011.

What if We Repaid Our Funding?

USCIS recently confirmed that if you received TARP funding, but have repaid your obligations, an employer will no longer be considered H-1B Dependent. Employers who have repaid their obligations should answer “no” to Question A.1.d. on the H-1B Data Collection and Filing Fee Exemption Supplement. USCIS also encourages employers to submit evidence that their TARP obligations have been repaid to avoid processing delays.

On January 13, 2010, the U.S. Citizenship and Immigration Services (USCIS) issued guidance that imposes enhanced evidentiary requirements on employers filing H-1B petitions.  The memo discusses what evidence must accompany an H-1B petition to establish a valid employer-employee relationship.  The guidance also addresses in what instances the H-1B visa is appropriate for foreign workers who will be placed at third-party client worksites. It also discusses if self-employed individuals, business owners, and independent contractors can continue to qualify for the H-1B.

The federal regulations governing the H-1B classification require that an employer establish that it has an employer-employee relationship with the beneficiary of a petition.  The new memo provides guidance on how USCIS will evaluate if this relationship exists.  The memo lists a variety of factors to be considered when evaluating the petitioner’s right to control the beneficiary, including the manner and extent to which the petitioner actually supervises the beneficiary; the petitioner’s right to control the beneficiary’s daily work and work product; and the petitioner’s right to hire, pay and fire the beneficiary.  USCIS instructs its adjudicators to review the totality of the circumstances when making a final determination of whether the employer-employee relationship exists.  The memo also requires that the petitioner establish that the right to control the beneficiary’s work will continue to exist throughout the duration of the beneficiary’s employment with the petitioner.

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