Klasko Law will continue to monitor the situation and will provide updates regarding how many H-1B spots continue to remain.

 
Since the DOL implemented the iCERT system, there have been numerous delays in obtaining certification of LCAs.  As we previously blogged, while it was known that iCERT would eliminate same day LCA approvals, the DOL originally anticipated that it could take up to seven business days to certify the LCA. However, since its implementation the iCERT system has experienced a number of technical glitches that have resulted in delays in obtaining certified LCAs beyond the seven day period.  With April 1, 2010 fast approaching, employers should contact their Klasko Law attorney immediately if they wish to sponsor an employee for an H-1B visa in the 2011 fiscal year.

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.

 
Expedited removal in which the government covers the costs of the return airline ticket, bars the individual from reentering the U.S. for a period of five years.  CBP officers are authorized to institute expedited removal when they believe that an individual is entering the U.S. in violation of the terms and conditions of the visa.  Reports from those impacted state that they were put into secondary inspection by CBP officers and coerced into signing statements that contain falsehoods.  These statements were then used as the basis for their removal.  Interestingly, the H-1Bs were not advised that they could withdraw their applications to enter the U.S. and return home at their own expense.  This option would have allowed the nonimmigrants to apply for a new H-1B visa stamp either with the same or a new H1B employer and reenter the U.S. at anytime thereafter.

 
Entering nonimmigrants are often placed into secondary inspection if CBP officers wish to question the alien as to the intent of their stay in the U.S.  Although intimidating, it is critical for nonimmigrants to ensure that they answer all questions honestly and accurately, as only erroneous expedited removal orders can be vacated. Unfortunately, aliens seeking entry at CBP do not have a right to counsel and therefore, must be extremely precise when articulating their reasons for entry to CBP.  It is believed that CBP in Newark is instituting these actions in response to the recent USCIS memo which limits the definition of the employer-employee relationship and in particular targets IT consulting companies and “job shops.” 

Klasko Law will continue to provide updates on this issue.

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.

Read more after the jump.

The memo proceeds to provide several examples of employment relationships some of which satisfy the new criteria for documenting an employer-employee relationship and some which would be prohibited under the new guidance.  In cases where an H-1B worker is placed at a third-party worksite, the petitioner must establish that the petitioner will have the right to ultimate control over the beneficiary’s work for the H-1B to be approved.  In contrast, if the H-1B worker will be employed at a “job shop”/ third-party worksite where they will report to a manager of that third-party company and the petitioner will not retain control over the beneficiary’s work, the petition will be denied.

In cases where the H-1B beneficiary is self-employed or has an ownership interest in the petitioning entity, the memo states that the petition must demonstrate that the petitioning entity is distinct from the beneficiary such that the necessary employment relationship and control exists.  USCIS warns applicants to expect greater scrutiny in cases where the H-1B beneficiary is also the petitioner and reports to no one but himself or herself.  If there is no separation between the petitioning company and the beneficiary and no evidence that the business entity will control the H-1B’s work, the petition will be denied. In cases where the beneficiary is an independent contractor whose work will not be controlled by the petitioner, the USCIS takes the position that an employment relationship does not exist and the H-1B is not appropriate.

To establish the employer-employee relationships discussed in the memo, employers can expect that they will see an increase in the kinds of supporting documentation that they will need to provide with H-1B filings.  All H-1B petitions will need to include evidence that the petitioner and the H-1B worker will have a valid employer-employee relationship and that the petitioner will have the right of control over the beneficiary’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 these instances, the employer will need to document that they will retain the right to supervise, direct and review the H-1B beneficiary’s work and terminate their employment.  Evidence to establish the employer-employee relationship can include:

-A complete itinerary of services or engagements that specifies the dates of each service or engagement, the name and address of the actual employer, and the names and address of the establishment, venues or locations where the services will be performed for the period of time requested;

-Copy of signed employment agreement between the petitioner and beneficiary detailing the terms and conditions of employment;

-Copies of employment letters that clearly describes the nature of the employer-employee relationship and the services to be performed by the beneficiary;

-Copies of relevant portions of valid contracts between the petitioner and a client (in which the petitioner has entered into a business agreement for which the petitioner’s employees will be utilized) that establishes that while the petitioner’s employees are placed at the third-party worksite, the petitioner will continue to have the right to control its employees;

-Copies of signed contractual agreements, statements of work, work orders, service agreements, and letters between the petitioner and the authorized officials of the ultimate end-client companies where the work will actually be performed by the beneficiary, which provide information such as detailed description of the duties the beneficiary will perform, 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, demonstrating the beneficiary’s supervisory chain.

The memo also notes that if the H-1B worker will be placed at multiple worksites during the course of the H-1B validity period, the employer will need to provide a complete itinerary of the worker’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 worker will be placed.  The memo also reminds employers that they must include labor condition applications (LCAs) certified by the Department of Labor for each employment location.

In the case of H-1B extensions, USCIS will review the petition to determine if the necessary employer-employee relationship existed during the initial H-1B status approval period and whether it will continue to exist for the extension. Evidence to document the ongoing relationship can include:

-Copes of the beneficiary’s pay records;

-Copies of the beneficiary’s payroll summaries and/ or Form W-2s;

-Time sheets;

-Copies of prior years’ work schedules;

-Documentary examples of work product created or produced by the beneficiary for the past H-1B validity period;

-Copies of dated performance reviews; and/ or

-Copies of any employment history records, including but not limited to, documentation showing dates of hire, dates of job changes, i.e. promotions, demotions, transfers, layoffs, and pay changes with effective dates.

If USCIS determines, while adjudicating the extension petition, that the petitioner failed to maintain a valid employer-employee relationship with the beneficiary throughout the initial approval period, or violated any other terms of its prior H-1B petition, the extension petition may be denied.

Throughout the memo, the USCIS notes that the petitioner must establish the requisite employer-employee relationship throughout the requested validity period of the petition.  Generally, USCIS has always approved extension requests for up to three years, even if the employer did not provide documentation to support the beneficiary’s activities for all three years.  However, the tone of the memo implies that employers can expect that USCIS will only approve petitions for the period of time established by the supporting documentation.  This may be problematic for many business that may not have contracts in place for employment that will occur a year or two down the line.  These businesses may be required to file multiple H-1B extensions.

The memo makes clear that employers must adapt their practices for the preparation and submission of H-1B petitions.  Those petitions that do not meet the requisite evidentiary requirements may be subject to Requests for Evidence.  If you have further questions on the new agency guidance please contact your Klasko Law Attorney.

For example, in 2008, the number of H-1B petitions was 5 percent lower than it was in 2007.  Of those petitions, only 20% were for truly “new” H-1B employees – individuals outside the United States entering for new employers.  The majority of petitions filed (60%) were for current H-1B workers getting extensions of status, with the remaining 20% going to individuals who were already in the United States in another status (mostly students at US universities) changing to H-1B.

One interesting statistic was that the majority (over 56%) of H-1B workers are in their 30’s, still short of their prime earning years.  Only 1% is under age 24, and 14% are 40 or over.   Another is that less than half have only a bachelor’s degree; the majority of H-1Bs have a Master’s, doctoral or professional degree.

While much has been written about the concentration of H-1Bs in the computer industry, it is interesting to note that the majority of employers of H-1Bs (56.5%) are outside the computer, electrical engineering and data networking fields.  In fact, a list of the “top five” H-1B occupations other than computer professionals would look something like this: 1. C0llege and University Faculty and Staff; 2. Accountants and Auditors; 3. Physicians and Surgeons; 4. Mechanical Engineers; and 5. Biological Scientists.

Another myth challenged by the data is that H-1Bs are underpaid as compared to similar US workers.  In fact, the report shows that the median salary of all H-1Bs was $60,000, which compares favorably to the $57,980 median wage reported for the same period for similar US workers (those with a Bachelor’s or higher degree; data from the Current Population Survey from the Bureau of Labor Statistics).

Oh, and one other helpful perspective when thinking about H-1Bs: in 2008, the number of initial H-1B petitions (new professional workers from overseas and from US schools) constituted just three-tenths of one percent of the workers in the United States with a bachelor’s or a higher degree.