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Staffing or Third-Party Placement Consulting Companies: Do You Qualify for Filing H-1B Visas?
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On January 8, 2010, the United States Citizenship and Immigration Services (USCIS) issued a memorandum intended to clarify the meaning of the “employer-employee” relationship for H-1B visa purposes.  While the January 8 memo does not change any of the basic requirements for H-1B visa classification, the clarifications provided means that USCIS will be taking a closer look at all H-1B visa petitions, both new employment and extension petitions.

The January 8 memo focuses in particular on the employer-employee relationship where beneficiaries are placed at third-party worksites, are independent contractors, or are self-employed. Given the new emphasis on the employer-employee relationship petitioners will have to supply additional information to prove the employer-employee relationship.

We will address several of the main points of the memo through a “Question and Answer” format.

Question 1:  Does the memo change any of the basic requirements for the H-1B visa status?
Answer:  No. The memo is only intended to clarify the employer-employee relationship and outline the types of documentation necessary to establish that relationship.

Question 2:  What kind of test will the USCIS use to determine if there is an employer-employee relationship?
Answer: The main test that the USCIS is using is whether the employer has the right of control over when, where, and how the employee does his or her work.  The USCIS will use the common law definition of the employer-employee relationship.

Question 3:  What factors will the USCIS use to determine if the employer has sufficient control?
Answer:  There are numerous factors that they will look at, none of which is controlling by itself.  These include:

  1. Does the petitioner supervise the employee, and is the supervision on-site or off-site?

  2. If the supervision is off-site, how does the petitioner maintain such supervision, i.e., weekly calls, reporting back to the main office routinely, or site visits by the supervisor, etc.?

  3. Does the petitioner have the right to control the work of the beneficiary on a day-to-day basis if such control is required?

  4. Does the petitioner provide the tools or instrumentalities needed for the beneficiary to perform the duties of employment?

  5. Does the petitioner hire, pay, and have the right to fire the beneficiary?

  6. Does the petitioner evaluate the work-product of the beneficiary, i.e., progress and performance reviews?

  7. Does the petitioner claim the beneficiary for tax purposes?

  8. Does the petitioner provide the beneficiary any type of employee benefits?

  9. Does the beneficiary use proprietary information of the petitioner in order to perform the duties of employment?

  10. Does the beneficiary produce an end-product that is directly related to the petitioner’s line of business?

  11. Does the petitioner have the ability to control the manner and means in which the work of the beneficiary is accomplished?

Question 4:  What kind of documentation can I submit to show the required control?
Answer:  The documentation provided must sufficiently prove that there is a valid employer-employee relationship. The following list is representative of the type of documentation that the USCIS will require:

  1. Copy of the employment agreement between the petitioner and the employee, detailing the terms and conditions of employment.

  2. Copy of the employment offer letter that describes the nature of the employer-employee relationship between the petitioner and the beneficiary, as well as the services the employee will perform.

  3. A detailed job description.

  4. Copy of relevant provisions of valid contracts between the petitioner and its client that show the petitioner will have the right to control any employees that are placed at a client site.

  5. Copies of contracts, statements of work, work orders, service agreements, letters between the petitioner and client, or other similar documents that describe the duties of the H-1B employee, the qualifications required to perform the job duties, and who will supervise the H-1B employee.

  6. Copy of the petitioner’s organizational chart showing the employee’s chain of supervision.

  7. A description of the performance review process.

Question 5:  Are the same documents required for both a new petition and a petition to extend H-1B employment without change?
Answer:  Yes. However, in addition to proving that a valid employer-employee relationship exists H-1B petitioner seeking to extend H-1B employment will have to show that the employer-employee relationship was maintained throughout the prior approval period.  You may do so by submitting a combination of the following:

  1. Copy of the beneficiary’s pay records (pay stubs, leave records, etc.) for the previous H-1B period.

  2. Copy of the beneficiary’s payroll summaries and/or W-2s for the previous H-1B period.

  3. Copy of time sheets and/or work schedules for the previous H-1B period.

  4. Copy of employment history records, including but not limited to, documentation showing date of hire, dates of job changes (promotions, transfers, and pay changes with effective dates).

Question 6:  What documentation do I have to provide the USCIS if the employee is a “traveling” employee and will be placed at several locations during the period of the petition?
Answer:  If the beneficiary will be placed at more than one location during the period of the petition, the employer will need to submit a complete itinerary for that employee that states the dates that the employee will be at each location or engagement, the names and addresses of the actual employers, and the names and addresses of the establishments, venues or locations where the services will be performed for the full period requested.  USCIS will no longer accept a partial itinerary or an itinerary only for the initial part of the requested period.

Question 7:  What will happen if the employer is unable to prove that there is a valid employer-employee relationship?
Answer:  If the USCIS determines that the petitioner has failed to show that there is a valid employer-employee relationship they may issue a Request For Evidence (RFE). Any such RFE must state specifically what issues the adjudicator believes are deficient, and must “be tailored to request specific illustrative types of evidence from the petitioner that goes directly to what USCIS deems as deficient.”

Question 8:  Can the USCIS deny my H-1B extension petition if there has been no change in my employment?
Answer:  Yes, if the USCIS determines that you did not maintain a valid employer-employee relationship throughout your previously approved period of H-1B status, or violated any other provisions of your visa during that period, they may deny the H-1B extension petition.

Below are several examples of qualifying and non-qualifying employer-employee relationships:

  1. The employee works at an office location owned/leased by the employer, 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.

    This is considered to be traditional employment for purposes of the employer-employee relationship. The petitioner maintains actual control of the beneficiary.

  1. The petitioner is an accounting firm with numerous clients. The beneficiary is an accountant. The beneficiary is required to travel to several 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 employer 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.

    This is considered temporary off-site employment with right to control maintained.

  1. The petitioner is 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.

    This is considered long-term/permanent off-site employment with right to control specified and actual control exercised.

With the shift in emphasis by USCIS, and the additional scrutiny H-1B petitions are receiving, third-party placement and staffing companies especially must be very careful in the preparation of new H-1B petitions. Because of the employer/employee relationship requirement many of the petitions approved in the past may no longer qualify for H-1B treatment.

It is now more important than ever to prepare a solid well documented case for filing. Petitioners are going to have to file even more supporting documentation with each petition.

If you have any doubts whether your position qualifies for H-1B treatment we suggest that you consult an experienced VisaPro immigration attorney before starting the process.

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