On January 8, 2010, the United States Citizenship and Immigration Services (USCIS) released a guidance memorandum written by Donald Neufeld on “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements.” This Neufeld H-1B memorandum has left many employers, especially those whose employees work primarily outside of the main office, more confused than ever. They are rightfully asking if there is a sound legal ground that gives USCIS the basis to question whether its employees qualify for H-1B visas. Employer’s struggles to understand the need for policy changes if they are headquartered in Michigan, for example, and have employees working Columbus, Ohio. USCIS also appears to struggles defending its ill conceived and legally questionable policy memo it issued last month
Despite the USCIS’ February 18, 2010 collaborative session to hear feedback and gather input on the impact of this guidance, there is no guarantee the concerns expressed will be considered or that the guidance memorandum will be revised. Therefore, H-1B employers with “roving employees” should consider implementing, or confirm their business has the following policies in place to ensure their employer-employee relationship meets the “clarified” requirements.
One question, according to the memorandum, that the USCIS adjudicator must ask when assessing the existence of an employer-employee relationship is whether the petitioner evaluates the work-product of the beneficiary. For off-site employees, evaluations and progress reviews may be unconventional or infrequent, but employers should consider implementing a firm and consistent review policy. The H-1B employer should progressively review the foreign national employee’s work and conduct an annual evaluation of the employee to establish the requisite control or right to control, as is stressed in the recent guidance memorandum. These progress reviews and evaluations should be adequately documented and maintained in the employee’s personnel file.
Further, a USCIS adjudicator will also be looking for evidence of supervisory control over the employee. The USCIS will first look to see if the employee is supervised by the H-1B employer on-site. Supervision on-site by H-1B employers is atypical for roving employees. Accordingly, in the absence of on-site supervision, the USCIS will look for evidence of off-site supervision by the H-1B employer. To adequately establish supervision for off-site employees, employers should schedule and document regular meetings with such employees. These meetings can be accomplished through a combination of weekly calls, reporting back to the main office and site visits by the H-1B employer. Regardless of the method, the meetings should be regularly held and sufficiently recorded. Consult with an experienced immigration attorney to assure that any policy changes are well designed and implemented to help success in future H-1B petitions.
Next, H-1B employers with roving employees should examine whether they claim their H-1B employees for tax purposes and whether they provide H-1B employees with benefits. The USCIS finds these factors useful in determining whether an employer-employee relationship exists. If an H-1B employer does not currently claim their H-1B employees for tax purposes or provide their employees with benefits, they should consider changing their policies. These elements help establish the existence of control or the right to control the employee. By allowing a third-party to claim the H-1B employee for tax purposes or provide the H-1B employee with benefits, the H-1B employer risks being categorized as a “job shop” employment arrangement which is explicitly prohibited in the Neufeld Memorandum.
The creation of an employee handbook or manual is an effective means of establishing the rights and obligations of the H-1B employer, as well as those of their off-site employees. It can also be a credible technique for demonstrating the aforementioned policies are a part of the employer’s regular business model. It is not only important to incorporate such policies into one’s day-to-day business, but it is also essential that they be codified. In the event of a Request For Evidence (RFE) on an H-1B petition, the H-1B employer will have documentary evidence showing they maintain control or the right to control their employees and, thus, qualify as a legitimate H-1B employer.
The USCIS memorandum recognized that some third-party placement arrangements meet the employer-employee relationship criteria and, for that reason, employers should take all the necessary precautions to ensure their employer-employee relationship conforms to the requirements set forth in the guidance memorandum. This should include not only implementing the foregoing policies, but also sufficiently documenting that such policies are in place and regularly followed.