Labor Immigration Law

Now that the H-1B quota has been reached (as of December 21, 2009), we are receiving an increasing number of inquiries by both cap-subject employers and prospective employees about the alternatives for work authorization between now and October 1, 2010, when the new fiscal year’s H-1B quota would begin (as a reminder, April 1, 2010 is the earliest a cap-subject H-1B application can be filed).  We describe some of the most common H-1B visa alternatives.  Note that the list is not intended to exhaust all possible visa types and scenarios pursuant to which an employee may be legally employed.  Our goal is to list some of the common options for the benefit of our clients and readers.  We are happy to discuss individual cases as part of our FREE initial consultation.

O-1 or P-1 Extraordinary Ability Visas

O-1 and P-1 visas are generally reserved for individuals who have extraordinary ability in the sciences, arts (including the television and motion picture industry), education, business, or athletics.  By definition, not many individuals qualify for one or both of these visa types, but where possible, an application for O-1 and/or P-1 should be prepared in lieu of H-1B.   In addition to being able to obtain work authorization pursuant to these visa types, an O-1 and/or P-1 approval may establish the basis for the subsequent application for an EB-1 category permanent residency.  Please contact us if you would like our help in evaluating your O-1 and/or P-1 visa case.

L-1 Intracompany Transferree

The L-1 visa type allows multinational companies who have presence abroad to transfer their employees from their overseas offices to their U.S. office (or to establish a new U.S. office).  This visa type is a good option for foreign employers seeking to establish or boost their U.S. presence and for foreign nationals currently employed abroad.   Foreign nationals who are currently in the U.S. generally will not qualify for L-1 visa.  An added benefit to the L-1 visa is that family members are entitled to a work authorization pursuant to L-2 status.

E-1/E-2 Treaty Trader or Investor

The E-1/E-2 visas allow nationals of countries with which the U.S. has trade treaties to invest an amount in the U.S. and receive an E-1 (treaty trader) or E-2 (treaty investor) visa.  See a list of treaty countries.

The E-1 treaty trader visa is suitable if the foreign national has a multinational employer who is willing to transfer them, and the company has significant trade between the foreign country and the U.S.  The employee must also have skills which are essential to the operation of the company trade.   Dependents of E-1 visa holder are eligible for work in the U.S.

The E-2 treaty investor allows foreign nationals to invest (preferably) a substantial amount in the U.S. and obtain an E-2 visa to be able to manage and direct their investment.  The amount required for investment generally varies depending on the industry (the so called, proportionality test) with more capital-intensive industries requiring more significant investment for E-2 application.   Dependents of E-2 visa holders are eligible to apply for work authorization.

H-1B Program Changes by Congress Unlikely

While we do not expect Congress to raise the H-1B cap for FY2010, it is nonetheless possible.  There are a number of proposals currently circulating in Congress, some of which aim to increase the H-1B cap.  However,  the chance of such proposals becoming law outside of a comprehensive immigration reform (which is barely starting to gain ground) is small.

Wait and File on April 1, 2010 for the FY2011 Cap

For some of our clients, waiting until April 1, 2010 to file a new cap-subject H-1B petition may be the best option.  The H-1B visa type, although subject to some requirements, is a fairly common visa type for which many qualified employees are eligible.    As of now, the FY2011 H-1B cap is expected to be the same as it was for the FY2010 fiscal year – 65,000 H-1B visas.  However, as the economy starts to improve and employers increase hiring, we do not expect that next year’s H-1B numbers will remain available for as much as 8 months, as they did in 2009.   Accordingly, we urge employees and employers to prepare and file most or all of their H-1B petitions on or about April 1, 2010, to ensure that their petition has the greatest chance to be included in the quota.

USCIS released updated information on the numbers of cap-subject H-1Bs filed since April 1.  As of November 27, 2009, USCIS has received approximately 58,900 H-1B petitions counting toward the 65,000 cap (an increase of 2,000 in the past week).   The updated count means that as of November 27, 2009, there were 6,100 H-1B visas left under this year’s H-1B quota and USCIS will continue to accept petitions subject to the general cap.

U.S. Masters Degrees Quota Reached

USCIS has received sufficient number of petitions for aliens with advanced degrees and as a result, USCIS has announced that the master’s cap for FY2010 has been met.  As of October 25, 2009, all FY2010 H-1B petitions for holders of U.S. advanced degrees will be counted towards the general cap of 65,000.

H-1B Quota Trends

The numbers, as reported over the past few weeks indicate that there was a notable increase in the H-1B filings.  As we previously reported, there has been an increase of about 900-1,300 H-1B visas for each of the past five weeks, in addition to this week’s increase of 2,000 H-1B visas.  Based on our tracking of the H-1B numbers, this increase shows a notable weekly increase in the numbers of H-1B filings.  As a result, if the current trend remains, we estimate that the H-1B quota will be reached within a 3-5 weeks.

If you are considering filing a cap-subject H-1B petition as part of the FY2010 quota, please contact us as soon as possible.

The U.S. Immigration and Customs Enforcement (“ICE”) announced recently that ICE would be issuing Notices of Inspection (NOI) to 1,000 employers across the United States associated with critical infrastructure.   The NOIS will seek to determine the employers’ compliance with employment eligibility verification laws.

What is Critical Infrastructure Employer?

The announcement seems to focus on employers associated with critical infrastructure.  What exactly does this mean?  The 1,000 businesses served with audit notices have been selected for inspection as a result of investigative leads and intelligence and because of the business’ connection to public safety and national security—for example, privately owned critical infrastructure and key resources.

What Would the Audits Focus On?

The audits will involve a comprehensive review of Form I-9s, which employers are required to complete and
retain for each individual hired in the United States. I-9 forms require employers to review and record each individual’s identity and work eligibility document(s) and determine whether the document(s) reasonably appear to be genuine and related to that specific individual.

What Are the I-9 Audit Procedures and Fines?

By law, employers are required to maintain for inspection original Forms I-9 for all current employees. In the case of former employees, retention of Forms I-9 are required for a period of at least three years from the date of hire or for one year after the employee is no longer employer, whichever is longer.  The authority of ICE to perform I-9 audits is specifically granted by law and penalties range from $375 to $16,000 per violation.  Penalties for failing to produce a Form I-9 range from $110 to $1,100 per violation.  For employers with many employees, the potential fine amount can be substantial.

The procedures for I-9 audits and the applicable fines can be found in this Form I-9 Inspection Overview document.

We have reported of increased H-1B employer site visits as part of USCIS’ Administrative Site Visit Verification Program (ASVVP).  Some of our clients have experienced such site visits and in this article we aim to describe the process and the kind of information sought by the site inspectors during each visit.

Generally, site inspectors arrive unannounced at the H-1B petitioner’s location.  Site inspectors will identify themselves with USCIS credentials and seek to speak with the petitioner (or the person who signed the H-1B paperwork).  In the petitioner’s absence, another suitable individual, such as HR representative, will  be sought.

The site inspector will seek information for the following categories.

1.  Does the facility visually appear to be that of the sponsoring organization?

The goal is to make sure that the address of the sponsoring organization and the actual facility suggest that the petitioner does business at that facility.  Information about the location, including whether it appears to be a residential or commercial property, whether other businesses share the same location, etc.  Some photographs may be taken.

2.  Was an organizational representative authority present?

The goal is to speak with a proper petitioner representative about the business.  If access is denied or no such representative is found, the site inspector may seek information from neighboring businesses.

3.  Did results of the site visit suggest presence of a legitimate organization?

In this section the site inspector tries to determine whether the site is one of a legitimate organization.  In addition to reviewing the site location and representative (#1 and #2 above), the site inspector may ask and analyze other factors to determine whether a legitimate business is conducted.  Such datapoints include type of product or service offered, number of employees (part- and full-time), type of clients, number of H-1B employees, number of alien employees, length of time the organization has been in business, other business locations.

4.  Did the organization have knowledge of the beneficiary and the petition filed on behalf of the organization?

This is a fairly simple question the answer to which may suggest fraud if the company representative is not aware of an H-1B application filed by the company.  Information about the employee’s duties, salary, job location may be sought.

5.   Was the beneficiary working for the organization?

The site inspector may seek information and records showing that the beneficiary was working for the employer, including time sheet reports,  performance reports, etc.

6.  Were you able to identify and speak to the beneficiary?

The site inspector will attempt to determine whether the beneficiary is currently at the location, and if not, whether the employee has been terminated, working at a different job site, etc.

7.  Was the beneficiary knowledgeable, cooperative and forthcoming with questions?

The site inspector will describe the behavior of the H-1B beneficiary and the beneficiary’s description of his or her employment with the petitioner company.  Any discrepancies noted with the information provided by the employer should be highlighted by the site inspector.

8.  Was the beneficiary paid the indicated salary?

This kind of inquiry seeks to determine whether the beneficiary may be underpaid or placed on bench period.  The site inspector may seek W-2s, pay stubs or other payroll information.

9.  Was the beneficiary performing the duties as indicated?

The site inspector will seek information and records from the company to determine whether the beneficiary’s duties are consistent with the stated duties on the sponsor paperwork.

10.  Do you recommend further inquiry?

The site inspector would, based on the entire record, make a recommendation as to whether further inquiry on this employer is necessary.

The H-1B regulations impose certain additional recruitment and attestation requirements to so called “H-1B dependent employers.”  Therefore, it becomes to understand the definition of H-1B dependent employer.

Definition of H-1B Dependent Employer

Pursuant to 20 CFR 655.736,  an H-1B dependent employer is one which meets one of the following standards:

1. The employer has 25 or fewer full-time equivalent (“FTE”) employees in the U.S. and employs more than seven (7) H-1B nonimmigrants;
2. The employer has at least 26 but no more than 50 FTE employees and employs more than twelve (12) H-1B nonimmigrants; or
3. The employer has at least 51 FTE employees and employs H-1B nonimmigrants accounting for more than fifteen percent (15%) of the employer’s total FTE employees.

Duties of H-1B Dependent Employers

If an employer is deemed to be H-1B dependent, then an additional set of requirements applies:

1. The employer has to promise that it will not displace a similarly employed U.S. worker within ninety (90) days before or after an H-1B visa petition is filed;
2. The employer will make good faith efforts to recruit U.S. workers; and
3. The employer must make a job offer to an equally or better qualified U.S. applicant.

Exempt Employees

The  H-1B dependent requirements do not apply to “exempt” H-1B candidates.  Exempt H-1B candidates are those holding a master’s or higher degree or its equivalent in a specialty related to the intended employment, or who earn wages (including cash bonuses and similar compensation) at an annual rate of at least $60,000.

Calculations Must Be Made With Each LCA/H-1B Filing

As employers constantly change the composition of their workforce, it becomes important to perform the H-1B dependent employer analysis with each LCA/H-1B filing.  If an employer turns out that it is H-1B dependent and if the H-1B candidate it not exempt (as described above), then the additional set of requirements (described above) must be met before the H-1B petition can be filed.

Under a new directive marked as “Tier 1″ (high strategic importance and significant impact on one or more industries), the Internal Revenue Service (“IRS”) has indicated that it will be focusing increased resources on H-1B sponsor companies’ tax withholding and reporting.

As our clients and readers know, the H-1B nonimmmigrant work visa is one of the most commonly used work visas for sponsoring foreign workers.   The H-1B visa requires that the H-1B beneficiary be employed as an “employee” (as opposed to a “consultant”) with all the benefits and rights afforded to the company’s other employees.   All wages earned by H-1B employees must be reported on Form W-2 and subject to withholding of income tax (and often employment tax) in the same way as U.S. citizens and residents.  Additionally, the IRS can examine expenses paid for or reimbursed to the employee which payments could represent compensation or a taxable employee benefit. 

Our firm often receives inquiries from corporate and individual clients as to whether there is a specific requirement that the H-1B employee be considered a “W-2 employee” versus a “1099 contractor.”  The IRS statement and the upcoming audits of H-1B employers make it very important that any H-1B employee be considered as an “empoyee” and a Form W-2 prepared along with the proper withholdings.

There has been quite a bit of legal activity in connection with the Bush administration executive order requiring federal contractors to use E-Verify to check the employment eligibility of all  newly hired employees as well as current employees directly working on a contract.

Rule Goes Into Effect on September 8, 2009

On August 26, 2009, a U.S. District Court struck down the challenges to the E-Verify rule.  As a result, the new rule goes into effect on September 8, 2009.

This means that most federal contracts awarded, as well as solicitations issued after September 8, 2009, must include a clause mandating use of E-Verify for all employees hired during the contract period and all existing employees assigned to perform work under the contract.  The United States Citizenship and Immigration Services (USCIS) has published information and frequently asked questions on its website regarding application of the rule.

E-Verify Compliance

The Capitol Immigration Law Group is an E-Verify designated agent which allows us to handle E-Verify compliance on behalf of our clients.  If you or your company are interested in E-Verify compliance assistance please feel free to contact us.

In a memorandum dated August 6, 2009, Donald Neufeld, the Acting Associate Director for USCIS Domestic Operations Unit provides new guidance and amends USCIS policy with respect to review of Form I-140 successor-in-interest (“SI”) amendments.  The goal of the new guidance is to update (the dated) USCIS policy in light of changing business realities with respect to corporate mergers and acquisitions.

Prior I-140 SI Standard

The prior standard by which I-140 SI filings were reviewed was that the I-140’s validity will be reaffirmed only if the successor company had assumed all of the rights, duties, obligations and assets of the original employer and continue to operate the same type of business as the original employer.  Additionally, the new employer had to establish its ability to pay the profferred wage specified on the labor certification.

The old standard, initially set forth in a 1993 Paleo memorandum, is quite old and does not reflect the realities of the corporate M&A and business practices where it is now rare that a successor company would assume all of the predecessor company’s rights and obligations.

New Standard for I-140 SI Review

According to the Neufeld Memo, for all SI I-140 petitions filed after August 6, 2009, the adjudication officers should focus  on the following factors:

1.  The Job Opportunity Offered By The Successor Must Be The Same As The Job Opportunity In The Original Labor Certification.

The job offered by the successor must remain unchanged with respect to rate-of-pay (upward adjustments due to passage of time are acceptable), job description and job requirements specified on the labor certification.   There cannot be any changes to the job which would affect the labor market test conducted initially by the predecessor company.  The job opportunity must continue to exist at all time and there must not be a substantial lapse of operations with respect to the successor company after the business transfer.

2. The Successor Company Bears Burden To Establish Continuing Eligibility In All Respects, Including Ability-to-Pay.

The successor company must demonstrate that all of the criteria for the visa classification initially proposed have been met.  This includes, but is not limited to, the predecessor’s ability to pay the profferred wage from the date of the filing of the labor certification (the “priority date”) until the date of the business transfer. Similarly, the successor must demonstrate that it is a valid “employer” under the USCIS regulations and that it has ability to pay the profferred wage.   The I-140 SI petition must also include evidence to establish that the sponsored employee possesses the minimum education/experience specified on the labor certification.

3. The Successor Must Fully Document The Transfer And Assumption Of Ownership.

The Neufeld Memo specifically addresses that the transfer of ownership must occur after the approval of the underlying labor certification.  Additionally, the successor must present evidence to document the business transaction such as:

• contract of sale or similar document of the acquisition;
• mortgage closing statements;
• SEC Form 10-K;
• audited financial statements;
• documentation of the transfer of real property and business licenses;
• copies of financial instruments used to executed the transfer; and
• media or other reports of the business transfer.

When a specific unit of the predecessor unit is being transferred, the transferred unit must be clearly defined unit within the predecessor organization and that unit must be transferred in its entirety to the successor except certain unrelated liabilities.  As discussed above, the job offered to the alien beneficiary must continue to be in the transferred unit.

AC21 and Successor-in Interest

The Neufeld Memo specifically addresses the situations in which the alien beneficiary is entitled to port his or her process to a new employer under Section 106(c) of AC21.  In such cases, a SI entity need not file a new petition on alien’s behalf assuming AC21 conditions have been met (such as “same or similar job”).

SI Amendments Not Needed For Self-Sponsored I-140 Petitions

I-140 petitions filed in connection with visa categories which do not require labor certifications (EB-1 EA, EB-2 NIW) remain valid even if a business transfer has occurred.  There is no need of I-140 SI amendments in such cases.

New Labor Certification May Be Required In Certain Cases

If the successor entity cannot support the requirements outlined above a new labor certification setting forth the changed job conditions must be filed.   Specifically, USCIS required a new labor certification be filed when (1) the successor entity has not met the three factors outlined in the Neufeld Memo, (2) the labor certification is not valid for the new geographic area of the alien beneficiary’s proposed employment, or (3) there has been another material change in the job opportunity offered.

The H-2B filing period for fiscal year 2009 (FY2009) has been reopened by USCIS due to insufficient applications filed under the cap.  Accordingly, USCIS accepts immediately new H-2B petitions under the FY2009 cap for starting work date before October 1, 2009.

FY2009 H-2B Numbers Are Under the Quota

On January 7, 2009,  USCIS announced that it has accepted a sufficient number of H-2B petitions to meet the annual cap of 66,000 H-2B visas.  However, the Department of State has received far fewer than expected requests for H-2B visas and as a result, has issued only 40,640 H-2B visas for fiscal year 2009 to date. This means that there are approximately 25,000 visas that may go unused, as they have not been granted. Because of the low visa issuance rate, USCIS is reopening the filing period to allow employers to file additional petitions for qualified H-2B temporary foreign nonagricultural workers.

FY2009 Filing Deadline Is Imminent

The normal (non-premium processing) adjudication time frame for H-2B petitions is 60 days. USCIS will make visa numbers available to petitions in the order in which the petitions are filed. However, because H-2B petitions (Form I-129) for fiscal year 2009 visas must be received, evaluated, and adjudicated on or before the fiscal year 2009 deadline of Sept. 30, 2009, USCIS cannot guarantee approval of any H-2B petition on or before the Sept. 30, 2009 deadline. Employers therefore are encouraged to file as soon as possible and to request premium processing by filing a Form I-907 and
submitting the $1000 premium processing fee, which will allow for expedited adjudication before October 1.

Petitions received on or after Oct. 1, 2009, and/or requesting a starting date on or after Oct. 1, 2009, will be considered towards the fiscal year 2010 H-2B cap and are subject to all eligibility requirements for fiscal year 2010 H-2B filings, including 8 CFR 214.2(h)(6)(iv)(D), which requires that the start date listed on the petition be the same as the starting date authorized on the temporary labor certification.

Please see a USCIS FAQ regarding this H-2B filing window reopening.

The U.S. Customs and Immigration Enforcement (“ICE”) has released a supplemental guidance sheet with respect to gap-cap extensions available to holders of F-1 status who work pursuant to their optional practical training and who are beneficiaries of a cap-subject H-1B work visa petition.

The guidance sheet is helpful in not only describing in more detail what happens when an OPT F-1 holder is a beneficiary of an H-1B petition.  Normally, when USCIS receives an H-1B petition it enters the information into its mainframe called CLAIMS.  This update automatically updates the SEVIS system and which automatically should reflect the cap-gap extension for the F-1 holder.    If this process does not work (due to time constraints, mainly), SEVIS allows the Designated School Official (“DSO”) to enter manually that the student is in valid status pursuant to cap-gap into SEVIS.

This functionality also allows DSOs to enter gap-cap information in cases where the H-1B application has been filed but it has not yet been processed by USCIS.  The guidance notes, however, that the “manual” update of cap-gap status by the DSO should not be done unless in cases where the student’s OPT may expire before USCIS can receipt the H-1B petition (and therefore enter the H-1B petition in CLAIMS).