Labor Immigration Law

Today’s Wall Street Journal has a recap of recent high-level meetings and plans regarding an immigration reform, a topic which President Obama said he will tackle during his first year in office.

Washington has been busy for the past few months with health care, wars and the economic crisis.  Not surprisingly, immigration reform has not been high on the President’s agenda.

A pair of senators trying to put together a comprehensive immigration bill showed their outline to President Barack Obama Thursday and asked his help in recruiting additional Senate backers. But with a full plate already and elections looming, it was unclear how involved the White House plans to get on the issue.

According to the Wall Street Journal, while President Obama remains “fully committed” to immigration reform, his administration has taken a more hands-off approach and has left Congress to propose the outline of the reform plans and to “sell” it on Capitol Hill.

The Schumer/Graham plan, proposed by Senators Charles Schumer (D-NY) and Linsay Graham (R-SC), was presented to the President.  However, Sen. Graham is looking for another Republican sponsor, but has been unable to find one.  Senator McCain (R-AZ) who supported a similar plan when President Bush proposed it, has not been willing to sign on.

The Schumer/Graham Plan Outline

While the Senators have not released their plan formally,  it may include many of the building blocks from the last failed effort, including a path to citizenship for those here illegally, now estimated at 10.8 million people; a guest worker program; and, in a new twist, a mandatory biometric identification card for workers to stem the flow of illegal workers into the country in future years.

Immigration Reform – Slow Movement

In this political climate, it seems that immigration reform, if it happens, will move forward very slowly.   The President has seemingly delegated to Congress finding support for the immigration reform, and the current political gridlock in Congress will not help.   We will provide to monitor the current state of the immigration reform from our offices in Washington, DC, and provide further updates.   To stay up-to-date on this and other immigration topics, please consider subscribing to our free weekly immigration newsletter.

Among our clients and readers, we  have many entrepreneurs and start-up companies which may be interested in a recent development in Congress.

Senators Kerry (D-MA) and Lugar (R-IN) have introduced a new bill in Congress seeking to drive job creation and increasing America’s global competitiveness by helping immigrant entrepreneurs secure visas to the United States.  The bill’s title is the “StartUp Visa Act of 2010″ and will allow an immigrant entrepreneur to receive a two-year visa if they can show that a qualified U.S. investor is willing to dedicate a significant sum – a minimum of $250,000 – to the immigrant’s startup venture.   Please see full text of the draft bill and Senator Lugar’s press release.

The Act would amend immigration law to create a new EB-6 category for immigrant entrepreneurs, drawing from existing visas under the EB-5 category, which permits foreign nationals who invest at least $1 million into the U.S., and thereby create ten jobs, to obtain a green card.  After proving that he or she has secured initial investment capital and if, after two years, the immigrant entrepreneur can show that he or she has generated at least five full-time jobs in the United States, attracted $1 million in additional investment capital or achieved $1 million in revenue, then he or she would receive permanent legal resident status.

We will monitor the path of this bill through Congress and provide updates as we have them.

Earlier today USCIS held a collaboration session on “Determining Employer-Employee Relationships for Adjudication of H-1B Petitions.“  We had the opportunity to attend the session, to listen and to engage in a discussion regarding the January 8, 2010, USCIS Memorandum by Donald Neufeld on the Employer-Employee Relationship.

The Session Generated Great Interest

The session proved to be very popular.  There were about 50 in-person attendees and over 600 phone conference dial-ins.   Obviously, this Memorandum has stirred many interests and has caused a tremendous amount of emotions, both negative and positive.

Although the session was expected to be a question-and-answer format, it turned out that both the questions were posed mainly as comments and reactions to the Memo.  In addition, when questions were posed, USCIS representatives, which included Donald Neufeld, did not provide much information or guidance.  As a result, we can report on what we heard and felt are concerns associated with the January 8, 2010 Memo.  Hopefully, USCIS will provide some sort of a response to the multitude of comments and reactions.

There were comments from immigration attorneys and practitioners, business owners, employees, representatives of trade organizations, and former congressmen, among others.  USCIS started first, by setting out their goals in drafting the Memorandum – to provide clearer standards for adjudication and to provide more clarify and transparency in the H-1B adjudication process for all parties involved.

Comments Were Mostly Critical

Then, the floor was open for questions and comments.  Overall, the comments were critical of the Neufeld Memorandum.   Many comments confirmed what we have realized from recent conversations with some of our consulting or staffing company clients – that the new Memorandum is likely to hurt their business due to the unpredictability of the current adjudication standards.  Several owners of IT consulting companies cited downsizing (and potentially closing) their companies due to the new standards and having to cut not only H-1B employees but also U.S. workers who work at the company.  A number of comments referred to the unintended (negative) consequences of the Neufeld Memorandum – for example, some physicians work at hospitals, but hospitals are prohibited by state law to employ them directly, thereby resulting in a situation where H-1B for a physician employed at a hospital is not possible under the Memorandum.

A caller expressed a concern that the Memorandum creates even more ambiguity in cases where an employer has in-house and client-placements of H-1Bs and with respect to a real situation where USCIS rejected H-1Bs for both in-house and client-placed employees due to the fact that USCIS could not have guarantee that in-house employees would not be placed at a client site at a later time.

We have seen RFEs which are drafted as a result of the January 8, 2010 Memorandum and a caller expressed dissatisfaction with (1) the length of the standard RFE seeking explanation of the employer-employee relationship but also with (2) the legally incorrect requirements for establishing such employer-employee relationship.

Some Callers Praised the Memorandum

There were also comments which praised the Memorandum.  A caller from a professional association was outraged that in this economic climate the H-1B program exists at all; citing high unemployment, the caller seemed to call for abandonment of the H-1B program altogether.   The Memorandum was similarly praised from callers representing organizations calling for limited number of work visas and also calling for a more restrictive set of rules on current staffing companies.

USCIS Listened, Mostly

USCIS representatives mostly listened.  What USCIS could acknowledge was that the January 8, 2010 Memorandum is not related to the Customs and Border Protection (CBP) issues some H-1B holders faced since the holidays at Newark, New Jersey, airport.   However, it was noted that CBP has coordinated its Newark actions with the FDNS investigations on employers who potentially have violated the H-1B program rules.

Conclusion

While we applaud USCIS’ desire to open a dialogue with its stakeholders regarding the implementation and the impact of the Memorandum, given the number of negative comments and the unintended consequences of the Memorandum, it may seem that such dialogue should have been done before the publication of the Memorandum.  USCIS stated as one of its goals a transparent process; yet, it appears that the Memorandum was drafted in the shadows.

We are hoping that, in response to this meeting, USCIS will engage in a more robust review process and will provide some amendments to the Memorandum or, at the very least, some clarifications and explanations.

The Department of Homeland Security (DHS), in a recent symposium, has provides some useful insight into its operations and policies.  We are happy to share some of DHS’s disclosures.

DHS Investigations on Employers to Continue and Increase

Janet Napolitano, the DHS Secretary, has indicated that employer investigations will continue and, possibly, intensify.  In 2009 there were $24 million in employer fines (compared to zero in 2006).  In 2009, 45 businesses and 47 individuals have been debarred while in 2008 only one was debarred.  Immigration and Customs Enforcement (ICE) has issued  over 1,000 I-9 Notice of Inspection (NOI) in 2009 to random employers with another 1,000 announced at the symposium.   I-9 audits, many of which are conducted randomly, may result in civil penalties, and where bad faith is found, lead to criminal prosecution.

DHS has clarified that it would continue under a two-prong approach:  (1) prosecute employers acting in bad faith and (2) work with employers to achieve compliance.

E-Verify Updates

DHS announced that there are more than 170,000 employers in the E-Verify system.  In 2008, there were 8.5 million queries run on new hires.  96.9% of those new hires were authorized by E-Verify within 24 hours; 2.8% are found to be ineligible to work; and 0.3% received tentative non-confirmation but were later confirmed as authorized to work.

DHS announced that the photo tool will be soon made available to designated agents, as well as to employers. The photo tool should also be expanded to include passport photos of U.S. citizens.

E-Verify Usage Issues.  DHS noted several E-Verify usage issues, as reported by a third party engaged to analyze E-Verify usage.

• It was reported that 16% of the E-Verify employers did not complete the tutorial – which can indicate, according to DHS, sharing of passwords by employers or insufficient training;
• 16% of the E-Verify employers use the system as a pre-screen, which is a violation of the E-Verify and can be prosecuted;
• 20% of employers took adverse action against prospective employees who received a tentative non-confirmation, again, in violation of E-Verify rules;
• 9% of employers received a tentative non-confirmation but failed to give notice to the employee of the election to contest.

FAR

Over 18,000 federal contractors are now enrolled in E-Verify following rules requiring such participation.  9,000 federal contractors have the FAR clause inserted in the federal contracts.

Conclusion

In light of these updates on DHS policies, it is clear that DHS will sharpen its focus on employers and require proper E-Verify participation (for E-Verify employers) and good Form I-9 compliance practices.  The increasing audits, fines and, in some cases, debarments, should serve as a notice to employers to create and follow proper employment authorization and immigration compliance programs.    Please contact us if we can help you evaluate and modify your programs.

The National Visa Center (NVC) has released numbers and statistics on the immigrant visa numbers pending at NVC.   The information is as of November 1, 2009.  It is important to note that these numbers reflect immigrant visas which have chosen “consular processing” and not adjustment of status (I-485) applications filed from within the U.S.  Also, the numbers reflect all applicants, including derivative beneficiaries such as spouses and children.

Overall Pending Immigrant Visa

Family-based.  As of November 1, 2009, there are 245,516 family-based first preference category applications pending; 842,762 second category (324,864 in 2A and 517,898 in 2B sub-category); 553,280 in third category; and 1,727,897 in fourth category.  The total family-based NVC pending cases are 3,369,455.

Employment-based.   As of November 1, 2009, there are 3,601 employment-based first preference category applications pending; 6,295 second category; 119,759 in third category (103,448 in skilled workers and 16,311 in other workers sub-category); 529 in fourth category; and 325 in fifth category.  The total employment-based NVC pending cases are 130,509.

Distribution by Country

Thirteen countries represent 79% of the total NVC pending immigrant petitions.  Mexico is number one with 1,178,761 cases (most of which are family-based);  Philippines is second with 482,694, China-mainland is third with 197,559, while India is fourth with 194,954.

Please see the full report for more detailed statistics.  It is important to note that the annual FY-2010 maximum of family-based immigrant visas issued for any one country is 15,820.  The maximum employment-based immigrant visas issued for any country is 10,440.

The Neufeld Memorandum of January 8, 2010, has generated a substantial amount of discussion with its newly-proposed standard for “employer-employee” relationship applied to third-party H-1B employee placements, which are very common for consulting companies.  Our office has handled many consultations and inquiries relating to the Neufeld Memorandum and what it means for the thousands of H-1B employees currently on H-1B visa and for their employers.

AILA Seeks Rescission of the Neufeld Memorandum

Our office has revised its standard H-1B preparation guidelines for third-party worksite H-1B petitions to comply, to the extent possible, with the new requirements imposed by the Neufeld Memorandum.  In the meantime, the American Immigration Lawyers Association (AILA), in a January 26, 2010, Memorandum addressed to the Chief Counsel of USCIS, calls for the rescission of the Neufeld Memorandum effective immediately and for the issuance of a new memorandum to redefine the employer-employee relationship differently, considering legal precedent.

The AILA Memo is quite lengthy (24 pages) and goes into a great detail to substantiate its main claims that (1) the Neufeld Memorandum improperly creates substantive new rule outside the proper channel for making such rules and (2) that the employer-employee relationship definition in the Neufeld Memorandum is improper and is against congressional intent.

The Neufeld Memorandum is Improper Rulemaking

As an initial matter, AILA argues that the Neufeld Memorandum is issued improperly  because it seeks to change substantive rules without the necessary process.  Change in substantive rules must be done by following the required notice and comment procedures.  AILA argues that the “guidance” in the Neufeld Memorandum is a substantive rule change which cannot be imposed by a memorandum;  instead it should follow the normal rulemaking process.  As a result, AILA argues that the Neufeld Memorandum should be set aside as a violation of the Administrative Procedures Act (APA).

The Neufeld Memorandum Definition of Employer-Employee Relationship is Incorrect

As its main argument for seeking the rescission of the Neufeld Memorandum, AILA argues that the sweeping definition of “employer” is inconsistent with the law, impedes its intent and purpose and is inconsistent with decades of precedent.  The AILA Memo then goes into great detail and legal analysis of its claim to conclude that the Neufeld Memorandum, in addition to certain recent AAO’s non-precedent decisions and the accompanying adjudications at the Service Centers that are applying these decisions to current filings seek to overturn over fifty years of consistent precedent and regulatory interpretation to categorically deny eligibility for benefits to an entire class.

Conclusion

The AILA Memorandum is a well researched and substantiated request for the rescission of the Neufeld Memorandum.  However, we do not know yet what USCIS’ position would be in response and whether USCIS will take any steps in response to this memorandum.  We will continue to provide updates on this topic as it is of great interest of our clients, readers and a large portion of the employment-based immigration community.

In a January 8, 2010, Memorandum, Donald Neufeld, the Associate Director for Service Center Operations, provides some guidance on the standards for H-1B petitions filed by independent contractors, self-employed beneficiaries, and beneficiaries working at third-party worksites.

Focus on Employer-Employee Relationship

The guidance is primarily concerned with the employer-employee relationship.  Pursuant to the H-1B regulations, an employer who seeks to sponsor a temporary worker in an H-1B specialty occupation is required to establish such employer-employee relationship.  USCIS deems that such relationship is established when the employer has the right to control the means and manner in which the work is performed.

Some of the factors which are helpful in determining whether such employer-employee relationship exists are the employer’s ability to pay, hire, fire, supervise or otherwise control the work of the employee.

Who Is Most Affected by the New Guidance?

While the employer-employee relationship must be established in all H-1B cases, in practice, the right to control and the employee-employer relationship issues arise in self-employment, contractor (or consultant) companies or with beneficiaries placed at third-party worksites.  The right to control issue should be addressed also with in-house H-1B petitions, although in many cases it would be easy to establish such right to control when the employee is working on the employer’s premises.

Establish the Employer’s Right to Control

Under the Neufeld Memorandum guidance, with each H-1B petition, USCIS must determine if the employer  has a sufficient level of control over the employee.

The right to control can be established when considering the following factors:

1. Does the petitioner supervise the beneficiary and is such supervision off-site or on-site?
2. If the supervision is off-site, how does the petitioner maintain such supervision (weekly calls, progress reports, site visits, 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 tools or instrumentalities needed by the beneficiary?
5. Does the petitioner hire, pay and  have the ability to fire the beneficiary?
6. Does the petitioner evaluate the work-product of the  beneficiary?
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?
10. Does the beneficiary produce an end-product that is directly linked to the petitioner’s line of business?
11. Does the petitioner have the ability to control the manner and the means in which the work product of the beneficiary is accomplished?

The Neufeld Memorandum provides that these factors should be weighed in the “totality of the circumstances” which allows some flexibility to focus on some, but not all, factors.

Additional Evidence Required in H-1B Filings by Consulting Companies and Third-party Worksite Employers

As a result of the Neufeld Memorandum, USCIS establishes a new level of evidence to be submitted as part of all new, transfer and even extension H-1B petitions filed by employers which intend to place the beneficiary at a third-party worksite.

Currently, such third-party worksite H-1B applications require evidence to establish the exact position and duties in which the beneficiary will be engaged at the third-party worksite.  In addition, as a result of the new guidance, H-1B petitioners will have to now include information to satisfy all or many of the right to control factors described above.

Pursuant to the field guidance, such right of control test is applied to all new, transfer and even H-1B extensions with the same employer.

Conclusion

The Neufeld Memorandum creates another set of information and documents which will have to be prepared and provided as part of each H-1B filing by a consulting, self-employment and third-party worksite petitioner.

While the guidance is intended to apply for all H-1B beneficiaries, regardless of where they are employed, the guidance is most likely to be more rigorously enforced against employers who file H-1B petitions on behalf of employees placed at a third-party site or off-site.

Petitioners who regularly place employees off-site should become familiar with the 11 factors described above  and be prepared to answer and document the petitioner’s right to control the intended H-1B beneficiary.

In a shift in  policy, the CDC has announced that effective Decemeber 14, 2009, the HPV vaccine will no longer be required for immigrants applying for immigrant visa or adjusting their status from within the U.S.

Background About the Required Vaccinations

Under Section 212(a)(1)(A)(ii) of the Immigration and Nationality Act (INA), any alien who seeks admission into the United States as an immigrant, or who seeks adjustment of status to the status of an alien lawfully admitted for permanent residence, is inadmissible into the United States if the alien is unable to present documentation of having received vaccination against “vaccine-preventable diseases, which shall include at least the following diseases: Mumps, measles, rubella, polio, tetanus and diphtheria toxoids, pertussis, Haemophilus influenzae type B, and hepatitis B, and any other vaccinations against vaccine-preventable diseases recommended by the Advisory Committee on Immunization Practices.”  Current guidance by the Center of Disease Control (“CDC”) includes the HPV vaccin to the list of vaccine-preventable diseases and is therefore required by girls and women between the ages of 11 and 26 who are seeking to become legal permanent US residents.  Those within this age range were required to get at least the first dose of the HPV vaccine, which protects against some strains of the virus blamed for cervical cancer. Additionally, the Gardasil shot was added to the vaccine list for immigrants in July 2008 by the CDC.

HPV Vaccine Requirement Controversy 

While HPV remains the single most widespread sexually transmitted disease in the country, only a small percentage of those infected with the virus will go on to develop life-threatening diseases like cervical cancer. The cost-effectiveness of the Gardasil vaccine (the HPV vaccine) remains largely in debate especially when young girls coming from a variety of foreign nationalities and cultures have to be subjected to medical exam and vaccination.  Additionally, the price of the vaccine, which is administered in three separate shots, can cost anywhere from $400 to $1000  (and the cost is often not reimbursable by insurance companies).

New CDC Guidance

Accordingly, CDC has announced a revised rule which becomes effective December 14, 2009, and under which the HPV vaccine will not be required for aliens seeking admission as an immigrant or seeking adjustment of status to that of an alien lawfully admitted for permanent residence.

In providing explanation to this change in policy, CDC recognized that genital infection with HPV is an extremely common infection due to its efficient transmission via sexual intercourse. There are approximately 6 million incident infections occurring annually in the United States. Over half of sexually active men and women will develop HPV infection at some point in their lives and 15% of all Americans have current infection with HPV.

Although there are millions of HPV infections annually, it is very difficult to distinguish those cases which resolve from those (about 10,000 per year) cases which result in cervical cancer.  Therefore, while HPV may be an age-appropriate vaccine for an immigrant applicant, HPV neither causes outbreaks nor is it associated with outbreaks (per explanation in the background section).  Further, HPV has not been eliminated, nor is in the process of elimination, in the United States. Therefore, because HPV does not meet the adopted criteria, it will not be a required vaccine for immigrant and adjustment of status to permanent residence applicants.

In an article today, the Washington Post reports on a speech made by the Homeland Secretary Janet Napolitano and her prediction that in “[t]he first part of 2010, we will see legislation beginning to move.”

The Post article is based on a speech made by Secretary Napolitano earlier today.  She claimed that the Obama administration has been doing much to strengthen the borders and this gives it an opportunity to move forward with a comprehensive immigration reform in early 2010.   According to the Post,

In recent years, the U.S. government has erected more than 600 miles of fencing and pedestrian barriers on the 2,000 mile border with Mexico, and more than doubled the ranks of the U.S. Border Patrol, to 20,000 officers, Napolitano said. Meanwhile, due to a shrinking job market and increased enforcement, Border Patrol arrests last year were less than half the 2005 level of 1.2 million.

While talk of the possibility of immigration reform may be welcome by some groups who have been pushing for such reform in a long time, the Obama administration and Congress have a very dense agenda over the next few months and congressional experts believe that there may not be sufficient time and/or political capital to tackle immigration reform before next year’s mid-term elections.

Over the past months we have written extensively about the issues raised by today’s Wall Street Journal article “Slump Sinks Visa Program” but it is still an interesting read.   Most of our readers are aware of the current H-1B quota and the fact that a substantial number of H-1B visas still remain available (for comparison, prior years’ H-1B quota was exhausted in as little as 5 days).

The article explains the decrease in the H-1B demand not only due to the economic slowdown and the corresponding decrease in hiring but also to recent anti-immigrant sentiment in Washington,

Vivek Wadhwa, a visiting scholar at the University of California at Berkeley who has studied H-1B visas, said that [the decreasing number of H-1B applications trend] has been compounded by what he sees as rising anti-immigrant sentiment in the U.S. “The best and the brightest who would normally come here are saying, ‘Why do we need to go to a country where we are not welcome, where our quality of life would be less, and we would be at the bottom of the social ladder?’” Mr. Wadhwa said.

…

[Also,] some would-be employers are put off by a crackdown on fraud. U.S. Citizenship and Immigration Services, which administers the H-1B program, has been dispatching inspectors on surprise company visits to verify that H-1B employees are performing the jobs on the terms specified. The fraud-detection unit in coming months is expected to inspect up to 20,000 companies with H-1Bs and other temporary worker visas.

However, the article also points out the value of the H-1B program to the U.S. economy,

While the number of visa holders is small compared with the U.S. work force, their contribution is huge, employers say. For example, last year 35% of Microsoft’s patent applications in the U.S. came from new inventions by visa and green-card holders, according to company general counsel Brad Smith.

Google Inc. also says that the H-1B program allowed it to tap top talent that was crucial to its development. India native Krishna Bharat, for example, joined the firm in 1999 through the H-1B program, and went on to earn several patents while at Google. He was credited by the company as being the key developer of its Google News service. Today, he holds the title of distinguished research scientist.

Read the full article here.