USCIS Memo on H-1B Employer-Employee Relationship

A recent memorandum issued by USCIS has drastically changed the way that H-1B petitions are adjudicated. This January 8, 2010 memo, authored by Mr. Donald Neufeld, an Associate Director of USCIS, mandates that a traditional common law "employer-employee relationship" must exist between the petitioner and the beneficiary of an H-1B petition during the entire period of H-1B employment.

To determine whether an employer-employee relationship in the context of H-1B adjudication, the USCIS looks at the following questions:

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, i.e. weekly calls, reporting back to main office routinely, or site visits by the petitioner?
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 ability to fire the beneficiary?
6) Does the petitioner evaluate the work-product of the beneficiary, i.e. progress/performance reviews?
7) Does the petitioner claim the beneficiary for tax purposes?
8) Does the petitioner provide the beneficiary any 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 linked to the petitioner's line of business?
11) Does the petitioner have the ability to control the manner and means in which the work product of the beneficiary is accomplished?

Under this new policy of USCIS, certain types of relationship would not qualify for H-1B status. For example, a self-employed consultant would not be able to present evidence that he or she is under the control of an employer. A typical IT consultant firm that places H-1B workers at client locations would also have problems meeting these requirements. IT consultants usually are under the administrative control of the consultant firm only: the firm pays the salary and provides basic benefits to consultants only but does not have regular, daily control over their work. The end-client typically supervises these consultants and provides project specifications and feedback to them. Unless a consultant firm has some proprietary information or a product that its consultants actually bring to use at the client site, it would be difficult to establish an "employer-employee" relationship under these new set of critieria espoused by the USCIS.

This memo also modifies the Field Administrative Manuel (FAM) used by Service adjudicators by adding a number of additional requirements on the issue of whether or not an employer-employee relationship exists in a H-1B petition. It should be noted that although the memo provides additional guidance to the adjudicators, it does not carry the same legal effect that a regulation promulgated by a government agency has. It is expected that more definitive answers on this important issue will come down in form of court decisions or new regulations. In the meantime, H-1B employers and workers must pay special attention to H-1b filings and try to comply with the Neufeld memo as much as possible. Meticulous documentation should be provided to support all H-1B petitions and proper legal advice should be sought.