Rajiv S. Khanna
Immigration policy has always been the favorite whipping horse of recessionary economies. True to that practice, over the last two years, U.S. employment-based visas have been whipped into a form that is now almost unrecognizable. What makes matters worse is that an attempt to withdraw a petition after an RFE is issued is now a well-known trigger for an investigation by USCIS. These types of investigations can examine H-1 and L-1 cases filed by an employer over several years. Even for approved petitions, USCIS often conducts site visits to verify the accuracy of information that was provided in the petition and RFE responses. Thus, an ill-considered petition exposes the petitioner to substantial risk and expense. This article provides suggestions on understanding and complying with the new paradigm.

I. The H-1B Category
The H-1B category is the most commonly used employment-based visa for working in the U.S. H-1B visas are meant to be utilized by those foreign workers who are coming to the U.S. to perform services in a specialty occupation – an occupation that requires at least the U.S. equivalent of a bachelor’s degree in a specific subject. An H-1B worker must be employed with a U.S. “employer,” defined as a person, firm, corporation, partnership, contractor or other association or organization in the United States, with an Internal Revenue Service (“IRS”) tax identification number. U.S. branches and subsidiaries of an overseas company can also file H-1B Petitions.

Currently, the most common issues in H-1B filings are demonstrating the existence of a valid employer-employee relationship and a job opportunity whose existence is documented and demonstrably available throughout the period for which the H-1B approval is requested. United States Citizenship and Immigration Services (“USCIS”) formally articulated these concerns in a January 8, 2010 memorandum (commonly referred to as the “Neufeld Memo”), describing an employer-employee relationship as one where the employer has the right to control the means and manner by which the employee’s work is performed, and underscoring the importance of specificity of an offered job. The memo is available at http://forums.immigration.com/entry.php?234-H-1b-Employer-Employee-Memo-of-8-January.

A. Employer’s Right to Control – Deployment at a Client Site
India takes up more than one-third of the world-wide quota for H-1B visas, most of which are used by consulting companies who deploy their employees at client sites. Therefore, the Neufeld Memo, as it applies to the deployment of workers at client sites, is of significant concern to Indian companies.   Proving an employer-employee relationship and employer’s right to control the employee can be especially challenging in these situations. Below is a sample Request for Evidence (“RFE”) from USCIS listing the factors USCIS considers important in evaluating the existence of employer-employee relationship and particularly the employer’s right to control the work of an employee:

Sample H-B RFE from USCIS – Neufeld Memo
USCIS must determine if you have the right to control the employee through evidence that describes (with no one factor being decisive or exhaustive):

• the skill required to perform the specialty occupation;
• the source of the instrumentalities and tools needed to perform the specialty occupation;
• the location of the work;
• the duration of the relationship between you and the beneficiary;
• whether you have the right to assign additional work to the beneficiary;
• the extent of beneficiary’s discretion over when and how long to work;
• the method of payment of the beneficiary’s salary;
• the beneficiary’s role in hiring and paying assistants;
• whether the specialty occupation work is part of your regular business;
• whether you are in business;
• the provision of employee benefits;
• the tax treatment of the beneficiary;
• whether you can hire or fire the beneficiary or set rules and regulation on the beneficiary’s work;
• whether, and if so, to what extent you supervise the beneficiary’s work; and/or
• whether the beneficiary reports to someone higher in your organization.

As such, it is requested that the petitioner demonstrate an employer-employee relationship with the beneficiary through the right to control the manner and means by which the product or services are accomplished for the duration of the requested H-1B validity period by providing a combination of the following or similar types of evidence. This list is not inclusive of all types of evidence that may be submitted. You may submit any and all evidence you feel would meet the employer-employee requirement.

To demonstrate the employer-employee relationship and the existence of the right to control, the Neufeld Memo requires the petitioner to provide an end-client letter in support of all H-1B visa petitions that require deployment of foreign workers at client sites. Initially the end-clients, typically large companies, were reluctant to get involved in the H-1B process. But now, almost a year since the issuance of the Neufeld Memo, end-clients are increasingly willing to provide letters in support of H-1B petitions, as long as they are carefully drafted to avoid any unintended liability for the end-client. The following sample letter should provide sufficient legal protection to end-clients and also satisfy concerns raised by the Neufeld Memo.

[Sample End-Client Letter in Response to RFE from USCIS]
[End-Client’s Corporate Letterhead]

[Date]

[Addressed to: USCIS or Prime Contractor]

Re:Verification of work and anticipated duration

Dear Sir or Madam:

This letter is being provided at the request of [Prime Contractor] to verify the facts stated herein. All representations made are strictly for submission to the immigration authorities. No legal or equitable rights are created, modified or abrogated by this letter.

[Mr./Ms. H-1B Worker] is anticipated to contribute to our work in the capacity of a contracted [insert job title].   [He/she] will be performing the following job duties: [Detailed job description]

[Mr./Ms. H-1B Worker] will not be our employee. As long as [he/she] follows our standard workplace policies, we will have no responsibility to dictate how [he/she] performs [his/her] job duties.   We will also not be responsible for hiring, discharge, promotion, demotion, remuneration or any other incidents of [his/her] employment.

Currently, we have issued a work order for [6 months] but we anticipate the need for [his/her] services to go beyond that time to approximately [3-4 years].   For emphasis, we note here again, this statement is merely an expression of intent and is not a contractually or equitably binding commitment.

 ____________________

[Name]

[Title]

To ensure compliance, in addition to procuring end-client letters, all H-1B employers should consider applying the following policies and procedures to the extent applicable to their business model:

1. Implement procedures to ensure that the employer continues to supervise the employee even when the employee is working at an end-client location.
2. Establish work flows and document them to show how many times a week or month the employee reports to the employer. Prepare and maintain documentation that provides dates and substance of discussions with the employee.
3. Document that the employer has the right to control the day-to-day work of the employee. For instance, document that the employer determines for the employees the time they arrive and leave, amount of work they must do each day, qualitative standards for the work, and how to perform the work.
4. Document that the employer provides the tools or instrumentalities needed to perform the job. In many industries, that would mean providing items like laptops, desktops, printers and job-related software.
5. Document that the employer has the ability to hire, pay, and fire the employee. This can be documented through the employment contract with the beneficiary or through the initial job offer letter. Note, however, that there is no legal requirement that an employer must enter into an employment agreement with employees, H-1B or otherwise.
6. Document that the employer evaluates the work product of the employee. In the IT industry, this is akin to the review of a product before user acceptance. Even if the employer does not evaluate the employee’s completed work product, they may be able to demonstrate control over the employee by establishing performance review criteria, such as technical proficiency, ability to learn new material, client satisfaction, and communication skills.
7. Ensure that the H-1B employees are being claimed as employees for tax purposes (IRS Form W-2). During a recent compliance review/audit of a large health care client, we found that some H-1B physician employees were being paid as independent contractors (IRS Form 1099) instead of being claimed as employees, negating the existence of employer-employee relationship that is required under the law.
8. Document the employee benefits including medical insurance, paid vacations, bonuses, travel allowances (per diem), etc.
9. Document any training employer provides to the employees and the employee’s use of any such proprietary knowledge in performing the job.
10. Set up performance review processes and procedures and also create company-wide performance standards for all employees, no matter where they are deployed.
11. Reimburse employees for travel and similar job-related expenses. They should avoid letting end-clients directly reimburse H-1B employees.
12. Where possible, employers should add terms in their contracts with end-clients and vendors that specify that the employer has the right to control and manage how the employee performs their work, and the exclusive and sole right to re-assign the employee.
13. Employers should take responsibility for delegating end-client assignments to the employees.
14. Many of the above suggestions should also be incorporated in the employee handbooks.

B.In-house Deployment – Specificity of H-1B Job
If the H-1B employee is placed on an in-house project at the employer’s location, USCIS asks for specific details and proof that the employer has sufficient work for the employee on that project. Below is a sample RFE listing the factors that guide USCIS’s adjudication.

Sample H-1B RFE from USCIS for In-House Project
If the beneficiary will work on a project at your own location, provide evidence that demonstrates you have sufficient specialty occupation work that is immediately available upon entry into the United States through the entire requested H-1B validity period by providing a combination of the following or similar types of evidence. This list is not inclusive of all types of evidence that may be submitted. You may submit any evidence you feel will establish sufficient specialty occupation work.

• Copy of signed Employment Agreement between you and beneficiary detailing the terms and conditions of employment;
• Copy of an employment offer letter that clearly describes the nature of the employer-employee relationship and the services to be performed by the beneficiary;
• Copy of relevant portions of valid contracts, statements of work, work orders, service agreements, and letters between you and the authorized officials of the ultimate end-client companies to whom the end product or services worked on by the beneficiary will be delivered;
• Copy of a position description or any other documentation that describes the skills required to perform the job offered, the tools needed to perform the job, the product to be developed or the service to be provided, the method of payment, whether the work to be performed is part of your regular business, the provision of employee benefits, and the tax treatment of the beneficiary by you;
• Evidence of sufficient production space and equipment to support the beneficiary’s specialty occupation work;
• Copies of critical reviews of your software in trade journals that describes the purpose of the software, its cost, and its ranking among similarly produced software manufacturers;
• Proof of your software inventory;
• Proof of sufficient warehouse space to store your software inventory;
• Copy of the marketing analysis for your final software product;
• Copy of the cost analysis for your software product;
• Evidence of sufficient production space and equipment to support the production of your software;
• Evidence of how many man-hours it would take to complete the proposed project and of these – how many man-hours will be assigned to the beneficiary;
• What are the various stages of the project completion;
• Explain the beneficiary’s role in the project;
• How many other employees are engaged in the project and what are their respective roles in the project.

The above RFE is self-explanatory, requiring specific details of the project from any company that claims in-house deployment of an H-1B worker. USCIS does, however, permit a petitioner to provide evidence as it applies to the petitioner’s specific situation. For instance, warehousing space as mentioned in the RFE above will not be of concern to a software manufacturing company that delivers its product online. Nevertheless, if a particular item requested by USCIS is inapplicable to petitioner’s situation, it is important for the petitioner to explain why in its response to the RFE.

II. The L-1 Category
The L-1 category is typically used by multinational companies to bring foreign employees into the U.S. in an executive or managerial capacity (L-1A visa), or as a specialized knowledge worker (L-1B visa). To qualify for the L-1 category: (i) the beneficiary must have worked abroad for the overseas company for at least one year continuously within the previous three years; (ii) the company for which the employee has worked abroad must be a parent, branch, subsidiary or affiliate of the U.S. employer; and (iii) the beneficiary must have been employed abroad in an executive or managerial capacity (L-1A), or in a position of specialized knowledge worker (L-1B). USCIS is currently placing heavy emphasis on proof of the bona fides of the petitioning employer, past experience of the intended L-1 beneficiary, as well as the nature of the offered position in the U.S.

A.L-1A Visa – Defining Managerial and Executive Capacity
An individual in a managerial position is one whose primary duties are to manage the organization, department, subdivision or its function. This individual supervises other professional personnel or manages the essential functions of the organization, and exercises discretion over daily operations. Notably, supervisors who plan, schedule, and supervise the day-to-day work of nonprofessional employees are not employed in an executive or managerial capacity, even though they may be referred to as managers in their particular organization. To prove executive capacity, USCIS requires evidence that the employee is responsible for directing the management of the organization or of a major component or function. The evidence must also show that the employee establishes goals and policies, operates under minimal supervision, and exercises a great degree of autonomy in making business decisions. It is theoretically possible for an executive or a manager to be “in charge” of a function, rather than of people. But, USCIS requires that the function itself must not be directly performed by the executive or manager, failing which the position should be viewed as that of a staff officer or specialist. In other words, such manager or executive must not be primarily performing the tasks necessary to produce the product or provide the service of the petitioning employer.

L-1A Request for Evidence

• Submit a complete copy of Form 941, Employer’s Quarterly Tax Return for all the four quarters of 2009.
• Submit a copy of all Form W-2s and Form 1099s issued by the U.S. entity in 2009.
• Submit a copy of the Form W-3 and Form 1096 issued by the U.S. entity in 2009.
• Submit photographs of interior and exterior of the premises, which you have secured for the U.S. entity. These should include photographs, which clearly depict the organization and operation of the company as well as posted signs of the business name outside of the building Inside photos should show working areas, files, sample products, etc. and any employees. They should also include factory and work space, inside and outside of the office/building, equipment, merchandise, products, etc. Also, provide addresses and detailed directions to each facility.
• Submit complete copies of U.S. entity’s phone records for the last three months.

• Submit a copy of your business’ phone listing in both the white and yellow pages of your area’s phone/business directory.

• Submit samples of your advertising copy for print media, such as newspapers, magazines, and trade journals, used by business in the U.S. to promote your organization. Please indicate the name of the periodical, which published the advertisement, as well as the date on which the advertisement was published.

• Submit proof of business conducted at the location listed on the petition. Such evidence should include utility deposits and bills, rent receipts, etc. Provide copies of all city, county, and state business licenses. In addition, submit a letter from the owner of the building and/or management company on their corporate stationery, which verifies company occupancy. This should include information to show authorization for another company to sublease to your business.

• Submit letters from public or private professional, business, and trade organizations stating their knowledge of the U.S. company’s membership. Provide details as to the type of organization, purpose, membership requirements, and benefits gained by members.

• Submit a copy of the zoning map that shows the location of the U.S. company’s business premises to verify the listed addresses zoned for commercial purposes.

• Submit a copy of company’s business insurance policy or the business insurance policy from the building owner or management company, or from the sub-lessor. The policy must include the U.S. company and all its facilities and equipment. Include a letter from the insurer stating their knowledge of the U.S. company’s building occupancy.

• Submit a copy of the city or county fire department occupancy permit for the U.S. company. Provide a letter or other proof from the local fire department as to the permit’s validity, and their knowledge of the U.S. company’s building occupancy.

• Submit an organizational chart for the foreign entity, indicating the beneficiary’s position within this hierarchy.

• Describe the typical managerial responsibilities performed by the beneficiary abroad; for example, your method of evaluating employees under the beneficiary’s authority. Please articulate and submit documentary evidence of the managerial decisions made by the beneficiary on behalf of the foreign organization.

• In addition, please provide short answers to the following:

1. How many subordinate supervisors were under the beneficiary’s management?
2. What are the job titles and job duties of the employees managed?
3. What executive and technical skills were required to perform the overseas duties?
4. How much of the time spent by the beneficiary was allotted to executive duties and how much to other non-executive functions?
5. What degree of discretionary authority in day-to day operations did the beneficiary have in the overseas job?

• Submit additional evidence to establish the beneficiary has been employed abroad, in an executive/managerial capacity for one continuous year of full time employment within the three years prior to February 4, 2010. The documents to submit should include, but are not limited to:

1. The beneficiary’s last annual tax return and if applicable tax withholding statement reflecting the employer
2. Copies of payroll documents of the company reflecting the beneficiary’s period of employment and salary, and
3. Other unequivocal evidence establishing the foreign employment by the beneficiary.

• Submit a comprehensive description of beneficiary’s duties. Also indicate how the beneficiary’s duties will be managerial or executive in nature. For executive or managerial consideration, you must also:

1. Demonstrate the beneficiary functions at a senior level within an organizational hierarchy other than in position title, or
2. Demonstrate the beneficiary will be managing a subordinate staff of professional managerial or supervisory personnel who will relieve him from performing non-qualifying duties, if appropriate.

• Submit a list of your U.S. employees, which identifies each employee by name and position title. In addition, submit a complete position description for all of your employees in the U.S. Submit a breakdown of the number of hours devoted to each of the employees’ job duties on a weekly basis, as well as the educational requirements needed to fulfill their job positions.

The amount of detail required by RFEs has become quite cumbersome.   In addition to tax filings, the above RFE requires pictures of the company’s premises, phone records and listing, advertisements promoting the company, utility bills, rental receipts, proof of occupancy, evidence of membership in trade organizations (if any), zoning maps, and insurance policies. USCIS requires evidence that clearly indicates that the beneficiary is an executive or a managerial level employee and not merely a first line supervisor.

B. L-1B Category – Current Issues
An individual qualifying as a specialized knowledge worker, or L-1B employee, either has specialized knowledge of the petitioning employer’s product and its application in international markets or has an advanced level of knowledge of processes and procedures of the company.

SAMPLE L-1B RFE

Duties Abroad: Submit a more detailed description of the beneficiary’s duties abroad. Be specific. Provide timelines for training and experience. Additionally, explain how the alien’s employment abroad qualifies him to perform the intended services in the U.S. in a specialized knowledge capacity. A petitioner’s assertion that the alien possesses an advanced level of knowledge of the processes and procedures of the company must be supported by evidence describing and setting apart that knowledge from the elementary or basic knowledge possessed by others. It is the weight and type of evidence that establishes whether or not the beneficiary possesses specialized knowledge. Petitioner’s Product: Explain, in more detail, exactly what is the equipment, system, product, technique, research, or service of which the beneficiary of this petition has specialized knowledge, and indicate if it is used or produced by other employers in the U.S. and abroad Beneficiary’s Training or Experience: Explain how the beneficiary’s training or experience is uncommon, noteworthy, or distinguished by some unusual quality and not generally known to practitioners in the alien’s field in comparison to that of others employed by the petitioner in the alien’s field of endeavor. Specialized Knowledge position at the off-site work location: In order to establish that the beneficiary will be coming to the U.S. to perform duties in a specialized knowledge capacity, at the off-site employer’s work location, please submit the following additional documentation: Contracts: Submit copies of contracts, statements of work, work orders, service agreements between the petitioner and the unaffiliated employer or “client” for the services or products to be provided.

The above RFE describes many of the current issues we are currently facing in L-1B adjudications. Admittedly, not all of them are applicable to every case, but petitioners should be prepared for the entire gamut of possibilities.

1. Beneficiary’s Duties Abroad and Training
USCIS expects job description to be specific and detailed enough to describe the typical work day or week of the employee in non-technical terms, along with details of any applicable specialized training. The details of the training must include the number of hours of instruction provided, the time span over which the hours were spread, and the detailed content of the training. Evidence must be presented that the training is provided only to key employees of the organization and that the training or specialized knowledge obtained as a result of such training is not a matter of common knowledge within the industry.

2. Petitioner’s Product
USCIS requires a detailed and specific explanation regarding the petitioner’s equipment, system, product, technique, research, or service, and how it is distinguishable or unique in comparison with items available in the open market. We have successfully used the following types of evidence to satisfy this uniqueness requirement:

• Comparative market or feasibility studies conducted or commissioned by employer.
• Evidence of tie-ins for joint marketing with other companies who are willing to attest to the uniqueness of the petitioner’s product.
• Letters from clients who use the product.
• Articles in media about the product.
• Evidence from expert witnesses.

3. Specialized Knowledge position in USA
We need to address how the specialized knowledge that the beneficiary possesses will be required while working in the US. The level of specificity goes down to describing in lay terms what the typical workday or week of the beneficiary would entail. Generic statements are likely to be rejected.

4. Control of Employee
When an L-1B employee is posted at a client site, USCIS requires proof that the petitioner has the requisite employer-employee relationship. In effect, they are trying to ensure that the L-1B (and even L-1A) category is not being used merely as a device for staff augmentation at the end-client site. Consider this requirement to include most of what we have discussed in relation to the Neufeld Memo above. In addition to the existing contracts, work orders, etc., petitioner should also provide a letter from the end-client essentially in the format provided above under the discussion of Neufeld memo related control issues.

III.Conclusion

The cautionary conclusion in both H-1 and L-1 cases is that even before contemplating filing a petition, we need to ascertain whether or not we can meet the anticipated evidentiary requirements interposed by USCIS.

Rajiv is a member of the Virginia and District of Columbia Bars and the principal of the Law Offices of Rajiv S. Khanna, PC. His practice is focused on employment and business-based immigration and related litigation.  He can be reached at rskhanna@immigration.com.