Employers who source talent from consulting or staffing companies continue to face growing scrutiny from multiple government agencies, including the Department of Homeland Security (DHS), the Department of Labor (DOL), and the Department of State (DOS). Over the past year employers are seeing a dramatic uptick in DOL scrutiny; in-person site visits from DHS investigators; and inquiries from DOS consular officers abroad.
Reanalyzing the Employer-Employee Relationship
In 2010, United States Citizenship and Immigration Services (USCIS) issued a memorandum clarifying their interpretation on who an actual employer is in an employer-employee relationship, and thus who should be the correct entity to sponsor a foreign national for work authorization. Adjudicating officers are instructed to weigh multiple factors (which mirror the factors in determining a joint-employer situation) when determining whether a valid employer-employee relationship exists.
The memo emphasized that the determination of whether an employer-employee relationship is valid should hinge on the extent to which the petitioner has the right to control the beneficiary's work.
Recent pronouncements from the current administration may encourage employers to change the way they utilize staffing and consulting contract workers.
Increased DOL Scrutiny
In July 2017, Secretary of Labor Andrew Acosta announced in a press release that DOL would take actions to “increase protections of American workers while more aggressively confronting entities committing visa program fraud and abuse.”
DOL has implemented new policies which have a broad impact beyond just addressing fraud and abuse, and which impact employers and end-clients which lawfully engage foreign workers. In November 2018, DOL revised the Form ETA 9035 Labor Condition Application (LCA). An LCA, certified by the DOL, is required for each petition filed to USCIS for an H-1B or E-3 worker. The revised form now requires employers (such as professional consulting firms and staffing firms) to disclose whether the foreign worker associated with the LCA will be placed at a “secondary entity.” If so, the LCA must list the legal business name of that entity as well as the address of the place of employment. With limited exceptions, the name of the client where the H-1B / E-3 worker will be placed must be listed in the LCA, even if that worker will not be an employee of the end-client.
In addition, in March 2019, DOL’s Wage and Hour Division (WHD) issued a bulletin which revises the Notice requirement for employers which file LCAs for H-1B and E-3 workers.
This bulletin creates a significantly increased burden on employers of H-1B and E-3 workers who will be placed at client sites. In essence, the H-1B / E-3 worker’s employer must coordinate with the end-client where the worker will be placed, in order to provide notice to the end-client’s employees of the terms and conditions of employment for those foreign workers at the client site.
There is concern that WHD will begin data-mining information on LCAs, both for employers which file LCAs and end-clients that are listed on LCAs. Employers and end-clients should reach out to immigration and employment law counsel to ensure that they are compliant with these new DOL requirements.
Additional Government Scrutiny
Both employers and end-clients should be prepared for investigations from USCIS and DOS. In both instances, if the foreign worker has an approved petition that lists an end-client, either USCIS or DOS (or both) may inquire about the nature of the relationship between the companies, and the nature of the foreign worker’s employment.
USCIS - FDNS Site Visits
USCIS (a division of DHS), created the Fraud Detection and National Security Directorate (FDNS) to investigate those receiving an immigration benefit to confirm that USCIS-authorized employment is consistent with the terms of the approved petition. FDNS officers conduct random site visits to verify employment details of foreign national employees. Because a third-party worksite may be listed on an employment visa petition, FDNS officers may appear at the employer’s worksite or at the third-party client’s worksite. Current trends show the increased targeting of third-party worksite employees and scrutiny of the employer-employee relationship.
As FDNS site visits are unannounced, all employers who have H-1B or L-1 visa holders on-site should be prepared for an unannounced site visit. The plan should include:
Training for receptionists to receive the FDNS officer and notify appropriate HR personnel;
Identifying designated HR personnel to meet with the FDNS officer, who should:
confirm whether the foreign worker who is the subject of the FDNS site visit is their employee, or a contract worker;
if an employee: confirm the details of the foreign national employee’s employment; and
invite the foreign worker to meet with the officer, and explain briefly the reason for the visit.
Having a secure area for the FDNS officer, HR representative, and foreign national employee to meet; and
Contacting immigration counsel at the time of the visit.
These FDNS site visits are often routine, and typically go smoothly if the employer is prepared.
Department of State Inquiries
The Department of State often inquires about the details of a foreign worker’s employment when he or she applies for a visa stamp at a United States Consular Post. DOS typically makes requests in writing. If the underlying employment petition contains details about an end-client work location, DOS will often contact both the employer and the end-client to verify the agreement between the parties and the nature of the foreign national’s work.
New DOL Requirements and DHS/DOL Scrutiny Necessitates Coordination between Companies
Employers who have third-party professional staff or consultants at their worksites should communicate with their staffing and consulting vendors to address all of the above scenarios.
For DOS and USCIS inquiries, the requests often ask for contract documentation, such as Master Services Agreements or Statements of Work; the duties performed by the foreign worker; and the details on supervision of the foreign worker. End clients and their staffing and consulting vendors should discuss the following:
Is there sensitive information in contracts that must be redacted, or requires that the contracts not be disclosed?
Which entity controls the foreign worker’s employment? If USCIS or DOS is requesting a detailed description of duties, the end-client should request those details from the employer.
Is there a set end-date for the foreign worker’s placement at the end-client site?
How an employer and end-client respond to these questions will affect whether or not the foreign worker will be approved for a petition or a visa; and may also affect the duration of the approval.
To ensure compliance with DOL and WHD requirements end-clients should request that their vendors notify them in advance of placing the client’s name on any required LCAs for foreign workers; and discuss how the employer will comply with the WHD notice requirement, where affected U.S. workers who are employed by the end-client must be notified of the presence of certain foreign contract works at the worksite.
Future Changes to Consulting and Staffing Arrangements may be in Order
As mentioned in a prior FE blog post, companies may want to rethink the placement of staffing and consulting resources at their worksite, given the current scrutiny from government agencies and new DOL requirements. If companies can limit the amount of time that third-party foreign workers actually spend at their worksites, they can remain fully compliant with regulatory requirements, and avoid potential scrutiny from multiple government agencies. Employers should consult with their employment law and immigration counsel to talk through these options.
End-client employers need to work closely with their vendors from the onset on the issue of who has the right to control the employee and determine the details of employee’s duties. Vendors (the petitioning entity) need to maintain supervision of the employee and the employee’s work. Employers should also review all of the factors laid out in the 2010 Memorandum on employer-employee relationship. End-clients should also only provide details on staffing and consulting companies with whom they have a direct contractual relationship with.
End-client employers should be prepared for playing a bigger role validating their foreign national workforce, regardless of whether they are the employer / petitioner. All employers should create an internal plan on what to do when they receive a site visit from FDNS. And finally, although the questions being asked by the government agencies may appear straightforward, it is very important to confer with counsel before responding.