H-1B Visa Filings for FY2011 Begin on April 1, 2010

On April 1, 2010 US Citizenship and Immigration Services (USCIS) will begin accepting filings of H-1B visa petitions for employment in the fiscal year 2011 (FY2011). Employers should prepare now to start filing H-1B petitions on April 1, 2010 for new and existing employees who will be eligible for a first-time H-1B visa to begin employment in FY2011 (that is, on or after October 1, 2010). It can take anywhere from several weeks to several months to get all the paperwork and documentation organized and prepared to file, so employers are encouraged to start the process as soon as possible.

Congress has mandated an annual cap of 65,000 H-1B visas, with an additional 20,000 visas available for beneficiaries with advanced degrees from US colleges or universities. It should be noted that H-1B visa petitions filed on behalf of current workers who have been counted previously against the H-1B visa cap will not be included toward the annual cap set by Congress. Furthermore, pursuant to the free trade agreements with Chile and Singapore, 6,800 H-1B visas are available exclusively to Chile and Singapore nationals. This effectively reduces the total allotment of available H-1B visas to 58,200.

Last year, likely due to the state of the economy, the 58,200 allotment was not exhausted until December 21, 2009. In years past, however, the 58,200 allotment has been exhausted within a day, as has the allotment of 20,000 visas for beneficiaries with advanced degrees from US universities. Demand will likely be greater than last year for H-1B visas, so employers are encouraged to file on April 1, 2010 if they need to employ foreign workers in the H-1B category.

"Cap-Gap" Relief

As a reminder, an interim final rule issued in 2008 remains in effect and provides "cap-gap" relief for F-1 students with pending H-1B petitions. Specifically, F-1 student visa holders that have received work authorization, pursuant to Optional Practical Training (OPT), may extend their authorized period of stay and work authorization as long as they are a beneficiary of a timely-filed H-1B petition that was granted by, or is pending with, USCIS, prior to the expiration of their OPT. For more detailed information see our April 2008 Immigration Alert.

Do not wait! For information regarding the petition-filing process and H-1B visas, please contact your principal Squire Sanders lawyer or one of the individuals listed on this Alert.

USCIS Issues a Guidance Memorandum on Establishing the "Employer-Employee" Relationship in H-1B Petitions

On January 8, 2010 USCIS released a memorandum providing guidance for adjudication of H-1B petitions regarding the existence of an employer-employee relationship between the petitioner and the beneficiary throughout the duration of the requested H-1B term. The key concept in the memo is whether or not the H-1B employer/petitioner has the right to control the employee/beneficiary’s work. USCIS will consider several factors (with no one factor being decisive) to make the determination including supervision and control of the beneficiary, location of employment, method of compensation and how taxes are paid among other factors.

The memo lists scenarios in which the H-1B petition will be approved or denied. According to the memo, H-1B petitions will be approved (so long as there are no other deficiencies in the petition) for traditional employment where the employee occasionally visits off-site clients, for long-term off-site employment where the beneficiary reports to the petitioner’s staff and not to third-party clients’ staff, and for long-term off-site employment where the beneficiary is using the petitioner’s proprietary software/processes.

No "Job Shops"

H-1B petitions will not be approved for "job shop" situations where the petitioner places the H-1B employee at third-party off-site clients and the petitioner exercises no control over the beneficiary’s work. USCIS lists characteristics of "job shops" which include situations where the petitioner has contracts with many companies to which it supplies staff; the contracts do not list specific positions, but are staffed on an as-needed basis; the beneficiary is working in a core position (i.e., working on the client’s payroll software); the beneficiary reports to a manager who is an employee of the third-party company; the beneficiary’s work assignments are determined by the third-party company; no proprietary information (owned by petitioner) is used; and the beneficiary’s progress reviews are completed by the third-party company.

Scrutiny of "Self-Employment"

The memo also stresses that H-1B petitions will not be approved where the beneficiary functions as an independent contractor (i.e., an outside sales representative), or where the beneficiary is "self-employed." With regard to the interpretation of "self-employment," the memo appears to overturn 50 years of agency precedent and regulatory practice by limiting or prohibiting H-1B eligibility where beneficiaries own a significant interest and exercise control over the petitioner. The immigration bar has already taken steps to challenge the process by which USCIS has issued this change in policy and we will continue to monitor and provide updates.

Evidence to Establish Employer-Employee Relationship

As a result of this memo, USCIS will consistently scrutinize H-1B petitions for evidence that documents the employer-employee relationship. Therefore, for initial H-1B petitions, employers should provide copies of one or more the following: offer letters, employment contracts, with regard to off-site workers: itinerary of engagements, contracts, statement of work, or work orders between the petitioner and its client supporting the need for off-site employment; performance reviews; and organizational charts. For extension petitions, relevant evidence listed above, as well as: pay records (earning statements, pay stubs), W-2s and payroll summaries for the H-1B worker; time sheets or work schedules; H-1B beneficiary’s work product; performance reviews; and other employment history records.

Impact on Admission Process

We have already received reports that the US Customs and Border Protection (CBP) has taken note of the issues raised by this memo and, at least at one port of entry (Newark, New Jersey), CBP has instituted new inspection procedures. The new CBP policy involves conducting random checks for returning H-1B, L-1 and other employment-based visa holders. If upon initial inspection the person’s admissibility is questionable (including the status of their employment and the employer-employee relationship), he or she will be sent to secondary inspection for further questioning. CBP advises that if their officers find discrepancies between the individual’s statements and the previously filed petition, the person may be asked to withdraw his/her request for admission to the United States or be subject to expedited removal.