January 20, 2021
An advance copy has been made available of the final rule entitled “Strengthening the H-1B Nonimmigrant Visa Classification Program,” which narrowly amends U.S. Citizenship & Immigration Services (USCIS) regulations to clarify how the agency will determine whether there is an employer-employee relationship between an H-1B petitioner and beneficiary, for the purposes of qualifying as a "United States employer."
As reported last October, USCIS had announced this rule as part of a set of interim regulations, with the stated purpose of bolstering the criteria to be met by U.S. employers in sponsoring foreign workers in the H-1B nonimmigrant category. The interim regulations were very broad in scope, intending to redefine the term “Specialty Occupation” for H-1B purposes, and limiting H-1B approval periods for out-placed contract workers. With the final rule, USCIS has chosen to only implement the provisions pertaining to the H-1B employer-employee relationship. The other parts of the interim regulation may be finalized in the future.
The new rule will have the following impact, all relating to the subject of the H-1B employer-employee relationship:
a. Definition of “Employer” for H-1B Purposes: USCIS will remove the phrase “as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee” from the current definition of “U.S. employer,” and replace it with a lengthier definition, to better clarify what might qualify as a proper employer-employee relationship, between an H-1B worker and a sponsoring employer. The new regulatory definition has actually existed for many years, in the form of USCIS guidance commonly known as the “Neufeld Memo” which was published in 2010, on the same topic. New regulatory factors that will be considered by USCIS (nearly all of which were previously announced in the Neufeld Memo) in determining whether an “employer-employee relationship” exists, are:
- Whether the petitioner supervises the beneficiary and, if so, where such supervision takes place;
- Where the supervision is not at the petitioner’s worksite, how the petitioner maintains such supervision;
- Whether the petitioner has the right to control the work of the beneficiary on a day-today basis and to assign projects;
- Whether the petitioner provides the tools or instrumentalities needed for the beneficiary to perform the duties of employment;
- Whether the petitioner hires, pays, and has the ability to fire the beneficiary;
- Whether the petitioner evaluates the work-product of the beneficiary;
- Whether the petitioner claims the beneficiary as an employee for tax purposes;
- Whether the petitioner provides the beneficiary any type of employee benefits;
- Whether the beneficiary uses proprietary information of the petitioner in order to perform the duties of employment;
- Whether the beneficiary produces an end-product that is directly linked to the petitioner’s line of business; and
- Whether the petitioner has the ability to control the manner and means in which the work product of the beneficiary is accomplished.
b. Dual H-1B Employment: In cases where an employer “contracts out” an H-1B worker, who will be supervised and controlled by another entity (such as a “mid-vendor,” or potentially a client receiving the services), USCIS might require that both entities submit separate H-1B petitions, on behalf of the worker. The Department of Labor (DOL) Office of Foreign Labor Certification also issued a corresponding bulletin, clarifying filing and posting requirements for Labor Condition Applications, by secondary employers.
The new USCIS rule is set to go into effect 180 days from its publication, approximately six months from now. We will continue to monitor this situation closely, and provide updates as they become available. Please contact me or another member of our Immigration Practice Team if you have any questions, or would otherwise like to discuss.