The U.S. Citizenship and Immigration Services (USCIS) issued a memorandum dated January 8, 2010 that has great significance for the IT consulting industry. This memo specifies how USCIS personnel should determine the existence of the required employer-employee relationship when adjudicating H1B petitions.
The memo, issued by Associate Director of Service Center Operations, Donald Neufeld, provides guidance regarding the type of evidence that sufficiently confirms the existence of an employer-employee relationship between an H1B-petitioning employer and the beneficiary when the employee's work is performed off site.
1. Legal Relationship of Employer-Employee Required
The long-standing H1B regulations require, in most H1B cases, an employer-employee relationship between the petitioner and the beneficiary. (H1Bs filed by agents are outside the scope of this article.) The need for this relationship is not new, and the USCIS has historically required proof of the relationship. The nature of the evidence or proof required was not previously addressed in detail, however.
The USCIS utilized certain case law interpretations of the employer-employee concept. The memo mentions that it is intended to provide clarity on this matter and is directed specifically at adjudication of the employer-employee requirement, if the beneficiary is placed at a third-party worksite.
2. Employer's Right of Control Required
The issue in the employer-employee relationship is that of the petitioner's right of control over the beneficiary. The petitioner does not need to show actual control over the beneficiary's work, but the petitioner must provide evidence that it has the right to exert such control. The memo makes it clear that it is not sufficient to simply engage the individual to work, and then pay the wage.
3. Factors to Establish Employer-Employee Relationship
The USCIS examiners are directed to weigh various factors when making the determination as to whether there is an employer-employee relationship. There are eleven enumerated factors, with no single factor being determinative. They must review whether the petitioner supervises the beneficiary, and whether this supervision is performed on site or off site. If the work is offsite, then the method and frequency of such supervision is assessed. One of the factors is whether the petitioner has the right to control the beneficiary's daily work, if such control is required.
Also included in the eleven factors is whether the petitioner provides the tools needed to perform the tasks required of the position. The USCIS will review whether the petitioner hires, pays, and can fire the beneficiary, as well as whether the petitioner evaluates the beneficiary's work product. Other factors include whether the petitioner provides employee benefits to the beneficiary and claims the beneficiary for tax purposes. There are questions related to the nature of the work, including whether the beneficiary uses proprietary information regarding the petitioner in order to perform the work, and whether the beneficiary's end work product is directly linked to the petitioner's business.
4. Evidence to Establish Employment Relationship
The memo also lists evidence that typically establishes the employer-employee relationship when the USCIS issues a request for evidence (RFE) for an initial, new H1B petition. Examples mentioned in the memo include an itinerary (if there is more than one worksite location during the requested validity period), employment contracts and offer letters, end-client and mid-vendor contracts and/or letters, work orders, and similar documentation. There must be labor condition applications (LCAs) approved for the location/s of employment.
Additionally, the memo provides a list of evidence for H1B extension requests that must continue to establish the employer-employee relationship. The evidence needed also includes documentation that the petitioner previously had the required relationship as an employer. This includes such items as: timesheets, payroll records, performance reviews, work schedules, and examples of the beneficiary's work product.
5. Examples of Valid Employer-Employee Relationship and Third-Party Worksite in IT Context - Allowed
The memo provides examples of what constitutes an employer-employee relationship. The easiest examples are those in which there is traditional, onsite employment. This direct employment typically involves daily contact, work at the employer's facilities, and use of the employer's equipment.
Another fairly straightforward example is traditional employment, with temporary or occasional offsite employment. The example given is that of an accountant traveling to client sites for auditing purposes.
The memo confirms that an employer-employee relationship exists when there is long-term, offsite employment. The example given is an architect working on a building project for a client. The contract specifies that the employer manages and supervises the onsite employees. The tools and equipment are provided by the employer and the employee reports directly to the employer. The work is controlled by the employer.
The final example of a confirmed employer-employee relationship involves long-term placement at a third-party worksite in the IT context. The example given involves a contract to develop an in-house computer program for a client, using the petitioner's proprietary software and expertise. The beneficiary performs that work at the client site, but reports weekly to a manager employed by the petitioner. The beneficiary also is paid and receives employee benefits from the petitioner. The USCIS considers this sufficient to demonstrate that control is specified and exercised.
