On October 8, 2020, DHS published an interim final rule (IFR) titled Strengthening the H-1B Nonimmigrant Visa Classification Program. The IFR becomes effective automatically on December 7, 2020, but there are concurrent public comment periods. Changes include revised definitions of and standards for a "specialty occupation" and "employer-employee relationship," limited petition validity for third-party placements, and other changes that make use of the H-1B category more challenging.
Read the interim final rule published at 85 FR 63918 (October 8, 2020).
- The interim final rule is effective on December 7, 2020.
- Written comments on the interim final rule itself must be received on or before December 7, 2020.
- Comments on the collection of information (associated USCIS forms) must be received on or before November 9, 2020.
DHS published this item as an interim final rule* despite the fact it was listed at the proposed rule stage in the Spring 2020 regulatory agenda and prior regulatory agendas.
The Department of Labor (DOL) also published a "strengthening" interim final rule effective on the date of publication (October 8, 2020) raising the four wage levels for OES wage data used in prevailing wage determinations. See NAFSA's page on the DOL rule.
*Note: The publication A Guide to the Rulemaking Process prepared by the Office of the Federal Register describes an interim final rule as follows:
"Interim Final Rule: When an agency finds that it has good cause to issue a final rule without first publishing a proposed rule, it often characterizes the rule as an “interim final rule,” or “interim rule.” This type of rule becomes effective immediately upon publication. In most cases, the agency stipulates that it will alter the interim rule if warranted by public comments. If the agency decides not to make changes to the interim rule, it generally will publish a brief final rule in the Federal Register confirming that decision."
From the preamble to the interim final rule:
- "On April 18, 2017, the President of the United States issued Executive Order (E.O.) 13788, Buy American and Hire American, instructing DHS to “propose new rules and issue new guidance, to supersede or revise previous rules and guidance if appropriate, to protect the interests of U.S. workers in the administration of our immigration system.” E.O. 13788 specifically directed DHS and other agencies to “suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.”
- "In response to the directives of E.O. 13788, DHS undertook a comprehensive review of all rules and policies regarding nonimmigrant visa classifications for temporary foreign workers, including the H-1B visa program. Although the H-1B program was intended to allow employers to fill gaps in their workforce and remain competitive in the global economy, it has expanded far beyond that, often to the detriment of U.S. workers. Data shows that the H-1B program has been used to displace U.S. workers and has led to reduced wages in a number of industries in the U.S. labor market. The economic crisis caused by the COVID-19 public health emergency has compounded those detrimental effects."
- "Section 5 of Proclamation 10052 [Suspension of Entry of Immigrants and Nonimmigrants Who Present a Risk to the United States Labor During the Economic Recovery Following the 2019 Novel Coronavirus Outbreak] directs the Secretary of DHS to, “as soon as practicable, and consistent with applicable law, consider promulgating regulations or take other appropriate action . . . ensuring that the presence in the United States of H-1B nonimmigrants does not disadvantage United States workers.”
DHS discussion from the preamble to the interim final rule, summarizing its rationale for each of the changes in the interim final rule:
"V. Discussion of the Provisions To Strengthen the H-1B Program
A. Amending the Definition and Criteria for a “Specialty Occupation”
1. Amending the Definition of a “Specialty Occupation”
DHS is revising the regulatory definition and standards for a “specialty occupation” to align with the statutory definition of “specialty occupation.”
Section 101(a)(15)(H)(i)(b) of the INA, 8 U.S.C. 1101(a)(15)(H)(i)(b), describes, among others, nonimmigrants coming temporarily to the United States to perform services in a specialty occupation. Section 214(i)(1) of the INA, 8 U.S.C. 1184(i)(1) states, in relevant part, “the term `specialty occupation' means an occupation that requires—(A) theoretical and practical application of a body of highly specialized knowledge, and (B) attainment of a bachelor's or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States.” Currently, 8 CFR 214.2(h)(4)(ii) defines “specialty occupation” as an occupation which requires theoretical and practical application of a body of highly specialized knowledge in fields of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts, and which requires the attainment of a bachelor's degree or higher in a specific specialty, or its equivalent, as a minimum for entry into the occupation in the United States.
First, this rule amends the definition of a “specialty occupation” at 8 CFR 214.2(h)(4)(ii) to clarify that there must be a direct relationship between the required degree field(s) and the duties of the position. Consistent with existing USCIS policy and practice, a position for which a bachelor's degree in any field is sufficient to qualify for the position, or for which a bachelor's degree in a wide variety of fields unrelated to the position is sufficient to qualify, would not be considered a specialty occupation as it would not require the application of a body of highly specialized knowledge. (52) Similarly, the amended definition clarifies that a position would not qualify as a specialty occupation if attainment of a general degree, without further specialization, is sufficient to qualify for the position. This is consistent with the statutory requirement that a degree be “in the specific specialty” and has long been the position of DHS and its predecessor, Immigration and Naturalization Service (INS). (53)
Under this new rule, the petitioner will have the burden of demonstrating that there is a direct relationship between the required degree in a specific specialty (in other words, the degree field(s) that would qualify someone for the position) and the duties of the position. In many cases, the relationship will be clear and relatively easy to establish. For example, it should not be difficult to establish that a required medical degree is directly correlated to the duties of a physician. Similarly, a direct relationship may be established between the duties of a lawyer and a required law degree, and the duties of an architect and a required architecture degree. In other cases, the direct relationship may be less readily apparent, and the petitioner may have to explain and provide documentation to meet its burden of demonstrating the relationship. To establish a direct relationship, the petitioner would need to provide information regarding the course(s) of study associated with the required degree, or its equivalent, and the duties of the proffered position, and demonstrate the connection between the course of study and the duties and responsibilities of the position.
The requirement of a direct relationship between a degree in a specific specialty, or its equivalent, and the position should not be misconstrued as necessarily requiring a singular field of study. Section 214(i)(1) of the INA allows the “attainment of a bachelor's or higher degree in the specific specialty (or its equivalent)” (emphasis added). The placement of the phrase “or its equivalent” after the phrase “in the specific specialty” means that USCIS may accept the equivalent to a degree in a specific specialty, as long as that equivalent provides the same (or essentially the same) body of specialized knowledge. (54) In general, provided the required fields of study are closely related, for example, electrical engineering and electronics engineering for the position of an electrical engineer, a minimum of a bachelor's or higher degree, or its equivalent, in more than one field of study may be recognized as satisfying the “degree in the specific specialty (or its equivalent)” requirement of section 214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B). In such a case, the “body of highly specialized knowledge” required by section 214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A), essentially would be the same, and each field of study would be in a “specific specialty” directly related to the position consistent with section 214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B).
In cases where the petitioner lists degrees in multiple disparate fields of study as the minimum entry requirement for a position, the petitioner would have to establish how each field of study is in a specific specialty providing “a body of highly specialized knowledge” directly related to the duties and responsibilities of the particular position to meet the requirements of sections 214(i)(1)(A) and (B) of the INA, 8 U.S.C. 1184(i)(1)(A) and (B), the regulatory definition, and one of the four criteria at new 8 CFR 214.2(h)(4)(iii)(A).
As such, a minimum entry requirement of a bachelor's or higher degree, or its equivalent, in multiple disparate fields of study would not automatically disqualify a position from being a specialty occupation. For example, a petitioner may be able to establish that a bachelor's degree in the specific specialties of either education or chemistry, each of which provide a body of highly specialized knowledge, is directly related to the duties and responsibilities of a chemistry teacher. In such a scenario, the “body of highly specialized knowledge” requirement of section 214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A), and the “degree in the specific specialty” requirement of section 214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B), would both be met and the chemistry teacher position listing multiple disparate fields of study would be in a specialty occupation.
In determining specialty occupation, USCIS interprets the “specific specialty” requirement in section 214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B), to relate back to the body of highly specialized knowledge requirement referenced in section 214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A), required by the specialty occupation in question, such that section 214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B), is only met if the purported degree in a specific specialty or specialties, or its equivalent, provides a body of specialized knowledge directly related to the duties and responsibilities of the particular position as required by section 214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A).
If the minimum entry requirement for a position is a general degree without further specialization or an explanation as to what type of degree is required, the “degree in the specific specialty (or its equivalent)” requirement of section 214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B), would not be satisfied. For example, a requirement of a general engineering degree for a position of software developer would not satisfy the specific specialty requirement. In such an instance, the petitioner would not satisfactorily demonstrate how a required general engineering degree provides a body of highly specialized knowledge that is directly related to the duties and responsibilities of a software developer position. (55)
Similarly, a petition with a requirement of an engineering degree in any or all fields of engineering for a position of software developer would not suffice unless the record establishes how each or every field of study within an engineering degree provides a body of highly specialized knowledge directly relating to the duties and responsibilities of the software developer position. (56) The issue is whether a proffered position requires the application of a body of highly specialized knowledge as required by section 214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A), and attainment of at least a bachelor's degree in the specific specialty (or its equivalent) as required by section 214(i)(1)(B) of the INA, 8 U.S.C. 1184(i)(1)(B). If an individual could qualify for a software developer position based on having a seemingly unrelated degree in any engineering field or in general engineering, or its equivalent, then it cannot be concluded that the position requires the application of a body of highly specialized knowledge and a degree in a specific specialty because someone with an entirely or largely unrelated degree may qualify to perform the job. (57) In such a scenario, the requirements of sections 214(i)(1)(A) and (B) of the INA, 8 U.S.C. 1184(i)(1)(A) and (B), would not be satisfied.
Similarly, a requirement of a bachelor's degree in an unspecified “quantitative field” (which could include mathematics, statistics, economics, accounting, or physics) for a software developer position would be insufficient to meet the requirements of a specialty occupation unless the record identifies specific specialties within the wide variety of “quantitative fields” and establishes how each identified degree in a specific specialty provides a body of highly specialized knowledge, consistent with section 214(i)(1)(A) of the INA, 8 U.S.C. 1184(i)(1)(A), that is directly related to the duties and responsibilities of the software developer position. While a position may allow a range of degrees, and apply multiple bodies of highly specialized knowledge, each of those qualifying degree fields must be directly related to the proffered position.
2. Amending the Criteria for Specialty Occupation Positions
As quoted above, under section 214(i)(1) of the INA, 8 U.S.C. 1184(i)(1), a “specialty occupation” requires attainment of a bachelor's or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States. However, the current regulatory criteria at 8 CFR 214.2(h)(4)(iii)(A) states that a bachelor's degree be “normally” required, or “common to the industry,” or that the knowledge required for the position is “usually associated” with at least a bachelor's degree or equivalent. The words “normally,” “common,” and “usually” are not found in the statute, and therefore, should not appear in the regulation. To conform to the statutory definition of a “specialty occupation” and promote consistent adjudications, DHS is eliminating the terms “normally,” “common,” and “usually” from the regulatory criteria. See new 8 CFR 214.2(h)(4)(iii)(A). This change means that the petitioner will have to establish that the bachelor's degree in a specific specialty or its equivalent is a minimum requirement for entry into the occupation in the United States by showing that this is always the requirement for the occupation as a whole, the occupational requirement within the relevant industry, the petitioner's particularized requirement, or because the position is so specialized, complex, or unique that it is necessarily required to perform the duties of the specific position.
The wording of the current regulatory criteria creates ambiguity. For example, the dictionary definition of “normally” is “usually, or in most cases,” and “usually” is defined as “in the way that most often happens.” (58) “Most” is defined as “the biggest number or amount (of), or more than anything or anyone else,” (59) and is a synonym for “normally” or “usually.” These definitions could be read to encompass anything from 51 percent to 99 percent, and possibly a broader range depending on the interpretation, highlighting how ambiguous they are. Use of these terms, if interpreted to mean that a position is a specialty occupation if merely 51 percent of positions within a certain occupation require at least a certain bachelor's degree, is inconsistent with the most natural read of, and arguably runs directly contrary to the statutory definition of, a “specialty occupation” which imposes a minimum entry requirement of a bachelor's or higher degree in the specific specialty (or its equivalent). See section 214(i)(1) of the INA, 8 U.S.C. 1184(i)(1). Thus, DHS believes that it is imperative to align the regulatory language with the statutory language and clarify that a bachelor's (or higher) degree in a directly related specific specialty is required. It will no longer be sufficient to show that a degree is normally, commonly, or usually required. In FY 2018, USCIS frequently issued Requests for Evidence (RFEs) in H-1B cases, requesting more evidence or explanations to establish that proffered positions qualified as specialty occupations. (60) DHS believes that the revisions in this rule will clarify the requirements for establishing a specialty occupation and reduce the need for RFEs in future adjudications.
In addition, DHS is replacing the phrase, “To qualify as a specialty occupation,” with the phrase “A proffered position does not meet the definition of specialty occupation unless it also satisfies” prior to setting forth the regulatory criteria. See new 8 CFR 214.2(h)(4)(iii)(A). This change will clarify that meeting one of the regulatory criteria is a necessary part of—but not necessarily sufficient for—demonstrating that a position qualifies as a specialty occupation. This is not new; the criteria at current 8 CFR 214.2(h)(4)(iii)(A) must be construed in harmony with and in addition to other controlling regulatory provisions and with the statute as a whole. In 2000, the U.S. Court of Appeals for the Fifth Circuit highlighted the ambiguity of the regulatory provision's current wording, and petitioners have misinterpreted the criteria in 8 CFR 214.2(h)(4)(iii)(A) as setting forth both the necessary and sufficient conditions to qualify as a specialty occupation, a reading that resulted in some positions meeting one condition of 8 CFR 214.2(h)(4)(iii)(A), but not the definition as a whole. 61 These changes will eliminate this source of confusion.
DHS also is amending 8 CFR 214.2(h)(4)(iii)(A)(1) by replacing the word “position” with “occupation,” so that it sets forth “the minimum requirement for entry into the particular occupation in which the beneficiary will be employed.” See new 8 CFR 214.2(h)(4)(iii)(A)(1). DHS believes that replacing “position” with “occupation” will clarify that the first criterion can be satisfied if the petitioner can show that its position falls within an occupational category for which all positions within that category have a qualifying minimum degree requirement. (62) DHS further believes that this revision provides added clarity to the regulatory criteria as the criteria will flow from general to specific (i.e., occupation level to industry to employer to position). If the occupation requires at least a bachelor's degree in a specific specialty (e.g., lawyer or doctor) then it necessarily follows that a position in one of those occupations would require a degree and qualify as a specialty occupation. If that is not applicable, then the petitioner could submit evidence to show that at least a bachelor's degree in a specific specialty (or its equivalent) is required based on industry norms, the employer's particular requirement, or because of the particulars of the specific position. USCIS will continue its practice of consulting DOL's Occupational Outlook Handbook and other reliable and informative sources submitted by the petitioner, to assist in its determination regarding the minimum entry requirements for positions located within a given occupation.
DHS further is amending 8 CFR 214.2(h)(4)(iii)(A)(2) by consolidating this criterion's second prong into the fourth criterion. See new 8 CFR 214.2(h)(4)(iii)(A)(2). The second prong of current 8 CFR 214.2(h)(4)(iii)(A)(2), which focuses on a position's complexity or uniqueness, is similar to current 8 CFR 214.2(h)(4)(iii)(A)(4), which focuses on a position's complexity and specialization. In practice, they are frequently consolidated into the same analysis. This amendment streamlines both criteria, as well as the explanation and analysis in written decisions issued by USCIS pertaining to specialty occupation determinations, as such decisions discuss all four criteria and are necessarily repetitive because of the existing overlap between 8 CFR 214.2(h)(4)(iii)(A)(2) and (4). This amendment also simplifies the analysis because petitioners may now demonstrate eligibility under this criterion if the position is “so specialized, complex, or unique” (emphasis added), as opposed to “so complex or unique” under current 8 CFR 214.2(h)(4)(iii)(A)(2) and “so specialized and complex” under current 8 CFR 214.2(h)(4)(iii)(A)(4) (emphasis added). Notwithstanding these amendments, the analytical framework of the first prong of 8 CFR 214.2(h)(4)(iii)(A)(2) generally will remain the same. Thus, a petitioner will satisfy new 8 CFR 214.2(h)(4)(iii)(A)(2) if it demonstrates that the specialty degree requirement is the minimum entry requirement for (1) parallel positions (2) at similar organizations (3) within the employer's industry in the United States. This criterion is intended for the subset of positions with minimum entry requirements that are determined not necessarily by occupation, but by specific industry standards. For example, registered nurses (RNs) generally do not qualify for H-1B classification because most RN positions normally do not require a U.S. bachelor's or higher degree in nursing (or a directly related field), or its equivalent, as the minimum for entry into these particular positions. (63) However, advanced practice registered nurses generally would be specialty occupations due to the advanced level of education and training required for certification. (64) For this criterion, DHS would continue its practice of consulting the DOL's Occupational Outlook Handbook and other reliable and informative sources, such as information from the industry's professional association or licensing body, submitted by the petitioner.
The third criterion at 8 CFR 214.2(h)(4)(iii)(A)(3) essentially will remain the same, other than the deletion of “normally.” This criterion still will recognize an employer's valid employment practices, provided that those practices reflect actual requirements. The additional sentence, “The petitioner also must establish that the proffered position requires such a directly related specialty degree, or its equivalent, to perform its duties,” simply will reinforce the existing requirements for a specialty occupation, in other words, that the position itself must require a directly related specialty degree, or its equivalent, to perform its duties. See new 8 CFR 214.2(h)(4)(iii)(A)(3). Employers requiring degrees as a proxy for a generic set of skills will not meet this standard. Employers listing a specialized degree as a hiring preference will not meet this standard either. If USCIS were constrained to recognize a position as a specialty occupation merely because an employer has an established practice of demanding certain educational requirements for the proffered position—without consideration of whether the position requires the application of a body of highly specialized knowledge consistent with the degree requirement—then any beneficiary with a bachelor's degree in a specific specialty could be brought into the United States to perform work in a non-specialty occupation if the employer arbitrarily imposed such a degree requirement for the non-specialty occupation position. (65) With respect to the first part of this criterion, a petitioner could submit evidence of an established recruiting and hiring practice for the position to establish its requirements for the position. DHS is leaving the term “established practice” undefined to allow more flexibility for petitioners, although it notes that petitioners seeking to fill a position for the first time generally would not be able to demonstrate an “established practice.” (66)
As discussed above, the criterion at the new 8 CFR 214.2(h)(4)(iii)(A)(4) incorporates the second prong of current 8 CFR 214.2(h)(4)(iii)(A)(2). See new 8 CFR 214.2(h)(4)(iii)(A)(4). No other substantive changes are being made to this criterion. Thus, the fourth criterion can be satisfied if the petitioner demonstrates that the proffered position's job duties are so specialized, complex, or unique that they necessitate the attainment of a U.S. bachelor's degree in a directly related specific specialty, or its equivalent.
DHS acknowledges that some petitioners may believe they have a reliance interest in retaining the existing regulatory framework for specialty occupation. For example, by eliminating the word “normally” from the regulatory criterion at 8 CFR 214.2(h)(4)(iii)(A)(1), some occupations that previously qualified under this criterion may no longer qualify because a bachelor's degree in a specific specialty or its equivalent is not always a minimum requirement for entry. To the extent that petitioners may have a reliance interest in retaining the current regulations, the government's interests in having the regulations conform to the best reading of the statutory definition and creating clearer standards to facilitate more consistent adjudications (67) far outweigh any such reliance interest. It is important to note that, although some occupations will no longer qualify under 8 CFR 214.2(h)(4)(iii)(A)(1), the petitioner may still establish that the proffered position satisfies any one of the other criteria at 8 CFR 214.2(h)(4)(iii)(A)(2)-(4). None of the revised provisions categorically prevent any particular position from qualifying as a specialty occupation.
Further, DHS recognizes the possibility that some petitions for H-1B nonimmigrant classification might have been approved in error under the current regulation even though the petitions indicated that an alien could qualify to perform the relevant position based on a general degree. USCIS has generally denied such petitions on the basis that such petitions do not meet the statutory and regulatory definition of specialty occupation under the current regulation, but recognizes that a small number might have been approved in error and that similar petitions will be denied as a result of this Rule's clarification of the definition of “specialty occupation.” For example, by adding the phrase “A position is not a specialty occupation if attainment of a general degree, such as business administration or liberal arts, without further specialization, is sufficient to qualify for the position” at new 8 CFR 214.2(h)(4)(ii), positions where a general degree may qualify someone to perform the job, and that may have been erroneously approved as specialty occupations because of confusion created by the ambiguous wording in the current regulations, may now be denied. But again, to the extent that the revised regulations would result in the denial of some petitions that were erroneously approved under the current regulatory scheme, the government's interests in better adhering to the statute and better ensuring consistent adjudication far outweigh any interests petitioners may have in receiving continued petition approvals in a small number of cases based on error resulting from imprecise regulatory text. DHS notes that each case is decided on its own merits, and simply because a petition was approved previously does not guarantee that a similar petition would be approved in the future as prior approvals are not binding on USCIS. (68) The burden of proof remains on the petitioner, even where an extension of stay in H-1B nonimmigrant status is sought. (69)
B. Defining “Worksite” and “Third Party Worksite”
DHS will add definitions for “worksite” and “third-party worksite” to the existing list of definitions at 8 CFR 214.2(h)(4)(ii). See new 8 CFR 214.2(h)(4)(ii). First, DHS will define “worksite” similar to the DOL definition of “place of employment” in 20 CFR 655.715 as “the physical location where the work is actually performed by the H-1B nonimmigrant.” A “worksite” will not include any location that would not be considered a “worksite” for LCA purposes, meaning that DHS will apply the same exclusions and examples of “non-worksite locations” as set forth in DOL's regulations. (70) As H-1B petitioners and USCIS officers should already be familiar with the concept of “worksite” because it also applies in the LCA context, DHS believes that this definition does not represent a significant change. Second, DHS will define “third-party worksite” as “a worksite, other than the beneficiary's residence in the United States, that is not owned or leased, and not operated, by the petitioner.” See new 8 CFR 214.2(h)(4)(ii). (71) This definition is similar to the “owned or operated” test commonly used in the LCA context. (72) Again, as this concept should already be familiar to H-1B petitioners and USCIS officers, this definition should not be a significant change.
The newly added definitions are helpful because the terms “worksite” and “third-party worksite” are used elsewhere in the amended regulations. As explained below, the new employer-employee relationship definition specifically refers to the beneficiary's worksite as a relevant factor in determining whether such relationship exists (e.g., “where the supervision is not at the petitioner's worksite, how the petitioner maintains such supervision,” see new 8 CFR 214.2(h)(4)(ii)). Further, a 1-year maximum validity period will apply whenever the beneficiary will be working at a third-party worksite. See new 8 CFR 214.2(h)(9)(iii)(A)(1). Finally, the new site visit provisions will clarify that inspections may include any third-party worksites, as applicable. See new 8 CFR 214.2(h)(4)(i)(B)(7).
C. Clarifying the Definition of “United States Employer”
Currently, the term “United States employer” is defined at 8 CFR 214.2(h)(4)(ii) as “a person, firm, corporation, contractor, or other association, or organization in the United States” which, among other things, “[e]ngages a person to work within the United States” and “[h]as an employer-employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee.” Through this rule, DHS is changing this definition by: (1) Striking the word “contractor” from the general definition of “United States employer”; (2) inserting the word “company” in that general definition; (2) expanding upon the existing requirement to engage the beneficiary to work within the United States; and (3) expanding upon the employer-employee relationship and the factors used to determine if a valid “employer-employee relationship” between the petitioner and the beneficiary exists or will exist. See new 8 CFR 214.2(h)(4)(ii).
DHS believes these revisions are necessary to clarify the requirements to qualify as an employer for purpose of the H-1B classification. As previously discussed, the current regulation at 8 CFR 214.2(h)(4)(ii) defines “United States employer” as an entity that has an “employer-employee relationship” with an “employee.” But these terms are not adequately defined. Section 101(a)(15)(H)(i)(b) of the INA, 8 U.S.C. 1101(a)(15)(H)(i)(b), defines an H-1B nonimmigrant as a worker coming temporarily to the United States to perform services in a specialty occupation, and for whom the intending “employer” has filed a labor condition application. Section 214(c)(1) of the INA, 8 U.S.C. 1184(c)(1), states in relevant part that the question of importing any alien as an H-1B nonimmigrant shall be determined after consultation with appropriate agencies of the Government, upon petition of the importing employer. Congress continued using the term “employer” and “employment” in subsequent amendments, but without specifically defining those terms. See, e.g., section 214(n) of the INA, 8 U.S.C. 1184(n), as amended by the American Competitiveness in the Twenty-first Century Act of 2000 (AC21), Public Law 106-313, 114 Stat. 1251 (authorizing the H-1B nonimmigrant to accept new “employment” upon the filing of an H-1B petition by the “prospective employer”). DHS believes the revisions in this rule are necessary to clarify and strengthen the requirements to qualify as a United States employer for the H-1B program.
1. Replacing “contractor” With “company”
First, striking “contractor” will avoid potential confusion as the term “contractor” in the definition is misleading. The inclusion of “contractors” in the regulatory language could be read to suggest that contractors should generally qualify under the definition of a “United States employer.” While a contractor is certainly not excluded from qualifying as a “United States employer” for purposes of an H-1B petition, the contractor, like any petitioner, must establish the requisite “employer-employee relationship” with the H-1B beneficiary. This revision will also update the definition to include reference to “company,” as that term is commonly used to describe various types of business entities, such as limited liability companies.
DHS acknowledges that third-party arrangements involving one or more contractors may be a legitimate business model. (73) However, these types of business arrangements generally make it more difficult to assess whether the petitioner and the beneficiary have or will have the requisite employer-employee relationship. Typically, these types of business arrangements require the beneficiary to be placed at one or more third-party worksites, which are not owned or leased and not operated, by the petitioner. This placement, in itself, potentially dilutes the petitioner's control over the beneficiary. The difficulty of assessing control is increased in situations where there are one or more intermediary contractors (often referred to as “vendors”) (74) involved in the contractual chain. Overall, the more parties there are in the contractual chain, the more likely those other parties exert control over the beneficiary's work, and more importantly, potentially limit the amount of control, if any, that the petitioner would have over the beneficiary's employment. As a result, the relationship between the petitioner and the beneficiary becomes more attenuated.
By removing the word “contractor”, DHS seeks to avoid any confusion or mistaken belief that contractors should generally qualify as “United States employers.” Petitioners that are contractors are reminded of their burden, similar to all other H-1B petitioners, whether they are a person, corporation, or company, to establish the employer-employee relationship for each H-1B petition they file.
Nevertheless, it is important to note that the deletion of the term “contractor” from the regulatory definition does not mean that a contractor never would qualify as a “United States employer” for the purpose of filing an H-1B petition. A contractor may be a person, firm, company, corporation, or other association or organization, and the contractor (whatever the form) still may qualify as a U.S. employer of the H-1B beneficiary if the contractor demonstrates the requisite employer-employee relationship with the beneficiary. (75) Because this change will not impact a contractor's continued ability to establish a valid employer-employee relationship on a case-by-case basis, DHS does not believe that removing the term “contractor” will have a substantive impact on the eligibility determination. The change is simply intended to remove a term that is typically associated with work arrangements that typically do not involve an employer and employee.
2. Engaging the Beneficiary To Work
As currently written in 8 CFR 214.2(h)(4)(ii), the requirement for a petitioner to “[engage] a person to work within the United States” has limited practical value. It does not specify that the petitioner should engage the beneficiary (rather than “a person”). And it does not qualify the work to be performed within the United States. By stating in new 8 CFR 214.2(h)(4)(ii) that an employer must “[engage] the beneficiary to work within the United States, and ha[ve] a bona fide, non-speculative job offer for the beneficiary,” DHS seeks to provide more meaningful requirements for the definition of “United States employer,” consistent with statutory references to the intending or importing employer petitioning for an alien to perform services in a specialty occupation. (76)
New 8 CFR 214.2(h)(4)(ii) will make it clear that a petitioner must have non-speculative employment for the beneficiary at the time of filing. (77) At the time of filing, the petitioner must establish that a bona fide job offer exists and that actual work will be available as of the requested start date. (78) If the petitioner does not have any work available, then it cannot reasonably engage the beneficiary “to work within the United States” in order to qualify as a United States employer at the time of filing. See 8 CFR 214.2(h)(4)(ii).
The agency long held and communicated the view that speculative employment is not permitted in the H-1B program. For example, a 1998 proposed rule documented this position, stating that historically, USCIS (or the Service, as it was called at the time) has not granted H-1B classification on the basis of speculative, or undetermined, prospective employment. (79) This proposed rule explained that the H-1B classification was not intended as a vehicle for an alien to engage in a job search within the United States, or for employers to bring in temporary foreign workers to meet possible workforce needs arising from potential business expansions or the expectation of potential new customers or contracts. (80) Speculative employment undermines the integrity and a key goal of the H-1B program, which is to help U.S. employers obtain the skilled workers they need to meet their business needs, subject to annual numerical limitations, while protecting the wages and working conditions of U.S. workers. Further, USCIS cannot reasonably ascertain whether the beneficiary will be employed in a specialty occupation if the employment is speculative.
Note, however, that establishing non-speculative employment does not amount to demonstrating non-speculative daily work assignments through the duration of the requested validity period. DHS is not by this rule requiring employers to establish non-speculative and specific assignments for each and every day of the proposed period of employment. (81) Again, under new 8 CFR 214.2(h)(4)(ii), a petitioner must demonstrate, at the time of filing, availability of actual work as of the requested start date.
3. Clarifying the “Employer-Employee Relationship”
Third, DHS 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 “United States employer,” and replace that phrase with a separate, more extensive definition of “employer-employee relationship” based on USCIS' interpretation of existing common law. See new 8 CFR 214.2(h)(4)(ii). These revisions will clarify the test for establishing the requisite “employer-employee relationship” and eliminate the ambiguity and confusion created by the existing regulation.
The term “employer-employee relationship” at 8 CFR 214.2(h)(4)(ii) is not adequately defined. The phrase in that provision which reads, “as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee,” does not give sufficient guidance. For example, it is unclear whether the five factors are entirely disjunctive, such that the test is met if any one factor is met, or whether the last factor (“or otherwise control”) is merely disjunctive of the fourth factor (“supervision”), such that the first three factors (“hire, pay, fire”) must always be met. (82) Although some courts have viewed this phrase as establishing that any single listed factor, such as pay, in and of itself is sufficient to establish the requisite control, (83) DHS agrees with the Fifth Circuit's statement in Defensor that the conjunctive interpretation, where “hire, pay, fire, supervise” are read together “as one prong of the test and `otherwise control the work' is . . . viewed as an independent prong of the test accords better with the commonsense notion of employer.” (84) DHS firmly disagrees with the disjunctive interpretation because it leads to the illogical result of virtually any petitioner satisfying the definition, because H-1B petitioners are generally required to submit an LCA that includes an attestation that the petitioner will pay the beneficiary at least the required wage. If the regulation is read to set forth a five-factor disjunctive test, then arguably all petitioners who submit an LCA would satisfy the pay factor, such that reference to other factors would be superfluous in any case where the petitioner is required to submit an LCA.
In the absence of specific, clear, and relevant statutory or regulatory definitions, USCIS has interpreted these terms consistent with its understanding of current common law. In 2010, USCIS provided clarifying policy guidance regarding the employer-employee regulation and factors based on the common law that USCIS officers should consider when adjudicating H-1B petitions. (85) While the listed factors were based on the agency's interpretation of the common law, they were specifically tailored to the H-1B program based on the agency's expertise and experience dealing with challenges posed particularly by cases where the beneficiary was placed at a third-party worksite. (86) This policy guidance remained in effect for more than a decade and was only recently rescinded in response to a recent court decision finding the policy guidance, as applied, to be a new substantive rule that required rulemaking in accordance with the Administrative Procedure Act (APA), 5 U.S.C. 551 et seq. (87) This interim final rule will restore, with additional clarification, the policy that existed since 2010 and only recently was rescinded due to a judicial ruling on procedural grounds.
USCIS interprets the term “employer-employee relationship” to be the “conventional master-servant relationship as understood by common-law agency doctrine.” (88) That doctrine, as explained by the Supreme Court, requires an evaluation of the hiring party's right to control the manner and means by which the product is accomplished “among the other factors” relevant to the employer-employee relationship. (89) As the common law test contains “no shorthand formula or magic phrase that can be applied to find the answer, . . . all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.” (90)
Foremost, in addition to restoring through this rule the longstanding policy that USCIS has applied until recently but had rescinded in order to reduce the potential for additional APA-based litigation, the revised regulation will make clear that USCIS will assess and weigh all relevant aspects of the relationship. See new 8 CFR 214.2(h)(4)(ii). DHS does not believe that any one factor should be decisive. To do otherwise could be construed as contrary to the Supreme Court's declaration in Nationwide Mutual Ins. Co. v. Darden that “all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.” (91)
Paragraph (1) of the revised “employer-employee” definition lists non-exhaustive factors to be considered in the totality of the circumstances in cases where the H-1B beneficiary does not possess an ownership interest in the petitioning organization or entity. The revised regulation lists the following factors: (i) Whether the petitioner supervises the beneficiary and, if so, where such supervision takes place; (ii) where the supervision is not at the petitioner's worksite, how the petitioner maintains such supervision; (iii) whether the petitioner has the right to control the work of the beneficiary on a day-to-day basis and to assign projects; (iv) whether the petitioner provides the tools or instrumentalities needed for the beneficiary to perform the duties of employment; (v) whether the petitioner hires, pays, and has the ability to fire the beneficiary; (vi) whether the petitioner evaluates the work-product of the beneficiary; (vii) whether the petitioner claims the beneficiary as an employee for tax purposes; (viii) whether the petitioner provides the beneficiary any type of employee benefits; (ix) whether the beneficiary uses proprietary information of the petitioner in order to perform the duties of employment; (x) whether the beneficiary produces an end-product that is directly linked to the petitioner's line of business; and (xi) whether the petitioner has the ability to control the manner and means in which the work product of the beneficiary is accomplished. By listing these factors out, DHS is making clear that no single factor is dispositive and that all factors must be taken into consideration to the extent applicable and appropriate to the facts of the specific case.
While the new regulation will clarify the employer-employee relationship test, it is largely consistent with past USCIS policy and practice and the standard familiar to USCIS officers and H-1B petitioners. (92) Specifically and as mentioned earlier, in 2010, USCIS issued a policy memorandum, “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements” (93) which explained the agency's approach of relying on common law doctrine, as articulated by the Supreme Court, to interpret the existing regulatory provision. This memorandum elaborated on a number of factors that USCIS considers particularly relevant in the H-1B context, based on its interpretation of the common law and the facts typically present in H-1B adjudications based on USCIS' experience. New 8 CFR 214.2(h)(4)(ii) incorporates the same factors listed in this memorandum with two exceptions, neither of which would have a significant impact on the adjudication of H-1B petitions. More specifically, the 2010 memorandum stated the third factor as, “Does the petitioner have the right to control the beneficiary on a day-to-day basis if such control is required?” In clarifying the factors in this regulation, DHS is not including the misleading phrase, “if such control is required,” that was previously included in the 2010 USCIS policy guidance because this phrase implies that control is not necessarily required. DHS believes that the petitioner should be required to demonstrate control, which includes, but is not limited to, the inquiry of whether the petitioner has the right to control day-to-day.
The 2010 memorandum contained another potentially confusing or inaccurate statement in footnote 6 that the employer-employee relationship “hinges upon the right to control.” USCIS now believes that this statement places an undue emphasis on the right to control and that the best interpretation of existing case law is that “right to control” is just one factor in the overall common law analysis rather than the determinative test. Specifically, the Supreme Court in Darden stated:
In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party's right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party (emphasis added). (94)
While the first sentence suggests that the test is right to control, the second sentence suggests that right to control is one of many factors, rather than the test. Further, in Clackamas Gastroenterology Assocs., P.C. v. Wells, the Supreme Court focused on “the common-law element of control [a]s the principal guidepost that should be followed in this case,” and proceeded to analyze `“the extent of control' that one may exercise over the details of the work of the other,” (95) which again suggests that the test does not hinge on the right to control. In Clackamas, the Supreme Court also emphasized that the employer-employee relationship depends on all incidents of the relationship, with no one factor being decisive. (96) As the quoted language in these cases suggests, the employer-employee relationship does not hinge upon any single factor. Thus, the 2010 memorandum's emphasis on the right to control arguably is in tension with these Supreme Court decisions. DHS believes that the new definitions in 8 CFR 214.2(h)(4)(ii), along with this explanation, will clarify that the right to control is not determinative and will not, in itself, be sufficient to demonstrate an employer-employee relationship, consistent with common law.
DHS believes that this clarification of “right to control” as one factor rather than a determinative factor is not a clear departure from the way USCIS has generally applied the common law test over many years. While the rescinded 2010 memorandum indicated that the determination hinges on the right to control, the analysis has always required an evaluation of the totality of the facts involved, including, in part, the degree to which the petitioner exercises actual control over the beneficiary's work. Some officers have placed more weight on the relevance of the actual control exercised, or to be exercised, when making the determination. For example, various Administrative Appeals Office (AAO) non-precedent decisions, citing the rule established in Darden, have stated that we “. . . must examine who has actual control, not just the right to control, the beneficiary's work.” (97) Other officers may have placed less weight on the relevance of the actual control exercised, or to be exercised, and more weight on the petitioner's legal right to control the beneficiary's work. In 2018, USCIS provided further clarification on its website regarding the implementation of the 2010 policy memorandum interpreting the employment relationship regulatory requirement:
Although the 2010 memorandum states that the “employer-employee relationship hinges on the right to control” the beneficiary's employment, the factors that are generally taken into consideration when assessing the relationship primarily focus on who actually takes/will take the action rather than the right to take certain action. For example, when assessing whether the petitioner provides or will provide the tools or instrumentalities for the beneficiary, the primary focus is not whether the petitioner has the right to provide such tools or instrumentalities, but whether the petitioner actually provides or will provide such items. (98)
Accordingly, as reflected on the USCIS website in the 2018 clarification, whether the petitioner actually controls the beneficiary's employment has been an important factor in the overall analysis.
Therefore, DHS believes that this provision will not represent a clear change in longstanding past practice. (99) The revised provision, however, will clarify that the employer-employee relationship determination will be based on the totality of the circumstances. USCIS will analyze the applicability of the relevant factors listed in the definition based on the specific evidence provided by the petitioner when making the employment relationship determination, consistent with its historical past practice. USCIS will assess and weigh each factor as it exists or will exist “in the reality of the actual working relationship.” (100) Thus, even though the “right to control the work of the beneficiary” is listed as a relevant factor, it is one among many factors that will be weighed. USCIS will also consider other factors, as noted above, including the petitioner's ability to control the manner and means in which the work product of the beneficiary is accomplished. Similarly, when assessing whether the petitioner provides or will provide the tools or instrumentalities for the beneficiary, USCIS believes that the primary focus should not be on whether the petitioner has the right to provide such tools or instrumentalities, but whether the petitioner actually provides or will provide such items. (101) While another person or entity may have the right to provide tools or instrumentalities to the worker, the relevant point of focus is on who will actually provide the tools or instrumentalities. For example, if the tools or instrumentalities will be provided by the H-1B beneficiary or end-client, that fact may weigh against a finding that the petitioner will be the employer. If, however, the petitioner will provide the tools and instrumentalities for the beneficiary to perform the work, that fact would weigh in favor of a finding that the petitioner will be the employer. Overall, the petitioner will be required to demonstrate that it can actually take the claimed actions when it comes to these factors. It will not be enough for a petitioner to simply show that it retains the right to control. (102)
Paragraph (2) of the revised provision lists additional factors that would be considered in cases where the H-1B beneficiary possesses an ownership interest in the petitioning organization or entity. These factors include: (i) Whether the petitioning entity can hire or fire the beneficiary or set the rules and parameters of the beneficiary's work, (ii) whether and, if so, to what extent the petitioner supervises the beneficiary's work, (iii) whether the beneficiary reports to someone higher in the petitioning entity, (iv) whether and, if so, to what extent the beneficiary is able to influence the petitioning entity, (v) whether the parties intended that the beneficiary be an employee, as expressed in written agreements or contracts, and (vi) whether the beneficiary shares in the profits, losses, and liabilities of the organization or entity. All of these are additional factors, meaning that they would supplement, not replace, the other factors listed in paragraph (1) of the revised definition. These additional factors mirror the Supreme Court's analysis in Clackamas, consistent with DHS's position that the term “employer,” undefined in the statute, should be interpreted consistent with the common law. These additional factors, as provided in Clackamas, are also familiar to USCIS officers and H-1B petitioners given the specific references to Clackamas in the 2010 policy guidance that was in effect until June 2020. (103)
DHS recognizes that, as a general principle of law, a corporation is a separate legal entity from its shareholders. (104) Nevertheless, DHS may look beyond the corporate entity to assess whether a valid employment relationship exists between the petitioner and the beneficiary such that the petitioner, rather than the beneficiary, truly qualifies as an “employer” pursuant to the statute. Absent unusual factual circumstances, a beneficiary who is the sole or majority shareholder of the petitioning entity, does not report to anyone higher within the organization, is not subject to the decisions made by a separate board of directors, and has veto power over decisions made by others on behalf of the organization, will likely not be considered an “employee” of that entity for H-1B purposes. On the other hand, if a beneficiary is bound by decisions (including the decision to terminate the beneficiary's position) made by a separate board of directors or similar managing authority, and does not have veto power (including negative veto power) over those decisions, then the mere fact of his or her ownership interest will not necessarily preclude the beneficiary from being considered an employee.
USCIS considered alternatives for defining the term “employer[,]” including revising the current regulatory definition to delete and replace the disjunctive “or” with “and[,]” or listing the common law factors verbatim from existing case law. USCIS declined to simply delete and replace the disjunctive “or[,]” and otherwise retain the current regulation, as it fails to provide the same level of clarification and guidance as the new definition listing factors relevant to employer-employee relationship determinations, including those where the beneficiary has an ownership interest in the petitioner. USCIS also declined simply to cite to the existing case law or list the factors verbatim from the existing case law. USCIS believes that its officers and H-1B petitioners are most familiar with the general factors as articulated in the rescinded 2010 policy memorandum. USCIS seeks to restore the policy that has guided H-1B adjudications of this issue for more than a decade, with certain changes for added clarity, and believes that the definition in this interim final rule best accomplishes that goal with the least amount of potential disruption for USCIS officers and H-1B petitioners. USCIS rescinded the 2010 policy memorandum because of a recent court decision finding the memorandum, as applied, imposed a substantive rule that departs from the existing regulation, thereby failing to comply with the APA's rulemaking requirements. This interim final rule will restore the policy as articulated in the 2010 memorandum, with additional clarifications, in compliance with the APA.
DHS recognizes that some petitioners may have developed a reliance interest based on H-1B adjudications subsequent to the June 2020 rescission of the 2010 policy memorandum. DHS believes, however, that the reliance interest some petitioners may have based on recent adjudications does not outweigh the importance of restoring guidance, with additional clarification, that has existed since 2010 and on which USCIS officers and H-1B petitioners have relied to assess eligibility for H-1B classification. The disjunctive wording of the current regulation is confusing for USCIS officers and H-1B petitioners alike, and DHS believes that any reliance interest that may have developed in the short time since June 2020 should yield to restoring guidance that is more detailed and less ambiguous for all involved in the H-1B program.
D. Corroborating Evidence of Work in a Specialty Occupation
Pursuant to section 101(a)(15)(H)(i)(b) of the INA, 8 U.S.C. 1101(a)(15)(H)(i)(b), an H-1B nonimmigrant must be coming temporarily to the United States to perform services in a specialty occupation. USCIS interprets this statutory provision to require that the petitioner must actually have work in the specialty occupation listed in the H-1B petition available for the beneficiary as of the start date of intended employment. Therefore, DHS is making it clear at new 8 CFR 214.2(h)(4)(iv)(C) that the petitioner must establish, at the time of filing, that it has actual work in a specialty occupation available for the beneficiary as of the start date of the validity period as requested on the petition. New 8 CFR 214.2(h)(4)(iv)(C) complements the revised definition of “United States employer” at new 8 CFR 214.2(h)(4)(ii) requiring evidence of a bona fide, non-speculative job offer. Read together, both new provisions reinforce that speculative employment is not permitted in the H-1B program. As stated earlier, USCIS cannot reasonably ascertain whether the beneficiary will be employed in a specialty occupation if the employment is speculative. (105) USCIS must assess the actual services to be performed to determine whether the alien will be performing services in a specialty occupation. That determination necessarily requires review and analysis of the actual work to be performed and cannot be based on speculation.
Importantly, new 8 CFR 214.2(h)(4)(iv)(C) clarifies the types of corroborating evidence petitioners must submit in third-party placement cases. Based on USCIS' program experience, petitioners who regularly place their workers at third-party worksites often submit uncorroborated statements describing the role the H-1B beneficiary will perform at the third-party worksite. Such statements, without additional evidence, are generally insufficient to establish by a preponderance of the evidence that the H-1B beneficiary will actually perform work in a specialty occupation. Moreover, such uncorroborated statements are generally insufficient to establish that the petitioner will have and maintain an employer-employee relationship while the beneficiary works at the third-party worksite. (106) Therefore, where a beneficiary will be placed at one or more third-party worksites, DHS will require the petitioner to submit evidence such as contracts, work orders, or other similar evidence (such as a detailed letter from an authorized official at the third-party worksite) to establish that the beneficiary will perform services in a specialty occupation at the third-party worksite(s), and that the petitioner will have an employer-employee relationship with the beneficiary. See new 8 CFR 214.2(h)(4)(iv)(C).
If submitting contracts, the petitioner should include both the master services agreement and the accompanying work order(s), statement(s) of work, or other similar legally-binding agreements under different titles. These contracts should be signed by an authorized official of the third-party entity that will use the beneficiary's services. In general, the master services agreement (also commonly called a supplier agreement) sets out the essential contract terms and provides the basic framework for the overall relationship between the parties. (107) The work order or statement of work provides more specific information, such as the scope of services to be performed, details about the services, and the allocation of responsibilities among the parties. (108) The petitioner may also submit a detailed letter signed by an authorized official of the ultimate end-client company or companies where the beneficiary will actually work. Other types of corroborating evidence may include technical documentation, milestone tables, marketing analyses, cost-benefit analyses, brochures, and funding documents, insofar as this evidence corroborates that the petitioner will have an employer-employee relationship with the beneficiary, and that the beneficiary will perform services in a specialty occupation at the third-party worksite(s). Overall, the totality of the evidence submitted by the petitioner must be detailed enough to provide a sufficiently comprehensive view of the work available and substantiate, by a preponderance of the evidence, the terms and conditions under which the work will be performed. Documentation that merely sets forth the general obligations of the parties to the agreement, or which do not provide specific information pertaining to the actual work to be performed, would generally be insufficient. (109)
Further, in cases where the beneficiary is staffed to a third-party, the submitted corroborating documents should generally demonstrate the requirements of the position as imposed by the third-party entity (commonly referred to as the “end-client”) that will use the beneficiary's services. As noted in Defensor v. Meissner, if only the petitioner's requirements are considered, “then any beneficiary with a bachelor's degree could be brought into the United States to perform work in a non-specialty occupation, so long as that person's employment was arranged through an employment agency that required all [staffed workers] to have bachelor's degrees.” (110) This result would be completely opposite of the plain purpose of the statute and regulations, which is to limit H-1B visas to positions which require specialized education to perform duties that require theoretical and practical application of a body of highly specialized knowledge. (111) However, not all third-party placements would necessarily require such evidence. For example, where the beneficiary is placed at a third-party's worksite, but performs work as part of a team of the petitioner's employees, including an on-site supervisor employed by the petitioner and who manages the work of the petitioner's employees, the requirements of the position as established by the petitioner may be determinative. USCIS will make the determination as to whether the requirements of the petitioner or third-party entity are controlling on a case-by-case basis, taking into consideration the totality of the relevant circumstances, as described above.
Finally, new 8 CFR 214.2(h)(4)(iv)(C) will also state that, in accordance with 8 CFR 103.2(b) and 214.2(h)(9), USCIS may request copies of contracts, work orders, or other similar corroborating evidence on a case-by-case basis in all cases, regardless of where the beneficiary will be placed. While USCIS already has general authority to request any document it deems necessary, this additional provision will make it clear that USCIS has authority to specifically request contracts and other similar evidence. This provision will apply to any H-1B petition, including a petition where the petitioner indicates that the beneficiary will exclusively work in-house. For example, if a petitioner indicates that the beneficiary will develop system software for a client but will perform such work exclusively at the petitioner's premises, USCIS may request a copy of the client contract or other corroborating evidence to confirm that the relevant work exists to ensure that the beneficiary will be employed in a specialty occupation.
E. Maximum Validity Period for Third-Party Placements
While DHS recognizes that third-party arrangements may generally be part of a legitimate business model, this business model presents more challenges in the context of the H-1B program and USCIS' ability to better ensure eligibility and compliance. Accordingly, DHS will set a 1-year maximum validity period for all H-1B petitions in which the beneficiary will be working at a third-party worksite. See new 8 CFR 214.2(h)(9)(iii)(A)(1). To make the determination of whether a beneficiary will be working or placed at a third-party worksite, USCIS will rely on information contained in the H-1B petition and any accompanying LCA, which must identify each worksite where the beneficiary will work and the name of any third-party entity (secondary entity) at each worksite. (112)
Although the maximum period of authorized admission for an H-1B nonimmigrant has been established by Congress in section 214(g)(4) of the INA, 8 U.S.C. 1184(g)(4), Congress did not specify the validity period for an approved H-1B visa petition. Congress authorized DHS to promulgate regulations setting the validity period, including a range of validity periods not to exceed the maximum period of authorized admission. Id. In relevant part, section 214(a)(1) of the INA, 8 U.S.C. 1184(a)(1), states, “the admission to the United States of any alien as a nonimmigrant shall be for such time and under such conditions as the [Secretary] may by regulations prescribe . . . .” See also section 214(c)(1) of the INA, 8 U.S.C. 1184(c)(1) (“The question of importing any alien as [an H-1B nonimmigrant] in any specific case or specific cases shall be determined by [DHS] . . . upon petition of the importing employer . . . . The petition shall be in such form and contain such information as [DHS] shall prescribe.”). Under current regulations at 8 CFR 214.2(h)(9)(iii), the maximum validity period an H-1B petition may be approved is “up to three years,” which necessarily allows for lesser periods as well. USCIS has an established practice of approving H-1B petitions for less than 3 years for various reasons, such as to conform to the dates of the accompanying LCA. See id. Further, DHS regulations already limit the validity period to 1 year in cases of temporary licensure. See 8 CFR 214.2(h)(4)(v)(C). Likewise, DHS will now limit the validity period for third-party placement petitions to a maximum of 1 year.
DHS believes that the 1-year limit is reasonable given the nature of third-party placements. In general, the nature of contracting work leads to beneficiaries being more transient, as well as greater potential for changes to the terms and conditions of employment. Specifically, these are situations where the petitioner is not the end-user of the H-1B worker's services, and the beneficiary performs work for another entity at that other entity's worksite. DHS believes that enhanced monitoring of compliance is valuable and needed to ensure that the beneficiary is being employed consistent with the terms and conditions of the petition approval. (113) The fact that 6 to 12 month work orders are common in petitions involving third-party placements, based on USCIS' program experience and review of evidence in such cases, (114) supports DHS's belief that limiting the validity period to up to one year is reasonable as it more closely aligns with the length of time that a beneficiary would generally be assigned under a particular work order. It is also common based on USCIS' program experience that, despite the requirement that the petitioner must file an amended or new H-1B petition with the corresponding LCA when there is a material change in the terms and conditions of employment, (115) once a certain work order expires, a petitioner may obtain another work order under changed terms and conditions, including a different work location, or even assign the beneficiary to a different client, without timely filing the required amended or new petition. Such unaccounted changes increase the risk of violations of H-1B program requirements. DHS believes that continuing to approve third-party petitions for longer periods of time, including the maximum three-year validity period, would greatly diminish USCIS' ability to properly monitor program compliance in cases where fraud and abuse are more likely to occur.
DHS considered an alternative of limiting validity periods only when the beneficiary would “primarily” work at a third-party worksite. DHS believes that this alternative would allow petitioners to easily avoid the limited validity period provision. For example, if “primarily” were defined to mean more than half of the time, the petitioner could claim that a beneficiary would not work 51% of the time (and thus not “primarily”) at a third-party worksite to circumvent this limitation. This would undermine the effectiveness of the rule. It would also create additional burdens on DHS in that it would require adjudicators to review and evaluate evidence regarding where a beneficiary would “primarily” be placed. Further, DHS believes that excluding any location that would not require an LCA from the definition of “worksite” provides sufficient flexibility in the application of this rule. (116) Therefore, DHS rejected the alternative of limiting validity periods only when the beneficiary would “primarily” work at a third-party worksite.
DHS believes that limiting approvals for third-party placement petitions to a maximum of 1 year will allow the agency to more consistently and thoroughly monitor a petitioner's and beneficiary's continuing eligibility, including whether the beneficiary has maintained H-1B status, whether the beneficiary's position remains a specialty occupation (e.g., whether the terms of the contract or placement have changed), and whether any changes in the nature of the placement interfere with the necessary employer-employee relationship between the petitioner and the beneficiary, through the adjudication of more frequent petitions requesting an extension of status. (117) Additionally, it will reduce the potential for employer violations. Based on the agency's experience in administering the H-1B program, significant employer violations, including placing beneficiaries in non-specialty occupation jobs, may be more likely to occur when petitioners place beneficiaries at third-party worksites. (118) In many instances, the relationship between the petitioning employer and the H-1B beneficiary is more attenuated when the beneficiary is working at a third-party worksite. Petitioners who contract H-1B workers out to another company at a third-party worksite generally have less visibility into the actual work being performed, including whether it is the appropriate work for a specialty occupation, the hours worked, and the relationship between the beneficiary and his or her on-site supervisor. As the GAO stated in its 2011 report to Congress, DOL's Wage and Hour investigators reported that a large number of the complaints they received were related to the activities of staffing companies, where the H-1B beneficiary is placed at a third-party worksite. (119)
DHS believes that fraud and abuse is more likely to occur in cases involving third-party placements, as evidenced by the higher rate of noncompliance in those cases. Noncompliance is determined when an immigration officer conducts a compliance review to ensure that the petitioner (employer) and beneficiary (job applicant or other potential employee) follow the terms and conditions of their petition. (120) This process includes reviewing the petition and supporting documents, researching information in public records and government systems, and, where possible, interviewing the petitioner and beneficiary through unannounced site visits. (121) DHS analyzed a sampling of H-1B petitions filed during FYs 16-19 (through March 27, 2019) and found that the noncompliance rate for petitioners who indicated the beneficiary works at an off-site or third-party location is much higher compared to worksites where the beneficiary does not work off-site (21.7 percent vs 9.9 percent). (122) DHS believes that limiting the maximum validity period for petitions where beneficiaries are placed at third-party worksites is reasonable given this significantly higher noncompliance rate, and so will also encourage compliance with the regulations and improve the program's overall integrity.
When approving an H-1B petition involving third-party placement, USCIS will generally consider granting the maximum validity period of 1 year, barring a separate consideration consistent with the controlling statutes and DHS regulations (such as the beneficiary reaching the 6-year maximum period of authorized admission pursuant to section 214(g)(4) of the INA, and not being eligible for an exemption from that 6-year limit) compelling a shorter approval period. This general practice will have the added benefit of providing petitioners who provide sufficient evidence a degree of certainty with respect to what validity period to request and to expect, if approved. If a petitioner indicates in the H-1B petition or LCA that the beneficiary will be working at a third-party worksite, then the maximum validity period the petitioner should request is 1 year. And if USCIS approves such petition for the maximum period of 1 year after making a determination that the petitioner has met its burden of proof, then there should be no reason to dispute the length of the validity period since it is set by regulation. (123)
As with any petition requesting an extension of stay, a petition requesting a 1-year extension of stay for a beneficiary who will work at a third-party worksite may be accompanied by either a new, or a photocopy of the prior, LCA from DOL that the petitioner continues to have on file, provided that the LCA is still valid for the period of time requested and properly corresponds to the petition. See 8 CFR 214.2(h)(15)(ii)(B). In this sense, a prior LCA is still valid if the validity period does not expire before the end date of the extension petition's requested validity period. (124) However, note that a new LCA is required if there are any material changes in the terms and conditions of employment or training or the alien's eligibility as specified in the original approved petition. See 8 CFR 214.2(h)(2)(i)(E) (requiring that a petitioner file an amended or new petition to reflect any material changes in the terms and conditions of employment or training or the alien's eligibility as specified in the original approved petition, and that “this requirement includes a new labor condition application”).
DHS recognizes that new 8 CFR 214.2(h)(9)(iii)(A)(1) will require those affected petitioners to submit extension petitions more frequently, thereby incurring more filing costs. DHS further recognizes that some of these affected petitioners may incur significantly higher filing costs with each extension petition, namely, the 9-11 Response and Biometric Entry-Exit Fee (Pub. L. 114-113 Fee) of $4,000. (125) If the Fee Schedule Final Rule takes effect, the Public Law 114-113 Fee would apply to any petitioner filing an H-1B petition that employs 50 or more employees in the United States if more than 50 percent of the petitioner's employees in the aggregate are in H-1B, L-1A or L-1B nonimmigrant status, including filing an extension of stay request. (126) DHS recognizes the increased cost on this population of affected petitioners, but believes this increased cost is justified due to the importance of better ensuring compliance with the terms and conditions of the petition approval in these instances, as explained above. Additionally, nothing in this rulemaking limiting the maximum validity period to 1 year for H-1B aliens placed at third-party worksites would directly result in such alien worker being unable to obtain the statutory maximum six years of H-1B status. Instead, through this rulemaking, petitioners with this business model will have to pay more filing costs for the continued use of H-1B workers than they currently do. It is valuable to note that the amount and parameters of the Public Law 114-113 Fee is mandated by Congress. In creating the Public Law 114-113 Fee, the goal was to impose this additional fee on employers that overly rely on H-1B or L nonimmigrant workers. (127)
F. Written Explanation for Certain H-1B Approvals
DHS is amending its regulations to require its issuance of a brief explanation when an H-1B nonimmigrant petition is approved but USCIS grants an earlier end validity date than requested by the petitioner. See new 8 CFR 214.2(h)(9)(i)(B). Providing such an explanation will help ensure that the petitioner is aware of the reason for the limited validity approval.
G. Revising the Itinerary Requirement for H-1B Petitions
DHS is revising the itinerary requirement at 8 CFR 214.2(h)(2)(i)(B) (for service or training in more than one location) to specify that this particular provision will not apply to H-1B petitions. See new 8 CFR 214.2(h)(2)(i)(B). DHS is making this revision in response to a recent court decision specific to H-1B petitions. (128) The itinerary requirement at 8 CFR 214.2(h)(2)(i)(B) will still apply to other H classifications. In addition, DHS will still apply the itinerary requirement at 8 CFR 214.2(h)(2)(i)(F)(1) for H-1B petitions filed by agents.
H. Site Visits
Pursuant to its general authority under sections 103(a) and 287(b) of the INA, 8 U.S.C. 1103(a) and 1357(b), and 8 CFR 2.1, USCIS conducts inspections, evaluations,-verifications, and compliance reviews to ensure that an alien is eligible for the benefit sought and that all laws have been complied with before and after approval of such benefits. These inspections and other compliance reviews may be conducted telephonically or electronically, as well as through physical on-site inspections (site visits). The existing authority to conduct inspections is vital to the integrity of the immigration system as a whole, including the H-1B program specifically, and protecting American workers. In this rule, DHS is adding regulations specific to the H-1B program to codify its existing authority and clarify the scope of inspections—particularly on-site inspections—and the consequences of a petitioner's or third party's refusal or failure to fully cooperate with these inspections. (129) See new 8 CFR 214.2(h)(4)(i)(B)(7). The authority of USCIS to conduct on-site inspections or other compliance reviews to verify information does not relieve the petitioner of its burden of proof or responsibility to provide information in the petition (and evidence submitted in support of the petition) that is complete, true, and correct.
In 2008, USCIS conducted a review of 246 randomly selected H-1B petitions filed between October 1, 2005, and March 31, 2006, and found violations ranging from “document fraud to deliberate misstatements regarding job locations, wages paid, and duties performed” in 20.7 percent of the cases reviewed. (130) Following this, in July 2009, USCIS started the Administrative Site Visit and Verification Program as an additional way to verify information in certain visa petitions. Under this program, USCIS Fraud Detection and National Security (FDNS) officers make unannounced site visits to collect information as part of a compliance review. A compliance review verifies whether petitioners and beneficiaries are following the immigration laws and regulations that are applicable in a particular case. This process includes researching information in government databases, reviewing public records and evidence accompanying the petition, and interviewing the petitioner and beneficiary. (131) It also includes conducting site visits.
In addition, beginning in 2017, USCIS began taking a more targeted approach in conducting site visits related to the H-1B program. USCIS started focusing on H-1B-dependent employers (those who have a high ratio of H-1B workers as compared to U.S. workers, as defined in section 212(n) of the INA), cases in which USCIS cannot validate the employer's basic business information through commercially available data, and employers petitioning for H-1B workers who work off-site at another company or organization's location.
The site visits conducted by USCIS through the Administrative Site Visit and Verification Program have uncovered a significant amount of noncompliance in the H-1B program. From Fiscal Year (FY) 2013 through FY 2016, USCIS conducted 30,786 H-1B compliance reviews. Of those, 3,811 (12 percent) were found to be noncompliant. (132) From FY 2016 through March 27, 2019, USCIS conducted 20,492 H-1B compliance reviews and found 2,341 (11.4 percent) to be noncompliant. (133) Further, DHS analyzed the results of the compliance reviews from FY16-FY19 and found that the noncompliance rate for petitioners who indicated the beneficiary works at an off-site or third-party location is much higher compared to worksites where the beneficiary does not work off-site (21.7 percent versus 9.9 percent, respectively). (134)
Site visits are important to maintaining the integrity of the H-1B program and in detecting and deterring fraud and noncompliance with H-1B program requirements. (135) By better ensuring program integrity and detecting and deterring fraud and noncompliance, DHS will better ensure that the H-1B program is used appropriately and that the economic interests of U.S. workers are protected. Therefore, as noted above, DHS is adding regulations specific to the H-1B program to set forth the scope of on-site inspections and the consequences of a petitioner's or third party's refusal or failure to fully cooperate with these inspections. The new regulations make clear that inspections may include, but are not limited to, an on-site visit of the petitioning organization's facilities, interviews with its officials, review of its records related to compliance with immigration laws and regulations, and interviews with any other individuals or review of any other records that USCIS may lawfully obtain and that it considers pertinent to verify facts related to the adjudication of the H-1B petition, such as facts relating to the petitioner's and beneficiary's H-1B eligibility and compliance. See new 8 CFR 214.2(h)(4)(i)(B)(7)(i). The new regulation also clarifies the possible scope of an inspection, which may include the petitioning organization's headquarters, satellite locations, or the location where the beneficiary works or will work, including third-party worksites, as applicable. DHS believes that the ability to inspect various locations is critical since the purpose of a site inspection is to confirm information related to the H-1B petition, and any one of these locations may have information relevant to a given petition.
The new regulation also states that, if USCIS is unable to verify facts related to an H-1B petition or to compliance with H-1B petition requirements due to the failure or refusal of the petitioner or third-party to cooperate with a site visit, (136) then such failure or refusal may be grounds for denial or revocation of any H-1B petition for H-1B workers performing services at the location or locations which are a subject of inspection, including any third-party worksites. See new 8 CFR 214.2(h)(4)(i)(B)(7)(iii). This new provision will put petitioners on notice of the specific consequences for noncompliance, whether by them or by a contractual third-party. It has long been established that, in H-1B visa petition proceedings, it is the petitioner's burden to establish eligibility for the immigration benefit sought. (137) If USCIS conducts a site visit in order to verify facts related to the H-1B petition or to verify that the beneficiary is being employed consistent with the terms of the petition approval, and is unable to verify relevant facts and otherwise confirm compliance, then DHS believes that it would be reasonable to conclude that the petitioner will not have met its burden of proof and the petition may be properly denied or revoked. This would be true whether the unverified facts relate to a petitioner worksite or a third-party worksite at which a beneficiary has been or will be placed by the petitioner. It would also be true whether the failure or refusal to cooperate is by the petitioner or a third-party.
In addition, with respect to a failure or refusal to cooperate by a third-party, DHS believes this provision is reasonable because the third-party is benefiting from the services performed by the H-1B worker at its location. The third-party should not be permitted to benefit from the services performed by the H-1B worker if it simultaneously refuses to allow DHS access to verify that those services are being performed in accordance with the law. Additionally, if this provision did not apply to third-party worksites, such that a third-party's failure to cooperate with a site visit could not be grounds for denial or revocation, then this would create an unfair loophole with respect to third-party worksites, which could be exploited by unscrupulous petitioners and undermine the integrity of the H-1B program.
As with all other new provisions in this interim final rule, new 8 CFR 214.2(h)(4)(i)(B)(7)(iii) will apply to petitions filed on or after the effective date of the regulation. If, for example, a third-party refuses to cooperate with a site visit conducted after the effective date of the regulation, but in connection with a petition that was filed before the effective date of the regulation, USCIS will make a final decision on that petition under the legal framework in effect at the time the petition was filed.
Finally, DHS has added a clause to clarify its intent with respect to the provisions being amended or added by this rule; DHS intends that all the provisions covered by this rule function separately from one another and be implemented as such. Therefore, in the event of litigation or other legal action preventing the implementation of some aspect of this rule, DHS intends to implement all others to the greatest extent possible."