USCIS has issued a Policy Memorandum wherein, effective immediately, they have rescinded two of their own controversial policy memorandum which had become cause of denial of a large number of H1B petitions for the last 10 years– one for  determining Employer-Employee Relationship for Adjudication of H-1B Petitions (including Third-Party Site Placements), issued in January 2010 (popularly known ‘Neufeld’ Memo) and the other requiring  Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites issued in February 2018.

Hopefully, this Memorandum ends 10 years of relentless harassment of both the employers & employees in terms of H1B adjudication process wherein USCIS had created their own arbitrary rule defining ’employer-employee relationship’ and the USCIS adjudication officers were even more whimsical in their interpretation of that rule and deny genuine cases.

This new Policy Memorandum follows the landmark March 10, 2020, District Court judgement whereby the judge ruled that key USCIS memos and policies   interpreting an employer-employee relationship and an itinerary rule/short term approvals of H-1B petitions, were unlawful. Ruling in the case of  ITServe Alliance v. L. Francis Cissnathe judge focused on USCIS policies interpreting an employer-employee relationship and an itinerary rule/short term approvals of H-1B petitions.

The now rescinded 2010 memorandum provided guidance on the requirement that a petitioner establish that an employer-employee relationship exists and would continue to exist with the beneficiary throughout the duration of the requested H-1B validity period. The memorandum became the ground for denial of a heavy number of genuine and valid H1B petitions by USCIS’s over zealous adjudicators who interpreted this memo as having armed them with unlimited discretionary power, which they could use arbitrarily. The 2018 memorandum provided guidance relating to H-1B petitions filed for workers who would be employed at one or more third-party worksites and was intended to be read in conjunction with the 2010 memorandum and as a complement to that policy.

The new Memorandum, while replacing the 2010 and 2018 Memoranda clarifies that the USCIS adjudicating officers should rely on submitted Labor Condition Application (LCA) and a copy of any written contract between the petitioner and the beneficiary and depending upon the content of such documentation, it may establish the employer-employee relationship.

The USCIS has further clarified that the adjudicating officer should apply the existing regulatory definition in assessing whether an employer and a beneficiary have an employer-employee relationship and that the officer should consider whether the petitioner has established that it meets at least one of the  five- “hire, pay, fire, supervise, or otherwise control the work of” factors with respect to the beneficiary.

In support of the petition, an H-1B petitioner henceforth is not required by the regulations to submit contracts or legal agreements between the petitioner and third parties.

The Memorandum also clarifies that while a petitioner is not required to identify and document the beneficiary’s specific day-to-day assignments, the petitioner must still meet all statutory and regulatory requirements, excluding the itinerary requirement. An officer should deny a petition when the petitioner has not established that the beneficiary will work in a specialty occupation.

If the officer finds that a petitioner has not established, by a preponderance of the evidence, statutory or regulatory eligibility for the classification as of the time of filing, the officer should articulate that basis in denying the H-1B petition. To make this determination, the officer should apply statutory and regulatory requirements, (excluding the itinerary requirement); binding court precedent; Administrative Appeals Office (AAO) adopted and precedent decisions; and current USCIS policy guidance concerning H-1B nonimmigrant classification.

According to the Memorandum, the guidance concerning benching remains unchanged and except in certain limited circumstances, “benching” is prohibited by law and may be viewed as failure to work according to the terms and conditions of the petition approval, which may attract, among other enforcement actions, revocation of the petition approval, a finding that the beneficiary failed to maintain status, or both. If a beneficiary is in non-productive status because of a lack of work, that could indicate to the USCIS that the beneficiary no longer is in a specialty occupation and that may affect eligibility. However, it would not be a violation of H-1B nonimmigrant status for a beneficiary to be in non-productive status during a period that is not subject to payment under the petitioner’s benefit plan or other statutes such as the FMLA-Family and Medical Leave Act or the ADA-Americans with Disabilities Act.

USCIS is likely issue new guidance pertaining to itinerary of employment, but in the meantime the officers will abstain from the application of the itinerary requirement.

USCIS guidance also states that USCIS may issue approvals for H-1B petitions with validity periods shorter than the time period requested by the H-1B petitioner, only if the decision is  accompanied by a brief explanation as to why the validity period has been limited, eg. instances in which the certified LCA has a validity period of shorter duration than that specified on the H-1B petition.

About Bhatiaco

About Us Bhatia & Co, Inc, Certified Public Accountants is a diversified Full service financial and business services firm concentrating on providingservices to domestic and international organizations, with special focus on international transactions and tax planning. Our Team of highly skilled and diversified range of finance and business professionals provide services in areas of business and individual tax,audit & review, international tax planning, incorporation and corporatecompliance, accounting, outsourcing, business consulting, financial and retirement planning, immigration consulting and litigation support to adiverse range of clients.. We are located in the prestigious Techmart building in the heart of Silicon Valley in Santa Clara,CA for the last 13+ years and have offices in New Delhi for 30+ years. . Our current engagements include cross border tax planning and transactions, corporate structuring, and complex Tax audits and representation including recent oversees disclosure programs (OVDP/OVDI). Our organization is headed by Neeraj Bhatia, who is an accomplished accounting professional with 30+ years expertise in international and domestic tax planning and compliance for startups and multinational entities. Neeraj is a licensed CPA in California, New York and Colorado and a CA in India. He also has a LL.M. in International Taxation from the US, Costs and Works (Management) Accountancy, and a Bachelor (Honors) degree in Commerce from India. During his academic years he has received several awards and scholarships for being the top ranker nationally.

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