What the USCIS learned
Does the USCIS fully understand the law and the legal implications of the Neufeld Memorandum? An April 15, 2010 Executive Summary of a recent teleconference implies that the Service may be getting the message, although the Executive Summary may confuse as much as it informs.
The Neufeld Memo's main flaw is that it misreads the underlying regulation. 8 CFR 214.2(h)(4)(ii) holds that a U.S. employer is indicated by five characteristics: hire, pay, fire, supervise, or otherwise control. This regulation is controlling. Incorrectly, the Neufeld Memo implies that "right of control" is a superior characteristic encompassing the other characteristics.
In order to attempt to get its hands around the growing confusion, the USCIS held a Listening Session on March 26, 2010. MU's attended and participated at the Session.
The USCIS' recently released Executive Summary from that session recognizes that "if" right of control is required, then the Neufeld Memo contradicts the existing regulation. The Executive Summary goes further and agrees that "if" right of control is only one of the five elements, then an amendment is needed to the Memo.
These are not small issues. Staffing companies use the H-1B visa to supply staff to third-party worksites, mainly where well-documented US supply is short. At this point, it simply makes sense for the USCIS to suspend or withdraw the Neufeld Memorandum. At best, the Memo makes a confusing area of law incomprehensible. At worst, it takes a simple regulation and misapplies it.