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Rami Fakhoury on IT Immigration

The Fight Book: Chapter I-H1B: Part G, H, I

Rating: 14 votes, 4.71 average.

Rami Fakhoury and Mark Levey


Copyright@2010Fakhoury Law Group/ Rami Fakhoury


G.  TORTS LIABILITY - A Legal Indicator of the Employer-Employee Relationship 


Liability is another factor that indicates a bona-fide employment relationship.  The common-law doctrine of respondeat superior holds an employer liable for the negligent acts of its employee. Generally, under common law, the hiring party is not responsible for the negligence of an independent contractor. The Restatement (Second) of Torts identifies a few exceptions to this rule. The hiring party may be liable when, owing to its failure to exercise reasonable care to retain a competent and careful contractor, a third party is physically harmed. Also, when an independent contractor acts pursuant to orders or directions negligently given by the hiring party, the latter may be held liable. Notwithstanding the exceptions, the hiring party's risk of liability is greatly reduced by hiring independent contractors rather than employees.


The employer of an independent contractor is generally not held vicariously liable for the tortuous acts and omissions of the contractor, because the control and supervision found in an employer-employee or Principal-Agent relationship is lacking.[1]  This is without reference to liability that may be conveyed or relieved by contractual obligation.  However, vicarious liability will be imposed under torts for the acts of independent contractors. Some of these exceptions are:



  • Negligently selecting an independent contractor;

  • Furnishing the contractor with faulty plans or specifications;

  • Hiring a contractor to perform a task which is inherently dangerous;[2]

  • Further, liability may be conveyed to the employer by estoppel if the independent contractor is held out as an employee or agent.  


Generally, unless the employment contract contains reference to assignment of risk to the employee, there should be an assumption that liability generally falls upon the employer.  There are few employers who would risk such potential liability of a sham employer-employee relationship would entail, so such a sham relationship cannot be presumed by USCIS without good cause, and ineligibility due to such a fraud must be established by a preponderance of the evidence. 

 


H.  PLAIN-LANGUAGE DEFINITION OF "INDEPENDENT CONTRACTOR"


Finally, a common usage definition for an independent contractor is[3]: "a natural person, business, or corporation which provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required, during which time she or he may be subject to the Law of Agency (see immediately below). Independent contractors are usually paid on a freelance basis. Contractors often work through a limited company which they themselves own, or may work through an umbrella company."  IRS provides a short definition as follows[4]:


The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.


Independent contractors may themselves pay employees or subcontractors, or both, who perform services for them.


 


I.   THE THIRD STEP IN THE ALTERNATIVE ANALYSIS - Employer or Agent?


There is one more necessary step to this analysis, and that is to identify the legal relationship between petitioner and the beneficiary - is the petitioner an Agent or the Employer of the beneficiary?   Once we have determined which party is the employer of the beneficiary, and whether the relationship of beneficiary to petitioner is as an employee or an independent contractor, there is a further issue to resolve.  This third-step is required to determine whether the petitioner is an employer or merely an agent for the beneficiary.  This final step is necessary to assign the correct regulatory classification, that of "employer" or "agent"  This will, in turn, determine the burden of evidence, and how much disclosure USCIS can demand of itineraries for workers assigned to client sites.  Under the regulations, that burden is higher for agents than it is for employers. [NOTE: The Neufeld memo touches on the issue of agency as an element of control, and this factor must be carefully addressed in cases where USCIS might conclude that the beneficiary is self-employed and thus not an employee.] 


Agency is a field of commercial law dealing with a set of legal relationships.  An agent is authorized to act on behalf of another (the Principal) to enter into a legal relationships with third parties.  These relationships may be of various kinds - contractual, quasi-contractual tripartite, or non-contractual.  The essence of the relationship between a principal and an agent is the principal, expressly or impliedly, authorizes the agent to work under his control and on his behalf.   The agent is, thus, required to negotiate on behalf of the principal or bring him and third parties into contractual relationship. This branch of law separates and regulates the relationships between:



  • Agents and Principals;

  • Agents and the Third Parties with whom they deal on their Principals' behalf; and

  • Principals and the Third Parties when the Agents purport to deal on their behalf.


The common law principle in operation is usually represented in the Latin phrase, qui facit per alium, facit per se, i.e. "the one who acts through another, acts in his or her own interests."  That is a parallel concept to vicarious liability and strict liability in which one person is held liable in Criminal Law or Tort for the acts or omissions of another.  A more direct translation is, "the principal is liable personally for the negligence of its agent."[5]


Agency is a different relationship in two major respects from that between an employee and the employer.  First, the relationship of employer-employee is one of "master-servant", where the employer has the right to control and to direct the result of the work, as well as the means and methods of accomplishing the result.  The agent working on behalf of a Principal does not control the work of a Principal performed for a third-party, rather it is the Principal who, as the independent contractor, controls the terms of that work along with the terms of the work of the agent.  The agent, as well, is an independent contractor working on behalf of the Principal, but retains control over the means and methods of accomplishing the result.    


A second aspect of the Agent-Principal relation that differs from employment relationship is that agent has either no or only limited liability for the work the Principal may perform for a third-party.  An employer, on the other hand, has strict and vicarious liability under Torts for the work performed by its employees.  Finally, a Principal may have vicarious liability for the work of the Agent who is representing his interests.  


___________

 

J.  OTHER LEGAL ISSUES RELATED TO DEFENSOR AND NEUFELD

 


1."Speculative Employment" Not Found in Law; Agency's Reliance on Phantom Regulations and Rejection of Definitive Interpretation on Itineraries  

The agency itself recognized and addressed the impracticality and unfairness of requiring full detailed agendas in a series of policy guidance memos issued by legacy INS, which once appeared to have settled these issues years ago.  In response to a large number of denials at Service Centers of these cases in the 1990s, Service headquarters released the so-called Aytes[6] and Crocetti[7] memos, which were in place and broadly adopted long enough so as to   constitute "definitive interpretation" on the subject.  Assistant Commissioner Aytes addressed the issue of Service Center misinterpretation of regulations to require fully detailed itineraries:

[I]n the case of an H-1B petition filed by an employment contractor, a general statement of the alien's proposed or possible employment is acceptable since the regulation does not require that the employer provide the Service with the exact dates and places of employment. As long as the officer is convinced of the bona fides of the petitioner's intentions with respect to the alien's employment, the itinerary requirement has been met. The itinerary does not have to be so specific as to list each and every day of the alien's employment in the United States. Service officers are encouraged to use discretion in determining whether the petitioner has met the burden of establishing that it has an actual employment opportunity for the alien.


Further guidance is offered in the Aytes memo regarding the factors that a Service Center adjudicator should consider in deciding the credibility of a petitioner's itinerary:*


The petitioner's past hiring should also be considered in determining whether the petitioner has met the itinerary requirement as discussed in the regulation. Certainly a company's demonstrated past practice of employing H-1B nonimmigrants in conformity with the statute and regulation should be given significant weight in determining whether the itinerary requirement has been met. [Aytes memo, Ibid.][*NOTE: PARAGRAPH MAY NEED TO BE OMITTED IF EMPLOYER HAS HAD PAST, RELEVANT COMPLIANCE ISSUES]


At about the same time as the Aytes memo appeared, Associate Commission Crocetti clarified that agency regulation at 8 CFR 214.2(h)(2)(I)(B) regarding supporting documents for petitions.  That guidance states that Service Centers should not normally require copies of end-user contracts:

It appears that a large number of cases are being returned to employment contractors for the submission of contracts between the employer and the alien work site. The submission of such contracts should not be a normal requirement for the approval of an H-1B petition filed by an employment contractor. Requests for contracts should be made only in those cases where the officer can articulate a specific need for such documentation. The mere fact that a petitioner is an employment contractor is not a reason to request such contracts.


The Aytes and Crocetti memos forbade Service practices that have again become widespread.  These reemergent practices - that have carried into the FDNS "articulable fraud" indicators, automatically triggering issuance of RFEs and worksite audits -- amount to arbitrarily imposed rules and agency norms.  In effect, USCIS is re-imposing defunct legal standards that operate to the detriment of today's H-1B applicants, with particularly discriminatory and damaging economic effect upon companies in the IT consulting industry.    


The Neufeld memo has imposed a burden of evidence that is contrary and inconsistent with previous stated policy reaffirmed in a more recent Service directive.  Specifically, a July 24, 2005 Memo by the CIS Commissioner, the Yates memo, states that examiners normally should accept representations from company representatives of "large, established companies" about the nature of duties performed without a requirement for further documentation of specialized knowledge.[8]  * While this applies specifically to L-1, the principle is the same and reaffirms the Crocetti memo directive that deference should be given to information provided by established companies with good track records of compliance. [IBID.]


2. Agency Imposition of Restrictions and Heightened Barriers Contrary to Congressional Intent


In addition to a violation of regulation and binding agency directive, the imposition of restrictions on H-1B outsourcing also is clearly inconsistent with Congressional intent.   Indeed, had Congress wanted to restrict outsourcing of H-1B visa holders, it would have done so at the time of passage of the 2004 H-1B and L-1 Visa Reform Act and related amendments attached to that year's Omnibus Spending Bill.  At that time, Congress restricted the transfer of L-1B specialized-knowledge visa holders to client company work sites, except under very limited circumstances.  Congress then had the opportunity to do the same thing with H-1B, and has on numerous occasions since, but all such provisions have either been uniformly rejected or stripped-out of final bills.  No laws restricting outsourcing of H-1Bs in non-governmental contracting have, in fact, passed. [9]


 


3.HISTORY OF USCIS POLICY REGARDING "COMPLETE ITINERARY" - Implementation of Defunct Proposed Rules Without Final Publication


A review of past USCIS policy statements have more than historical value.  They provide a useful indicator of how the agency actually interpreted the Act and how at various times it intended adjudicators to interpret various issues.  These go to the second prong of the test articulated in Center for Auto Safety in distinguishing "de facto rules or binding norms" from general statements of agency policy, which are non-reviewable.

Absent contrary regulation or expressed superceding guidance, USCIS HQ memos carry the weight of binding rules over Service Center adjudications, but the Aytes and Crocetti directives appear to have fallen by the wayside in actual practice well before Neufeld emerged.  Until recently, USCIS has made changes without even so much as publicly issuing superceding directives.[10]  The current expression of de facto agency rules still does not satisfy the APA requirement that it publish Final Regulations and afford the public an opportunity for input before they are enforced.  

What, in fact, appears to have happened is that portions of Proposed Regulations published in 1998, but never published as Final Regulations, have been selectively implemented in order to carry out the Defensor decision and a de facto policy of restricting H-1B outsourcing.  This sort of selective implementation of proposed regulation is well outside the permissible limits of an agency's normal discretionary power to interpret its own regulations, and is an abuse of discretion, as the Patel decision previously found. Once the regulatory process has commenced by publication of proposed rules, these can only be adopted by publishing final or superceding regulation.  Furthermore, application of such de facto rules or binding norms, where they conflict with existing law, regulation, agency rules or binding norms is an abuse of discretion, and they may not be relied upon in adjudications.  They certainly deserve no deference by courts of review.

The stated purpose of the 1998 proposed regulations[11] was as follows:  

to amend the Immigration and Naturalization Service's (Service) regulations to accommodate the needs of certain United States employers with respect to the filing of new and amended petitions for H-1B nonimmigrant workers. This rule was written in response to a number of complaints received from certain industries which asserted that the current H regulations contain requirements with which some U.S. employers cannot comply. In addition, the current regulations contain certain procedures which are burdensome to both the Service and to the public. Specifically, this rule proposes to amend the Service's regulation with regard to the submission of itineraries with certain H-1B petitions. [30421] 

Specifically, those proposed rules laid out new regulatory provisions for H-1B petitions. A regulatory change was proposed regarding the potential placement of a beneficiary at multiple client sites, the regulatory change proposed at 214.2(h)(2)(i)(B) read:


Services or training in more than one location.--(1) H-1B petitions. An H-1B petition which require services to be performed or training to be received in more than one location must include, to the extent possible, a complete itinerary with the dates and locations of the services or training to be performed. The petition must be filed with the Service Center having jurisdiction over the place where the petitioner is located. The address which the petitioner specifies as its location on the petition shall be where the petitioner is located for purposes of this paragraph. If the petitioner has not yet determined all of the locations where the beneficiary might be employed at the time of filing, the petitioner must provide an itinerary of all definite employment and provide a description of any proposed or possible employment for the period of time covered by the petition. Petitions filed by an agent must also comport with 8 CFR 214.2(h)(2)(i)(F).[30421-22]

               

Of course, proposed regulations have no real effect until published in final form, and this provision did not make it into the Code of Federal Regulations.  See, APA, Secs. 552, 553.  The actual regulation currently reads:


214(h)(2)(i)(B) Service or training in more than one location. A petition that requires services to be performed or training to be received in more than one location must include an itinerary with the dates and locations of the services or training and must be filed with USCIS as provided in the form instructions. The address that the petitioner specifies as its location on the Form I-129 shall be where the petitioner is located for purposes of this paragraph.  


The requirement for submission of "a complete itinerary" for H-1B workers assigned to multiple worksites clearly did, however, become a de facto norm, but without the allowance for "to the extent possible" and without becoming regulation, as the APA would require.  With Neufeld, the Service is imposing a burden of evidence in excess of what is consistent with the regulations, and even exceeds what was in the proposed regulations. 


Instead, a general statement of job duties and itinerary along the lines of those specified in the Aytes and Crocetti memos is no longer acceptable to the agency, as Neufeld makes manifest.  *Similarly gone by the wayside is the guidance offered in the Aytes memo regarding the factors that a Service Center adjudicator should consider in deciding the credibility of a petitioner's itinerary:


The petitioner's past hiring should also be considered in determining whether the petitioner has met the itinerary requirement as discussed in the regulation. Certainly a company's demonstrated past practice of employing H-1B nonimmigrants in conformity with the statute and regulation should be given significant weight in determining whether the itinerary requirement has been met. [Aytes memo, Ibid.][IBID.]


 



  1. 1.      VIOLATES APA "LOGICAL OUTGROWTH" RULE: Application of standards amounting to substantive agency rules without publication of final agency rules violates APA requirements.


The Administrative Procedure Act (APA) sets forth the requirements for "informal rulemaking," the process generally used by agencies to issue legislative rules. The informal rulemaking process, "notice-and-comment rulemaking," requires that DHS first issue a notice of proposed rulemaking (NPRM) and provide an opportunity for public comment on the proposal before it can issue a final rule. APA  5 U.S.C. 553. 

 That process normally follows a three-step sequence of publication of proposed regulations, public comment, and finally publication of final agency regulations.  However, publication of final rules is not mandatory if the agency finds good cause to adopt a rule without prior public participation. 5 U.S.C. 553(b)(3)(B). The good cause requirement is satisfied when prior public participation is impracticable, unnecessary, or contrary to the public interest.   Where the agency determines that it will implement its interim rule as final regulations they must be "a logical outgrowth" of the Agency's interim rule.  

Here, the plaintiff does not object to the Agency's decision to not adopt its proposed 1998 amendments to the regulations at 214(h)(2)(i)(B).  DHS may choose to not implement its proposed regulations if they are not published in final form.  See Am. Iron & Steel Inst. v. EPA, 886 F.2d 390, 400 (D.C.Cir.1989) ("One logical outgrowth of a proposal is surely, as [an agency] says, to refrain from taking the proposed step."). However, in requiring "complete itineraries" USCIS did more, and less --after taking the first step in its rulemaking, USCIS adopted only a select portion of it in such a way as to cherry-pick its original 1998 mandate, contradicting the original stated purpose "to accommodate the needs of certain United States employers with respect to the filing of new and amended petitions for H-1B nonimmigrant workers."  Once a rules change is proposed, it may be completed or abandoned, but never partially implemented in such a way as to significantly alter the meaning of the original proposal.  As the US Court of Appeals for the District of Columbia Circuit found in Environmental Integrity Project v. EPA,  425 F3d. 992 (October 7, 2003) at 16, this type of:


"flip-flop complies with the APA only if preceded by adequate notice and opportunity for public comment.  Compare Alaska Prof'l Hunters ***'n, Inc. v. FAA, 177 F.3d 1030, 1034 (D.C.Cir.1999) ("When an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish without notice and comment."), and Paralyzed Veterans of Am. v. D.C. Arena L.P., 117 F.3d 579, 586 (D.C.Cir.1997) ("Once an agency gives its regulation an interpretation, it can only change that interpretation as it would formally modify the regulation itself: through the process of notice and comment rulemaking."), with Hudson v. FAA, 192 F.3d 1031, 1036 (D.C.Cir.1999) (stating agency may change its longstanding policies without notice and comment, so long as "there is no dispute as to the regulation's meaning"), and Syncor Int'l Corp. v. Shalala, 127 F.3d 90, 94 (D.C.Cir.1997) ("[I]nterpretative rules and policy statements are quite different agency instruments. An agency policy statement does not seek to impose or elaborate or interpret a legal norm. It merely represents an agency position with respect to how it will treat--typically enforce--the governing legal norm.").


If USCIS desires to modify or implement the 1998 rules in this instance, the requirement for a NPRM is mandatory - a requirement the agency itself recognized in its publication years ago of the Proposed Rules.  The agency may not now plausibly argue that rulemakings are exempted as mere "interpretation" or for "good cause" ("impracticable, unnecessary, or contrary to the public interest;" e.g., for such things as "emergencies"). In this case, clearly USCIS cannot now, more than a decade years later, claim that there is an emergency, or that it would be contrary to the public interest to delay formal publication of the rule.

Similarly, a member of the public could not have anticipated that the 1998 proposal would result in the de facto rule, thus the APA requirements have not been satisfied.  That proposal expressly allowed an exception for production of itineraries to "the extent possible."  In fact, as the Neufeld memo illustrates, the agency is imposing on the petitioner an impossible or impractical burden for itineraries that detail unforeseeable future assignments. The de facto rules also defeat the purpose stated for the 1998 proposals, which were "written in response to a number of complaints received from certain industries which asserted that the current H regulations contain requirements with which some U.S. employers cannot comply."  The de facto rule and current actual agency practice do not even suggest a course of action similar to the proposed rule and, therefore, the de facto rule could not have been anticipated by the public.


Furthermore, pursuant to the APA, the agency's decision has to be reasonable; and it must provide a basis for its decision and show how the rule will achieve its purpose. The APA notice-and-comment process recognizes that changes may be made to the proposed rule based on the public comments received, but the courts have required that any changes made in the final rule be of a type that could have been reasonably anticipated by the public - a logical outgrowth.  If the "logical outgrowth test" is not met, the agency needs to provide a second notice with an opportunity for public comment on the changes. 


The USCIS de facto rule violates APA  551(5), 553(c), because it was not a "logical outgrowth" of the Agency's proposed interim rule and therefore did not comport with the requirements of notice-and-comment rulemaking. See Sprint Corp. v. FCC, 315 F.3d 369, 375-76 (D.C.Cir.2003); Kooritzky v. Reich, 17 F.3d 1509, 1513 (D.C.Cir.1994).

Once the comment period closes and the agency has reviewed the comments received and analyzed them, the agency has only three options: the agency may proceed with the rulemaking proposed, issue a new or modified proposal, or withdraw the proposal.  It may not partially implement the delayed rule in such a way that it evades the "logical outgrowth test."  Before issuing a final rule, the agency makes any appropriate revisions to the various supporting analyses prepared for the NPRM.  The final rule may be published in the Federal Register or personally served on affected interests. 


Finally, the provisions contained in a final legislative rule cannot be made effective in less than 30 days after final publication, unless it is granting an exemption, relieving a restriction, or for "good cause," which includes such things as emergencies.  Sometimes agencies will set implementation or compliance dates that are later than the effective date of the rule.  This may be because the rule is being implemented in stages following its effective date, because the agency may want to allow compliance with the new rule before it is required, or for other reasons.  None of these latter exceptions apply in this matter.



  1. Evidentiary Requirements Under Neufeld Memo, Imposed Without Meeting APA Requirements for Notice and Comment , Violate Chenery II Principles,  and are Contrary to Raungswang and Patel Line of Decisions


While it does not articulate entirely new policy, the Neufeld memo continues and amplifies an alarming trend toward USCIS departure from lawful regulatory requirements under the Administrative Procedures Act (APA) that agencies publish significant policies with broad application that deviate from published rules and procedures. 


First, there are things that have not significantly changed by issuance of the Neufeld memo.  Under the APA, federal agencies and departments have flexibility in the way they can regulate.  Agencies can make rules either through publication of binding regulations or by a case-by-case adjudications method.  Both approaches to rule-making are perfectly acceptable pursuant to the Supreme Court's seminal  1947 Chenery II decision; that case sets out the original ground rules for such matters, allowing agencies a choice, but the decision also imposed limits on how rule-making may be done. For instance, under the Chenery II principles, the agency may not issue case-by-case rulings that violate a previous published rule, and rulemaking by adjudication is only permitted to affect a small, specific class of applicants.  Any rule that has more general application must be published under the APA "notice and comment" requirement.  [5 U.S.C. Sec.  553]   Unless and until the agency eventually publishes its new rule in The Federal Register it does not have force of law.  Even the most deferential standard possible, embodied in the Chevron decision, mandates that agency decisions are not entitled to deference by the courts unless they hold the "force of law."[12]   The burden is on the agency to establish the rationality of such an informal, unpublished interpretation under an older Skidmore standard, "according to its persuasiveness."[13]


Recent decisions interpreting Chevron limit "Chevron deference" to agency rulings derived by APA 553  formal "notice and comment" process, and withhold it from more informal types of agency decision-making by the agency.  The vast majority of USCIS and DOL rulemaking is de facto rules and binding norms, not published regulations.  The limits on the use of the informal approach in the context of immigration have been interpreted in a line of federal decisions as follows.



 In Raungswang v INS, 591 F.2d 39 (9th Cir. 1978)[14] the Ninth Circuit held that legacy INS had abused its discretion in denying an investor visa petition by adding eligibility requirements without allowing for notice.  In that case, the panel considered the appropriateness of new requirements imposed through adjudication by the Board of Immigration Appeals (BIA) on investor visa immigrants beyond those expressly stated in the then pertaining regulations.  The Circuit found informal rulemaking in that instance to be impermissible, applying the following analysis:



We are aware that, as the INS argues, courts must give "great deference" and "controlling weight" to an agency's interpretation of its own regulations. E. g., United States v. Larionoff, 431 U.S. 864, 872, 97 S.Ct. 2150, 53 L.Ed.2d 48 (1977); Udall v. Tallman, 380 U.S. 1, 16-17, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965). That doctrine is inapplicable, however, when the agency's interpretation " 'is plainly erroneous or inconsistent with the regulation.' " United States v. Larionoff, supra, 431 U.S. at 872, 97 S.Ct. at 2156 (quoting Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 89 L.Ed. 1700 (1945)). We have thus refused to defer to an agency construction that "is clearly contrary to the plain and sensible meaning of the regulation." Hart v. McLucas, 535 F.2d 516, 520 (9th Cir. 1976). What is clear in this case is that the interpretation of the INS is contrary to the plain language of the regulation, and that there was no reason for Mrs. Ruangswang to expect, when she sought to comply with the regulation, that the requirements for receiving an adjustment of status would be anything other than the objective criteria set forth in the 1973 regulation.


17


Hence, under principles of agency interpretation, the Board's application of the law cannot be sustained. The objective criteria of the 1973 regulation were clearly met by Mrs. Ruangswang. There simply is no room for the agency to interpret the regulation so as to add another requirement.


There is a second element applied by the Circuit in the Raungswang analysis [18-22].  The court ruled INS may not make use of informal rulemaking through adjudications "to change course in midstream" where the departure from previous agency practice has an adverse consequence on a party, and where the party had reliance on the previous rule:


Our review of whether the proper law was applied, however, does not end when we determine that the added requirement is not justified by agency interpretation. We must still consider whether the Board may establish the standards that it sought to apply by the adjudicatory proceedings in this case and have them bind Mrs. Ruangswang.


Through a series of cases commencing with its second decision in SEC v. Chenery Corp. (Chenery II), 332 U.S. 194, 67 S.Ct. 1575, 91 L.Ed. 995 (1947), the United States Supreme Court has held that administrative agencies may properly use adjudication to "announc(e) and (apply) a new standard of conduct," Id. at 203, 67 S.Ct. at 1580. In NLRB v. Wyman-Gordon Co., 394 U.S. 759, 89 S.Ct. 1426, 22 L.Ed.2d 709 (1969), Justice Fortas, speaking for a plurality of four, stated that although the NLRB could not, in light of the Administrative Procedure Act, establish binding prospective rules by adjudication, it could establish a new standard of conduct that would be binding on the parties before it in any particular case, and that such adjudications could have stare decisis effect.


20


More recently the Court again considered this question, and, relying heavily on the two former cases, held that the adjudicative forum can often be used to announce new principles applicable to the specific parties before the NLRB in particular cases, even if the principles involve a change from past policies. NLRB v. Bell Aerospace Co., 416 U.S. 267, 290-95, 94 S.Ct. 1757, 40 L.Ed.2d 134 (1974). The Court cautioned, however, that "there may be situations where the Board's reliance on adjudication would amount to an abuse of discretion or a violation of the Act . . . ." Id. at 294, 94 S.Ct. at 1771. The Court suggested that the "adverse consequences ensuing from . . . reliance (upon the NLRB's past decisions may be) so substantial that the Board should be precluded from reconsidering the issue in an adjudicative proceeding." Id. at 295, 94 S.Ct. at 1772. Adjudication might also be inappropriate where "some new liability" results from "past actions which were taken in good-faith reliance on Board pronouncements," or where "fines or damages" are involved. Id.


21


While the Court favors, whenever possible, the use of prospective quasi-legislative rule-making powers to formulate new standards rather than ad hoc adjudication, See, e. g., Chenery II, supra, 332 U.S. at 202, 67 S.Ct. 1575; NLRB v. Majestic Weaving Co., 355 F.2d 854, 860 (2d Cir. 1966), we have not received definitive limits on agency6 use of adjudicative proceedings to change course in midstream. We are, however, convinced that what the Board seeks to do in this case is beyond the bounds of that which is permissible under Bell. The adverse consequences voluntary departure at best, and deportation at worst are certainly substantial. In the sense that the requirement added to the 1973 regulation prevents an adjustment of status, there is some new liability. Finally, if there was good faith reliance on the 1973 regulation, Bell militates against allowance of the adjudication method.


Following Ruangswang, the 9th Circuit further limited the ability of INS to informally expand the reach of its regulations by adjudications in its subsequent ruling, Patel v. INS.  As the Board of Immigration Appeals ruefully observed upon remand in Matter of Patel, 15 I&N Dec. 2842 (BIA, 1980)[15]:


Subsequently, in Matter of Wang, 16 I&N Dec. 711 (BIA 1979), another case arising in the Ninth Circuit, we distinguished the Ninth Circuit's Ruangswang opinion holding that an alien who had made an investment more than a year after Heitland was decided had had adequate notice of its


requirements and had to comply with them. However, the Ninth Circuit has recently rendered another decision which holds that the Heitland requirements cannot be added to the terms of the regulation even where there has been ample notice. Patel v. INS, 638 F.2d 1199 (9th Cir. 1980)  Accordingly, since the present case arose in the Ninth Circuit, the Heitland requirements will not be applied in determining whether the respondent has established eligibility for classification as an investor.  Consequently, on the basis of the immigration judge's finding that the respondent has satisfied the specific criteria set forth in 8 C.F.K. 212.8(b)(4), we conclude that the respondent is eligible for investor classification.



 


As the BIA notes, the Patel decision is very significant inasmuch as it holds that the element of lack of notice is not the sole ground upon which abuse of discretion may be found in such cases.  Another impermissible practice, as the court finds in Patel, is the application as dicta of rules discarded from previous regulations that do not appear in those actually published as final regulations.   The Circuit observes in the Patel ruling [9]:


 



After the promulgation of this new regulation in 1973, the Board decided Heitland, supra, 14 I. & N. Dec. 563, a case arising under the "substantial amount of capital" requirement of the pre-1973 regulation. Heitland overruled previous Board interpretations of "substantial," and stated that the alien's investment "must tend to expand job opportunities and thus offset any adverse impact which the alien's employment may have on the market for jobs ...." 14 I. & N. Dec. at 567. Although Heitland was concerned only with the pre-1973 "substantial amount of capital" requirement, it stated in dicta that the recently-promulgated and facially-objective 1973 regulation must also be construed to require that the investment expand job opportunities. Id. at 566-67. Thus, by adjudication, the Board attempted to add a requirement to the 1973 regulation which had been expressly discarded during its rule-making proceedings.2


 



  1. 3.      Adverse Impact of the Application of USCIS Dicta Derived from Discarded Proposed Regulations Regarding  Evidence of "Control" and "Complete Itineraries" requirements. 


What, in fact, appears to have occurred is that portions of Proposed Regulations published in 1998, but never published as Final Regulations, have been selectively implemented in order to carry out the Defensor dicta and a de facto policy of restricting H-1B outsourcing.  This sort of selective implementation of proposed regulation is well outside the permissible limits of an agency's normal discretionary power to interpret its own regulations, and is ultra vires.  Once the regulatory process has commenced by publication of proposed rules, these can only be adopted by publishing final or superceding regulation.  Furthermore, application of such de facto rules or binding norms, where they conflict with existing law, regulation, agency rules or binding norms is an abuse of discretion, and they may not be relied upon in adjudications.  They certainly deserve no deference by courts of review.  

Meanwhile, both the Raungswang and Patel cases remain good law and both are widely cited in subsequent cases across the circuits. 

The stated purpose of the 1998 proposed regulations[16] was as follows:  

to amend the Immigration and Naturalization Service's (Service) regulations to accommodate the needs of certain United States employers with respect to the filing of new and amended petitions for H-1B nonimmigrant workers. This rule was written in response to a number of complaints received from certain industries which asserted that the current H regulations contain requirements with which some U.S. employers cannot comply. In addition, the current regulations contain certain procedures which are burdensome to both the Service and to the public. Specifically, this rule proposes to amend the Service's regulation with regard to the submission of itineraries with certain H-1B petitions. [30421] 

Specifically, those proposed rules laid out new regulatory provisions for H-1B petitions. A regulatory change was proposed regarding the potential placement of a beneficiary at multiple client sites, the 1998 regulatory change proposed at 214.2(h)(2)(i)(B) read:


Services or training in more than one location.--(1) H-1B petitions. An H-1B petition which require services to be performed or training to be received in more than one location must include, to the extent possible, a complete itinerary with the dates and locations of the services or training to be performed. The petition must be filed with the Service Center having jurisdiction over the place where the petitioner is located. The address which the petitioner specifies as its location on the petition shall be where the petitioner is located for purposes of this paragraph. If the petitioner has not yet determined all of the locations where the beneficiary might be employed at the time of filing, the petitioner must provide an itinerary of all definite employment and provide a description of any proposed or possible employment for the period of time covered by the petition.

Petitions filed by an agent must also comport with 8 CFR 214.2(h)(2)(i)(F).[30421-22]

               


  1. 4.      Unreasonable to Require Full Itinerary Six Months Prior to First Possible Start Date


Many cases present a further problem with unreasonable agency interpretation of its regulations.   Because of the H-1B lottery system, visa petitions must be submitted on April 1, six months in advance of the date the visas are released, and first-time workers can commence employment.   By requiring proof of a complete and ironclad itinerary six months in advance of the first possible start date (October 1, when new H-1B visas are released on the first day of new fiscal year), USCIS effectively closes off access to the benefits process, and does it selectively as a prejudicial requirement imposed upon companies that place employees at client sites.   While a petitioner has made a good-faith effort to provide as complete and accurate an itinerary as possible, given that the first start date is at least half a year after the date of the initial H-1B submission, that itinerary may not be valid by the time the beneficiary is allowed to commence initial employment.  USCIS routinely denies visa petitions that do include "complete itineraries" that provide documentation of exact dates of employment.  Given that I-129 petitions may be amended, it is simply unreasonable of USCIS to base its denial of a petition on the ground it suspects the initial itinerary proposed will no longer be accurate at some point at least six months in the future.


Application of this dictum, in fact, discriminates against petitioners that employ H-1B workers for shorter-term assignments at client sites.


 



  1. 5.      Petition Was Approvable at the Time of Filing Under 8 CFR 103.2(b)(1)


USCIS selectively imposes a requirement for complete itineraries in violation of its own regulation.  It is improper for USCIS to apply its regulation to require -- and then challenge the credibility of - a petition on the grounds that it is not accompanied by an itinerary for assignments that are many months distant from the time of filing. It is unreasonable for the Service to impose a requirement for proof of specific client site assignments beyond which can be accurately scheduled in the foreseeable future.  This violates the regulations at 8 CFR 103.2(b)(1).


The regulation states that a petition must be approvable "at the time of filing", not six months later when a visa can first be issued.  Provided an itinerary attached to the petition submitted is accurate and approvable as of the date of filing, it should be approved.  It is contrary to statute and regulation to require documents that cannot reasonably be produced or are unavailable.  The applicable standard in this matter is that the petitioner "must establish that he or she is eligible for the requested benefit at the time of filing the application or petition. " [emphasis added] 


8 CFR 103.2(b)(1), Powers and Duties; Availability of Records, Applications , Petitions, and Other Documents, Evidence and Processing:



Demonstrating eligibility at time of filing. An applicant or petitioner must establish that he or she is eligible for the requested benefit at the time of filing the application or petition. All required application or petition forms must be properly completed and filed with any initial evidence required by applicable regulations and/or the form's instructions. Any evidence submitted in connection with the application or petition is incorporated into and considered part of the relating application or petition.


 


In the I-140 context, where this issue frequently arises, the BIA has consistently held that for the petition to be approvable, inter alia, the beneficiary must possess all required qualifications. For the petition to be approvable at the time of Adjustment it must have been approvable on the date it was filed, and the labor certification must also have been approvable when filed.  Except for limited circumstances, such as the closure of the petitioning business or a finding of fraud, subsequent intervening events do not negate the presumption that such an employment-based petition was approvable when filed.  See, In re: Sadruddin Tajuddin Ladhani (a.k.a. Sadruddin Ladhani), A96 114 076, (Atlanta, GA, Aug. 09, 2008).  Also, see, Matter of Katigbak, 14 I&N Dec. 45 (R.C. 1971); Matter of Great Wall, 16 I&N Dec. 142 (Acting R.C. 1977); Matter of Wing's Tea House, 16 I&N Dec. 158 (Acting R.C. 1977),  Matter of Riero, supra, at 268-69; Matter of Ahmad, 15 I &N. Dec. 81, 82-83 (BIA 1974); see also 20 C.F.R. 656.30(d) (''after issuance, a labor certification is subject to invalidation by the DHS or by a Consul of the Department of State upon a determination, made in accordance with those agencies' procedures or by a court, of fraud or willful misrepresentation of a material fact involving the labor certification application.'').   [NOTE: A showing of continuing ability to pay the wage offered must also be made at the time of Adjustment.]


The approvable when filed rule applies in the context of a wide variety of applications and visa petitions, and is most specifically interpreted in conjunction with Adjustment under Sec. 245(i).  The BIA found in the Ladhani matter:


To be ''properly filed,'' the application must have been ''accepted pursuant to the regulations of the Secretary of Labor.'' See 8 C.F.R. 245.10(a)(2)(ii); see also 20 C.F.R. 656.17, 656.21; 8 C.F.R. 103.2(a). An application for labor certification is approvable when filed if it was (1) properly filed, (2) meritorious in fact, and (3) not frivolous. See 8 C.F.R. 1245.10(a)(3). This determination ''will be made based on the circumstances that existed at the time the qualifying petition or application was filed.'' See 8 C.F.R. 1245.10(a)(3); see, e.g., Matter of Riero, 24 I&N Dec. 267, 268-69 (BIA 2007) (respondent has the burden to show that marriage was bona fide and, thus, the visa petition was approvable when filed); Matter of Wang, 23 I&N Dec. 924, 933 (BIA 2006).
 


Even if, in arguendo, the requirement for a complete itinerary were consistent with present regulations and rules, it is unreasonable for the agency to apply its rules in such a way as to close the door at first application, making it impossible for some petitioners to place first-time beneficiaries at known, initial job sites on the same basis as other petitioners.  Regulations and procedures must be rationally construed so as to carry out the purpose of the statute.  In the H-1B context, this is anticipated by regulations that allow for and mandate the filing of an amended petition in the event of material change in employment, such as reassignment to a different long-term job site. 


The agency must make reasonable accommodations to keep the door to initial petitions open - there is no valid public policy reason to close off initial access to the process to employees with shorter-term assignments, when petitions can be amended if assignments change.  A petitioner may file amended petitions and/or LCAs as needed.  As AILA author Laurie Grossman has observed, interpretation of these issues is fluid, and the agency need not change its positions radically to bring its practices back into alignment with regulation[17]:


What types of changes in an alien's employment are "material," giving rise to the requirement that an amended petition be filed? When does a change in the petitioner's identity result in the creation of a "new employer" that must then file a new petition? Which agencies must approve the change?


The answers to these and related questions involving "changed circumstances" continue to elude employers, aliens and their representatives,  as the many types of change possible make "bright-line" tests infeasible. As a result, the government agencies involved in the oversight of nonimmigrant workers have largely addressed such issues on a case-by-case basis, issuing advisory opinions that may be vague or conflicting and by which they are not bound. Ultimately, the responsibility for the determination is placed squarely on the shoulders of the petitioner.








[1] See, Jennifer Arlen, "Beyond Master-Servant, A Critique of Vicarious Liability",  NYU, Law and  Economics Research Paper No. 04-028; and USC Law and Economics Research Paper No. 04-28 , EXPLORING TORT LAW, Stuart Madden, ed., Cambridge University Press, 2005http://papers.ssrn.com/sol3/papers.cfm?abstract_id=624564  


 




[2] See,  Stephen F. Matthews and Timothy W. Triplett, "Liability of Farm Employers", Department of Agricultural Economics, University of Missouri-Columbia,   http://aglaw.missouri.edu/farmemployerliability.htm




[3] See,  Wikipedia, http://en.wikipedia.org/wiki/Independent_contractor




[4] See, IRS, Ibid.





[6] Interpretation of Itinerary in H-1B Petitions (12/25/1995)
December 29, 1995 memo from Michael L. Aytes, Assistant Commissioner (INS) regarding the interpretation of the term 'Itinerary' as it relates to the H-1B nonimmigrant classification.



[7]  INS on Supporting Documentation for H-1B Petitions (11/13/1995)
The following is a November 13, 1995 memo from Louis D. Crocetti, Jr., Associate Commissioner (INS) regarding supporting documentation for H-1B petitions.  Cite as "AILA InfoNet Doc. No. 95111390 (posted Nov. 13, 1995)"

 


 




[8]  USCIS Memo Implementing L-1 Reform Act of 2004 , AILA Doc. No. 05080566, at 6.




[9]  Among the H-1B restriction bills defeated in the 108th Congress, H.R. 2688, Amendment to Immigration and Nationality Act, a bill introduced on 7/9/03 to repeal H1-B visas and related authorities.  Several 2003-4 bills (S. 2094, H.R. 3820, H.R. 3888, H.R. 3911) would have banned companies that engage in certain off-shoring activities from receiving some federal assistance or federal and state contracts. Yet another bill that year, H.R. 2849, a companion bill to Grassley-Durbin, was intended to impose a labor market test on H-1B and L-1 visas.  A Senate Bill, S. 31, introduced but failed to pass in the 110th Congress, would have, inter alia, banned H-1B outsourcing across state lines and permitted USCIS to initiate and lodge a noncompliance complaint with DOL. 




[10] It is the normal practice of USCIS to issue a memo whenever it desires to make a circuit decision apply as nationwide policy.  See, e.g., USCIS Applies Akhtar Nationally , AILA Doc. No. 05020460.  Nonetheless, to the best of our knowledge, this step was not taken pursuant to the Defensor decision.




[11]  See, Federal Register/Vol. 63, No. 107/Thursday, June 4, 1998/Proposed Rules/pp. 30419-23, http://ftp.resource.org/gpo.gov/register/1998/1998_30421.pdf.




[12]    See, CHEVRON U.S.A., INC. V. NRDC, 467 U. S. 837, 842-45 (1984) .  




[13]    See, UNITED STATES V. MEAD CORP., 533 U.S. 218 (2001) 185 F.3d 1304, op. cit. , Skidmore v. Swift & Co., 323 U.S. 134 (1944).






[16]  See, Federal Register/Vol. 63, No. 107/Thursday, June 4, 1998/Proposed Rules/pp. 30419-23, http://ftp.resource.org/gpo.gov/register/1998/1998_30421.pdf.




[17]  See, Lurie Grossman, AILA Publications, Employment Changes and H-1Bs: Guiding Principles and Recent Developments, http://www.wildesweinberg.com/uploadedfiles/AILA_H1_bs.pdf


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