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Rami Fakhoury on IT Immigration

The Fight Back Book: Chapter I - H1B: Part A,B

Rating: 146 votes, 5.00 average.

Rami Fakhoury and Mark Levey


Copyright@2010 Fakhoury Law Group/ Rami Fakhoury


 


H-1B 


A.   OVERVIEW  


 


1.  USCIS Becomes a Wannabe Intelligence and Law Enforcement Agency


 


In recent years, USCIS routinely runs all applications from outsourcing companies through a computerized data base and analysis platform, the Fraud Detection and National Security Data System (FDNS-DS), and shares that information with a wide variety of federal agencies.  Business petitions and supporting documents are compared with data on file from tax returns, driver's licenses, and private open source data purchased from credit reporting agencies.  The system uses analytical tools to alerts examiners to patterns of suspected fraud.  An application that displays red flags of fraud is automatically referred to ICE for potential field investigation that can involve multi-agency Benefits Fraud Task Forces (BFTFs). 


ICE also conducts follow-up investigations and so-called Random Audits of selected applications.  Most applicants are unaware that ICE has the ability to track the location of its non-immigrant employees in near real-time.  Where compliance problems are detected - such as benching or long-term work assignments at locations for which amended LCAs and petitions have not been filed - and employers have lied or misrepresented material facts, the full weight of federal prosecution is applied.  As in the Vision Systems Group case, enhanced enforcement has resulted in multi-state round-ups and trial of company employees and their executives.  The rules that companies employing non-immigrant H-1B workers must follow to remain in compliance are discussed, below.


The impact of this is not restricted to a few bad corporate actors.  All companies that seek immigration benefits are today subjected to extremely intrusive demands for disclosure of documents about company business processes, personnel, products, and in select cases, information about third-party customers. Companies that have contracts to provide on-site services to clients must now provide USCIS a copy of those contracts, and provide further information about them, including names and job titles of supervisors working for the client.  Many clients, understandably, are reluctant to share such privileged information with agencies involved in aggressive compliance and enforcement activities, and they also fear law suits from their own employees and third-party companies whose privacy and confidences may be put at risk. 


 


2.  H-1B and L-1 Strategies


 


This policy has attended serious economic, competitive and reputational damages to targeted industries, especially Indian IT consulting and foreign-based financial firms that receive what they widely believe is particularly unfavorable - indeed, discriminatory -- treatment by USCIS.   The first several chapters of this book detail how H-1B petitions are improperly adjudicated with harmful consequences, and offer companies and individual victims a host of legal strategies and litigation remedies. 


 While it carried out an aggressive mission to harden the borders, DHS made America a far more difficult, risky and ultimately less secure place to do business, particularly for certain types of businesses involved in international trade in services.   In the 1990s, the U.S. was the prime-mover of the World Trade Organization (WTO), and signed and ratified a series of treaties and a set of rules related to the Global Agreement on Trade in Services (GATS).  Parts of the GATS Agreements, Modes 3 and 4, correspond with (and, arguably, govern) the terms and restrictions the U.S. can now place on the L-1 Intracompany visa and H-1B Temporary Specialty Worker visa categories.  DHS and DOL practices transgress WTO rules that forbid undue restrictions and unfavorable conditions imposed on foreign company workers and service providers.  


These outcomes weren't just the result of a clumsy bureaucracy struggling with a difficult, conflicted mission.  The anti-terrorism and anti-fraud mandates appear to have been widely misused at the agency level to carry out a policy agenda unrelated to national security and prevention of actual benefits fraud.  H-1B workers are widely blamed for taking what is viewed as American jobs, and USCIS has made it as difficult for outsourcing companies to legally employ non-immigrant workers as it can.  This lends support to charges of discrimination on account of race and nationality.  Three out of four nonimmigrant visas issued for systems analysts and programmers are for Asian countries, primarily India. [1]  In assessing cases against government policies, the courts look to see whether the effects match the stated intent, as well as whether there is a legitimate governmental interest at stake.  This sort of discriminatory policy that particularly impacts certain nationalities in ways that are contrary to law is clearly not legitimate, and will not withstand judicial scrutiny. 


As this book will show at length, the dicta the agencies have developed to limit market access by foreign IT consultants are neither rational nor consistent with Congressional intent.  They impermissibly deviate from the agency's own regulations, as well as misapplying a mandate to deny H-1B outsourcing that does not exist in statute.   In addition, they violate the rights of U.S. firms who have a cognizable interest in benefits available under law, and guaranteed by Treaty.  If USCIS does not move on its own to abandon or modify its stance on this and related issues, there is good reason to expect relief may be available in the courts.


The main reason this sort of improper rulemaking has gone largely unchallenged in recent years is fear in an extraordinary era of draconian government power over foreign entities, an era that may be passing. After 9/11, employers and immigration lawyers groups were understandably and justifiably afraid that they, too, would be targeted for retaliatory action. 


Indeed, the immigration bar has started to fight back, as occurred in 2008, after the Labor Department moved to audit all of the PERM labor certifications filed by Fragomen, Del Rey, Bernsen & Loewy, a prominent and respected national immigration firm that is also the largest PERM filer with hundreds of pending cases.  FDB&L is not shy about filing law suits against the government, and it often wins the cases it files, and, in fact, the Labor Department backed down. [2]  


These flawed agency policies have done a great amount of economic damage, and there is a large class of aggrieved parties with standing in the courts.  Dozens, perhaps hundreds, of companies have suffered serious economic, competitive, and reputational losses, particularly in targeted industries, such as Indian IT consulting and foreign-based financial firms that receive discriminatory treatment by USCIS and other agencies.   Should there be class-action suit against the agencies on these and related issues, the class could be both sizable and formidable, including large multinationals and numerous small entities.


The purpose here is to provide legal and practical responses to arbitrary and capricious USCIS actions, particularly the wholesale issuance of RFEs and denials that run contrary to law and published regulations.  This book further includes litigation strategies, which all petitioning companies can use to deal with problems USCIS has created in its mismanagement of business immigration benefits, especially the H-1B and L-1 programs. 


 In addition to USCIS, the Department of Labor has also seriously mismanaged its transition to a partially-automated PERM labor certification process.  US Department of Labor, which also reserves some jurisdiction for administering the Labor Condition Attestation (LCA) component of the H-1B process (an important jurisdictional point, as will become clear below), has long had problems interpreting changes in law in the context of rapidly evolving industrial and technological practices.  A third federal agency with statutory jurisdiction over immigration, the US State Department, also exhibits its share of administrative problems, particularly in its heavy-handed and inequitable application of powers to deny applications on various broad grounds and to return approved visa petitions to USCIS for revocation. 


USCIS has had particular problems interpreting threshold regulatory definitions of the terms, "U.S. employer", "employer-employee relationship", "control", "specialty occupation", and "specialized knowledge" in the context of the widening industry practices of outsourcing, along with other forms of the dual-tier global business model, including outsourcing of business processes (BPO), such as information (IPO), legal services (LPO), and financial processes (FPO) outsourcing.  It is not just one industry that is damaged by hostile USCIS policies, it is several, along with other firms and individuals adversely effected.  Not only do the agencies damage and misconstrue the regulatory framework, they also have done manifest damage to their customers, who are "aggrieved" parties under the APA framework - that makes this problem ripe for litigation, as these chapters make plain.


Under the Defensor and Neufeld dicta, petitions received from a discrete category of companies are treated differently from others operating according to a different business model.  Petitions received where beneficiaries are placed at client sites that are not approved without additional requirements for documentation in excess of what is required by existing regulation.  Companies that place foreign employees at customer sites must provide complete itineraries and contracts with end-user clients, something which the agency has not consistently required and does not require of "brick and mortar" companies that do not provide outsourcing services.  In some cases, USCIS demands that end-user clients specify the names of supervisory employees, and details about other business partners and operations, proprietary information which many third-party clients understandably refuse to provide.  This puts these companies that employ H-1B workers at a grave disadvantage relative to competitors.   Similarly intrusive demands for client contracts and details about their clients are made of any L-1B petitioner whose employee may be assigned to client sites.  This effectively walls off both the H-1B and    L-1B programs from U.S. companies that employ the dual-tier staffing model in use around the world.   This puts such I.T. consulting companies still operating inside the U.S. at a huge competitive disadvantage, and many have responded by simply expanding operations abroad while closing down offices and functions in this country.  These agency practices are neither good administrative procedure nor good public policy.


To further compound the damage, USCIS has recently revoked a growing number of approved for H-1B and L-1 petitions for selected IT consulting companies.  This has been done without citing specific wrongdoing, fraud, or other serious violation of status by the company or its nonimmigrant employees.   The illegality of this practice is also discussed in detail in the H-1B section that follows.  


USCIS has misapplied law and selectively cherry-picked its own regulations to effectively forbid many  H-1B visas for IT outsourcing companies, something which Congress has explicitly refused to do, defeating repeated bills that attempt to outlaw H-1B outsourcing.  Despite the manifest intention of Congress not to disturb the practice, and agency regulations that expressly permit employee assignments at client sites, USCIS has taken the position in the Defensor dicta that companies that outsource are not "U.S. employers" for H-1B purposes and treats them as agents rather than as employers, a practice that is carried over in effect into the Neufeld directives.   For reasons that will be explained, that places additional evidentiary burdens on these companies that in many cases are impossible to meet.  As sections below makes clear, that has an inherently discriminatory effect.  Finally, that brings us to the question: how would the courts rule if presented squarely with these issues?  If the decision were consistent with the best in American law, to paraphrase a famous line from the Supreme Court's 1886 Yick Wo decision, we should expect to read something like the following in a decision from the bench in the 21st Century:


The effect of the execution of this ordinance in the manner indicated in the record would seem to be necessarily to close up the many Chinese laundries now existing, or compel their owners to pull down their present buildings and reconstruct of brick or stone, or to drive them outside the city and county of San Francisco to the adjoining counties, beyond the convenient reach of customers, either of which results would be little short of absolute confiscation of the large amount of property shown to be now, and to have been for a long time, invested in these occupations. If this would not be depriving such parties of their property without due process of law, it would be difficult to say what would effect that prohibited result. The necessary tendency, if not the specific purpose, of this ordinance, and of enforcing it in the manner indicated in the record, is to drive out of business all the numerous small laundries, especially those owned by Chinese, and give a monopoly of the business to the large institutions established and carried on by means of large associated Caucasian capital. If the facts appearing on the face [p363] of the ordinance, on the petition and return, and admitted in the case and shown by the notorious public and municipal history of the times indicate a purpose to drive out the Chinese laundrymen, and not merely to regulate the business for the public safety, does it not disclose a case of violation of the provisions of the Fourteenth Amendment to the National Constitution, and of the treaty between the United States and China, in more than one particular? . . . If this means prohibition of the occupation and destruction of the business and property of the Chinese laundrymen in San Francisco -- and it seems to us this must be the effect of executing the ordinance -- and not merely the proper regulation of the business, then there is discrimination and a violation of other highly important rights secured by the Fourteenth Amendment and the treaty. That it does mean prohibition as to the Chinese it seems to us must be apparent to every citizen of San Francisco who has been here long enough to be familiar with the cause of an active and aggressive branch of public opinion and of public notorious events. Can a court be blind to what must be necessarily known to every intelligent person in the State?


H-1B
B.  HISTORY


 


HISTORICAL HIGHLIGHTS AND LEGISLATIVE HISTORY OF THE H-1B PROGRAM


1952 - The Immigration and Nationality Act of 1952, the McCarren-Walter Act, established the H-1 program, which allowed the US Attorney General "after consultation with appropriate agencies of the Government" to import needed foreign workers.[3] 


This law reversed the 1885 Alien Contract Law prohibition against importing contract laborers into the U.S. and expanded the classes of non-immigrants exempt from national immigration quotas.


The admission of temporary workers during labor shortages was authorized. H-1 non-immigrants were initially described as aliens of "distinguished merit and ability" who were filling positions that were temporary and had to maintain a foreign residence.[4]



1978 - [Significant federal court decision] [Raungswang v INS, 591 F.2d 39 (9th Cir. 1978)[5], little remarked upon at the time outside of the context of investor visa cases in the 9th Circuit, this case and those that followed it, Patel[6],  etc. , established the important principle that INS does not have unfettered discretion to apply new eligibility requirements by adjudications without publishing new regulations]  In Raungswang,  the Ninth Circuit held that legacy INS had abused its discretion in denying the investor visa petition by adding 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 on investor visa immigrants beyond those expressly stated in the then pertaining regulations.  The Circuit found informal rulemaking in that instance to be impermissible.


 



1990 -  The Immigration Act of 1990, P.L. 101-649, 104 Stat. 4978 (1990)(herein after "1990 Act")  established the main features of H-1B visa as it is known today. 205 of P.L. 101-649 replaced "distinguished merit and ability" with the present "specialty occupation" definition. That amendment also imposed labor attestation requirements and the annual numerical limit of 65,000 on H-1B visas. H-1B workers are issued for an initial 3-year period of stay with a possible extension for a total of six years. IRCA specified that H-1B workers must hold at least a bachelor's degree or its equivalent in a specialty field. The Act also required employers to pay H-1B workers the prevailing wage. The foreign residence requirement was eliminated, and "dual intent" recognized for immigrant visa purposes.[7]


In addition, the 1990 Act created three other new visa categories for skilled temporary workers--the H-1A visa for nurses and O and P visas for outstanding ability and prominent scientists, educators, artists, athletes and entertainers.  A cap of 25,000 visas per year was placed on the annual number of newly created "P visas" available for foreign workers in the entertainment industry.[8]


 


1995 -  [A. Significant Agency Interpretation] Interpretation of Itinerary in H-1B Petitions (12/25/1995) Memo from Michael L. Aytes, Assistant Commissioner (INS) regarding the interpretation of the term 'Itinerary' as it relates to the H-1B.  Directs that full itinerary should not normally be required from companies that assign workers to client sites.


INS on Supporting Documentation for H-1B Petitions (11/13/1995) memo from Louis D. Crocetti, Jr., Associate Commissioner (INS) regarding H-1B petition supporting documentation.  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.

[B. Significant treaty]  The General Agreement on Trade in Services (GATS), a treaty of the World Trade Organization (WTO), is ratified as a result of the 1995 Uruguay Round of global trade negotiations. The treaty extends the multilateral trading system to the service sector, parallel to the General Agreement of Tariffs and Trade (GATT) system for trade in goods and merchandise.[9]


All members of the WTO, including the U.S. are signatories to the GATS.   The GATS system is divided into 4 Modes, or means by which trade in services takes place across borders. Mode 3 liberalizes the provision of services by firms and businesses operating internationally with a "commercial presence" in other countries, and Mode 4 guarantees the free movement across borders of individuals ("natural persons") to perform temporary services in foreign jurisdictions. 


Mode 3 corresponds loosely with the U.S. L-visa category for Intracompany Transferees while Mode 4 applies to H-1B temporary workers.  The GATS agreement forbids "national treatment" favoring any country's own service providers and outlaws regulatory "barriers to entry" that have the effect of blocking access to labor markets or interfering with the work of service providers.   Negotiations on the removal of remaining limitations and "emergency" barriers to implementation and details of this treaty are ongoing.  Since its adoption, the US and EU have withdrawn under Article XXI in a closely limited way, modifying their commitments under provisions related to Mode 1 cross-border provision of on-line services.  In 2006, Congress passed a law outlawing on-line gambling that WTO had ruled adversely affected interests in Antigua, offending GATS[10].   


1998 - The American Competitiveness and Workforce Improvement Act of 1998 (Title IV of P.L. 105-277) added new attestation requirements for recruitment and layoff  protections, but only for firms that are "H-1B dependent" (in general, at least 15% of workforce, but the definition varies according to a range by the size of the employer).  These attestations sunsetted at the end of FY 2001 (but were re-imposed in 2004 as part of P.L. 108-447, see below).   Filers found to be "Willful Violators" are another group subject to these attestation requirements, and are subject to random audits by USDOL. The House version of the 1998 bill coming out of the Judiciary Committee contained a provision that would have further restricted so-called job-shops, but that was removed before the bill came to a vote.[11]


The Labor Department enforces all aspects of the attestation program impacted H-1 dependent and willful violators except in instances where an American worker claims that a job should have been offered to him or her instead of an H-1B nonimmigrant. In such cases, an arbitrator appointed by the Federal Mediation and Conciliation Service will decide the issue. [Footnote 107: ACWIA Sec. 413(b) (codified at INA sec. 212(n)(5)).][12]


The Labor Department is able to investigate an employer using the H-1B program without having received a complaint from an aggrieved party in certain circumstances where it receives specific credible information that provides reasonable cause to believe that the employer has committed a willful failure to meet conditions of the H-1B program, has shown a pattern or practice of failing to meet the conditions, or has substantially failed to meet the conditions in a way that affects multiple employees.  DOL has interpreted these provisions as authorizing investigations based upon profiling.


All firms have to offer H-1Bs benefits as well as wages comparable to their U.S. workers. Education and training for U.S. workers is funded by a $500 fee paid by the employer for each H-1B worker that is hired.


H-1B numbers for bachelor's degree holders were temporarily increased from 115,000 in both FY1999 and FY2000, 107,500 in FY2001, and returned to 65,000 in FY2002[13]


 

1998 - [significant agency interpretation] Proposed H-1B rules published.[14]  A regulatory change was proposed regarding the potential placement of a beneficiary at multiple client sites, the regulatory change proposed changes at 214.2(h)(2)(i)(B) to require: 

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]

Final Regulations pursuant to this proposed rule-making are never published.  However, USCIS will later selectively apply the elevated requirement for a "complete itinerary with the dates and locations of the services" to be performed.  In actual agency practice, however, the allowance for a more generalized description of "any proposed or possible employment  for the period of time covered by the petition" was dropped, but without publishing final rules, as would normally be required under the APA, Secs. 552, 553.   [See, related, Patel v. Immigration & Naturalization Service, 638 F.2d 1199, 1980 U.S. App. LEXIS 12970 (9th Cir. 1980), op. cit.,  Raungswang v INS, 591 F.2d 39 (9th Cir. 1978)]


2000 - [A. The American Competitiveness in the Twenty-First Century Act of 2000 (ACT-21) (P.L. 106-313) signed on October 17 added an additional 80,000 new H-1B visas for FY2000, 87,500 visas for FY2001, and 130,000 visas for FY2002. It also retroactively authorized additional numbers for FY1999 to cover the excess petitions  INS approved by error that year.  ACT-21 excluded from the new cap all H-1B non-immigrants who work for universities and nonprofit research centers, and made the visas of H-1B holders portable so they could immediately start work for new U.S. employers  That law also temporarily eliminated the per-country ceilings for employment-based immigrants. Separate legislation raised the DOL retraining fee from $500 to $1,000.]


[B. Significant Court Decision] On December , 2000, a panel of the Fifth Circuit Court of Appeals hands down a decision that will eventually be adopted by USCIS as a nationwide de facto rule or binding norm to support denial of H-1B petitions for companies in outsourcing industries.  In  Defensor v Meissner (2000, CA5 Miss) 201 F3d 384  the court asserts that in outsourcing cases, the petitioner is only a "token" employer, and thus the petitioner's requirement for a bachelor's degree is irrelevant to the determination of whether the position offered is a "specialty occupation", as required by the regulations.  Without publishing this rule as a final regulation, USCIS uses Defensor as dicta to require production of contracts and other documents between the petitioner and its third-party clients, something which many companies, wary of regulatory compliance risks, refuse to voluntarily disclose.  This is viewed by global consulting firms as a discriminatory measure to curtail their U.S. consulting operations, illegal under U.S law, and as a protectionist measure violating WTO GATS agreements.


 


2004 - Title IV of P.L. 108-447 (H.R. 4818), the Consolidated Appropriations Act for FY2005, incorporated many provisions of the L-1 and H-1B Reform Act of 2004 as part of the omnibus spending bill passed in the last hours of the session.  The amendment was adopted in the wake of a report released by DHS Inspector General, Review of Vulnerabilities and Potential Abuses of the L-1 Visa Program, that focused on antecdotal allegations that L-1 is afflicted with fraud.  It echoed complaints from USCIS examiners frustrated that they lacked legal means to deny the petitions filed by Indian-based outsourcing companies to place workers at U.S. client sites, which they characterized as an abuse without citing any statutory basis for that allegation.[15] 


Notably, P.L. 109-447 outlawed outsourcing of L-1B workers, but did not apply the same provision in the draft bill to H-1B.[16]  However, it reinstated an attestation requirement regarding non-displacement of U.S.workers to "willful violators" and "H-1B-dependent" employers, granting USCIS authorization to investigate complaints from US workers allegedly displaced by such employers in contravention of the law.  That Act also reauthorized the Secretary of Labor to investigate an employer's failure to meet LCA conditions, and to levy civil fines and disbar from the H-1B program employers found to be willful violators or "pattern and practice" violations.  While enforcement of the LCA requirements was reserved to DOL, USCIS received a mandate to withhold approval of H-1B petitions from companies DOL disbars. The Act also imposed a new fee ranging from $750 to $1500 for fraud prevention detection on H-1B or L petitioners for use in combating fraud and carrying out labor attestation enforcement activities.  USCIS establishes the Fraud Detection and National Security Database System (FDNS-DS), a computerized analysis and referral system, at Service Centers to scan several categories of petitions, including H-1B and L-1.  It exempted from the H-1B cap up to 20,000 holders of a master's or higher degree.


 


2005 - REAL ID Act (The Act is a rider, formally Division B of H.R. 1268, the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005, passed without hearings attached to a "must-pass" Bill).   The 2005 REAL ID Act[17] reinforced and clarified the extent of jurisdictional barriers put in place by the AEDPA and IRRIRA laws of 1995.  The second subpart of  section 1252 (a)(2)(B)(ii) restricts federal court jurisdiction over "any other decision or action ... the authority for which is specified under this title [Title II] to be in the discretion or the Attorney General or the Secretary of Homeland Security." It amended the scope of 8 U.S.C. 242(a)(2)(B) so that it now applies "regardless of whether the [discretionary] judgment, decision, or action is made in removal proceedings."  That language effectively precludes review of discretionary determinations in all I-129 non-immigrant visa petitions along with I-140 immigrant visa petitions.


Even in the case of removal proceedings falling under the REAL ID Act, in which Congress expressly imposed its desire that discretionary decisions pertaining to certain categories of aliens be held as unreviewable, REAL ID stipulated that Courts of Appeal may continue to extend review for basic constitutional issues, even for criminal alien removals, a function which the courts in fact continue to often perform.  The amendment expressly permits continued "review of constitutional claims or questions of law raised upon a petition for review filed with an appropriate court of appeals in accordance with this section." See, 8 USC 1252(a)(2)(D); 8 U.S.C. 1252(a)(1) and (b)(9)


[Significant Agency interpretation] "Yates Memo" clarifies 2004 directive regarding summary denial without issuance of an RFE or NOID for petitions received that provide documents establishing prima facie evidence of ineligibility for the benefit sought.[18]


 


2007 -   Senators Grassley and Durbin reintroduced their perennial H-1B bill banning outsourcing and requiring recruitment of U.S. workers and a demonstrated labor shortage before any company can petition for an H-1B.  The bill seeks other major changes, summarized by Sen. Durbin:


 



  • The Durbin-Grassley bill would prohibit employers from hiring H-1B employees who are then outsourced to other companies. This is a method that some companies use "to evade restrictions on hiring H-1Bs."


Currently, so-called "job shops" hire large numbers of foreign workers on H-1B visas for short time periods to train and then outsource these workers offshore.



  • The Durbin-Grassley bill would prohibit companies from hiring H-1B employees if they employ more than 50 people and more than 50% of their employees are H-1B visa holders.

  • The Durbin-Grassley bill would give DOL the ability to conduct random audits of any company that uses the H-1B program, and would require DOL to conduct annual audits of companies with more than 100 employees that have 15% or more of those workers on H-1B visas.

  • The Durbin-Grassley bill would give DOL authority to review employers' H-1B applications for "clear indicators of fraud or misrepresentation of material fact." Currently, DOL is only authorized to review applications for "completeness and obvious inaccuracies."

  • The Durbin-Grassley bill would give DOL 14 days to review H-1B applications, instead of the seven days currently permitted.

  • The Durbin-Grassley bill would give DOL more authority to conduct employer investigations and streamline the investigative process by, among other things, permitting DOL to initiate its own investigations and eliminating the requirement that the DOL Secretary personally authorize an investigation.

  • The Durbin-Grassley bill would require the Department of Homeland Security (DHS) to share with DOL any information in H-1B visa applications indicating that an H-1B employer is not complying with program requirements."


Durbin additionally charges that, "Currently, so-called "job shops" hire large numbers of foreign workers on H-1B visas for short time periods to train and then outsource these workers offshore."


Critics of H-1B often cite figures that showed that in FY 2006, the US affiliates of India-based outsourcing firms where the leading users of H-1B specialty worker visas[19] as well of the L-1 category.  [See Figure, below]  While the Grassley-Durbin H-1B measure did not pass, USCIS and ICE enforcement measures carried out much of the mandate through administrative measures that restricted H-1B usage by  IT consulting companies, which particularly impacted India-based companies, as can be seen below: 


 


 




























































































































































Top 20 L-1 Visa Users



Rank  



Company  



Headquarters  



Primary Employment Base  



L-1 Visa Received  



1



Tata



Mumbai, India



India



4887



2



Cognizant Technology Solutions



New Jersey



India



3520



3



IBM



Armonk, New York



USA



1237*



4



Satyam



Hyderabad, India



India



950



5



Wipro



Bangalore, India



India



839



6



Hindustan Computers



Noida, India



India



511



7



Deloitte & Touche LLP



New York, New York



USA



512



8



Patni Computer Systems



Mumbai, India



India



440



9



Intel Corporation



Santa Clara, California



USA



392



10



Kanbay



Chicago, Pune, Hyderabad, and Chennai



India



329



11



Honeywell International



Morristown, New Jersey



USA



320



12



Hewlett Packard



Palo Alto, California



USA



316



13



Infosys



Bangalore, India



India



294



14



Accenture



Hamilton, Bermuda



India



291



15



Caritor



San Ramon, California



India



231



16



Schlumberger Technology Corp



Houston, Texas



USA



214



17



Oracle Corporation



Redwood Shores, California



USA



176



18



Syntel



Troy, Michigan



India



171



19



PricewaterhouseCoopers



New York, New York



USA



168



20



Microsoft



Redmond, Washington



USA



168



(source: list published by the US Senators Richard Durbin and Chuck Grassley on June 26, 2007); *A figure later challenged by IBM, who said they only had 411 L-1 visas in fiscal 2006.[1]





























































































Top Ten Companies Receiving H-1B's[20]



Rank



Company



Headquarters



Primary Employment Base



H-1Bs received 2006



1



Infosys



Bangalore, Karnataka, India



India



4,108



2



Wipro



Bangalore, Karnataka, India



India



4,107



3



Microsoft



Redmond, Washington



USA



3,517



4



Tata Consultancy Services



Mumbai, Maharashtra, India



India



3,046



5



Satyam Computer Services



Hyderabad, Andhra Pradesh, India



India



2,880



6



Cognizant



Teaneck, New Jersey[44]



India



2,226



7



Patni Computer Systems



Mumbai, Maharashtra, India



India



1,391



8



IBM



Armonk, New York



USA



1,130



9



Oracle Corporation



Redwood Shores, California



USA



1,022



10



Larsen & Toubro Infotech



Mumbai, Maharashtra, India



India



947



 



 



 



 



 



 


 


 


The sponsors of the Durbin-Grassley Act repeat allegations that the H-1B program has become an offshoring conduit for these same firms.   Nevertheless, these measures have repeatedly failed over several years to attract enough votes in the Senate to obtain passage.  It is clearly and repeatedly not the intention of Congress to ban H-1B outsourcing, but DHS appears to have proceeded on its own initiative to effectively carry out its own mandate to block these firms from the H-1B program.  The de facto policies put in place to deny H-1B petitions are specifically discussed in detail at Sec.  1, and the litigation responses are laid out in Sec. 2, below. 


There are systematic irregularities in the way that FDNS works with other agencies to collect and distribute information about companies that file H-1B petitions.  A study of the FDNS-DS fraud detection system and  Document and Benefits Fraud Task Forces (DBFTFs) in operation since 2004 shows that ICE has already implemented by de facto measures provisions in the failed Grassley-Durbin bills.  While DOL is forbidden by law from initiating LCA investigations pursuant to information contained in H-1B filings, nonetheless, ICE and USCIS share with DOL information in H-1B visa applications indicating that an H-1B employer is not complying with program requirements, and DHS investigates wage and hour violations that are strictly under the jurisdiction of DOL.   


 


2008 -   H.R.5630: Innovation Employment Act was introduced but failed to pass the House.  That measure would have doubled H-1B numbers, but like Durbin-Grassley sought to ban outsourcing.  The legislation would have also prohibited companies with more than 50 employees that have more than half of their staff as H-1B workers from hiring additional H-1Bs, and allowed DOL to deny LCAs for perceived indicators of fraud.


A September 2008  U.S. CITIZENSHIP AND IMMIGRATION SERVICES H-1B Benefit Fraud and Compliance Assessment  alleged that more than 20 percent of the H-1B cases audited showed evidence of fraud or substantial technical violations.[21]  The report used a methodology of collecting data from cases that were already under investigation at USCIS Service Centers rather than drawing upon a random sample.


USCIS uses the FDNS-DS data analysis system to identify and refer suspected fraud cases to ICE for investigation.   Documents related to the FDNS-DS show that the fraud detection criteria includes factors that point to outsourcing firms: the business was established less than 10 years, and company seeks to place employee at client sites without end-user contracts.  In general, the criteria used to select the sample population was weighted toward smaller, newer companies, foreign-based outsourcing companies, and companies that already had known compliance problems.  Not surprisingly, this study showed that H-1B has a fraud problem among those groups.  Not surprisingly,     H-1B opponents used this result to bolster their case to bar such firms from receiving these visas to shut down the U.S. operations of Indian consulting companies and put them out of business.  [See Sec. ____]


2009 - On Feb. 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 ("stimulus bill"), Public Law 111-5.  Section 1661 of the ARRA incorporates the Employ American Workers Act ("EAWA") by Senators Sanders (I-Vt.) and Grassley (R-Iowa) to limit certain banks and other financial institutions from hiring H-1B workers unless they had offered positions to equally- or better-qualified US workers, and to prevent banks from hiring H-1B workers in occupations in which they had laid off US workers.


On April 1, USCIS opened its annual lottery for H-1B visa applications.  In several previous years, the annual allotment for bachelor's degree-holders were "sold-out" in the first few days that cases were accepted, and applications received far exceeded the cap.  This year, in the midst of the economic crisis that has devastated the bottom-lines of IT consulting industries both in the U.S. and abroad, neither the regular cap of 65,000 nor the additional allotment of 20,000 visas for holders of Masters degrees or higher still has not been reached several months later.  While the degree of linkage is not yet well understood, this tends to disprove allegations made that H-1B usage is directly tied to off-shoring.  Recent reports[22] indicate that despite the general economic downturn, little reduction in offshoring is expected in 2009, as U.S. companies seek to pare costs to the bone. 



























































































































































































(2009 Nonimmigrant Flow Report, DHS Office of Immigration Statistics (April, 2010), Table 4) http://www.ilw.com/immigrationdaily/news/2010,0430-nonimmigrant.pdf


H1B and L1 Admissions by Country of Citizenship: Fiscal Years 2007 to 2009



2009



2008



2007



Country of citizenship



Number



Percent



Number



Percent



Number



Percent



H1B Admissions, Workers in Specialty Occupations



Total . . . . . . . . . . . . . . .



339,243



100.0



409,619



100.0



461,730



100.0



India . . . . . . . . . . . . . . . .



123,002



36.3



154,726



37.8



157,613



34.1



Canada . . . . . . . . . . . . . .



22,156



6.5



23,312



5.7



26,209



5.7



United Kingdom . . . . . . . .



14,610



4.3



19,209



4.7



25,507



5.5



Mexico . . . . . . . . . . . . . .



14,352



4.2



16,382



4.0



18,165



3.9



China . . . . . . . . . . . . . . .



12,922



3.8



13,828



3.4



16,628



3.6



Other . . . . . . . . . . . . . . . .



150,887



44.5



181,073



44.2



216,343



46.9



Unknown . . . . . . . . . . . . .



1,314



0.4



1,089



0.3



1,265



0.3



L1 Admissions, Intracompany Transferees



Total . . . . . . . . . . . . . . .



333,386



100.0



382,776



100.0



363,536



100.0



India . . . . . . . . . . . . . . . .



54,556



16.4



63,156



16.5



51,469



14.2



United Kingdom . . . . . . . .



44,033



13.2



52,687



13.8



53,948



14.8



Japan . . . . . . . . . . . . . . .



32,860



9.9



37,507



9.8



36,008



9.9



Mexico . . . . . . . . . . . . . .



20,253



6.1



21,714



5.7



21,178



5.8



France . . . . . . . . . . . . . . .



18,779



5.6



21,858



5.7



20,141



5.5



Other . . . . . . . . . . . . . . . .



161,693



48.5



185,255



48.4



180,211



49.6



Unknown . . . . . . . . . . . . .



1,212



0.4



599



0.2



581



0.2



Source: U.S. Department of Homeland Security, Customs and Border Protection (CBP), TECS, Arrival File, Fiscal Years 2007 to 2009.


                 

 


2010  - [Significant Agency Directive][A) The Neufeld Memo] On January 8, 2010, USCIS issued a directive that is of importance to companies that utilize the H-1B program, particularly firms that place non-immigrant workers at client sites or have owners working on H-1B or L-1 visas.   The memo to Service Center Directors was written by Donald Neufeld, Associate Director Service Center Operations, hereinafter, the "Neufeld memo" .[23] 


The Neufeld memo outlines new guidance to USCIS officers at Service Centers processing H-1B applications, and also signals a new focus for the agency's efforts to regulate outsourcing and so-called Job Shops.  It has also aroused concerns about what appears to be new restrictions on non-immigrant visas for upper managers who have an ownership interest in petitioning companies as well as consultants who have a history of working as self-employed subcontractors .  The Neufeld memo is important to all H-1B employers because it lays out an expanded list of documents in several categories that companies will now have to provide with initial petitions for H-1B workers.


 Significantly, the Neufeld Memo identifies a number of categories of outsourcing applications that the Service will approve and a list of documents that will be required.  It also describes several scenarios involving types of cases Service Center examiners should not approve, and provides what the agency now claims to be a legal rationale for how they are to make these decisions. 


In addition to heightened documentary demands, the memo instructs examiners how they should deal with the issue of employer "control" over the work of H-1B beneficiaries assigned at third-party client sites.  While some of these issues are not new, this is a significant restatement of how USCIS will treat certain categories of applications, and a warning that the agency will be requiring all applicants to address and document issues related to control. 


[B) Significant Agency Directive:  Invocation of Common Law basis for Determining "Control" Over H-1B Workers]   Decisions by the AAO and USCIS Service Centers start to invoke a new common law basis for the "control issue identified in a pair of Supreme Court decisions, Darden and Clackamas.   Also, of greatest concern to some observers, USCIS has communicated it will also be more strictly enforcing rules against the self-employment of investors, the hiring of independent contractors, and will be looking at certain indicators that H-1B petitioners are actually employment agencies, and will deny those determined to be operating outside the traditional "employer- employee relationship" -- specifically the definition of the term "employee" as it applies to H-1B and L-1 matter -- which it most recently asserts is found in the common law doctrine of "control" of employment rather than in statute.   That is a startling acknowledgment, with potential unintended legal consequence, as without a statutory authority, USCIS interpretation of the issue of "control" over H-1B has only limited sway over reviewing courts


The Neufeld memo has raised questions about the legality of new USCIS policies restricting eligibility for non-immigrant visas, potentially in the L-1 as well as H-1B category, of upper managers with a proprietary interest in the petitioning firm.    The American Immigration Lawyers Association (AILA)  calls on the agency to reverse the Neufeld directives that, according to AILA, violate "the intent of Congress in the INA as well as longstanding agency precedent and policy." 


_____________________________________________________________________________________


(2009 Nonimmigrant Flow Report, DHS Office of Immigration Statistics (April, 2010)), Table 2, http://www.ilw.com/immigrationdaily/news/2010,0430-nonimmigrant.pdf  




































































































































































































































































































































Short-term Resident Nonimmigrant Admissions by Class of Admission: Fiscal Years 2007 to 2009



Class of admission



2009



2008



2007



Number



Percent



Number



Percent



Number



Percent



 



Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



3,438,276



100.0



3,688,167



100.0



3,566,367



100.0



Temporary workers and families . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



1,703,697



49.6



1,949,695



52.9



1,932,075



54.2



Temporary workers and trainees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



936,272



27.2



1,101,938



29.9



1,118,138



31.4



Workers in specialty occupations (H1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



339,243



9.9



409,619



11.1



461,730



12.9



Chile and Singapore Free Trade Agreement (H1B1) . . . . . . . . . . . . . . . . . . . . .



213



-



153



-



170



-



Registered nurses participating in the Nursing Relief for Disadvantaged


Areas (H1C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



231



-



170



-



49



-



Seasonal agricultural workers (H2A)* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



149,763



4.4



173,103



4.7



87,316



2.4



Seasonal nonagricultural workers and returning H2B workers (H2B,H2R) . . . . . .



56,543



1.6



109,621



3.0



154,895



4.3



Trainees (H3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



4,168



0.1



6,156



0.2



5,540



0.2



Workers with extraordinary ability or achievement and their assistants


(O1,O2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



58,566



1.7



53,735



1.5



46,533



1.3



Internationally recognized athletes or entertainers (P1) . . . . . . . . . . . . . . . . . .



54,432



1.6



57,030



1.5



53,050



1.5



Artists or entertainers in reciprocal exchange or culturally unique programs


(P2,P3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



15,469



0.4



17,125



0.5



16,735



0.5



Workers in international cultural exchange programs (Q1) . . . . . . . . . . . . . . . . .



2,555



0.1



3,231



0.1



2,412



0.1



Workers in religious occupations (R1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



17,362



0.5



25,106



0.7



25,162



0.7



North American Free Trade Agreement (NAFTA) professional workers (TN) . . . . .



99,018



2.9



88,382



2.4



85,142



2.4



Spouses and children of temporary workers and trainees (H4,O3,P4,R2,TD) . . .



138,709



4.0



158,507



4.3



179,404



5.0



Intracompany transferees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



493,992



14.4



558,485



15.1



531,073



14.9



Intracompany transferees (L1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



333,386



9.7



382,776



10.4



363,536



10.2



Spouses and children of intracompany transferees (L2) . . . . . . . . . . . . . . . . . .



160,606



4.7



175,709



4.8



167,537



4.7



Treaty traders and investors and spouses and children (E1 to E3) . . . . . . . . . . . . . .



229,301



6.7



243,386



6.6



238,936



6.7



Representatives of foreign media and spouses and children (I1) . . . . . . . . . . . . . . .



44,132



1.3



45,886



1.2



43,928



1.2



Students . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



951,964



27.7



917,373



24.9



841,673



23.6



Academic students (F1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



895,392



26.0



859,169



23.3



787,756



22.1



Vocational students (M1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



14,632



0.4



15,496



0.4



13,073



0.4



Spouses and children of academic and vocational students (F2,M2) . . . . . . . . . . . .



41,940



1.2



42,708



1.2



40,844



1.1



Exchange visitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



459,408



13.4



506,138



13.7



489,286



13.7



Exchange visitors (J1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



413,150



12.0



459,126



12.4



443,482



12.4



Spouses and children of exchange visitors (J2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .



46,258



1.3



47,012



1.3



45,804



1.3



Diplomats and other representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



323,183



9.4



314,920



8.5



303,290



8.5



Ambassadors, public ministers, career diplomats, consular officers, other foreign government officials and their spouses, children, and attendants (A1 to A3) . . . . .



175,119



5.1



169,267



4.6



163,476



4.6



Representatives to international organizations and their spouses, children, and attendants (G1 to G5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



127,584



3.7



125,669



3.4



120,926



3.4



NATO officials and their families (N1 to N7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



20,480



0.6



19,984



0.5



18,888



0.5



Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



24



-



41



-



43



-



- Represents zero or rounds to 0.0.


* The increase in H2A admissions between 2007 and 2008 may be due to more complete recording of pedestrian admissions along the Southwest border. Source: U.S. Department of Homeland Security, Customs and Border Protection (CBP), TECS, Arrival File, Fiscal Years 2007 to 2009.








[1] See, Yeoh et al., 'State/Nation/trasnation: Perspectives on Transnationalism in the Asia-Pacific', Routledge, 2004, ISBN 041540279X, page 167




[2]  See, FRAGOMEN, DEL REY, BERNSEN & LOEWY, LLP v. CHAO et al. ,  DCDC,  Case No. 1:2008cv01387 (August 8, 2008); related, Department of Labor, 'U.S. Department of Labor auditing all permanent labor certification applications filed by major immigration law firm,' June 2, 2008. http://www.dol.gov/opa/media/press/eta/eta20080752.htm.


 




[3]  Philip Martin, "US Guest Workers: Experience and Issues", University of California, Davis, (1999),  http://www2.smu.edu/tower/P_Martin.html




[4]  Congressional Research Service, Memorandum (March 20, 2006) based on CRS Report RL30498, Immigration: Legislative Issues on Nonimmigrant Professional Specialty (H-1) Workers, by Ruth Ellen Wasem, http://www.aila.org/content/default.aspx?docid=18974





[6]  See, Patel v. Immigration & Naturalization Service, 638 F.2d 1199, 1980 U.S. App. LEXIS 12970 (9th Cir. 1980)




[7] Wasem, Ibid.




[8] Margaret L. Usdansky , Thomas J. Espenshade, "The H-1B Visa Debate in Historical Perspective: The Evolution of U.S. Policy Toward Foreign-Born Workers", Princeton University Working Paper No. 11 (May 10, 2000), http://www.ccis-ucsd.org/PUBLICATIONS/wrkg11.pdf




[9]  See, Copyright (c) 2006 University of Texas at Austin School of Law Publications, Inc. Texas International Law Journal, Fall, 2006, 42 Tex. Int'l L.J. 55, 37312 words, ARTICLE: Conflicts Between United States Immigration Law and the General Agreement on Trade in Services: Most-Favored-Nation Obligation, William Thomas Worster ; c.f.,   Alison Umberger,  NOTE: FREE TRADE VISAS: EXPLORING THE CONSTITUTIONAL BOUNDARIES OF TRADE PROMOTION AUTHORITY, 22 Geo. Immigr. L.J. 319




[10]  See, The Forum on Democracy and Trade,  http://www.forumdemocracy.net/section.php?id=242




[11] See, Search Results - THOMAS (Library of Congress) , The American Competitiveness and Workforce Improvement Act of 1998 (`ACWIA') 99, See, comment of Chairman Lamar Smith regarding  "workers contained in ACWIA focused on `job contractors' or `job shops'",  Cached




[12] Ibid.




[13] Wasem, Id.




[14] 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





[16] 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. 




[17]  See, [H.R.1268.ENR], Emergency Supplemental Appropriations Act for Defense, the Global War on   Terror, and Tsunami Relief, 2005 (Enrolled as Agreed to or Passed by Both House and Senate, became P.L. 109-113 on 05/11/2003), SEC. 106, . JUDICIAL REVIEW OF ORDERS OF REMOVAL, amending Section 242(a) of the Immigration and Nationality Act (8 U.S.C. 1252), http:// thomas.loc.gov/cgi-bin/bdquery/z?d109:h.r.00418, HR 418 - Search Results - THOMAS (Library of Congress)


 




[18]  For a more complete statement of appropriate evidentiary standards in adjudications of  nonimmigrant visa petitions, see, HQOPRD 70/2 Interoffice Memorandum To: Regional Directors Service ...,
From: William R.Yates, Associate Director, Operations. Date: February 16, 2005. Re: Requests for Evidence (RFE) and Notices of Intent to Deny, http:// www.uscis.gov/files/pressrelease/RFE021605.pdf


 


 




[19] See, Marianne Kolbasuk McGee,  InformationWeek , "Who Gets H-1B Visas?",  May 17, 2007, http://www.informationweek.com/news/management/showArticle.jhtml?articleID=199601616




[20]  Ibid.




[21] See, USCIS, H-1B Benefits Fraud and Compliance Assessment,  http://www.laborimmigration.com/wp-content/uploads/2008/10/uscis-h1b-audit-report.pdf





[23]  See, Donald Neufeld, Associate Director, Service Center Operations, DHS, USCIS, HQ 70/6.2.8, AD10.24,  Memorandum for Service Center Directors, "Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements", Additions to Officer's Field Manual (AFM) Chapter 31.3(g)(15)(AFM Update AD 10-24)(Jan. 08, 2010), linked at: http://www.aila.org/content/default.aspx?docid=30956 



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