Rami Fakhoury and Mark Levey
Copyright@2010 Fakhoury Law Group/ Rami Fakhoury
Appendix V
THE NEUFELD MEMO
U.S. Department of Homeland Security
U.S. Citizenship and Immigration Services
Service Center Operations Directorate.
Washington, DC
20529-2060
U.S. Citizenship and Immigration Services
HQ 70/6.2.8
JAN 08 2010
AD 10-24
Memorandum
TO:
Service Center Directors
FROM:
Donald Neufeld
Associate Director, Service Centers
SUBJECT:
Determining Employer-Employee Relationship for Adjudication ofH-1B
Petitions, Including Third-Party Site Placements
Additions to Officer's Field Manual (AFM) Chapter 31.3(g)(15) (AFM Update
AD 10-24) /
I. Purpose
This memorandum is intended to provide guidance, in the context of H-1B-petitions, on the
requirement that a petitioner establish that an employer-employee relationship exists and will
continue to exist with the beneficiary throughout the duration of the requested H-1B validity
period.
.
II. Background
Section 101(a)(15)(H)(i)(b) of the Immigration and Nationality Act (INA) defines an H-1B
nonimmigrant as an alien:
who is coming temporarily to the United States to perform services.. .in a specialty"
occupation described in section 1184(i)(1)..., who meets the requirements of the
occupation specified in section 1184(i)(2)..., and with respect to whom the Secretary of
Labor determines and certifies...that the intending employer has filed with the Secretary
an application under 1182(n)(1).
The Code of Federal Regulations (C.F.R.) provides that a "United States employer" shall file an
[H-1B] petition. 8 C.F.R. 214.2(h)(2)(i)(A).
The term "United States employer", in turn, is defined at 8 C.F.R. 214.2(h)(4)(ii) as follows:
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication of H-IB Petitions,
Including Third-Party Site Placements
Page 2
United States employer means a person, firm, corporation, contractor, or other
association, or organization in the United States which: .
(1) Engages a person to work within the United States;
(2) Has an employer-employee relationship with respect to employees under this part,
as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the
work of any such employee; and
(3) Has an Internal Revenue Service Tax identification number.
In support of an H-1 B petition, a petitioner must not only establish that the beneficiary is coming to the United States temporarily to work in a specialty occupation but the petitioner must also satisfy the requirement of being a U.S. employer by establishing that a valid employer-employee relationship exists between the U.S. employer and the beneficiary throughout the requested H-IB validity period. To date, USCIC has relied on common law principles1 and two leading Supreme Court cases in determining what constitutes an employer-employee relationship2
The lack of guidance clearly defining what constitutes a valid employer-employee relationship as required by 8 C.F.R. 214.2(h)(4)(ii) has raised problems, in particular, with independent contractors, self-employed beneficiaries, and beneficiaries placed at third-party worksites. The placement of the beneficiary/employee at a work site that is not operated by the petitioner/employer (third-party placement), which is common in some industries, generally makes it more difficult to assess whether the requisite employer-employee relationship exists and will continue to exist.
While some third-party placement arrangements meet the employer-employee relationship criteria, there are instances where the employer and beneficiary do not maintain such a relationship. Petitioner control over the beneficiary must be established when the beneficiary is placed into another employer's business, and expected to become a part of that business’s regular operations. The requisite control may not exist in certain instances· when the petitioner's business is to provide its employees to fill vacancies in businesses that contract with the petitioner for personnel needs. Such placements are likely to require close review in order to determine if the required relationship exists.
Furthermore, USCIS must ensure that the employer is in compliance with the Department of Labor regulations requiring that a petitioner file an LCA specific to each location where the USCIS has also relied on the Department of Labor definition found at 20 C.F.R. 655.715 which states:
Employed, employed by the employer, or employment relationship means the employment relationship as determined under the common law, under which the key determinant is the putative employer's right to control the means and manner in which the work is performed. Under the common law, "no shorthand formula or magic phrase *** can be applied to find the answer * * *. [A]lL of the incidents of the relationship must be assessed and weighed with no one factor being decisive." NLRB v. United Ins. Co. of America, 390 U.S. 254,258 (1968).
____________________________________________
2 Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318, 322-323 (1992) (hereinafter Darden) and Clackamas Gastroenterology Assoc. v. Wells, 538 U.S.A40 (2003) (hereinafter Clackamas).
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-IB Petitions,
Including Third-Party Site Placements
Page 3
beneficiary will be working.3 In some situations, the location of the petitioner's business may
not be located in the same LCA jurisdiction as the place the beneficiary will be working.
III. Field Guidance
A. The Employer-Employee Relationship
An employer who seeks to sponsor a temporary worker in an H-IB specialty occupation is
required to establish a valid employer-employee relationship. USCIS has interpreted this term
to be the "conventional master-servant relationship as understood by common-law agency
doctrine.,,4 The common law test requires that all incidents of the relationship be assessed and
weighed with no one factor being decisive. The Supreme Court has stated:
we consider the hiring party's right to control the manner and means by which the
product is accomplished. Among the other factors relevant to this inquiry are the skill
required; the source of the instrumentalities and tools; the location of the work; the
duration of the relationship between the parties; whether the hiring party has the right to
assign additional projects 'to the hired party, the extent of the hired party's discretion
over when and how long to work; the method of payment; the hired party's role in hiring
and paying assistants,' whether the work is part of the regular business of the hiring
party; whether the hiring party is in business,' the provision of employee benefits; and the
tax treatment of the hired party.5
Therefore, USCIS must look at a number of factors to determine whether a valid employer employee relationship exists. Engaging a person to work in the United States is more than merely paying the wage or placing that person on the payroll. In considering whether or not there is a valid "employer-employee relationship" for purposes of H-lB petition adjudication, USCIS must determine if the employer has a sufficient level of control over the employee. The petitioner must be able to establish that it has the right to control6 over when, where, and how the beneficiary performs the job and USCIS will consider the following to make such a determination (with no one factor being decisive):
(1) Does the petitioner supervise the beneficiary and is such supervision off-site or on-site?
(2) rf the supervision is off-site, how does the petitioner maintain such supervision, i. e.
weekly calls, reporting back to main office routinely, or site visits by the petitioner? .
(3) Does the petitioner have the right to control the work of the beneficiary on a day-to-day
basis if such control is required?
___________________________
3 See 20 C.F.R. 655.730(c)(4)(v), 20 C.F.R. 655.730(c)(5) and 20 C.F.R. 655.730(d)(l)(ii)
4 See Darden at 322-323.
5 See Darden at 323-324 (Emphasis added.)
6 The right to control the beneficiary is different from actual control. An employer may have the right to control the beneficiary's job-related duties and yet not exercise actual control over each function performed by that beneficiary. The employer-employee relationship hinges on the right to control the beneficiary
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-lB Petitions,
Including Third-Party Site Placements
Page 4
(4) Does the petitioner provide the tools or instrumentalities needed for the beneficiary to
perform the duties of employment?
(5) Does the petitioner hire, pay, and have the ability to fire the beneficiary?
(6) Does the petitioner evaluate the work-product of the beneficiary, i.e. progress/performance reviews?
(7) Does the petitioner claim the beneficiary for tax purposes?
(8) Does the petitioner provide the beneficiary any type of employee benefits?
(9) Does the beneficiary use proprietary information of the petitioner in order to perform the
duties of employment?
(10) Does the beneficiary produce an end-product that is directly linked to the petitioner's
line of business?
(11) Does the petitioner have the ability to control the manner and means in which the work
product of the beneficiary is accomplished?
The common law is flexible about how these factors are to be weighed. The petitioner will have
met the relationship test, if, in the totality of the circumstances, a petitioner is able to present
evidence to establish its right to control the beneficiary's employment. In assessing the requisite degree of control, the officer should be mindful of the nature of the petitioner's business and the type of work of the beneficiary. The petitioner must also be able to establish that the right to control the beneficiary's work will continue to exist throughout the duration of the beneficiary's employment term with the petitioner.
Valid employer-employee relationship would exist in the following scenarios:7
Traditional Employment
The beneficiary works at an office location owned/leased by the petitioner, the beneficiary
reports directly to the petitioner on a daily basis, the petitioner sets the work schedule of the
beneficiary, the beneficiary uses the petitioner's tools/instrumentalities to perform the duties
of employment, and the petitioner directly reviews the work-product of the beneficiary. The
petitioner claims the beneficiary for tax purposes and provides medical benefits to the
beneficiary.
[Exercise of Actual Control Scenario]
Temporary/Occasional Off-Site Employment
The petitioner is an accounting firm with numerous clients. The beneficiary is an accountant.
The beneficiary is required to travel to different client sites for auditing purposes. In
performing such audits, the beneficiary must use established firm practices. If the
beneficiary travels to an off-site location outside the geographic location of the employer to
7 These scenarios are meant to be illustrative examples and are not exhaustive. Officers may see a variety of situations and factors when reviewing an H-lB petition.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-lB Petitions,
Including Third-Party Site Placements
Page 5
perform an audit, the petitioner provides food and lodging costs to the beneficiary. The
beneficiary reports to a centralized office when not performing audits for clients and has an
assigned office space. The beneficiary is paid by the petitioner and receives employee
benefits from the petitioner.
[Right to Control Scenario]
Long-Term/Permanent Off-Site Employment
The petitioner is an architectural firm and the beneficiary is an architect. The petitioner has a
contract with a client to build a structure in a location out of state from the petitioner's main
offices. The petitioner will place its architects and other staff at the off-site location while
the project is being completed. The contract between the petitioner and client states that the
petitioner will manage its employees at the off-site location. The petitioner provides the
instruments and tools used to complete the· project, the beneficiary reports directly to the
petitioner for assignments, and progress reviews of the beneficiary are completed by the
petitioner. The underlying contract states that the petitioner has the right to ultimate control
of the beneficiary's work.
[Right to Control Specified and Actual Control is Exercised]
Long Term Placement at a Third-Party Work Site
The petitioner is a computer software development company which has contracted with
another, unrelated company to develop an in-house computer program to track its
merchandise, using the petitioner's proprietary software and expertise. In order to complete
this project, petitioner has contracted to place software engineers at the client's main
warehouse where they will develop a computer system for the client using the petitioner's
software designs. The beneficiary is a software engineer who has been offered employment
to fulfill the needs of the contract in place between the petitioner and the client. The
beneficiary performs his duties at the client company's facility. While the beneficiary is at
the client company's facility, the beneficiary reports weekly to a manager who is employed
by the petitioner. The beneficiary is paid by the petitioner and receives employee benefits
from the petitioner.
[Right to Control Specified and Actual Control is Exercised]
The following scenarios would not present a valid employer-employee relationship:8
Self-Employed Beneficiaries
The petitioner is a fashion merchandising company that is owned by the beneficiary. The
beneficiary is a fashion analyst. The beneficiary is the sole operator, manager, and employee
______________________________________
8 These scenarios are meant to be illustrative examples and are not exhaustive. Officers may see a variety of situations and factors when reviewing an H-IB petition.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-lB Petitions,
Including Third-Party Site Placements
Page 6
of the petitioning company. The beneficiary cannot be fired by the petitioning company.
There is no outside entity which can exercise control over the beneficiary.9 The petitioner
has not provided evidence that that the corporation, and not the beneficiary herself, will be
. 10 controlling her work.
[No Separation between Individual and Employing Entity; No Independent Control
Exercised and No Right to Control Exists]
Independent Contractors
The beneficiary ·is a sales representative. The petitioner is a company that designs and
manufactures skis. The beneficiary sells these skis for the petitioner and works on
commission. The beneficiary also sells skis for other companies that design and manufacture
skis that are independent of the petitioner. The petitioner does not claim the beneficiary as
an employee for tax purposes. The petitioner does not control when, where, or how the
beneficiary sells its or any other manufacturer's products. The petitioner does not set the
work schedule of the beneficiary and does not conduct performance reviews of the
beneficiary.
[Petitioner Has No Right to Control; No Exercise of Control]
Third-Party Placement/ "Job-Shop"
The petitioner is a computer consulting company. The petitioner has contracts with
numerous outside companies in which it supplies these companies with employees to fulfill
specific staffing needs. The specific positions are not outlined in the contract between the
petitioner and the third-party company but are staffed on an as-needed basis. The beneficiary
is a computer analyst. The beneficiary has been assigned to· work for the third-party
company to fill a core position to maintain the third-party company's payroll. Once placed at
__________________________________________
9 USCIS acknowledges that a sole stockholder of a corporation can be employed by that corporation as the corporation is a separate legal entity from its owners and even its sole owner. See Matter of Aphrodite, 17 I&N Dec. 530 (BIA 1980). However, an H-1B beneficiary/employee who owns a majority of the sponsoring entity and who reports to no one but him or herself may not be able to establish that a valid employment relationship exists in that the beneficiary, who is also the petitioner, cannot establish the requisite "control". See generally Administrator, Wage and Hour Division v. Avenue Dental Care, 6-LCA-29 (ALJ June 28,2007) at 20-21.
10 In the past, the Administrative Appeals Office (AAO) has issued a limited number of unpublished decisions that addressed whether a beneficiary may be "employed" by the petitioner even though she is the sole owner and operator of the enterprise. The unpublished decisions correctly determined that corporations are separate and distinct from their stockholders and that a corporation may petition for, and hire, their principal stockholders as H1B temporary employees. However, similar to the 1979 decision in Matter of Allan Gee, Inc., the AAO did not reach the question of how, or whether, petitioners must establish that such beneficiaries are bona fide "employees" of "United States employers" having an "employer-employee relationship." 17 I&N Dec. 296 (Reg. Comm. 1979).
While it is correct that a petitioner may employ and seek H-1 B classification for a beneficiary who happens to have a significant ownership interest in a petitioner, this does not automatically mean that the beneficiary is a bona fide employee. Starting in 2007, the AAO has utilized the criteria discussed in Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318,322-323 (l992) and Clackamas Gastroenterology Associates, P.e. v. Wells, 538 U.S. 440 (2003) to
reach this pivotal analysis.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-IB Petitions,
Including Third-Party Site Placements
Page 7
the client company, the beneficiary reports to a manager who works for the third-party
company. The beneficiary does not report to the petitioner for work assignments, and all
work assignments are determined by the third-party company. The petitioner does not
control how the beneficiary will complete daily tasks, and no propriety information of the
petitioner is used by the beneficiary to complete any work assignments. The beneficiary's
end-product, the payroll, is not in any way related to the petitioner's line of business, which
is computer consulting. The beneficiary's progress reviews are completed by the client'
company, not the petitioner.
[Petitioner Has No Right to Control; No Exercise of Control].
The following is an example of a regulatory exception where the petitioner is not the
employer:
Agents as Petitioners (11)
The petitioner is a reputable modeling agency that books models for various modeling jobs at
different venues to include fashion houses and photo shoots. The beneficiary is a
distinguished runway model. The petitioner and beneficiary have a contract between one
another that includes such terms as to how the agency will advise, counsel, and promote the
model for fashion runway shows. The contract between the petitioner and beneficiary states
that the petitioner will receive a percentage of the beneficiary's fees when the beneficiary is
booked for a runway show. When the beneficiary is booked for a runway show, the
beneficiary can negotiate pay with the fashion house. The fashion house (actual employer)
controls when, where, and how the model will perform her duties while engaged in the
runway shows for the fashion house.
[Agent Has No Right to Control; Fashion House Has and Exercises Right to Control]
B. Documentation to Establish the Employer-Employee Relationship
Before approving H-1 B nonimmigrant visa petitions, "the director shall consider all the evidence submitted and such other evidence as he or she may independently require to assist his or her adjudication.,,12 In addition to all other regulatory requirements, including that the petitioner provide an LCA specific to each location where the beneficiary will be working, the petitioner must establish the employer-employee relationship described above. Such evidence should provide sufficient detail that the employer and beneficiary are engaged in a valid employer employee relationship. If it is determined that the employer will not have the right to control the
_____________________________________________
11 Under 8 C.F.R. 2I4.2(h)(2)(i)(F), it is also possible for an "agent" who may not be the actual employer of the HIB temporary employee to file a petition on behalf of the actual employer and the beneficiary. The beneficiary must be one who is traditionally self-employed or who uses agents to arrange short-term employment on their behalf with numerous employers. However, as discussed below, the fact that a petition is filed by an agent does not change the requirement that the end-employer have a valid employer-employee relationship with the beneficiary.
12 See 8 C.F.R. 214.2(h)(9)(i).
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-lB Petitions,
Including Third-Party Site Placements
Page 8
employee in the manner described below, the petition may be denied for failure of the employer to satisfy the requirements of being a United States employer under 8 C.F.R. 214.2(h)(4)(ii).
1. Initial Petition
The petitioner must clearly show that an employer-employee relationship will exist between the petitioner and beneficiary, and establish that the employer has the right to control the beneficiary's work, including the ability to hire, fire and supervise the beneficiary. The petitioner must also be responsible for the overall direction of the beneficiary's work. 13 Lastly, the petitioner should be able to establish that the above elements will continue to exist throughout the duration of the requested H-IB validity period. The petitioner can demonstrate an employer employee relationship by providing a combination of the following or similar types of evidence:
• A complete itinerary of services or engagements that specifies the dates of each service or engagement, the names and addresses of the actual employers, and the names and addresses of the establishment, venues, or locations where the services will be performed for the period of time requested;
• Copy of signed Employment Agreement between the petitioner and beneficiary detailing
the terms and conditions of employment;
• Copy of an employment offer letter that clearly describes the nature of the employeremployee relationship and the services to be performed by the beneficiary;
• Copy of relevant portions of valid contracts between the petitioner and a client (in which the petitioner has entered into a business agreement for which the petitioner's employees will be utilized) that establishes that while the petitioner's employees are placed at the third-party worksite, the petitioner will continue to have the right to control its employees;
•
Copies of signed contractual agreements, statements of work, work orders, service
agreements, and letters between the petitioner and the authorized officials of the ultimate
end-client companies where the work will actually be performed by the beneficiary,
which provide information such as a detailed description of the duties the beneficiary will
perform, the qualifications that are required to perform the job duties, salary or wages
paid, hours worked, benefits, a brief description of who will supervise the beneficiary and
their duties, and any other related evidence;
•
Copy of position description or any other documentation that describes the skills required
to perform the job offered, the source of the instrumentalities and tools needed to perform
the job, the product to be developed or the service to be provided, the location where the
beneficiary will perform the duties, the duration of the relationship between the petitioner
and beneficiary, whether the petitioner has the right to assign additional duties, the extent
of petitioner's discretion over when and how long the beneficiary will work, the method
of payment, the petitioner's role in paying and hiring assistaIlts to be utilized by the
beneficiary, whether the work to be performed is paIt of the regular business of the
13 See 8 C.F.R. 214.2(h)(4)(ii).
Memorandum for Service Center Directors
Subject: Detennining Employer-Employee Relationship for Adjudication ofH-1B Petitions,
Including Third-Party Site Placements
Page 9
petitioner, the provision of employee benefits, and the tax treatment of the beneficiary in
relation to the petitioner;
•
A description of the performance review process; and/or
•
Copy ofpetitioner's organizational chart, demonstrating beneficiary's ~upervisory
chain.
'.
2. Extension Petitions14
An H-1B petitioner seeking to extend H-1B employment for a beneficiary must continue to
establish that a valid employer-employee relationship exists. The petitioner can do so by
providing evidence that the petitioner continues to have the right to control the work of the
beneficiary, as described above.
The petitioner may also include a combination of the following or similar evidence to document
that it maintained a valid employer-employee relationship with the beneficiary throughout the
initial H-1B status approval period:
•
Copies of the beneficiary's pay records (leave and earnings statements, and pay stubs,
etc.) for the period of the previously approved H-1B status;
•
Copies ofthe beneficiary's payroll summaries and/or Fonn W-2s, evidencing wages paid
to the beneficiary during the period ofpreviously approved H-1B status;
•
CopyofTimeSheetsduringtheperiod ofpreviouslyapprovedH-1Bstatus;
•
Copy of prior years' work schedules;
•
Documentary examples of work product created or produced by the beneficiary for the
past H-1B validity period, (i.e., copies of: business plans, reports, presentations,
evaluations, recommendations, critical reviews, promotional materials, designs,
blueprints, newspaper articles, web-site text, news copy, photographs of prototypes, etc.).
Note: The materials must clearly substantiate the author and date created;
•
Copy of dated performance review(s); and/or
•
Copy of any employment history records, including but not limited to, documentation
showing date ofhire, dates ofjob changes, i.e. promotions, demotions, transfers, layoffs,
and pay changes with effective dates.
If USCIS determines, while adjudicating the extension petition, that the petitioner failed to
maintain a valid employer-employee relationship with the beneficiary throughout the initial
approval period, or violated any other terms of its prior H-1 B petition, the extension petition may
be denied unless there is a compelling reason to approve the new petition (e.g., the petitioner is
able to demonstrate that it did not meet all the terms and conditions through no fault of its own).
Such a limited exception will be made solely on a case-by-case basis.
14 In this context, an extension petition refers to a petition filed by the same petitioner to extend H-IB status without
a material change in the terms of employment.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-IB Petitions,
Including Third-Party Site Placements
Page 10
uscrs requests the documentation described above to increase H-IB program compliance and
curtail violations. As always, USCIS maintains the authority to do pre-or post-adjudication
compliance review site visits for either initial or extension petitions.
C. Request for Evidence to Establish Employer-Employee Relationship
uscrs may issue a Request For Evidence (RFE) when USCIS believes that the petitioner has
.failed to establish eligibility for the benefit sought, including in cases where the petitioner has
failed to establish that a valid employer-employee relationship exists and will continue to exist
throughout the duration of the beneficiary's employment term with the employer: Such RFEs,
however, must specifically state what is at issue (e.g. the petitioner has failed to establish through
evidence that a valid employer-employee relationship exists) and be tailored to request specific
illustrative types of evidence from the petitioner that goes directly to what USCIS deems as
deficient. Officers should first carefully review all the evidence provided with the H-IB petition
to determine which required elements have not been sufficiently established by the petitioner.
The RFE should neither mandate that a specific type of evidence be provided, unless provided
for by regulations (e.g. an itinerary of ~ervice
dates and. locations), nor should it request
information that has already been provided in the petition. Officers should state what element
the petitioner has failed to establish and provide examples of documentation that could be
provided to establish H-IB eligibility.
D. Compliance with 8 C.F.R. 214.2(h)(2)(i)(B)
Not only must a petitioner establish that a valid employer-employee relationship exists and will
continue to exist throughout the validity period of the H-IB petition, the petitioner must continue
to comply with 8 C.F.R. 214.2(h)(2)(i)(B) when a beneficiary is to be placed at more than one
work location to perform services. To satisfy the requirements of 8 C.F.R. 214.2(h)(2)(i)(B), the
petitioner must submit a complete itinerary of services or engagements that specifies the dates of
each service or engagement, the names and addresses of the actual employers, and the names and
addresses of the establishment, venues, or locations where the services will be performed for the
period of time requested. Compliance with 8 C.F.R. 214.2(h)(2)(i)(B) assists USCIS in
determining that the petitioner has concrete plans in place for a particular beneficiary, that the
beneficiary is performing duties in a specialty occupation, and that the beneficiary is not being
','benched" without pay between assignments. .
IV. Use
This memorandum is intended solely for the training and guidance of USCIS personnel in
performing their duties relative to the adjudication of applications. It is not intended to, does not,
and may not be relied upon to create any right or benefit, substantive or procedural, enforceable
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofB-IB Petitions,
Including Third-Party Site Placements
Page 11
at law or by any individual or other party in removal proceedings, in litigation with the United
States, or in any other form or manner. .
V. Contact
Any questions regarding the. memorandum should be directed through appropriate supyrvisory
channels to the Business Employment Services Team in the Service Center Operations
Directorate.
AFM UPDATES
Accordingly, the AFM is revised as follows:
1. Section (g)(15) of Chapter 31.3 of the Officers Field Manual is added to read as
follows:
31.3 H-1 B Classification, and Documentary Requirements
***
(g) Adjudicative Issues
(15) Evidence of Employer-Employee Relationship
USCIS must look at a number of factors to determine whether a valid employer
employee relationship exists. Engaging a person to work in the United States is more .
than merely paying the wage or placing that person on the payroll. In considering
whether or not there is a valid "employer-employee relationship" for purposes of H-1 B
petition adjudication, USCIS mU,st determine if the employer has a sufficient~
level of
control over the employee. The petitioner must be able to establish that it has the right
to control1 over when, where, and how the beneficiary performs the job and USCIS will
.consider the following to make such a determination (with no one factor being decisive):
(1) Does the petitioner supervise the beneficiary and is such supervision off-site or
on-site?
(2) If the supervision is off-site, how does the petitioner maintain such supervision,
i.e. weekly calls, reporting back to main office routinely, or site visits by the
petitioner? .
(3) Does the petitioner have the right to control the work of the beneficiary on a dayto-
day basis ifsuch control is required?
I The right to control the beneficiary is different from actual control. An employer may have the right to control the
beneficiary's job-related duties and yet not exercise actual control over each function perfOlwed by that beneficiary.
The employer-employee relationship hinges on the right to control the beneficiary.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-1B Petitions,
Including Third-Party Site Placements
Page 12
(4) Does the petitioner provide the tools or instrumentalities needed for the
beneficiary to perform the duties of employment?
(5) Does the petitioner hire, pay, and have the ability to fire the beneficiary?
(6) Does the petitioner evaluate the work-product of the beneficiary, i.e.
progress/performance reviews? . .
(7) Does the petitioner claim the beneficiary for tax purposes?c
(8) Does the petitioner provide the beneficiary any type of employee benefits?
(9) Does the beneficiary use proprietary information of the petitioner in order to
perform the duties of employment?
(10) Does the beneficiary produce an end-product that is directly linked to the
petitioner's line of business?
(11) Does the petitioner have the ability to control the manner and means in which
the work product of the beneficiary is accomplished?
The common law is' flexible about how these factors are to be weighed. The petitioner
will have met the relationship test, if, in the totality of the circumstances, a petitioner is
able to present evidence to establish its right to control the beneficiary's employment.
In assessing the requisite degree of control, the officer should be mindful of the nature
of the petitioner's business and the type of work of the beneficiary. The petitioner must
also be able to establish that the right to control the beneficiary's work will continue to
exist throughout the duration of the beneficiary's employment term with the petitioner.
Valid employer~employee
relationship would exist in the following scenarios:2
Traditional Employment
The beneficiary works at an office location owned/leased by the petitioner, the
beneficiary reports directly to the petitioner on a daily basis, the petitioner sets the
work schedule of the beneficiary, the beneficiary uses the petitioner's
tools/instrumentalities to perform the duties of employment, and the petitioner
directly reviews the work-product of the beneficiary. The petitioner claims the
beneficiary for tax purposes and provides medical benefits to the beneficiary.
[Exercise of Actual Control Scenario]
. Temporary/Occasional Off-Site Employment
The petitioner is an accounting firm with numerous clients. The beneficiary is an
accountant. The beneficiary is required to travel to different client sites for auditing
purposes. In performing such aUdits, the beneficiary must use established firm
practices. If the beneficiary travels to an off-site location outside the geographic
2 These scenarios are meant to be illustrative examples and are not exhaustive. Officers may see a variety of
situations and factors when reviewing an H-IB petition.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-lB Petitions,
Including Third-Party Site Placements
Page 13
location of the employer to perform an audit, the petitioner provides food and lodging
costs to the beneficiary. The beneficiary reports to a centralized office when not
performing audits for clients and has an assigned office space. The beneficiary is
paid by the petitioner and receives employee benefits from the petitioner.
[Right to Control Scenario]
Long-Term/Permanent Off-Site Employment
The petitioner is an architectural firm and the beneficiary is an architect. The
petitioner has a contract with a client to build a structure in a location out of state
from the petitioner's main offices. The petitioner will place its architects and other
staff at the off-site location while the project is being completed. The contract
between the petitioner and client states that the petitioner will manage its employees
at the off-site location. The petitioner provides the instruments and tools used to
complete the project, the beneficiary reports directly to the petitioner for
assignments, and progress reviews of the beneficiary are completed by the
petitioner. The underlying contract states that the petitioner has the right to ultimate
control of the beneficiary's work.
[Right to Control Specified and Actual Control is Exercised]
Long Term Placement at a Third-Party Work Site
The petitioner is a computer software development company which has contracted
with another, unrelated company to develop an in-house computer program to track
its merchandise, using the petitioner's proprietary software and expertise. In order
to complete this project, petitioner has contracted to place software engineers 'at the
client's main warehouse where they will develop a computer system for the client
using the petitioner's software designs. The beneficiary is a software engineer who
has been offered employment to fulfill the needs of the contract in place between the
petitioner and the client. The beneficiary performs his duties at the client company's
facility. While the beneficiary is at the client company's facility, the beneficiary
reports weekly to a manager who is employed by the petitioner. The beneficiary is
paid by the petitioner and receives employee benefits from the petitioner.
[Right to Control Specified and Actual Control is Exercised]
The following scenarios would not present a valid employer-employee
relationship:3
Self-Employed Beneficiaries
3 These scenarios are meant to be illustrative examples and are not exhaustive. Officers may see a variety of
situations and factors when reviewing an H-IB petition.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-lB Petitions,
Including Third-Party Site Placements
Page 14
The petitioner is a fashion merchandising company that is owned by the beneficiary.
The beneficiary is a fashion analyst. The beneficiary is the sole operator, manager,
and employee of the petitioning company. The beneficiary cannot be fired by the
petitioning company. There is no outside entity which can exercise control over the
beneficiary.4 The petitioner has not provided evidence that that the corporation, and
not the beneficiary herself, will be controlling her work.5
;-.::
[No Separation between Individual and Employing Entity; No Independent
Control Exercised and No Right to Control Exists]
Independent Contractors
The beneficiary is a sales representative. The petitioner is a company that designs
and manufactures skis. The beneficiary sells these skis for the petitioner and works
on commission. The beneficiary also sells skis for other companies that design and
manufacture skis that are independent of the petitioner. The petitioner does not
claim the beneficiary as an employee for tax purposes. The petitioner does not
control when, where, or how the beneficiary sells its or any other manufacturer's
products. The petitioner does not set the work schedule of the beneficiary and does
not conduct performance reviews of the beneficiary.
[Petitioner Has No Right to Control; No Exercise of Control]
Third-Party Placement! "Job-Shop"
The petitioner is a computer consulting company. The petitioner has contracts with
numerous outside companies in which it supplies these companies with employees
to fulfill specific staffing needs. The specific positions are not outlined in the contract
between the petitioner and the third-party company but are staffed on an as.-needed
basis. The beneficiary is a computer analyst. The beneficiary has been assigned to
work for the third-party company to fill a core position to maintain the third-party
company's payroll. Once placed at the client company, the beneficiary reports to a
4 uscrs acknowledges that a sole stockholder of a corporation can be employed by that corporation as the
corporation is a separate legal entity from its owners and even its sole owner. See Matter of Aphrodite, 17 r&N Dec.
530 (BrA 1980). However, an H-1B beneficiary/employee who owns a majority of the sponsoring entity and who
reports to no one but him or herself may not be able to establish that a valid employment relationship exists in that
the beneficiary, who is also the petitioner, cannot establish the requisite "control". See generally Administrator,
Wage and Hour Division v. Avenue Dental Care, 6-LCA-29 (ALJ June 28, 2007) at 20-21.
5 The Administrative Appeals Office (AAO) ofUSCrS has issued an unpublished decision on the issue of whether a
beneficiary may be "employed" by the petitioner even though she is the sole owner and operator of the enterprise.
The unpublished decisions of the AAO correctly determined that corporations are separate and distinct from their
stockholders and that a corporation may petition for, and hire, their principal stockholders as H-1B temporary
employees. However, the unpublished AAO decision did not address how, or whether, petitioners must establish
that such beneficiaries are bona fide "employees" of"United States employers" having an "employer-employee
relationship." The AAO decision did not reach this pivotal analysis and thus, while it is correct that a petitioner may
employ and seek H-1B classification for a beneficiary who happens to have a significant ownership interest in a
petitioner, this does not automatically mean that the beneficiary is a bona fide employee.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-IB Petitions,
Including Third-Party Site Placements
Page 15
manager who works for the third-party company. The beneficiary does not report to
the petitioner for work assignments, and all work assignments are determined by the
third-party company. The petitioner does not control how the beneficiary will
complete daily tasks, and no propriety information of the petitioner is used by the
beneficiary to complete any work assignments. The beneficiary's end-pro9uct, the
payroll, is not in any way related to the petitioner's line of business, which is
. computer consulting. The beneficiary's progress reviews are completed by the
client company, not the petitioner.
[Petitioner Has No Right to Control; No Exercise of Control]
The following is an example of a regulatory exception where the petitioner is not
the employer:
Agents as Petitioners6
The petitioner is a reputable modeling agency that books models for various
modeling jobs at different venues to include fashion .houses and photo shoots. The
beneficiary is a distinguished runway model. The petitioner and beneficiary have a
contract between one another that includes such terms as to how the agency will
advise, counsel, and promote the model for fashion runway shows. The contract
between the petitioner and beneficiary states that the petitioner will receive a
percentage of the beneficiary's fees when the beneficiary is booked for a runway
show. When the beneficiary is booked for a runway show, the beneficiary can
negotiate pay with the fashion house. The fashion house (actual employer) controls
when, where, and how the model will perform her duties while engaged in the
runway shows for the fashion house. .
[Agent Has No Right to Control; Fashion House Has and ·Exercises Right to
Control] . ",J
B. Documentation to Establish the Employer-Employee Relationship
Before approving H-1 B nonimmigrant visa petitions, "the director shall consider all the
evidence submitted and such other evidence as he or she may independently require to
assist his or her adjudication."? In addition to all other regulatory requirements,
including that the petitioner provide an LeA specific to each location where the
beneficiary will be working, the petitioner must establish the employer-employee
relationship described above. Such evidence should provide sufficient detail that the
6 Under 8 C.F.R. 214.2(h)(2)(i)(F), it is also possible for an "agent" who may not be the actual employer of the H-
IBtemporaryemployeetofileapetitiononbehalf oftheactualemployerandthebeneficiary. Thebeneficiarymust
be one who is traditionally self-employed or who uses agents to arrange short-term employment on their
behalf with numerous employers. However, as discussed below, the fact that a petition is filed by an agent does
not change the requirement that the end-employer have a valid employer-employee relationship with the beneficiary.
7 8 C.F.R. 214.2(h)(9)(i)
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-1 B Petitions,
Including Third-Party Site Placements
Page 16
employer and beneficiary are engaged in a valid employer-employee relationship. If it is
determined that the employer will not have the right to control the employee in the
manner described below, the petition may be denied for failure of the employer to
satisfy the requirements of being a United States employer under 8 C.F.R.
214.2(h)(4)(ii).
1. Initial Petition
The petitioner must clearly show that an employer-employee relationship will exist
between the petitioner and beneficiary, and establish that the employer has the right to
control the beneficiary's work, including the ability to hire, fire and supervise the
beneficiary. The petitioner must also be responsible for the overall direction of the
beneficiary's work.8 Lastly, the petitioner should be able to establish that the above
elements will continue to exist throughout the duration of the requested H-1 B validity
period. The petitioner can demonstrate an employer-employee relationship by providing
a combination of the following or similar types of evid~nce:
A complete itinerary of services or engagements that specifies the dates of each
service or engagement, the names and addresses of the actual employers, and
the names and addresses of the establishment, venues, or locations where the
services will be performed for the period of time requested;
•
Copy of signed Employment Agreement between the petitioner and beneficiary
detailing the terms and conditions of employment;
•
Copy of an employment offer letter that clearly describes the nature of the
employer-employee relationship and the services to be performed by the
beneficiary;
•
Copy of relevant portions of valid contracts between the petitioner and a client (in .
which the petitioner has entered into a business agreement for which the
petitioner's employees will be utilized) that establishes that while the petitioner's
employees are placed at the third-party worksite, the petitioner will continue to
have the right to control its employees;
•
Copies of signed contractual agreements, statements of work, work orders,
service agreements, and letters between the petitioner and the authorized
officials of the ultimate end-client companies where the work will actually be
performed by the beneficiary, which provide information such as a detailed
description of the duties the beneficiary will perform, the qualifications that are
required to perform the job duties, salary or wages paid, hours worked, benefits,
a brief description of who will supervise the beneficiary and their duties, and any
other related evidence;
•
Copy of position description or any other documentation that describes the skills
required to perform the job offered, the source of the instrumentalities and tools
8 See 8 C.F,R. 214.2(h)(4)(ii).
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-1B Petitions,
Including Third-Party Site Placements
Page 17
needed to perform the job, the product to be developed or the service to be
provided, the location where the beneficiary will perform the duties, the duration
of the relationship between the petitioner and beneficiary, whether the petitioner
has the right to assign additional duties, the extent of petitioner's discretion over
when and how long the beneficiary will work, the method of payment, the
\ ,I
petitioner's role in paying and hiring assistants to be· utilized by the bel\l.~ficiary,
whether the work to be performed is part of the regular business of the petitioner,
the provision of employee benefits, and the tax treatment of the beneficiary in
relation to the petitioner;
•
A description of the performance review process; and/or
•
Copy of petitioner's organizational chart, demonstrating beneficiary's supervisory
chain.
2.
Extension Petitions9
An H-1 B petitioner seeking to extend H-1 B employment for a beneficiary must continue
to establish that a valid employer-employee relationship exists. The petitioner can do
so by providing evidence that the petitioner continues to have the right to control the
work of the beneficiary, as described above. .
The petitioner may also include a combination of the following or similar evidence to
document that it maintained a valid employer-employee relationship with the beneficiary
throughout the initial H-1 B status approval period:
•
Copies of the beneficiary's pay records (leave and earnings statements, and pay
stubs, etc.) for the period of the previously approved H-1 B status;
•
Copies of the beneficiary's payroll summaries and/or Form W-2s, evidencing
wages paid to the beneficiary during the period of previously approved H-1 B
status;
•
Copy of Time Sheets during the period of previously approved H-1 B status;
•
Copy of prior years' work schedules;
•
Documentary examples of work product created or produced by the beneficiary
for the past H-1 B validity period, (Le., copies of: business plans, reports,
presentations, evaluations, recommendations, critical reviews, promotional
materials, designs, blueprints, newspaper articles,· web-site text, news copy,
photographs of prototypes, etc.). Note: The materials must clearly substantiate
the author and date created;
•
Copy of dated performance review(s); and/or
9 In this context, an extension petition refers to a petition filed by the same petitioner to extend H-l B status without
a material change in the terms of employment.
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-IB Petitions,
Including Third-Party Site Placements
Page 18
Copy of any employment history records, including but not limited to,
documentation showing date of hire, dates of job changes, i.e. promotions,
demotions, transfers, layoffs, and pay changes with effective dates.
If USCIS determines, while adjudicating the extension petition, that the petitioner failed
to maintain a valid employer-employee relationship with the beneficiary throu9h9ut the
initial approval period, or violated any other terms of its prior H-1 B petitr6n, the
extension petition may be denied unless there is a compelling reason to approve the
new petition (e.g., the petitioner is able to demonstrate that it did not meet all the terms
and conditions through no fault of its own). Such a limited exception will be made solely
on a case-by-case basis.
USCIS requests the documentation described above to increase H-1 B program
compliance and curtail violations. As always, USCIS maintains the authority to do preor
post-adjudication compliance review site visits for either initial or extension petitions.
C.
Request for Evidence to Establish Employer-Employee Relationship
USCIS may issue a Request For Evidence (RFE) when USCIS believes that the
petitioner has failed to establish eligibility for the benefit sought, including in cases
where the petitioner has failed to establish that a valid employer-employee relationship
exists and will continue to exist throughout the duration of the beneficiary's employment
term with the employer. Such RFEs, however, must specifically state what is at issue
(e.g. the petitioner has failed to establish through evidence that a valid employeremployee
relationship exists) and be tailored to request specific illustrative types of
evidence from the petitioner that goes directly to what USCIS deems as ~eficient.
Officers should first carefully 'review all the evidence provided with the H-1 B petition to
determine which required elements have not been sufficiently established by the
petitioner. The' RFE should neither mandate that a specific type of evidence be
provided, unless provided for' by regulations (e.g. an itinerary of service dates and
locations), nor should it request information that has already been provided in the
petition. Officers should state what element the peti'tioner has failed to establish and
provide examples of documentation that could be provided to establish H-1 B eligibility.
D.
Compliance with 8 C.F.R. 214.2(h)(2)(i)(B)
Not only must a petitioner establish that a valid employer-employee rejationship exists
and will continue to exist throughout the validity period of the H-1 B petition, the
petitioner must continue to comply with 8 C.F.R. 214.2(h)(2)(i)(B) when a beneficiary is
to be placed at more than one work location to perform services. To satisfy the
requirements of 8 C.F.R. 214.2(h)(2)(i)(B), the petitioner must submit a complete
Memorandum for Service Center Directors
Subject: Determining Employer-Employee Relationship for Adjudication ofH-1B Petitions,
Including Third-Party Site Placements
Page 19
itinerary of services or engagements that specifies the dates of each service or
engagement, the names and addresses of the actual employers, and the names and
addresses of the establishment, venues, or locations where the services will be
performed for the period of time requested. Compliance with 8 C.F.R. 214.2(h)(2)(i)(B)
assists USCIS in determining that the petitioner has concrete plans in place for a ,
.I _.
particular beneficiary, that the beneficiary is performing duties in a specialty occupation,
and that the beneficiary is not being "benched" without pay between assignments.
