As an immigration attorney the new USCIS memo is most baffling. On January 8, 2010, the United States Citizenship and Immigration Services (USCIS) released a memorandum offering guidance on "Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements." Based on the memo, companies across the nation from Columbus Ohio to Troy Michigan and beyond must now learn that some of their employees may not meet what USCIS calls employment. Though the memorandum facially claims that the requirements to establish eligibility for an H-1B petition have not changed, the substance of the memorandum indicates a dramatic policy shift. In particular, the USCIS has abrogated its position with regards to whether certain employers that place their employees at third-party worksites -- precisely employers they classify as "job shops" -- constitute a legitimate employer-employee relationship. Historically, such employment relationships satisfied the employer-employee requirement so long as the petitioner could prove the right to control when, where and how the beneficiary performed the job.
The recent memorandum continues to assert that a valid employer-employee relationship exists if the petitioning party can establish they have the right to control and are responsible for the direction of the foreign national employee's work. The USCIS relies on common law principles and the employer-employee relationship factors endorsed in the Supreme Court cases of Nationwide Mutual Ins. Co. v. Darden and Clackamas Gastroenterology Assoc. v. Wells to support its position. Notably, the memorandum recognizes that "[t]he common law is flexible about how these factors are to be weighed" and a totality of the circumstances test should be employed, "with no one factor being decisive."
Unfortunately, the memorandum's "examples" of situations that do not present a valid employer-employee relationship deprive petitioners of the case specific, factor-by-factor analysis called for by the Supreme Court and common law principles. The blanket assertion that computer consulting companies that place employees at third-party worksites do not constitute a valid employer-employee relationship is devoid of the proper legal analysis and a complete deviation from previous USCIS guidance. Even more interesting, the Supreme Court cases cited in the USCIS memorandum rely on an Equal Employment Opportunity Commission notice that reaches the exact opposite conclusion concerning whether staffing/consulting companies are the employers of individuals they place at third-party worksites.
Though the legal theory upon which the USCIS is basing their authority to unilaterally issue new regulations is unclear, one fact is clear -- the USCIS' recent actions do not comport with existing law and, rest assured, will be vehemently challenged by immigration lawyers, organizations, employers and employees alike.
