USCIS issues guidance on Employer-Employee Relationships, including Third-Party site Placements

The U.S. Citizenship and Immigration Services (USCIS) recently issued a memorandum specifying the requirements, in an H-1B context, to establish an employer-employee relationship and that such relationship will continue to exist throughout the duration of the requested H-1B validity period. The memo provides guidance on the kind of evidence required to establish an employer-employee relationship when the H-1B employee performs work off site at a third-party worksites.

The Employer-Employee Relationship

The H-1B regulations require an employer-employee relationship between the H-1B petitioning employer and the beneficiary. The memorandum states that the lack of guidance clearly defining what constitutes a valid employer-employee relationship has raised problems, in particular, with independent contractors, self-employed beneficiaries, and beneficiaries placed at third-party worksites.

In considering whether or not there is a valid employer-employee relationship for purposes of H-1B adjudication, USCIS will determine if the employer is able to establish that it has the right to control over when, where, and how the beneficiary performs the job; USCIS states that merely paying the wage or placing the beneficiary on the payroll is not enough. USCIS will consider the following factors, with no one factor being decisive, to determine the employer’s right to control the beneficiary’s employment:

1. Does the petition 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 day-to-day basis if such control is required?

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 products of the beneficiary is accomplished?

The USCIS will evaluate the totality of the circumstances to make the decision. The memorandum clearly states that in assessing the requisite degree of control, the USCIS officer should be mindful of the nature of the petitioner’s business and the type of work of the beneficiary. The petitioning employer must be able to establish that it will have the right to control the beneficiary’s work throughout the duration of the employment term.

Valid Employer-Employee Relationship Scenarios

The memorandum outlines several valid employer-employee relationship scenarios, and several others which would not present the valid employer-employee relationship.

The easiest example for a valid employer-employee relationship is the traditional employment, where the beneficiary works at the employer’s facility, reports directly to the employer, uses its equipments, and the employer directly reviews the work-product of the beneficiary. The memorandum further states that an H-1B beneficiary may be placed at third-party worksites, either on short-term or long-term assignments, as long as the petitioner establishes that it will have the right to control the beneficiary’s work. On the other hand, in the cases where the beneficiary reports to a manager of the third-party company, no proprietary information of the petitioner is used, and the petitioner does not control how the beneficiary performs the work, are considered invalid employer-employee relationships. The other problematic cases where the employer-employee relationships will be considered invalid are the cases where the beneficiary is either self-employed or is an independent contractor.

Documentation to Establish the Employer-Employee Relationship

The memorandum lists examples of evidence that may be submitted to demonstrate an employer-employee relationship. According to the memorandum, a petitioner can demonstrate an employer-employee relationship by providing a combination of the following or similar types of evidence, in initial H-1B petitions:

• 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 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;
• Copy of position description;
• A description of the performance review process; and/or
• Copy of petitioner’s organizational chart, demonstrating beneficiary’s supervisory chain.

When applying for an H-1B extension, the petitioner may also include evidence to document that it maintained a valid employer-employee relationship throughout the initial H-1B status approval period apart from establishing that a valid employer-employee relationship continues to exist. Such evidence includes:

• Copies of the beneficiary’s pay records for the period of the previously approved H-1B 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-1B status;
• Copy of Time Sheets during the period of previously approved H-1B status;
• Copy of prior years’ work schedules;
• Documentary examples of work product created or produced by the beneficiary for the past H-1B validity period;
• Copy of dated performance review(s); and/or
• 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.

Request for Evidence to Establish Employer-Employee Relationship

The memorandum status that USCIS may issue a Request for Evidence (RFE) when USCIS believes that the petitioner has failed to establish eligibility for the benefit sought. Such RFEs, however, must specifically state what is at issue and be tailored to request specific illustrative types of evidence from the petitioner that goes directly to what USCIS deems as deficient.

Compliance with regulations

When a beneficiary is to be placed at more than one work location to perform services, current regulations require the petitioner to 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. The memorandum reiterates the need to comply with the regulations, and to submit such itineraries.

Conclusion

The USCIS also issued Questions and Answers to clarify the concerns that the memorandum creates. Apart from other clarifications, the Q&A states that, if the petitioner provides evidence that a qualifying employer-employee relationship exists for a portion of the requested validity period, the petition may still be approved, however, the USCIS will limit its validity to the time period of qualifying employment established by the evidence. These Q&As may be accessed at C:\Documents and Settings\BLC2010\Local Settings\Temporary Internet Files\OLK1B1\USCIS - Questions Answers USCIS Issues Guidance Memorandum on Establishing the Employee-Employer Relationship in H-1B Petitions.mht