USCIS Rolls Back Controversial H-1B Policies

​U.S. Citizenship and Immigration Services (USCIS) will rescind certain policies for H-1B visa workers placed at third-party worksites. The agency's action follows a pair of court decisions rejecting its interpretation of the employer-employee relationship for H-1B workers contracted out to third-party clients.

"In ITServe Alliance, Inc. v. Cissna, decided March 10, plaintiffs argued that USCIS's narrow interpretation of employer-employee relationship was unsupported by law or regulation," said Lindsey Steinberg, an attorney in the Boston office of Mintz. Another case, Serenity Info Tech et al. v. Kenneth T. Cuccinelli, decided May 20, "closely followed the opinion and holding of the ITServe Alliance decision," she said. The agency rescinded the policies as a settlement with ITServe Alliance.

At issue in both cases was the interpretation of a valid employer-employee relationship between the sponsoring employer and the H-1B employee. Federal regulations state that an employer-employee relationship exists whenever the employer can "hire, pay, fire, supervise or otherwise control the work of the employee."

Stuart Anderson, executive director of the National Foundation for American Policy, a public-policy research organization based in Arlington, Va., explained that for many employers, the issue first arose in January 2010 when USCIS "asserted the authority to deny H-1B petitions based on a potentially restrictive understanding of what constituted an employer-employee relationship, including when an H-1B visa holder performed work at a customer's location."

Anderson said the agency's interpretation was then narrowed considerably in a February 2018 policy memo that required significantly more documentation from employers that place H-1B workers at third-party client sites.

"In [the 2018] memo, USCIS specifically requested detailed statements from end-user clients, copies of client contracts and work itineraries to demonstrate that assignments were available throughout the entire requested period," which typically lasts three years, said Earl DeBrine, an attorney in the Raleigh, N.C., office of Ogletree Deakins. "Prior to this memo, USCIS almost uniformly granted H-1B visa petitions for the entire three-year maximum duration. Following the implementation of the memo, USCIS shortened the validity of many H-1B visas to less than the standard three-year period. The policy change created confusion, increased costs for companies … and effectively forced businesses into making a choice: enter into three-year contracts with clients or face shortened H-1B approvals for workers under such contracts."

DeBrine added that USCIS determined it could deny any visa petition that did not provide a valid contract at the time of adjudication, even if the contract was valid at the time of filing, leaving employers scrambling to manage H-1B employees' work authorizations that were abruptly deemed invalid.

Steinberg said the 2018 policy led to an increase in H-1B denials and truncated approvals. "In one noteworthy example, USCIS approved an H-1B petition for a single day of validity," she said.

The policy change took place without the law being changed or USCIS issuing new regulations, leading to the lawsuits against the Trump administration.

[SHRM members-only toolkit: Understanding and Obtaining U.S. Employment Visas]

Policy Struck Down

Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia ruled in ITServe Alliance that the USCIS policy changes were unlawful.

"The current USCIS interpretation of the employer-employee relationship requirement is inconsistent with its regulation, was announced and applied without rulemaking, and cannot be enforced," she said.

Steinberg explained that established law allows an employer to retain an H-1B worker during "nonproductive" periods as long as the company continues to pay the required wage to the worker. "The judge concluded that there is no basis in the Immigration and Nationality Act or the agency's regulations for requiring a petitioner to submit evidence of specific, qualifying work requirements and micro-location information for every single day of the visa period."

Congress never required visa petitions to list all future work. Collyer ruled that "the USCIS requirements that employers provide proof of nonspeculative work assignments for the duration of the visa period is not supported by the statute or regulation."

Jonathan Wasden, an immigration attorney and partner at Wasden Banias in the Charleston, S.C., area, said the ruling means that to prove a valid employer-employee relationship, an employer only has to show it engaged in one of the following: hiring, paying, firing or otherwise controlling the H-1B employee. Wasden argued the plaintiffs' case in ITServe Alliance.

"Because the agreement requires USCIS to rescind the 2018 memo, H-1B employers need not rely solely on the availability of lengthy client contracts to support their petition for three years of employment in the United States," DeBrine said. "Employers in the IT and consulting industries and others that offer employment at a third-party worksite will soon enjoy eased restrictions."

The Settlement

USCIS agreed to rescind its 2018 policy memo within 90 days of the May 20 settlement. The agency will also revisit the specific H-1B cases that were the subject of the lawsuit.

Despite the settlement, other employers must go to court to overturn past denials or short-term approvals, Anderson said.

"USCIS is not going to go back and proactively overturn denials based on this settlement and will not go back and extend visas that were shortened," Wasden said. "In order to fix that, companies are going to have to go back to court. It should be a relatively simple process now that the issue has been resolved."

Steinberg noted that the settlement does not prevent USCIS from issuing new regulations regarding H-1B visa eligibility. Plans to redefine the employer-employee relationship with regard to H-1B workers has been on the Trump administration's regulatory agenda since 2017.