The H-1B category is intended to help U.S. companies satisfy their employment needs by hiring highly-specialized workers from abroad. Like many visa categories, the H-1B is not immune to misuse. In recent years, H-1B workers have been engaging in work that takes them beyond the premises of their sponsoring employers, interacting with third-party supervisors and corporations.

A basic example of this situation: an H-1B employee who works as a consultant at an oil and gas company might need to work closely with a refinery in a different state for several months. When this happens, the problematic issue that arises is that it is no longer clear for whom, exactly, the H-1B employee is working.

What’s the Problem?

By law, an H-1B employee is required to work for the U.S. employer that filed an H-1B petition on his or her behalf. When an H-1B employee is working for various organizations at various locations, which organization is his or her employer?

To answer this crucial question, we have to first understand what we mean by “employer.” According to 8 C.F.R 214.2(h)(4)(ii), the defining element of the definition of “employer” is the relationship between an organization and its laborers, i.e. a bona fide “employer-employee relationship.” Such a relationship implies that an organization that is an employer must be able to “hire, pay, fire, supervise, or otherwise control the work of” its employees.

Elaborating on the Employer-Employee Relationship

Unsurprisingly, there’s more to a valid “employer-employee relationship” than the basic duties listed above. In order to establish what sort of third-party placement arrangements are legal under H-1B criteria, U.S. Citizenship and Immigration Services (USCIS) released a memo for its adjudicators in which the agency clarifies questions regarding H-1B employees and third-party clients.

First, USCIS explicitly defines the components of an employer-employee relationship. In short, the employer must have the “right to control over when, where, and how the beneficiary performs the job” he or she was brought to the U.S. to fill. This includes, among other authorities, when the H-1B employee is placed at another employer’s business. Ultimately, when evaluating whether or not a valid employer-employee relationships exists for H-1B purposes, USCIS considers a combination of the following factors (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, e.g., through weekly calls, periodic reporting back to the main office, site visits  by the petitioner, etc.?

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, such as through progress or 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 Proof is in the Petition

Accordingly, in addition to the other requirements for obtaining an H-1B visa, the petitioner must be able to establish a valid employer-employee relationship in its initial petition. Further, petitioning employers must continue to show that the relationship exists if they seek to extend an employee’s H-1B status beyond the initial three years.

USCIS provides examples of documentation an employer can submit to establish the necessary employer-employee relationship. Keep in mind that following the initial petition, USCIS may issue a request for additional evidence (RFE) if an adjudicator feels that “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.” Documents that can serve as acceptable evidence for demonstrating such a relationship include, but are not necessarily limited to:

1. An itinerary of services or engagements with the names and addresses of the actual employers and the names and addresses of the locations where the services will be performed for the period of time requested

2. A copy of the signed employment agreement between the petitioner and beneficiary detailing the terms and conditions of employment

3. A copy of an employment offer letter that clearly describes the relationship and the services to be performed by the beneficiary

4. A copy of relevant portions of valid contracts between the petitioner and the client in which the petitioner has entered into a business agreement for which the petitioner’s employees will be utilized, specifying that the petitioner will continue to have the right to control its employees while they are placed at the third-party site

5. Copies of signed contractual agreements, statements of work, work orders, service agreements, and/or letters between the petitioner and the authorized officials of the third-party companies where the work will actually be performed by the beneficiary

   -These must provide descriptions of the duties the employee will perform, the qualifications required, the salary paid, hours worked, benefits, a brief description of who will supervise the beneficiary, and any other related evidence.

6. A copy of the position description or any such documentation that describes the skills required to perform the job, instruments and tools needed to perform the job, the product or service to be provided, the location where the employee 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 the petitioner’s discretion over when and how long the beneficiary will work, the method of payment, the petitioner’s role in paying and hiring assistants to be utilized by the beneficiary, whether the work is a part of the regular business of the petitioner, employee benefits, and the tax treatment of the beneficiary in relation to the petitioner

7. A description of the performance review process; and/or

8. A copy of the petitioner’s organizational chart, demonstrating the beneficiary’s supervisory chain.

If USCIS determines that an employer is unable to satisfactorily prove its right to control the employee for whom it petitioned, then said employer’s H-1B application will be denied. Similarly, USCIS will deny a petition to extend H-1B employment if a valid employer-employee relationship is not demonstrated to continue to exist.

Valid Employer-Employee Relationship Scenarios

The above definitions are a bit abstract, so below we’ve included examples of valid employer-employee relationships.

Traditional Employment: Exercise of Actual Control

Oompa J. Loompa, an H-1B beneficiary, goes to work every day in a factory owned by William H. Wonka, Mr. Loompa’s H-1B petitioner. The alien worker reports directly to Willie. Willie provides tasks and scheduling, gives feedback regarding Oompa’s work, provides tools to complete the job, provides medical benefits, and claims Oompa for tax purposes. Accordingly, a valid employer-employee relationship exists.

 

Temporary/Occasional Off-Site Employment: Right to Control

Richard Taxman is an H-1B beneficiary working as an accountant with the accounting firm Delight. Delight petitioned for Mr. Taxman’s H-1B status. As part of his routine job duties, Mr. Taxman is required to travel to different client sites to perform audits. When he is off-site to this end, Mr. Taxman must use Delight’s established practices and protocol, and Delight must provide compensation for food and travel. When he’s not conducting audits, Rich must report to a centralized office with an assigned workspace, and he receives wages and employee benefits from Delight. Accordingly, a valid employer-employee relationship exists.

Long-Term Permanent Off-Site Employment: Right to Control Specified, Actual Control Exercised

Renzo Tuba, an H-1B beneficiary, is an architect working for Jones, Jones, and Jones, Inc., an architectural firm in New York City. Jones has a contract with a client to build a big, beautiful wall in New Mexico. Jones will place its architects and other staff, including Renzo, at the New Mexico location while the project is being completed. The contract between Jones and the client states that Jones will manage its employees at the off-site location and that Jones will retain the right to control every aspect of Renzo's work. Jones will provide all necessary resources to its employees temporarily based in New Mexico, and Renzo will report directly to his supervisors at Jones. Accordingly, a valid employer-employee relationship exists.

Long-Term Placement at a Third-Party Worksite: Right to Control Specified, Actual Control Exercised

Code-It, an H-1B petitioner, is a computer software development company that has contracted with Sell-It, an unrelated third-party client, to develop an in-house computer program to track Sell-It’s merchandise. To complete this work, Code-It hires H-1B beneficiary Ann Jineer, a software engineer, to work at Sell-It’s main warehouse. While Ann performs her duties at Sell-It, she reports weekly to a manager employed by Code-It and receives all benefits and payments directly from Code-It. Accordingly, a valid employer-employee relationship exists.

Invalid Employer-Employee Relationships Scenarios

In brief, USCIS considers the following scenarios to be invalid employer-employee relationships:

1. Self-employed beneficiaries for whom there is no separation between the individual and the employing entity

   -In other words, the beneficiary is the sole operator, manager, and employee of the company.

2. Independent contractor beneficiaries: the petitioner has no right to control and no exercise of control over all of the beneficiary’s work

3. Third-party placement where the petitioner contracts the beneficiary to work at an outside company but the beneficiary receives progress reviews, payments, and benefits from the third-party company, not the petitioner

A Word of Warning

It is important for employers and employees alike to be aware of the guidelines for valid H-1B working relationships. If either party knowingly commits fraud on the requisite Labor Condition Application (LCA) or other interactions with USCIS or U.S. Department of Labor (DOL), they can face invalidation of their H-1B visas and other legal action. In 2009, 11 people, eight of whom were employees, of a company in Iowa, Vision Systems Group, were charged with green card fraud when they were found to have conspired to obtain H-1B visas and permanent residency by falsely claiming to live and work in Iowa. In fact, the employees were being hired by Vision Systems but were living and working in other states for third-party companies, and Vision Systems, as the petitioning employer, had no right of control. The incident serves as an important reminder that both employers and employees need to be cognizant of the law when petitioning for H-1B status and extensions. (Read more about the Vision Systems affair here.)

We’re Here to Help

The guidelines established in the USCIS memo make an H-1B application more challenging for an employer who wishes to send an H-1B employee off-site. For those engaged in third-party off-site consultation, small businesses, or in some cases self-employment, we highly recommend consulting an experienced legal team that can help you prepare the appropriate documentation for your H-1B application.

Our experienced immigration attorneys are here to guide professionals through the complicated H-1B application process, and minimize any and all confusion or challenges. We understand how important an H-1B visa is to you, whether as the employer or the prospective employee. Our seasoned staff and years-long track record of success make Zhang & Associates the natural choice to facilitate your H-1B petitions.

For more detailed information on the H-1B category, including minimum requirements and USCIS policies, refer to the following links:

General H-1B Topics

H-1B Articles

H-1B Visa: Temporary Workers in "Specialty" Occupations H-1B Requirements H-1B Services We Provide Applying for an H-1B Visa H-1B Advantages H-1B Limitations H-1B Documentation List Extending H-1B Status Beyond Six Years H-1B1 Subcategory: Free Trade Agreement H-1B2 Subcategory: Department of Defense H-1B3 Subcategory: Fashion Models Guidance on H-1Bs for Nurses H-1B Premium Processing and Related Issues H-4 Visas: Spouses and Children of H-1B Workers Frequently Asked Questions about H-1B Visas Filing Fees Attorney's Fees

The Cap USCIS Guidance on H-1B Cap Exemptions After the Cap Off-site Employees "Recapturing" Unused Time H-1B-Dependent Employers "Benching" H-1B Workers The Portability Rule Maintaining H-1B Status during Corporate Changes H-1B vs. O-1 Issues Relating to F-1 and OPT Issues Relating to Work, Travel, and Adjusting Status Memo: H-1B Status during the I-485 Waiting Period Memo: Be Aware of Abandonment Frequently Asked Questions about I-140 and I-485 Filing

 

Updated 05/08/2017