Consulting Companies and the H-1B Visa
By Beata McCann, Immigration Attorney
You run a consulting company. Can you hire a foreign national on an H-1B visa? Will USCIS approve an H-1B petition for an employee you place at a 3rd party website? The answer is yes, it can be done.
During the Trump administration, H-1B visas were denied in record numbers. According to a January 22, 2022, report from the National Foundation for American Policy (NFAP), historical denial rates for H-1B petitions were as follows:
In 2021, the H-1B denial rate fell back to pre-Trump rates. Not only was this due to a change in regime, but it was also due to many favorable federal court decisions, most notably the ITServe decision and its corresponding settlement, where USCIS ended many of the Trump administration’s restrictive policies on consulting companies.
ARE CONSULTING COMPANIES CONSIDERED AN EMPLOYER UNDER THE H-1B REGULATIONS?
§8 CFR 214.2(h)(4)(ii) explicitly identifies a United States employer for H-1B purposes as a person, firm, corporation, contractor, or other association, or organization in the United States which:
Engages a person to work within the United States;
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
Has an Internal Revenue Service Tax identification number.
Via the regulatory framework, a contractor company is recognized as an employer within the plain language of the regulations, so long as those three (3) elements are met.
Over the past decade, especially during the Trump years, the second prong of the regulation was repeatedly challenged by USCIS as it pertained to consulting companies. The first attack occurred in 2010 with the memorandum “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements: Additions to Officer’s Field Manual (AFM) Chapter 31.3(g)(15)(AFM Update AD 10-24),” commonly referred to as the “Neufeld Memo," which placed emphasis on the common law definition of the employee/ employer relationship. This memo laid out eleven (11) criteria for USCIS to consider while making a determination on whether an employee/ employer relationship existed. Many of the criteria focused on employee supervision and the ability of the employer to control the employee. If an employee was placed at a third-party worksite, the H-1B petitioning employer needed to provide evidence that although the employee was not working at the same worksite as the employer, the employer still was able to control the work of the employee.
On February 22, 2018, USCIS issued a near-fatal blow to consulting companies when it issued the policy memorandum, “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites,” which stated, “This PM is intended to be read together with the Employer-Employee Memo [Neufeld Memo] and as a complement to that policy.” The new policy set out the following additional guidelines: When a beneficiary would be placed at one or more third-party worksites, the petitioner must demonstrate that it had specific and non-speculative qualifying assignments in a specialty occupation for the beneficiary for the entire time requested on the petition. The petitioner would need to show that:
The petitioner has a specific work assignment in place for the beneficiary;
The petition is properly supported by a Labor Condition Application (LCA) that corresponds to such work; and
The actual work to be performed by the H-1B beneficiary will be in a specialty occupation based on the work requirements imposed by the end-client who uses the beneficiary’s services. See Defensor v. Meissner, 201 F.3d 384, 387 (5th Cir. 2000).
This “Third-Party Worksite Memo” resulted in many H-1B denials within the consulting industry. IT Serve Alliance, the largest association of IT Service organizations functioning across the United States, fought back. Through the law firm of Wasden Banias, LLC, ITServe Alliance won a sentinel case for the consulting industry. The United States District Court for the District of Columbia, in ITServe Alliance, Inc. v. United States Citizenship and Immigration Services, 1:18-cv-02350, U.S. Dist Ct D.D.C., March 10, 2020, ruled on the issues of the employee/ employer relationship and control. According to Judge Rosemary Collyer, “The current CIS interpretation of the employer-employee relationship requirement is inconsistent with its regulation, was announced and applied without rulemaking, and cannot be enforced.” Therefore, “This formulation makes evident that there are multiple ways to demonstrate employer control, that is, by hiring or paying or firing or supervising or “otherwise” showing control.” Therefore, if the petitioning employer performs at least one of these functions, the 2nd element of the definition of an employer has been met. With this decision, the issue of control in the employee/ employer relationship was simplified and less open to scrutiny by USCIS. In its settlement agreement with ITServe Alliance, USCIS rescinded both the Neufeld Memo and the Third-Party Worksite Memo. This was a huge win for the consulting company industry in the context of H-1B visas.
Additionally, the Court in ITServe Alliance did acknowledge that USCIS may approve an H-1B visa petition for less than 3 years. However, if it does approve a petition for less than three years or the amount of time requested on the petition, USCIS must provide its reasoning for approving the petition for less than the time requested. This stopped the trend of USCIS approving an H-1B petition for a consulting company for a protracted period, sometimes as short as one (1) day. This provision of the decision was a financial help to consulting companies, which were filing multiple H-1B petitions to extend the approved time period granted by USCIS.
OTHER FAVORABLE COURT DECISIONS BENEFITTING THE IT CONSULTING INDUSTRY
A flurry of favorable court decisions concerning the topic of specialty occupation also came out of the federal courts toward the end of the Trump administration. These decisions benefitted the IT consulting industry, which saw a great number of H-1B denials on the definition of whether its positions were specialty occupations.
In 3Q Digital, Inc. v. United States Citizenship and Immigration Services, et al, 1:19-cv-579, U.S. Dist Ct D.D.C., March 6, 2020, ruled that “The Court finds that using the OOH over the O*NET report is arbitrary and capricious…These documents [from a FOIA request] show that USCIS is improperly relying on the OOH to make legal conclusions about whether a position qualifies as a specialty occupation.” Therefore, USCIS’s use of the Occupational Outlook Handbook (OOH) as the authority on specialty occupations was an abuse of discretion. USCIS also needs to consider the information presented in the O*NET, which classifies many occupations, especially in the IT field, as professional occupations which require a bachelor’s degree.
In Inspectionxpert Corporation v. Kenneth T. Cuccinelli, 1:19cv65, U.S. Dist Ct M.D.N.C., March 5, 2020, found that “… the Agency’s longstanding construction … recognizes that a position can qualify as a specialty occupation even if it permits a degree in more than one academic discipline.” Even though the O*NET does not list specific majors, “it does inherently provide some limitations on what degrees qualify a person for this type of job.” Therefore, a position can qualify as a specialty occupation even if more than one type of major is accepted for the occupation.
I myself won a favorable decision in the District of Columbia on whether a Computer Systems Analyst was a specialty occupation. In Info Labs Inc. v. United States Citizenship and Immigration Services, et al, 19-684, U.S. Dist Ct D.D.C., March 31, 2020, Judge Rudolph Contreras ruled that it was indeed a specialty occupation. He stated:
From the Court’s perspective, the Handbook’s statement that a bachelor’s degree in computer or information science is “common, although not always a requirement” supports, rather than disproves, the proposition that a specialized degree or its equivalent is normally the minimum requirement. The fact that such a degree is not “always” required—or that “some firms” hire analysts with general business or liberal arts degrees—does not suggest a specialty degree is not “normally” required. Also suggestive is the language that “most” computer systems analysts have a bachelor’s degree in a computer-related field. While this is not phrased in terms of an explicit requirement or condition of employment, it does provide additional support for Info Labs’ position when read in context. And finally, the further indication that a master’s degree in computer science may be more appropriate for “more technically complex positions” fairly implies that a specialized bachelor’s degree is the typical baseline requirement.
These decisions, along with many others that are not mentioned here, curbed USCIS’s attack on specialty occupations within the context of the H-1B visa, especially within the IT field.
WHAT EVIDENCE DOES A CONSULTING COMPANY NEED TO FILE FOR AN H-1B VISA?
As discussed above, a consulting company is no longer required to include contracts, work orders, and end client letters to support the H-1B petition. In order to file an H-1B petition, a consulting company should include the following evidence:
An itinerary listing all work locations and the detailed job duties the beneficiary will perform at each work location
Evidence that the petitioning employer possesses enough work for the beneficiary
Evidence that the petitioning employer possesses the appropriate finances to pay the beneficiary, even when they are not on project
CONCLUSION
During the Trump administration’s assault on the H-1B visa, several consulting companies fought back and filed complaints against USCIS in federal court. A number of favorable decisions came out of these cases that aided H-1B petitioners, but the consulting industry was especially impacted by the ITServe decision. This decision took away many of the restrictions USCIS placed on the H-1B visa within the consulting industry.
Although many USCIS requirements have been lifted, in order to successfully prepare an H-1B petition for a consultant placed at a third-party workplace, an employer should find an attorney that has experience in this niche segment of H-1B petitions. The consulting industry presents certain challenges in the context of an H-1B visa, so be sure to find an attorney that is familiar with these unique challenges and is able to strategize accordingly.