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New Regulation on H-1B Criteria

Posted October 7, 2020Articles, H-1B

Department of Homeland Security has proposed new regulations that will change H-1B criteria. The interim final rule will be published in the Federal Register on October 8, and will take effect 60 days later. An interim final rule means that there is an opportunity to comment on the regulation, but it will go into effect regardless of the comments in 60 days. The government has argued the Covid 19 pandemic justifies these changes as urgent.

It is important to note that these new regulations will only affect applications filed after the effective date of December 7, 2020.

These regulations place in writing policies that the USCIS has relied on in policy memoranda for years. Some of these changes are not so much substantive as they are formalization of existing policies. Other polices make more notable changes. The greatest impact of these changes will be on consulting and staffing businesses. Most other businesses will not see dramatic changes in how petitions are reviewed, but we do believe these regulations could increase the likelihood of requests for evidence.

These regulations are very likely to be challenged by litigation over the next 60 days. We will be monitoring litigation efforts closely. In the meantime, we encourage companies to file for H-1B extensions, prior to December 7th, if possible.

The changes affect main areas of the current H-1B regulations:

Defining “specialty occupation” and the criteria to meet the requirement

Under the previous regulations, “specialty occupation” was defined as an occupation where a bachelor’s degree in a specific field is typically required for entry into the occupation.

Under the new regulation the Department of Homeland Security (DHS) is further clarifying that there must be a direct relationship between the required degree and duties of the position.  With each H-1B petition, sponsoring employers will be required to show how the courses of study for each accepted degree are connected to the duties of the offered position.

In addition to showing the accepted degree fields are related to the position, employers will need to demonstrate at least one of the following amended criteria for H-1Bs:

  • A bachelor’s degree in a specific field is always a requirement for entry into the occupation
    • It is no longer sufficient to demonstrate that a degree is normally, commonly, or usually required.
    • USCIS will continue to reference the Occupational Outlook Handbook (OOH) to determine minimum entry requirements for positions within an occupation.
  • A bachelor’s degree in a specific field is the minimum requirement for similar positions with similar organizations in the same industry as the sponsoring employer.
    • USCIS will continue to reference the OOH and other reliable resources such as information from the industry’s professional association, licensing body, etc.
  • A bachelor’s degree in a specific field is the sponsoring employer’s established practice.
    • Sponsoring employers must demonstrate that the position itself requires a degree in the specific field in order to successfully perform the duties.
    • Merely requiring a specific degree without correlating the degree to the duties will not satisfy this criteria.
    • First-time hires in a role will not satisfy this criterion.
  • The offered position is so specialized, complex, or unique that a bachelor’s degree in a specific field is required to perform the duties.
    • This requirement has not been substantially changed under the new regulations..

Defining  “worksite” , “third party worksite,” and “United States employer”

The USCIS will define worksite consistent with how the terms are defined by the Department of Labor for Labor Condition Application (LCA) purposes. A worksite is the physical location where the work is performed. A third-party worksite is a work location (other than a home office) not controlled by the sponsoring company.

The substantive change is that a maximum of one year validity will be granted for employees working at a third-party worksite.

The USCIS will formalize rules regarding employer-employee relationships for consulting and staffing companies. First, it is formalizing the expectation that the company has particular work available for the employee at the time of filing. Second, USCIS is restoring definitions of employer-employee relationship that existed in the third-party worksite memorandum, but was recently struck down in ItServe Alliance. In addition, USCIS lists 11 factors for determining whether an employer-employee relationship exists. No single factor is dispositive.

The revised regulation lists the following factors: 

  • Whether the petitioner supervises the beneficiary and, if so, where such supervision takes place; 
  • Where the supervision is not at the petitioner’s worksite, how  the petitioner maintains such supervision; 
  • Whether the petitioner has the right to control the work of the beneficiary on a day-to-day basis and to assign projects; 
  • Whether the petitioner provides the tools or instrumentalities needed for the beneficiary to perform the duties of employment; 
  • Whether the petitioner hires, pays, and has the ability to fire the beneficiary; 
  • Whether the petitioner evaluates the work-product of the beneficiary; (vii) whether the petitioner claims the beneficiary as an employee for tax purposes; 
  • Whether the petitioner provides the beneficiary any type of employee benefits; 
  • Whether the beneficiary uses proprietary information of the petitioner in order to perform the duties of employment; 
  • Whether the beneficiary produces an end-product that is directly linked to the petitioner’s line of business; and 
  • Whether the petitioner has the ability to control the manner and means in which the work product of the beneficiary is accomplished.

USCIS is arguing that merely having the right to control alone is not sufficient to demonstrate an employer-employee relationship. This regulation may not be consistent with existing employment law and may be construed as too narrow to comport with employment law in other areas.

Corroborating evidence of specialty occupation work

Sponsoring employers must show availability of work from the start to the end date of the requested period of H-1B stay and cannot be speculative. USCIS is reviving contract, statement of work and end-client letter requirements.  The contracts and supporting documents used to prove availability of work must include:

  • Specific information pertaining to the actual work to be performed, such as work orders, statements of work or other documentation that outlines the responsibilities of the employee.
  • The requirements of the position as imposed by the third-party entity or end-client. This can be a letter from an authorized individual at the end-client. USCIS notes an exception where sponsoring employer’s requirements may be considered, if the employer employs a team of employees at the third party worksite, including an on-site supervisor that manages the work of the team.  

USCIS specifically reserves the right to request contracts and other documentary proof of the availability of work even where the beneficiary will work from the employer's office.

Maximum  validity period for third-party placements

USCIS is issuing a maximum 1-year approval period for H-1B workers who will be placed at third-party client sites.

  • Third party placements will be determined by the certified Labor Condition Application (LCA) and Form I-129 information
  • A previously filed LCA that is still valid may be reused in subsequent one-year H-1B extensions as long as the LCA is valid for the entire requested H-1B validity period.

USCIS’ rationale for the shortened validity periods is that third-party placement workers are more transient and, through historical USCIS research, they've found a higher instance of fraud when conducting site visits for third party placements. Limiting third-party placement H-1B approvals to one year reduces the risk of fraud and failure to timely file amendments for "material changes in employment" 

Written explanation for shortened H-1B approvals

USCIS is now required to issue a brief explanation when H-1B approval notices are issued for an earlier end validity date than what was requested in the Form I-129.  This will not apply to the 1-year validity periods for third-party placements as the 1-year validity is the maximum that can be requested.

Itinerary requirements for H-1B petitions

As a result of the ITServe Alliance court decision, the itinerary requirement will no longer apply to H-1B petitions.  It will, however, still be required for other H classifications.

Site visits

USCIS is adding additional site visit regulations specific to the H-1B program to (1) codify existing authority, (2) clarify the scope of inspection, and (3) set forth consequences for petitioner or third-party failure to cooperate.

Scope of Inspection

The new regulations codify and expand the scope of investigations to authorize:

  • site visits at any petitioner or third-party location;
  • interviewing petitioner and third-party officials, or any other person USCIS deems necessary to verify facts; and
  • reviewing petitioner and third-party records related to compliance.

Failure to Cooperate 

The new regulations authorize revocation or denial of an H-1B petition for failure or refusal of a petitioner or third-party to cooperate with site visits.

The additional site visit regulations will only apply to H-1B petitions filed after the effective date of the regulation. For all petitions filed prior to the effective date, USCIS will use the legal framework in effect at the time the petition was filed.

We are closely monitoring this matter and will provide update as they are available.

Please reach out to your designated Meltzer Hellrung attorney or consultation@meltzerhellrung.com with any questions.