Angelo A. Paparelli on H-1B Litigation, USCIS Memo

Angelo A. Paparelli, June 22, 2020

Litigation Victories Force USCIS to Rescind Restrictive H-1B Memoranda ~ Agency Also Offers Unclear Guidance on H-1B “Nonproductive” Status

"In the wake of recent losses in the federal courts, U.S. Citizenship and Immigration Services (USCIS) — on June 17, 2020 — issued a memorandum that rescinds two agency policies which, for more than ten years, had forced employers of H-1B (Specialty Occupation) workers stationed at customer worksites to submit voluminous and burdensome evidence.  Thankfully, under the new interpretation such evidence will no longer be required.

The June 17 memorandum also provides partial guidance on possible petition denials and revocations, as well as potential status violations, when employees are placed in nonproductive status, whether in response to COVID-19, or otherwise.  Yet it leaves many questions unanswered.

Easier Proof of Employer-Employee Relationship

For more than a decade, USCIS had required employers intending to place H-1B employees at third-party worksites to submit proof of client contracts, purchase orders, statements of work, letters from customers, and similar evidence to establish that the H-1B petitioner (and not the customer) was and would remain the actual employer of the sponsored worker. See, “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements,” HQ 70/6.2.8 (AD 10-24), issued January 8, 2010. These documents often contained confidential business information; thus, procuring them for each employee often entailed needless delay and inconvenience, requiring outreach to, and delicate negotiation with, the corporate customer.

Employers petitioning for H-1B noncitizens for offsite work no longer need to file evidence obtained from customers. The January 8, 2010 policy is now rescinded and can no longer be applied to “any pending or new requests for H-1B classification, including motions on and appeals of revocations and denials of H-1B classification.”

USCIS’s latest memorandum makes clear that its adjudicators should not request evidence derived from the petitioner’s customers, but may consider such proof if the employer submits it.  An H-1B employer, however, must still prove the existence of a bona fide job offer when the petition is filed by satisfying only “ONE” (capitalization courtesy of USCIS) of the following criteria, namely, the authority to (1) hire, (2) pay, (3) fire, (4) supervise, or (5) otherwise control the work of the sponsored H-1B employee.

Contracts and Itineraries No Longer Required

Also rescinded by the recent USCIS policy memorandum is a February 22, 2018 interpretation, “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites,” PM-602-0157, which the agency describes as having been “intended to be read together with the 2010 memorandum and as a complement to that policy.”  The professed purpose of the 2018 memorandum was to allow USCIS adjudicators the opportunity to confirm that the H-1B employee would be employed, on a “non-speculative” bases, in a job classifiable as a specialty occupation.  In practice, USCIS had required proof of day-to-day assignments to establish the availability of specialty occupation work, and too often approved H-1B petitions only for the duration of the customer contract rather than for the otherwise-applicable statutory maximum period of H-1B petition validity. With USCIS’s issuance of its June 17 memorandum, contracts, itineraries and proof of day-to-day assignments are no longer required, but “the petitioner may choose to provide such evidence.”

Given that USCIS adjudicators are no longer allowed to ask for evidence that is burdensome and time-consuming to produce, and may not deny the petition or shorten the period of H-1B petition validity and status solely because such evidence is not filed, there seems no advantage in providing it. Or, as one wag has suggested, “[stress] is unnecessary and unnecessary stress is very unnecessary.”

New USCIS Guidance on Benching

The June 17, 2020 policy memorandum also clarified USCIS guidance on the possible immigration consequences arising in situations when an H-1B worker is not performing services as described in the employer’s petition.  The memorandum is especially relevant given the varying responses of H-1B employers and employees to the COVID-19 pandemic that has triggered a wave of repercussions ranging from reductions in hours, leaves of absence, furloughs, and terminations of employment, some of which have been couched as extended severance periods that purport to prolong employment status.

The new memorandum states:

The failure to work according to the terms and conditions of the petition approval may support, among other enforcement actions, revocation of the petition approval, a finding that the beneficiary failed to maintain status, or both. . . .

Lack of work may be a material change in the terms and conditions of employment that could affect eligibility for H-1B nonimmigrant classification and could require the filing of an amended petition. . . .

In assessing whether a beneficiary’s non-productive status constitutes a violation of the beneficiary’s H-1B nonimmigrant classification, the officer must assess the circumstances and time spent in non-productive status.

As the memorandum notes, the Immigration and Nationality Act (INA) and regulations of the U.S. Department of Labor (DOL) require that the employer continue to pay H-1B nonimmigrants the “required wage” reported to DOL if the employee “is not performing work and is in a nonproductive status due to a decision by the employer.” (This obligation, sometimes described as the duty to pay during periods of “benching,” applies as well to H-1B1 employees from Chile and Singapore and to E-3 workers from Australia.) The required wage need not be paid, however, if an employee “experiences a period of nonproductive status due to conditions” which “render the nonimmigrant unable to work.” See INA § 212(n)(2)(C)(vii)(listing exceptions to the prohibition on unpaid benching) and 20 CFR § 655.731(c)(7)(i) and (ii)(listing, respectively, circumstances where required wages “must” or “need not” be paid).

USCIS acknowledges in the new memorandum that “neither statutes nor regulations state the maximum allowable time of non-productive status.”  Thus, it authorizes agency officers to exercise discretion in issuing a notice of intent to deny (NOID) a pending petition, or a notice of intent to revoke (NOIR) a previously approved petition, and grant of status.  Issuance of a NOID or NOIR would give the petitioner (but not the worker) a chance to explain why adverse action should not be taken.

The memorandum also includes an exception (citing the DOL regulation, 20 CFR § 655.731(c)(7)(ii), noted above):

However, it would not be a violation of H-1B nonimmigrant status for a beneficiary to be in non-productive status during a period that is not subject to payment under the petitioner’s benefit plan or other statutes such as the Family and Medical Leave Act or the Americans with Disabilities Act. (Emphasis added.)

The quoted statement is unhelpful for two reasons.  First, it is confusing because it contains a triple negative.  Second, it conflates the employer’s duty to pay the required wage with the employee’s distinct obligation to maintain lawful status.

Presumably, a USCIS adjudicator in reliance on the quotation might find, for example, that a medical disability would still allow the individual to be classified as having maintained lawful status if the employee on medical leave is not paid under the benefits plan, the FMLA or the ADA or some other law requiring payment. Regrettably, however, the USCIS Memorandum does not address the opposite situation, i.e., where the employer pays the required wage to an H-1B worker who is on an approved medical leave, even though payment is not required by the benefits plan or by statute. (Readers should note that USCIS in the past has often approved an otherwise approvable H-1B petition, and found no violation of status, as a result of a leave of absence that is medically justified and reasonable in duration – whether or not the employer has paid the required wage in the interim.)

Also disappointing is the omission in the new memorandum of any guidance on recurrent fact patterns involving nonproductive status that have arisen in response to the COVID-19 pandemic.  Numerous questions remain unanswered in the new memorandum, including these:

• What happens if an employee’s hours were reduced even though s/he was willing and able to work full time and the employer never filed an amended petition to allow reduced hours? Will that be treated as a status violation when the employee invokes H-1B portability and seeks to transfer status to another employer? Note that the INA and the DOL regulations cited above are intended to protect the employee from unlawful benching by the employer, including a reduction of hours. Consider also relevant precedent decisions. See, e.g., Matter of Lee, 11 I&N Dec. 601 (Comm. 1966)(“[b]y ceasing his temporary employment . . . the applicant terminated his lawful nonimmigrant status”) and compare Matter of Siffre, 14 I&N Dec. 444 (Comm. 1973)(“[in the case of a nonimmigrant who] has been admitted for a fixed period, within that period his stay is not unlawful unless by his own conduct he violates one of the conditions of his admission [emphasis added]).
• What if an employer who intends to terminate the employment of an H-1B worker offers the employee a period of extended paid or unpaid “garden leave” to graciously allow the individual to find another career opportunity but requires no services or labor in return and affords the individual no access to employer IT or facilities? Note that USCIS regulations governing the Form I-9 (Employment Eligibility Verification) process allow employer-authorized paid or unpaid leaves of absence to be treated in certain situations as “continuing employment.” Note also that, although USCIS regulations allow a terminated H-1B employee up to a 60-day grace period to find and be sponsored for another job, the agency can shorten or eliminate the grace period in the exercise of discretion based on all of the facts involved in the “cessation of employment.”
• What if an H-1B employee files an aggrieved-party complaint with the DOL for having been benched without pay and terminated in retaliation for objecting to the pay cut? Note that INA 212(n)(2)(C)(v) requires the “Secretary of Labor and the Attorney General [now the Secretary of Homeland Security]” to “devise a process under which an H-1B nonimmigrant who files a complaint regarding [retaliation] and is otherwise eligible to remain and work in the United States may be allowed to seek other appropriate employment in the United States for a period not to exceed the maximum period of stay authorized for such nonimmigrant classification.” However, no such “process” has ever been “devise[d].” Is that a status violation by the employee?

Given that the June 17, 2020 memorandum does not fully address these and other foreseeable situations arising in response to the pandemic, H-1B employers and employees have little choice but to consult with their immigration counsel and await case-by-case adjudication outcomes – unless of course USCIS is again required to recant the latest guidance through federal court litigation."