Employer's Obligations When Placing H-1B Workers at Third-Party Site

Learn the basics to deal with USCIS concerns about who the actual employer is.

Ever since the issuance of a January 8, 2010 memorandum from Donald Neufeld, Associate Director of Service Center Operations of U.S. Citizenship and Immigration Services (USCIS), H-1B employers have had a heightened awareness of the legal and practical issues related to placing H-1B workers at third-party locations.

The typical third-party placement scenario involves, for example, an information technology consulting firm that places consultants on location at a client site for short- or long-term projects. Other scenarios may involve accountants performing on-site audit work or architects or engineers inspecting operations in the field.

Failure to handle and monitor these worker placements properly can result in denied petitions for H-1B workers, difficulty in sponsored workers obtaining H-1B visas from the U.S. Consulates abroad, enhanced scrutiny of initial H-1B petition filings, increased audits of petitions after they have been approved, assessment of back wages, civil fines, and the inability to sponsor other H-1B workers.

In each of these situations, if you are the employer, you need to know whether there is a strike at the location, how long the H-1B employee will be there, and how much control you will have over the employee. You also may need to have a contract to document the need for the third-party placement. The following examines these various issues and how they may affect you as the employer.

If the Placement Site Has a Strike, Lockout, or Work Stoppage

When you file the Labor Condition Application (LCA), which is a preliminary step in the H-1B petition process, you are stating that there is not a strike, lockout, or work stoppage for the H-1B employee's occupation at the work location. If a strike, lockout, or work stoppage happens after you file the LCA, you must notify the Department of Labor and not place any additional employees at that location in the same occupation until it is resolved.

Whether Assignment at the Third-Party Location Lasts Long Enough to Warrant an LCA

The length of time you assign an H-1B worker to a third-party location will determine whether you need to have an approved LCA for that location and whether you need to post an internal notice at the location or give notice to the collective bargaining representative, if it is a union job.

The rules are rather complex and require a case-by-case analysis for both short- and long-term placements. In general, if an H-1B employee is going to work at more than one location, you will need to identify all locations and the projected time period at each location to evaluate LCA and posting or notice requirements. If USCIS has already approved your H-1B petition, and you now want to assign the employee to a location not stated on your petition, you may need to file an amended petition.

Whether Your Company Exerts Sufficient Control Over the Employee

Perhaps the most significant development since the publication of what has become called "the Neufeld Memo" is the examination of how much control you have over your H-1B employee at third-party locations. USCIS wants to be sure that you as the H-1B Petitioner/Employer have sufficient control over your H-1B workers and that you are not simply sending your employees off to become employees in everything but name at third-party locations.

The IT Consultant is a good example. If you assign your H-1B employee to work on a new system installation at ABC Corp., you must continue to direct and control the activities of your employee. If you simply provide a paycheck, and ABC Corp. directs the H-1B worker, provides daily assignments, and reviews the H-1B worker's performance, USCIS will not approve the H-1B petition.

In deciding who the employee really works for, USCIS looks at such factors as supervision, work assignment and review, whose equipment/tools are used, salary and benefits payments, and use of your proprietary information to complete the work.

Therefore, before pursuing an H-1B petition for a worker whom you will assign offsite, you need to review the details of the situation to ensure that you’ll be complying with USCIS's interpretation of the employer-employee relationship required for H-1B petitions.

Creating a Contract for Services

A final important consideration for third-party placements of H-1B workers is the likely need to document that you will have actual work for the employee to do. Again using the IT Consultant example, USCIS will want to see copies of contracts outlining the work that you have agreed to do for your client(s).

For example, if you're in the midst of a three-year system upgrade for ABC Corp., you will need to provide a copy of the contract along with your H-1B petition, to show that you already have work for the H-1B employee.

USCIS usually approves H-1B petitions only for the duration of the existing contract. Therefore, if you are halfway through your three-year engagement, you likely will get an H-1B approval for 18 months. Provided the contract is extended, or provided you secure another contract, you can petition to extend the H-1B employee's immigration status/work authorization for additional periods.

It's still possible to hire H-1B workers and assign them to third-party locations. It simply requires careful analysis of the factors outlined above. Proper planning and supporting documentation will help you obtain approval of your H-1B petitions.

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