“Anti-Contractor” H-1B Memo from USCIS Challenged in Lawsuit

In early January, U.S. Citizenship and Immigration Services (USCIS) Associate Director Donald Neufeld issued a memorandum intended to provide guidance, in the context of H-1B-petitions, on the requirement that the H-1B employer/petitioner establish that an employer-employee relationship exists and will continue to exist with the sponsored H-1B beneficiary throughout the duration of the requested H-1B validity period. The “Neufeld memo” has been controversial since its introduction and has reportedly resulted in numerous visa petition denials, requests for additional evidence (RFEs), and possibly even refusals of admission at U.S. ports of entry (see the February 2010 issue of the Immigration eAuthority).

The impact of the memo clearly focuses on independent contractors, self-employment and third-party worksites, the latter of which is commonly used by staffing or consulting companies. The memo sets forth some of the considerations to be used when determining if the requisite level of control over work activities exists to establish a true employer-employee relationship. The memo further suggests the types of evidence (e.g., signed employment agreements) that sponsoring petitioners might submit to establish that such a relationship exists.

On June 8, several software and IT companies, along with a national trade association of staffing companies, filed a lawsuit against USCIS seeking invalidation of the Neufeld memo. The suit alleges that USCIS failed to follow proper regulatory protocols in enacting this change of policy. The plaintiffs are seeking a temporary injunction and declaratory judgment preventing USCIS from using the policies stated in the Neufeld memo, at least until proper rulemaking has taken place.