New Questions for Employers That Sponsor Foreign Nationals

USCIS Form Update Impacts H-1B, L-1 and Other Visa Categories

Starting December 22, 2010, employers seeking to sponsor foreign nationals for employment in H-1B, H-1B1, L-1 and O-1 visa categories must certify compliance with “deemed export” laws. The deemed export attestation is included on the new I-129 form recently released by U.S. Citizenship and Immigration Services (USCIS). The I-129 form is used by employers sponsoring foreign nationals in most temporary employment visa categories including the H-1B, L-1, TN and O-1. In addition to the deemed export certification, employers also must answer questions designed to determine whether the sponsored worker will work at a third-party site – an apparent follow-up to the increased USCIS scrutiny on consultants and contractors seeking H-1B status (see the June and August 2010 issues of the Immigration eAuthority for more information). Thus, the updated form creates new challenges for employers.

Deemed Export Certification

The amended I-129 form is required for all H-1B, H-1B1, L-1, TN, P and O-1 visa petitions filed directly with USCIS. (Note that L-1 blanket visa applications, whereby transferring employees of companies with an approved L-1 blanket petition can apply for the L-1 visa directly at the consulate, have not been impacted by this new export control attestation requirement.) The new deemed export certifications are required for H-1B, H-1B1, L-1 and O-1 petitions filed with USCIS.

In such cases, the amended form requires employer sponsors to certify compliance with two export control laws, the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). Under these laws, certain technology and technical data are “deemed” to be exported if such information is released or provided to a foreign national in the United States. While some technology and technical data are relatively easy to identify as defense or munitions that would fall under the export control regime, particularly that of ITAR, some technology and technical data are more difficult to classify under EAR as subject to deemed export rules. For example, “dual-use” technologies may be used in a benign consumer product but also may have potential applicability in defense, nuclear, or other prohibited end-uses. In addition to technology and data created by the entity itself, employers will have to evaluate and classify technology and technical data that may have been generated by third parties and vendors that is accessible to the foreign national employee in the performance of his or her job duties.

While these laws are not new, this is the first time that employers have had to make specific attestations regarding compliance with these export control laws in an immigration context. The new form requires the following specific attestations by the employer:

With respect to the technology or technical data the petitioner will release or otherwise provide access to the beneficiary, the petitioner certifies that it has reviewed the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) and has determined that:

• A license is not required from either [the] U.S. Department of Commerce or the U.S. Department of State to release such technology or technical data to the foreign person; or
  
• A license is required from the U.S. Department of Commerce and/or the U.S. Department of State to release such technology or technical data to the beneficiary and the petitioner will prevent access to the controlled technology or technical data by the beneficiary until and unless the petitioner has received the required license or other authorization to release it to the beneficiary. 

The form thus requires employers to accurately identify employees who will have access to their controlled technologies in order to make this attestation. Please note that “foreign national,” for the purposes of both EAR and ITAR, does not include U.S. permanent residents (i.e., “green card” holders), asylees, or refugees.

Employers with well-established export compliance programs already engage in early identification of deemed export license requirements. However, even these employers will need to adjust their hiring procedures and internal processes to correctly identify impacted individuals and communicate this with those individuals responsible for immigration functions. Employers without dedicated export control personnel may need assistance in quickly evaluating their technologies and technical data to assess applicability and to implement the necessary controls to address this new certification requirement.

It is still unclear how this issue will be enforced. Although USCIS has said in recent liaison calls that this issue is unlikely to impact adjudications and is merely meant to collect information, one can only imagine that the questions are being asked for a reason. The newly announced Export Enforcement Coordination Center will be housed within the Department of Homeland Security along with the USCIS. This makes it likely that the collected information will be shared with this new agency or that USCIS could add this issue to its on-site fraud or audit investigations. In addition, there is an increased possibility that employers that erroneously certify whether an export license is required may be subject to criminal sanctions for perjury due to a false statement. Certainly, it will lend the U.S. government additional tools with which to sanction employers for failure to comply with export control regulations.

Consultants and Contractors

Another change to Form I-129 will primarily impact staffing and consulting industry companies that sponsor H-1B workers. In January of this year, USCIS issued a memorandum intended to provide guidance regarding the requirement that the H-1B employer/petitioner establish that an employer-employee relationship exists with the sponsored H-1B worker. The “Neufeld memo” has been controversial since its introduction and reportedly has 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 (e.g., the ability to hire, pay, fire, and supervise the daily activities of the H-1B worker) 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, such as itineraries of assignments for roving employees, statements of work and contracts with third-party sites, employee performance reviews, and other indicia of an employer-employee relationship. The new I-129 form effectively memorializes the Neufeld memo. It includes a section of targeted itinerary and off-site worksite questions, thus indicating that the additional burdens that have plagued consulting and staffing companies since the memo’s release are here to stay.

Specifically, the new I-129 form includes questions such as, “Is an itinerary included with this petition?” and “Will the beneficiary work off-site?” In addition, the I-129 H supplement requires additional employer attestations to the following three Yes/No questions:

• The beneficiary of this petition will be assigned to work at an off-site location for all or part of the period for which H-1B classification is sought.
• Placement of the beneficiary off-site during the period of employment will comply with the statutory and regulatory requirements of the H-1B nonimmigrant classification.
• The beneficiary will be paid the higher of the prevailing or actual wage at any and all off-site locations.

Note that the issue of third-party placement also is relevant in the L-1B visa category. Employers of L-1B specialized knowledge workers who work at third-party sites also must demonstrate “control” of the L-1B worker, a requirement instituted by the Visa Reform Act of 2004. Thus, Neufeld memo criteria also may be applied to L-1B petitions and potentially in any visa category for which Form I-129 is required. Questions about working at a third-party site were included in the L-1B section of previous I-129 forms.

For those clients with employees who work off-site or are considered “roving employees,” these questions are problematic as it is often impossible to predict an employee’s exact assignment or location several months or years in advance. USCIS has included a new explanation page on the Form I-129 allowing the opportunity to explain the employee’s itinerary and address the off-site worksite question. There is a high probability that H-1B petitions will be limited to the length of time stated in third-party contracts and statements of work, resulting in a near constant need to renew and extend applications for those assigned to short-term contracts. Further, it is unclear at this point if the form will lead to new standards when reviewing H-1B petitions for these employees. Given the current focus on enforcement however, it is very likely that this form will invite an increased number of requests for evidence. Further, the answers to these questions will likely trigger an increase in the number of enforcement actions, particularly for those operating in the staffing industry. Thus, it is crucial that companies ensure that they are compliant and consistent in their recordkeeping for these H-1B employees.