The January 8, 2010 Neufeld Memo, a Reason to Panic or Breathe the Sigh of Relief?

Our law firm has 4 lawyers and our practice includes a vigorous H-1B visa processing for numerous clients spreading over Columbus, Ohio, Cleveland, Ohio, Washington, DC and Southfield, Michigan. One of my clients in Columbus, Ohio called me earlier this month greeting me stating: “Good morning Gus Shihab my H-1B Lawyer.” I laughed and said “good morning to you as well but I am more than just an H-1B visa lawyer.” He said: “I know, but I am really worried about this new memo recently issued by Donald Neufeld entitled: “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements”. He added: “is it the Neufeld Memo or the Neufeld Memo, I get the spelling confused.” I responded by saying: “it is indeed the latter and what is so “new” about the Neufeld Memo anyway?” After talking to him for about 30 additional minutes, he left me with a huge “thank you” and said: “I will be sure to spread the word.”

Now, if you are a company and have processed H-1B visas during the past couple of years, or you are an employee on whose behalf a specialty occupation, or H-1B visa petition was filed in that time period, you know that the USCIS was issuing, on a frequent basis, long, convoluted and nonsensical Requests for Evidence (“RFE”). The RFEs asked for the submittal of voluminous documentation, a lot of which had nothing to do with position offered itself or the specialty occupation nature of such position. Basically, the USCIS was using a “kitchen sink” approach in requesting documentation from H-1B visa petitioning companies. I have processed thousands of H-1b visas in my career, and I can comfortably tell you that the majority of these RFEs were targeting small to medium consulting companies; ones which contract most if not all of their employees to be placed at a third party client locations. It appeared to me that the USCIS was denying H-1B visa petitions where there was more than one entity contracting for the services of the alien employee between the petitioning company and the end client. In other words, if there was more than one contracting entity between the H-1B visa petitioning employer and the end client company, the H-1B visa petition is doomed for denial. The denial never talked about the element of control but instead it stated that the petitioning company is not an “employer” but maybe an “agent.”

I must share with you that it took a lot of head scratching, thinking and brainstorming at the Law Firm of Shihab & Associates until we finally figured it out! I am saying that we figured out what the USCIS was after, long before the January Neufeld memo was issued. What was between the lines of the numerous RFEs and the H-1b denial letters was a tacit but loud USCIS concern: who is actually controlling the actions of the employee. In essence, even though it never said so, the USCIS wanted to make certain that the H-1b visa petitioning employer exercised dominion and control over the alien’s actions; if the USCIS felt that there were too many layers between the H-1B visa petitioning employer and the end client, that the element of employer-employee relationship was lacking.

In doing so, the USCIS was quietly putting smaller information technology companies out of business and was in essence forcing the larger employers to petition for the H-1B visas, who had made a business decision to retain such consultants on as independent contractors. I would also add, that the USCIS in issuing these enormous RFEs and denial letters, were altering the course of free enterprise in putting smaller more agile companies out of business and by rearranging the business decisions of the larger end client companies.

Having said all of that, we wrestled with all of these issues advising our clients to make certain that they are keenly involved in the management of their employees and to make certain that they control their actions contractually through the middle layers of consulting companies. This is what we call in my firm as the evidence of “collaboration” and “proving the contractual path.”

As the reader can clearly see, it took on a lot of effort to “read the minds of the USCIS so to speak and to come up with a strategy to clarifying the issue of whether or not there existed a bona fide employer-employee relationship between the H-1B visa petitioning company and the alien/employee who is being placed at a third party end client worksite.

But, on January 8, 2010, Donald Neufeld issued a memorandum which introduced an eleven (11) prong criteria for determining whether such employer employee relationship existed. The criteria are listed in the memo. In doing so, the Neufeld memorandum attempts to create more objective criteria for determining whether the petitioning employer has control over the actions of the employee. The antecedent legal foundation which the memo relies on is the common law doctrine of master-servant. The common law doctrine of mater-servant explains that there are several factors, if they existed, the law will agree and determine that a master-servant relationship exists among the parties. If some of the criteria was not present, then such relationship may not rise to the level of master-servant; meaning employer-employee.

So now that we have more objective criteria, should we panic or should we breathe the sigh of relief. I am doing the latter because it gives the immigration bar and employers a clearer path in knowing how the USCIS will adjudicate H-1B visa petition when the alien is placed at a third party end client location.

Contact the Law Firm of Shihab & Associates, Co., LPA if you are in need of an attorney who is versed with the current issues affecting your H-1B visa. Our slogan is “Innovative Representation….Proven Results.” We fight for our clients. Call us today at 614-255-4USA (4872).

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