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H-1B Visas and maintaining foreign workers on- and off-site

By Elizabeth Espin Stern

Political pressure and increasing share of H-1B work visas used causing U.S. Congress and immigration authorities to increase scrutiny. IT industry represents the most substantial employer of H-1B workers. Rules of the game boil down to three major categories.

Technology companies and users of IT services in the U.S. often use the H-1B work visa to authorize highly-skilled foreign national college graduates (and advanced degree holders) to augment their workforces.

Being able to deploy a number of third-party employees on an urgent project is an important competitive advantage. Accordingly, a vibrant IT consulting market exists which, for the most part, employs foreign nationals holding H-1B work visas.

However, the economic slowdown, political pressure and the increasing share of H-1B work visas used by IT companies, have caused both the U.S. Congress and the immigration authorities to increase their scrutiny over the H-1B work visa program.

According to long-standing regulations, the H-1B visa is available to individuals whose services are sought by a U.S. employer in a specialty occupation. Such positions include jobs typically filled out by the IT consulting industry such as engineers, computer systems analysts, and many others. Meanwhile, recent restrictions on H-1B usage include:

  • Refusal by Congress to create a flexible quota related to demand
  • Imposition of job market test and other restrictions on recipients of Stimulus Act funding in 2009-10
  • New agency limitations based on employer-employee relationship proof when workers are off-site, without any rulemaking

To qualify for H-1B status, a foreign national employee must have at least a bachelor’s level degree (or foreign equivalent) in a field related to the position offered.

As part of the H-1B application process, the employer must attest the H-1B worker will receive a salary commensurate with the prevailing wage for U.S. workers. Similarly, the employer must also attest U.S. workers are not disadvantaged by the hiring of the foreign national and that U.S. and H-1B workers are offered the same benefits.

So, what are the rules of the game?

In essence, the rules boil down to three major categories – (i) is the worker highly skilled and relevant to a sufficiently complex position; (ii) has the employer proven wage parity; and (iii) does the employer have control over the employee’s services.

The latter is perhaps the most controversial currently, as until earlier this calendar year the validity of the employer-employee relationship was rarely questioned for H-1B workers, even for those performing services directly at customer sites.

Complex positions requiring highly skilled workers
To obtain an H-1B award, the employer must show it normally requires a four-year college degree or its equivalent for the position, with the job being sufficiently complex as to mandate that degreed-level know-how.

The candidate’s academic and career background must also clearly show attainment of this level of degreed-level training.

A tech support admin is unlikely to qualify for an H-1B, but an analyst with clear discretion to develop design specifications, analyze customer needs, and develop parameters for IT solutions is clearly functioning at the advanced technical level that logically requires a college degree.

To ensure companies are not misrepresenting the nature or terms of the position, the U.S. Citizenship and Immigration Services’ (www.uscis.gov)  Office of Fraud Detection and National Security (FDNS) has been making unannounced site visits for the past two years.

FDNS officials show up at the job site to investigate the legitimacy of an employer’s business and the accuracy of representations made in filed H-1B petitions. The focus for them? IT positions, as USCIS has assessed in prior fraud reports that the IT industry misuses the H-1B for lower-level jobs.

The bottom line, with increased scrutiny of the H-1B program, it is more important than ever for H-1B employers to provide accurate and clear information to support H-1B petitions they file.

The goal of the audit program is to search employers who truly abuse the H-1B program, however, compliant employers are equally at risk for a site visit and must be prepared to demonstrate the legitimacy of their H-1B program.

Competitive wages, appropriate benefits
A key compliance mandate is U.S. employers must offer competitive wages and standard benefits to H-1B workers.

The employer must submit a labor condition application (LCA) to the Department of Labor (www.dol.gov) in which the employer describes the job title, salary and location.

The LCA requires the employer to determine the prevailing market wage for the position in that geographic area, and actual company wages paid by the employer to other individuals with similar experience and qualifications for that type of work, and pay the higher of these amounts to the H-1B worker.

The employer must also attest the working conditions of U.S. workers similarly employed will not be adversely affected by the hiring of the H-1B worker.

It is essential the employer captures appropriate market wage information, by classifying the job appropriately.

Employers that hire a 10-year experienced computer systems analyst, for example, need to use a wage source that reflects a senior level (typically a level 3 or 4 in the Department of Labor’s preferred system) of the candidate.

There is a longstanding political perception that employers are using the H-1B to depress U.S. wages, capitalizing on what is demeaningly referred to as cheap foreign labor.

The fact that H-1B workers represent university-trained professionals from some of the leading academic institutions in the world – including often our own U.S. universities – seems to have gotten lost in the political debate about immigration policy.

Employers using the H-1B program now need to help clarify they are using H-1B workers to enrich their work force and not to cheapen the professional jobs sector.

Proving employer-employee relationships
In a January 8, 2010 memorandum by Donald Neufeld, associate director for service operations, USCIS provided new guidelines to its H-1B adjudicators which directly impact the ability of IT companies to place H-1B workers at third-party work sites.

The already stringent H-1B standards were given another dimension, one requiring the employer to demonstrate there are clear indicia of supervision of the employee and a traditionally acceptable employer-employee relationship.

USCIS deems that such relationship is established when the employer has the ‘right to control’ the means and manner in which the work is performed. This is the most significant for IT consulting situations, where third-party placements or similar arrangements occur frequently.

The Neufeld Memorandum calls for the adjudicator to weigh a number of factors when determining whether such right to control has been established.

For example, supervision arrangements; performance evaluation structure, daily job reporting, ownership of know-how, ownership of tools or instrumentalities used during work, hiring power, compensation, and control over end product are among the factors substantiating the employer-employee relationship.

Thus when an employee is assigned to a customer site, several practical recommendations are essential:

  • If the employer executes a services contract with the customer, that contract should clearly note that the employer-provider maintains exclusive personnel authority over any on-site worker, including hire, fire, and wage-setting authority;
  • The employee should report directly and regularly to a manager within the employer-provider organization, with a record of written reports maintained;
  • The employer-provider should maintain a record of routine evaluations of the performance of the assigned employee.

Conclusion
The H-1B visa is a valuable tool that should allow U.S. employers to attract top talent from around the world.

Protections to avoid abuse are appropriate, but the rigidity of a quota that does not adapt to market conditions; a clamp-down on the category for financial service companies when stimulus funding was provided, and attempts to direct how employers use their work corps are the types of blind limits that stifle market growth.

The IT industry represents the most substantial employer of H-1B workers.

To allow ongoing growth, a global supply of professional workers must be maintained to ensure American businesses remain versatile and competitive in the international marketplace.

As the U.S. IT sector continues to drive global innovation, it also needs to demonstrate movement of talent across borders – inbound and outbound – is at the root of economic success.




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