1. Introduction:

On February 23, 2018, the USCIS issued Policy Memo PM-602-0157 (PM). It rescinds outright certain earlier memos and supersedes others and seeks to add to and complement the Neufeld Memo (“Determining the Employer-Employee Relationship for Adjudication of H-1B petition, Including Third-Party Site placements”). The following memos are no longer valid:

  1. “Contracts Involving H-1B Petitions” – memo issued June 6, 1995.
  2. “Supporting Documentation for H-1B Petitions” – memo issued November 13, 1995
  3. “Interpretation of The Term ‘Itinerary’ – memo issued December 29, 1995

This PM also debuts the new mission statement of the USCIS. Where the earlier mission statement began with the words “USCIS secures America’s promise as a nation of immigrants”, the new mission statement uses language that appears to mirror the current administration’s political rhetoric. This aside, the memo seeks to primarily establish what constitutes eligibility for an H-1B petition involving third-party worksite placements. The memo sets out two evidentiary prongs:

  • The beneficiary will be employed in a specialty occupation. This means that the petitioner has specific and non-speculative qualifying assignments in a specialty occupation for the beneficiary for the entire time requested in the petition; and
  • The employer will maintain an employer-employee relationship with the beneficiary for the duration of the requested validity period.

2.  USCIS Acknowledges Legitimacy of Third-Party Arrangements and IT “Vendor” Contracts:

On Page 3, paragraph 4, the USCIS specifically acknowledges the legitimacy of third-party arrangements stating:

USCIS acknowledges that third-party arrangements may be a legitimate and frequently used business model.  These arrangements typically involve a third-party end-client who solicits service providers to deliver a product or fill a position at their worksite.  In some cases, the H-1B petitioner may place the beneficiary directly with the client, establishing a petitioner-client relationship.  In other cases, one or more subcontractors, commonly referred to as vendors, may serve as intermediaries between the end-client and the H-1B petitioner.

A footnote (FN2) to this paragraph appears below and further validates the information technology (IT) industry practice of using prime vendors and secondary vendors to staff individual projects. The footnote specifically states,

The “vendor” concept is frequently referenced in H-1B petitions that involve the information technology (IT) industry.  While the terms are not precisely defined, petitions commonly refer to “primary vendors,” who have an established or preferred relationship with a client, or “implementing vendors,” who bid on an IT project with a client and then implement the contract using their own staff.  Primary or implementing vendors may turn to secondary vendors to fill staffing needs on individual projects. As a result, the ultimate client project may be staffed by a team of H-1B beneficiaries who were petitioned for by different, unrelated employers.

The memo does not reject this arrangement but offers several conditions as to how the USCIS will adjudicate petitions involving such third-party arrangements. Specifically, the Service appears to be concerned with continuing abuses involving IT consulting companies such as “benching”, misclassification of the position to take advantage of lower wage occupations, and finally working in jobs that do not require an individual with a bachelor’s degree in a specific specialty (specialty occupations). The memo goes on to offer clarifying guidance regarding contracts and itineraries that petitioners submit in third-party worksite cases:

3.  Contracts and Itineraries:

  1. Contracts as evidence to demonstrate the beneficiary will be employed in a specialty occupation

The memo requires petitioners to demonstrate that it has specific and non-speculative qualifying assignments in a specialty occupation for the beneficiary for the entire time requested on the petition.  Specifically, the USCIS wants employers to submit corroborating evidence such as contracts and work orders from the end client that demonstrate that there is a specific work assignment for the H-1B beneficiary. In other words, Master Services Agreements with no corresponding work order for the duration of the assignment will be unacceptable.

No RFE: Based on this memo, USCIS Officers would now be allowed to deny the petition if this evidence is absent without having to issue a request for additional evidence.

  • Combination of Evidence to Satisfy the Lack of Direct Contract: The memo does offer an alternative when the petitioner is unable to submit a direct contract with the end client. However, the memo explains in a footnote [FN3] that the combination of evidence must include detailed statement of work providing a more comprehensive view of the work. It goes on to state, “contractual agreements that merely set forth the general obligations of the parties to the agreement, and that do not provide specific information pertaining to the actual work to be performed, may be insufficient to establish that the beneficiary will be employed in a specialty occupation.” The following combination of evidence may be submitted to satisfy the lack of a direct contract:
  • Evidence of actual work assignments, which may include technical documentation, milestone tables, marketing analysis, cost-benefit analysis, brochures, and funding documents.
  • Copies of relevant, signed contractual agreements between the petitioner and all other companies involved in the beneficiary’s placement, if the petitioner has not directly contracted with the third-party worksite.
  • Copies of detailed statements of work or work orders signed by an authorized official of the ultimate end-client company where the work will actually be performed by the beneficiary. The statement should detail the specialized duties the beneficiary will perform, the qualifications that are required to perform the job duties, the duration of the job, and the hours to be worked.
  • A letter signed by an authorized official of each ultimate end-client company where the beneficiary will actually work. The letter should provide information, such as a detailed description of the specialized duties the beneficiary will perform, the qualifications required to perform those duties, the duration of the job, salary or wages paid, hours worked, benefits, a detailed description of who will supervise the beneficiary and the beneficiary’s duties, and any other related evidence.

2. Contracts as evidence to demonstrate the employer will maintain an employer-employee relationship with the beneficiary for the duration of the requested validity period.

The memo recognizes the fact that placement of an H-1B worker at a third-party worksite through layers makes it difficult to evaluate the evidence being submitted and that this is likely to continue. However, Petitioners are encouraged to “specifically trace how it will maintain an employer-employee relationship with the beneficiary.”

3.  Itinerary as a regulatory requirement.

The memo specifically targets incomplete itineraries that fail to provide information regarding the H-1B engagement. An itinerary must include the dates and locations of the services to be provided. When an itinerary must be redacted to withhold information (e.g., salary, hourly rate, end client contact, etc.), it would still have to be detailed enough to contain all information necessary for USCIS to adjudicate the petition.

No RFE: Based on this memo, USCIS Officers would now be allowed to deny the petition if the Petitioner does not submit an itinerary.

4.  Itinerary as evidence to demonstrate the beneficiary will be employed in a specialty occupation

The memo encourages Petitioners to submit detailed itineraries that contain adequate information regarding the position itself. The memo acknowledges that although the regulations only require that an itinerary contain the dates and locations of the services to be provided, “a more detailed itinerary can help to demonstrate that the petitioner has non-speculative employment, even when the beneficiary will only be working at one third-party worksite.” The memo goes on to add, “for instance, it could help USCIS determine whether there are specific and non-speculative qualifying assignments if the petitioner submits a complete itinerary of services or engagements that specifies:

  • The dates of each service or engagement;
  • The names and addresses of the ultimate employer(s);
  • The names, addresses (including floor, suite, and office) and telephone numbers of the locations where the services will be performed for the period of time requested; and
  • Corroborating evidence for all of the above.

4.  USCIS to Limit Validity Period of H-1B Petition:

Based on this memo, the USCIS will now begin limiting the period requested on the H-1B petition based on the contracts and statements of work. Indeed, we have seen this trend in the past. However, this memo appears to allow adjudicating officers the flexibility to grant approvals for shorter periods regardless of the duration requested on the petitions.

5.  Extensions of Stay May be Denied if Underlying Conditions Not Met:

The memo clearly gives officers the ability to deny extensions if the underlying conditions of the previously approved employment was not met. The memo specifically states, “if the petitioner did not comply with the terms and conditions of the original petition and did not file an amended petition on time, USCIS may have eligibility concerns about a subsequent petition filed to extend the beneficiary’s employment. If the terms and conditions of the initial approval period were not met and the petitioner has demonstrated eligibility for the subsequent petition, the extension petition may be approved, but the extension of stay request may be denied.”

6.  Conclusion:

Our clients should not find any of the items in this memo to be any different from best practices that we have already recommended over the years. This memo merely reiterates our guidance and allows us to continue to represent you effectively.