In February 2013, the Department of Labor (DOL) determined that Bloom Energy, the acclaimed Silicon Valley startup, had abused the B-1 business visitor visa to circumvent federal prevailing wage requirements. After an investigation, it concluded that Bloom functioned as an employer when it brought foreign workers on B-1 visas from its plant in Chihuahua, Mexico to perform work while paying them in Mexican pesos. Although Bloom paid for them to stay in a Sunnyvale motel and provided each with a meal stipend of $50 a day, their salary was the equivalent of $2.66 an hour and they did not receive overtime wages. To put this in perspective, their pay amounted to less than a third of the minimum wage required under federal law. Bloom has been ordered to pay back wages, damages, and fines for its treatment of these foreign workers.
Companies should learn from Bloom Energy’s mistake and remember that they are still subject to U.S. labor and wage laws even if a U.S. consulate grants a B-1 visa, and USCIS and DOL are becoming more sensitive to these types of situations.
The B-1 business visitor visa is one of the most ill-defined U.S. visas. Its terms are purposely vague to incorporate a wide variety of business activities. Pursuant to Section 101(a)(15)(B) of the Immigration and Nationality Act (INA), a foreign national can enter the United States on a B-1 visa as a business visitor of a foreign entity. This is opposed to work visas, which allow for a foreign national to be an employee of a U.S. entity. Ambiguity lies in the demarcation of the B-1 visa’s scope—where is the line between business visitor and U.S. employee?
Although “business” is not defined in the statute, State Department regulations define it as “conventions, conferences, consultations and other legitimate activities of a commercial or professional nature;” but not “local employment or labor for hire,” i.e. gainful employment in the United States (22 C.F.R. § 41.31(b)(1)). State Department’s Foreign Affairs Manual (FAM) further provides that a B-1 visa holder cannot receive a salary from a U.S. source but can be reimbursed for any U.S. expenses incidental to the business performed (9 FAM § 41.31, Note 3.4). In other words, a B-1 visa is meant for a foreign national to enter the United States for short-term visits in order to fulfill specific business responsibilities but for which the foreign national does not receive direct payment.
The question, however, remains: what exactly are the factors that lead B-1 business activities to cross the line into unauthorized U.S. employment? Many of the factors considered turn on the degree of control the U.S. entity has over the foreign worker and his work. Here are some factors to be aware of:
- Instructions. Where a worker is required to comply with the U.S. entity’s instructions about when, where, and how he is to work, the worker may be deemed an employee.
- Training. Training a worker by requiring him to work with an experienced worker, requiring him to attend instructional meetings, or using other methods indicates that the U.S. entity wants the work to be performed in a particular manner; and the worker may be deemed an employee.
- Integration. Where the worker’s services are integrated into the U.S. entity’s business so much that the success or continuation of the business notably depends on the performance of the worker, he may be deemed an employee.
- Continuing relationship. Where there is a continuing relationship between the worker and the U.S. entity, the worker may be deemed an employee.
- Oral or written reports. Where the worker is required to submit regular oral or written reports to the U.S. entity, he may be deemed an employee.
- Accrual of profits. Where the actual place of accrual of profits from the work performed in the U.S. is in the U.S. and not the foreign country, the worker may be deemed an employee.
- Furnishing of tools and materials. Where the U.S. entity furnishes for the worker significant tools, materials, and other equipment, the worker may be deemed an employee.
- Realization of profit or loss. Where the worker cannot realize a profit or suffer a loss as a result of his services, he may be deemed an employee.
- Multiple entries. Where the worker makes multiple entries on the B-1 visa, and the purposes of entry are not individual or separate, the worker may be deemed an employee.
- Maintenance of foreign residence. Where the worker exhibits intent to stay in the United States permanently, he may be deemed an employee.
- Prearrangements. Where the business activities are not prearranged prior to the worker’s entry in the United States, the worker may be deemed an employee.
While the scope of the B-1 visa can be confusing, U.S. officials have shown with Bloom Energy that they will not allow for visa abuse by U.S. companies. DOL has stated that it believes Bloom is a rare case in the tech industry. However, DOL and USCIS may now more closely monitor for such abuse. As such, companies should remain informed of factors that define work as employment rather than B-1 business activities and ensure they follow U.S. immigration regulations and labor and wage laws.