Overturned: USCIS Policy for Client Contracts & SOWs Impacting H-1B for Consultants

25. May. 2020

Companies that provide IT staffing and consulting services will see less denials and longer H-1B approval periods after a lawsuit with USCIS against settled on May 20, 2020.

Background: in 2010 USCIS issued the “Neufeld memo,” which asserted that USCIS has the authority to deny H-1B petitions based on a strict interpretation of what constitutes valid employer-employee (ER-EE) relationship.  The Neufeld memo disproportionately impacted companies that provided IT services whose employees performed work at client locations. Under the Trump administration, USCIS issued another memo in February 2018 titled “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites.”  These policy memos required IT services companies to provide client contract, SOWs and/or client letters to prove what the H-1B employee will do and where, for the entire validity period requested. The impact to IT services providers became severe with denial of H-1B petitions rising sharply (from 6% in 2015 to 30% in 2020 per an analysis by the National Foundation for American Policy). Even when approved, these policies often led to USCIS issuing H-1B approvals for only a few months. 

Lawsuits Against USCIS: on March 10, 2020, U.S. District Judge Rosemary M. Collyer ruled that such USCIS memos and policies were unlawful (ITServe Alliance v. L. Francis Cissna).  Judge Collyer proclaimed the current USCIS interpretation of the ER-EE relationship requirement is inconsistent with its regulation, was announced and applied without rulemaking, and cannot be enforced. Subsequently, on May 20, 2020, U.S. District Court Judge Amy Totenberg closely followed the opinion of Judge Collyer and found that there is no basis in the Immigration and Nationality Act or the Agency’s regulations for requiring a petitioner to submit evidence of specific, qualifying work requirements and micro-location information for every single day of the visa period (Serenity Info Tech et al. v. Kenneth T. Cuccinelli).

The USCIS Settlement: USCIS is required to rescind the 2018 Contract and Itinerary Memorandum in its entirety within 90 days.  Additionally, in deciding new cases, USCIS agrees to comply with Judge Collyer’s March 10th decision and not issue approvals for H-1B petitions with validity periods shorter than the time period requested by the H-1B petitioner, unless such decisions are accompanied by a brief explanation as to why the validity period has been limited and in compliance with Judge Collyer’s March 10th decision in ITServe Alliance, Inc. v. Cissna.  The settlement does not benefit previous denials in that USCIS won’t proactively reverse denials affected by this settlement or extend approval periods that were shortened to match client contract durations.

Impact Going Forward: this settlement will make life a lot easier for petitioners whose employees work at client sites. The days USCIS can require a company to provide contracts and itineraries to prove what each H-1B employee will do each day for three years are over. Of course, the Trump administration may be planning other new obstacles for employers of foreign national workers.