On January 15 DHS released the text of a new rule which will change the way USCIS will determine whether an Employer/Employee relationship will exist. Furthermore, on the same day, DOL also released a memo that now interprets the regulations to require end-clients to also file an H-1B petition.
USCIS had previously relied on two memos to attack IT staffing companies by challenging them on whether there existed a valid employer/employee relationship. After a Federal Court case was filed USCIS was forced to rescind those memos in June 2020, which made it almost impossible for USCIS to question whether there existed a valid employer/employee relationship between an H-1B beneficiary and the entity filing the petition. As long as the entity was paying the beneficiary’s wage a valid employer/employee relationship existed.
Following the rescission of the two unlawful memos, DHS published a regulation in the form of an Interim Final Rule (IFR), in October 2020, which intended to alter the employer-employee relationship, the definition of a specialty occupation and to distinguish between a worksite and a third-party worksite. See our previous article for further details:
However, this rule was also struck down by a Federal Judge in December who found that the government did not follow transparency procedures.
DHS’s latest attempt, in the form of a new rule, only deals with the issue of Employer/employee relationship and attempts to classify end-clients as secondary employers on the basis that they fall under the common law definition of employer. DHS argues that because every employer has to file an H-1B petition this should now include end-clients. DOL’s memo which supports the DHS rule, confirms that secondary employers will be required to file an LCA. What madness is this? Clearly, this is not what Congress intended when creating the H-1B program and the fact that the Trump administration had the gall to publish this really blows my mind.
The new rule also seeks to change the very definition of employer/employee relationship, in which it lists 11 factors that USCIS should consider in determining whether such a relationship exists.
This rule will not take effect for another 180 days. However, this rule is clearly going to be the focus of several federal lawsuits and under the Biden administration, I would be extremely surprised if this rule is even permitted to take effect. This is probably the most damaging policy change I have seen and is clearly a last-ditch attempt by the Trump Administration to put an end to the IT staffing industry.
On a more positive note President Biden signed 6 Executive Orders related to Immigration on his first day in office. He repealed the Muslim travel Ban, reinstated DACA, halted the construction of the border wall, revoked Trump’s order excluding noncitizens from the census count and extended relief for Liberians until June 2022. He has also ordered a review of enforcement and removal policies, putting on hold certain removals for 100 days. Additionally, he has asked Congress to provide a 5- year path to citizenship for certain immigrants followed by a 3- year path to become a citizen. Although there is no mention of H-1Bs it is clear that the Biden administration is dedicated to effecting positive immigration changes and I for one look forward to seeing what the next few months will bring.
01/22/2021 update (Article originally published 01/21/2021)
I knew when writing the above article that everything would change, but it seems that change is coming faster than I thought. This is great news!
So DOL has already withdrawn its memo which would require secondary employers to file an LCA.
Furthermore, the DOL rule is likely to be withdrawn based on a recent memo published by the White House Chief of Staff. Therefore, it is extremely unlikely that end-clients will be required to file LCAs/H-1B petitions and the current definition of employer/employee relationship is unlikely to change for the foreseeable future.
PLG Attorneys will closely monitor the new administration’s immigration policies and will provide updates as necessary.