CIS issues memo on "employer-employee" relationship and consulting arrangements

The US Citizenship and Immigration Service has issued a long memorandum on what constitutes an "employer-employee" relationship for H-1B purposes. This should be especially interesting to H-1B workers and employers with consulting or contracting arrangements.

US immigration regulations (8 C.F.R. 214.2(h)(4)(ii)) require, among other things, that a H-1B petitioner "Has  an  employer-employee  relationship with respect to  employees under  this  part, as indicated by the  fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee"

CIS acknowledges that the lack of guidance defining what constitutes a valid employer-employee relationship has caused problems, especially when employees such as consultants or contractors are placed at 3rd-party sites. In these situations, the petitioner might not be able to show the required control over the employee's work. CIS considers that the "right to control" the employee's work is critical. The memo stresses that the right to control is different to actual control. To analyze the control, CIS looks at:

1. Does the petitioner supervise the beneficiary and is such supervision off-site or on-site?
2. If the supervision is off-site, how does the  petitioner maintain such supervision, i. e. weekly calls, reporting back to main office routinely, or site visits by the petitioner?
3. Does the petitioner have the right to  control the work of the beneficiary on a day-to-day basis if such control is required?
4. Does the petitioner provide the tools or instrumentalities needed  for the beneficiary to perform the duties of employment?
5. Does the petitioner hire, pay, and have the ability to fire the beneficiary?
6. Does the petitioner evaluate the work-product of the beneficiary, i.e. progress/performance reviews?
7. Does the petitioner claim the beneficiary for tax purposes?
8. Does the petitioner provide the beneficiary with any type of employee benefits?
9. Does the beneficiary use proprietary information of the petitioner in order to perform the duties of employment?
10. Does the beneficiary produce an end-product that is directly linked to the petitioner's line of business?
11. Can  the petitioner control the manner and means in which the work product of the beneficiary is accomplished? 

The CIS Memo describes various different employment relationships, and states whether they meet the regulatory requirements. Those which CIS considers do not comply with regulations include:

• Self employment;
• Independent contractors;
• "Job shops".

The memo describes, in detail, the evidence that can be submitted to prove an employer-employee relationship, especially where the employee will be working off-site.  

The memo also  notes that petitions must show compliance with 8 C.F.R. 214.2(h)(2)(i)(B) which states:

Service or training in more than one location. A petition that requires services to be performed or training to be received in more than one location must include an itinerary with the dates and locations of the services or training and must be filed with USCIS as provided in the form instructions. The address that the petitioner specifies as its location on the Form I-129 shall be where the petitioner is located for purposes of this paragraph.

The memo notes that to satisfy the requirements of 8 C.F.R. 214.2(h)(2)(i)(B), the petitioner must "submit a complete itinerary of services or engagements that specifies the dates of each service or engagement, the names and addresses of the actual employers, and the names and addresses of the establishment, venues, or locations where the services will be performed for the period of time requested. Compliance with 8 C.F.R. 214.2(h)(2)(i)(B) assists USCIS in determining that the petitioner has concrete plans in place for a particular beneficiary, that the beneficiary is performing  duties  in a specialty occupation, and that the beneficiary is not being "benched" without pay between assignments." Submitting a detailed itinerary for the next 3 years will be very difficult for many employers who place employees out on contracts.

This memo has just been published today, and there will undoubtedly be many more articles published that analyze the provisions. 

1/25/10 UPDATE: I'm happy that this posting is helping so many people. However, I cannot answer specific situations in the comments. This blog provides general information, not specific legal advice. If you would like a formal legal opinion, please speak with a lawyer who could fully analyze your situation and see all your documents. Also, before asking a general question, please check the comments to see if it has been answered earlier.