June 9, 2010

Challenging USCIS' Interpretation of Employer/Employee Relationships

With the release of an agency memorandum issued on January 8, 2010, U.S. Citizenship and Immigration Services (USCIS) changed the face of the H-1B visa program outlining its own interpretation and guidelines in identifying acceptable employer and employee relationships in the H-1B context.  In the months following the memo U.S. employers in the staffing and IT sector have experienced denials of H-1B petitions where the new guidelines are being applied.  U.S. staffing agencies providing workers across a number of industries are facing an uphill battle as they must now take additional steps to validate the employment relationships and the legitimate use of the H-1B program. This memorandum impacts companies nationwide and their ability to provide needed services to clients across a wide spectrum of industries, including healthcare, education, nonprofit, manufacturing and engineering.

The struggle has now escalated to the next level with a claim being filed against USCIS.  The case, BroadGate v. USCIS, was  filed on June 8, 2010, against USCIS, USCIS Director Alexander Mayorkas, the Department of Homeland Security (DHS), and DHS Secretary Janet Napolitano, seeking to overturn the rule established through an internal memorandum and failing to follow proper rule making procedures.  At its core the memorandum precludes staffing companies from obtaining H-1B status for its employees based upon the assertion and assumption that the placement of an employee at a third-party worksite on it face amounts to a lack of an employer-employee relationship.

As Counsel for the Plaintiffs, Greenberg Traurig attorneys Robert P. Charrow, Laura Klaus, Craig Etter and Laura Reiff filed a Complaint and Application for Preliminary Injunction with the United States District Court for the District of Columbia on behalf of several Plaintiffs, including the Information Technology (IT) services companies BroadGate Inc., Logic Planet Inc., and DVR Softek Inc., and the American Staffing Association and TechServe Alliance, both trade associations serving the U.S. staffing industry at large, and the IT services industry, respectively. In its Complaint, Plaintiffs allege the illegality of the USCIS rule for reasons that include violations of the requisite rule-making process under the Administrative Procedure Act (APA), failure to complete an analysis of the impact of the rule on small entities as required by the Regulatory Flexibility Act and the arbitrary and capricious nature of a rule that targets a specific business model while supplanting long-held existing law without notice, public hearing or good cause.

As this litigation continues, Greenberg Traurig will continue to report on its efforts to overturn the application of these guidelines.