USCIS Sued over Memo Regarding H-1B Employer-Employee Relationship
Requirement

For more than forty years, U.S. staffing companies, most of which are small businesses, have been providing a workforce of temporary and long-term engineers, health care professionals and others in specialty occupations to the federal government, government contractors, manufacturers, schools, universities and non-profit organizations. Many of these trained professionals come to the U.S. on H-1B visas because there are an insufficient number of U.S. citizens in a particular profession and geographic location. However, over the past two years, United States Citizenship and Immigration Services ("USCIS") has changed existing law governing these visa applications for professionals by challenging the established notion of employer/employee relationships through Requests for Evidence (RFEs) and denials without utilizing the rulemaking process of notice and comment.

On January 8, 2010, USCIS issued a memorandum to adjudicators which in essence put onto paper its practices of the previous two years by providing guidance on what employers must do to establish a valid "employer-employee relationship" in order to qualify their petitions for the H-1B specialty occupation classification. The memorandum emphasizes that the "right to control" is the main factor in establishing an employer-employee relationship and directs that petitioners must submit sufficiently detailed evidence with their petitions that demonstrates a right to control. The memo further provides a non-exclusive list of documentation that can be submitted as evidence of the employer-employee relationship.

In the months following the memo, U.S. employers in the staffing and IT sectors 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 are now forced to take additional steps to validate the employment relationships and the legitimate use of the H-1B program. The struggle has now escalated to the next level with a law suit 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. The Plaintiffs are seeking to overturn the rule established through the internal memorandum based on a failure to follow proper rule-making procedures. Plaintiffs assert that 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 its 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.