H-1B/Neufeld Memo on Employer-Employee Relationship

On January 8, 2010, USCIS’s Associate Director Donald Neufeld issued a memo providing guidance, in the H-1B context, on determining employer-employee relationships. The memo adds requirements for H-1B petitions that are not covered by the H-1B regulations. Specifically, the memo precludes employers from placing H-1B workers at client worksites in many situations and bars many employer-owned businesses from filing an H-1B petition. This Litigation Issue Page highlights legal challenges to the memo and provides information about other advocacy efforts to change USCIS policy.

Litigation Updates | Administrative Advocacy Updates | Documents and Resources

Litigation Updates

Broadgate v. USCIS, No. 10-00941 (D.D.C. dismissed Aug. 13, 2010)

Three employers (software developers and IT services firms) and two not-for-profit trade associations filed a suit in federal district court challenging the Neufeld memo. The plaintiffs alleged that USCIS issued the memo in violation of the Administrative Procedure Act’s notice and comment requirements; that USCIS failed to perform a Regulatory Flexibility Act analysis; that the memo is inconsistent with existing regulations addressing the employee-employer relationship and the term “contractor” and conflicts with the plain language of the INA; and that it is arbitrary and capricious. Plaintiffs asked the court to preliminarily and permanently enjoin USCIS from implementing the memo.

On August 13, 2010, the district court dismissed the case. The court found that the memo establishes “interpretive guidelines”; does not bind USCIS adjudicators; and does not amend the regulations. As a result, the memo is not a legislative rule. Thus, it is not subject to judicial review and notice and comment requirements.

• Complaint
• Application for Preliminary Injunction and Memorandum in Support of Application
• Memorandum in Opposition to Motion for Preliminary Injunction
• Court Opinion (dismissing complaint)

Administrative Advocacy Updates

AILA Writes to USCIS Regarding Related Issues (January 26, 2010)

AILA sent a detailed letter to USCIS Chief Council, Roxana Bacon, in which it expressed concern about the substance of the January 8, 2010 H-1B memo and noted that its issuance was in violation of the Administrative Procedures Act’s notice and comment requirements. The letter primarily focuses on recent USCIS decisions that unlawfully find that individuals with controlling or substantial interests in a petitioning U.S. company or its foreign parent company cannot -- in most cases -- be a beneficiary of a nonimmigrant or immigrant employment-based petition.

Documents and Resources

• H-1B Memo, USCIS (Jan. 8, 2010)
• AILA letter to USCIS (January 26, 2010)
• AILA Blog, “Why is H-1B a Dirty Word?” (Feb. 1, 2010)
• “Start-up Visas Can Jump-Start the Economy” Wall Street Journal (Dec. 2, 2009)