Itserve Alliance v. Cissna: a Victory—perhaps Temporary—for H-1b Beneficiaries and Petitioners

• Jurisdiction: United States,Federal
• Citation: Vol. 2 No. 2
• Publication year: 2020
• topic: Administrative Law,Intellectual Property,Immigration Law,Employment Law

Kaitlyn Box^*

Abstract: The recent ITServe Alliance v. Cissna case overturned nearly 10 years of restrictions on H-1B employers, but obstacles remain for H-1B visa holders and their employers. This article provides an overview of the ITServe Alliance v. Cissna case, and argues that the decision is a temporary victory for H-1B employers, but emphasizes that USCIS should end its overreliance on subregulatory guidance and instead embrace notice-and-comment rule-making to ensure more stable and coherent policies going forward.

On March 10, 2020, the U.S. District Court for the District of Columbia issued a decision in ITServe Alliance, Inc. v. Cissna that invalidated nearly ten years of barriers for employers and individuals seeking H-1B visas. The court struck down several key provisions of two policy memoranda issued by the U.S. Citizenship and Immigration Services (USCIS), the Department of Homeland Security (DHS) component tasked with adjudicating immigration-benefits requests: a USCIS 2010 memorandum, also known as the Neufeld Memo, on "Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements" and a USCIS 2018 policy memorandum on "Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites." The court set aside these memoranda on the grounds that they unlawfully conflicted with existing regulations and improperly circumvented the notice-and-comment rule-making process under the Administrative Procedure Act (APA).¹ In the wake of numerous Trump administration policies aimed at curtailing the issuance of H-1B visas, ITServe Alliance represents a major victory for H-1B visa seekers. However, this article argues that the decision is only a temporary victory, and that burdensome and unclear USCIS guidance will continue to plague H-1B petitions until USCIS ends its reliance on subregulatory guidance and embraces the APA notice-and-comment rule-making process.

The article will proceed in three parts. First, it will provide an overview of the 2010 Neufeld Memo and the 2018 policy memorandum, and the litigation that challenged these memoranda prior to ITServe Alliance. Next, it will analyze the court's decision in ITServe Alliance and examine the impact the case may have going forward. Finally, the article will argue that USCIS should utilize the notice-and-comment rule-making process and move away from issuing problematic subregulatory guidance.

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H-1B visas allow U.S. companies to temporarily employ highly skilled nonimmigrant workers in a "specialty occupation."² The U.S. employer has the burden of proving that the contemplated position qualifies as a "specialty occupation" under the Immigration and Nationality Act (INA).³ The INA defines a "specialty occupation" as one that requires "(A) theoretical and practical application of a body of highly specialized knowledge, and (B) attainment of a bachelor's or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States."⁴ Additionally, a specialty occupation must satisfy one of the following four regulatory criteria:

(1) A baccalaureate or higher degree or its equivalent is normally the minimum requirement for entry into the particular position;
(2) The degree requirement is common to the industry in parallel positions among similar organizations or, in the alternative, an employer may show that its particular position is so complex or unique that it can be performed only by an individual with a degree;
(3) The employer normally requires a degree or its equivalent for the position; or
(4) The nature of the specific duties are so specialized and complex that knowledge required to perform the duties is usually associated with the attainment of a baccalaureate or higher degree.⁵

The H-1B beneficiary must:

(1) Hold a United States baccalaureate or higher degree required by the specialty occupation from an accredited college or university;
(2) Hold a foreign degree determined to be equivalent to a United States baccalaureate or higher degree required by the specialty occupation from an accredited college or university;
(3) Hold an unrestricted State license, registration or certification which authorizes him or her to fully practice the specialty occupation and be immediately engaged in that specialty in the state of intended employment; or
(4) Have education, specialized training, and/or progressively responsible experience that is equivalent to completion of a United States baccalaureate or higher degree in the specialty occupation, and have recognition of expertise in the specialty through progressively responsible positions directly related to the specialty.⁶

Before filing an H-1B petition, U.S. employers must submit a Labor Condition Application (LCA) to the Department of Labor.⁷ In an LCA, the employer confirms that it "will offer wages at the level for similarly situated domestic employees, will provide working conditions that will not adversely affect these domestic employees, that there is not a labor dispute for this classification of employees, and that any bargaining representative has received notice of the LCA."⁸

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The USCIS 2010 Memorandum (Neufeld Memo)

The background to ITServe Alliance begins with the USCIS 2010 memorandum entitled "Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements" that was issued by then-Associate Director of USCIS Service Center Operations Donald Neufeld on January 8, 2010. The so-called Neufeld Memo provides guidance on H-1B petitions, specifically outlining when a valid employee-employer relationship exists and how to determine whether that relationship will exist for the duration of the visa validity period.⁹ The memo centers on the issue of whether the employer has a sufficient level of control over the timing, location, and manner of the beneficiary's performance of the job.¹⁰ Relying on the Supreme Court's decision in Nationwide Mut. Ins. Co. v. Darden,¹¹ the memo lays out eleven new criteria that officers must weigh when determining whether a qualifying employer-employee relationship exists.¹² The memo also offered scenarios that would typically qualify as a sufficient employer-employee relationship, such as traditional employment where there was an exercise of actual control; temporary/occasional off-site employment where there was a right to control; long-term/permanent off-site employment where there was a right to control specified and actual control exercised; and long-term placement at a third-party work site where there was a right to control specified and actual control exercised.¹³ Beneficiaries who were self-employed, employed as independent contractors, or assigned employment at third-party companies were unlikely to qualify.¹⁴ Further, the memo provided examples of necessary evidence for initial and extension petitions.¹⁵ Finally, the memo indicated that employers must prove that the requisite employer-employee relationship would continue for the entire three-year duration of the visa validity period.¹⁶

Commenters at the time sharply criticized the Neufeld Memo as "demanding, burdensome and commercially unreasonable."¹⁷ The memo had a particularly negative effect on the information technology (IT) consulting industry, where firms typically place H-1B employees at third-party worksites.¹⁸ The amount of evidence that employers were required to submit to prove that they would maintain the requisite employer-employee relationship with H-1B beneficiaries for the entire H-1B validity period was nearly impossible to gather. The burdensome impact of the evidentiary requirements is illustrated particularly well by the example of detailed itineraries. Because many IT consulting firms place H-1B employees at an end client to perform work during a long-term project, it is often extremely difficult for employers to estimate the employees' day-to-day assignments years into the future, particularly when the end client, rather than the H-1B petitioner, sets the project goals and timeline.¹⁹

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The USCIS 2018 Policy Memorandum

On February 22, 2018, USCIS issued an additional memorandum entitled "Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites" (2018 Memo) that imposed further requirements on H-1B petitioners who place beneficiaries at third-party worksites. The memo stated that third-party worksite placements made it more difficult for USCIS to ascertain whether the beneficiary would actually be employed in a specialty occupation, and whether the petitioner would maintain the requisite employer-employee relationship with the beneficiary for the duration of the visa validity period, particularly where intermediary vendors were involved.²⁰ To demonstrate that a beneficiary working at third-party worksite will have actual work in a specialty occupation and that the petitioner will maintain an employer-employee with the beneficiary for the duration of the validity period, the memo required petitioners to submit corroborating evidence, such as a contract between the petitioner and the client for the worksite.²¹ Further, the memo stated that 8 CFR § 214.2(h)(2)(i)(B) required petitioners to file an itinerary with dates and locations of worksites whenever a beneficiary would be performing work at third-party locations.²² The itinerary demonstrates that the beneficiary would have "specific and non-speculative qualifying assignments in a specialty occupation" for the duration of the visa validity period.²³ The itinerary cannot be a general description, but must include detailed information like the dates of each service or engagement; the names and addresses of the ultimate employer; the names, addresses, and telephone numbers of the locations where the services will be performed for the period of time requested; as well as corroborating evidence for each...