February 2010 Newsletter
H-1B PRACTICE AND THOUGHTS

February 12, 2010
By Robert D. Aronson

DEAR CLIENTS AND FRIENDS:

Each year starting in early March, our office becomes progressively more fixated on H-1B filings. The pace of our activity reaches a crescendo of frenzied activity culminating in the submission of batches of new H-1B Petitions on the evening of March 31 so that the fruits of our labors are received at U.S. Citizenship and Immigration Services (USCIS) precisely on April 1. Our work, particularly in the final run-up to this filing deadline, ultimately takes on the same quickened and purposeful pace as prospectors staking out claims during the Oklahoma Land Rush; or the jostling bread lines in Soviet Russia; or shoppers bounding into a Best Buy store to snarf up a new Nintendo Wii at discounted prices at the after-Thanksgiving sales – that is, there is a need for timeliness, promptness, resoluteness, accuracy, and advocacy.

Given that we are now approaching this year’s round of H-1B filings, I wish to dedicate this Newsletter to a discussion of H-1B practice as it will unfold in the coming weeks.

BUSINESS AT THE SPEED OF LIGHT/
H-1Bs ARE THE VOICE OF THE TURTLE

If you ask just about anyone what it takes for a business to be successful in this high-speed digital age, I would bet that the answers would come out pretty much the same. Business success requires speed, suppleness, flexibility, fast reactions to the marketplace, and high innovation. Plodding manufacturing giants or mammoth service organizations have been superseded as business models by upstart companies founded on a dream and a vision that not only respond to but in large measure create and mold our modern day consumer culture.

Running diametrically opposed to this sleek, fast-paced business model is a creaking, ossified business immigration system. Nowhere is the contrast more evident between legitimate, vital business needs and an unresponsive immigration system than in the steady erosion of H-1B availability to U.S. business interests that need to hire the best and brightest foreign professionals.

Just to review, the H-1B Temporary Worker classification is a temporary, nonimmigrant visa classification that is widely used by the U.S. business community to recruit foreign professionals. Historically, a U.S. employer in a relatively short lead time could qualify a foreign professional - many of whom possess professional skills critical to business success – for a relatively generous period of employment authorization, running up to six years. There is a numerical quota (that is, a limit) of 65,000 H-1B numbers available each year with an additional 20,000 H-1B visa numbers available to foreign professionals who hold Master’s Degrees or above from U.S. universities, although as discussed below, there are certain situations that are entirely exempted from the H-1B quota.

We are now rapidly approaching April 1, which is the “launch date” for filing H-1B Petitions that are cap-subject – that is, subject to the H-1B quota. In previous years when the economy was growing robustly and there was a voracious corporate appetite for talented professional personnel regardless of their nationality, the competition for these numbers was fierce and the entire H-1B quota allotment would be used up instantaneously on the first day. Then last year owing to the confluence of the economic slowdown, a sharp curtailment in hiring decisions, and a rise in U.S. unemployment, the H-1B numbers lingered until December 21, 2009. But in either scenario, the H-1B numerical allotment will become exhausted.

Let me deal in the balance of this Newsletter with some essential considerations now affecting H-1B hiring decisions.

STEP #1:
IS THE H-1B SUBJECT TO THE QUOTA?

Not all H-1B Petitions are subject to the quota. But if a case is subject to the quota, an employer is then forced to engage in a race against time to file the matter prior to the exhaustion of the H-1B numbers.

Therefore, the initial consideration is the following: Is the proposed H-1B Petition subject to the H-1B quota, which, in turn, will require that the H-1B Petition be filed in an allowable window of time running from April 1 to the date on which the H-1B numbers are exhausted?

Let’s begin by describing the types of cases that are exempt from the H-1B quota and therefore can be filed and approved at any point in time. The exempted H-1B situations basically fall within two broad paradigmatic classes:

1. Certain types of employers are exempted from the H-1B quota.
· Universities (technically, not-for-profit “institutions of higher education”)

· Employers that are both nonprofit and affiliated with an institution of higher education (such as a teaching hospital)

· Governmental or nonprofit research organizations

2. Some activities of a foreign national result in H-1B cap-exemption.
· H-1B extensions provided that the initial H-1B Petition was subject to the H-1B quota

· If the foreign professional had been counted against the quota within the past six years

J-1 physicians who have received waivers through Interested Government Agencies

· Joint appointments where part of the employment is for a cap-exempt employer

· Foreign professionals who are working AT (although not necessarily for) an exempt organization (usually, a university or a nonprofit university affiliated entity)

All other H-1B requests fall subject to the quota so as to require the availability of an H-1B number in order to approve the case. So, let’s take a look at considerations pertaining to this line of cases.

STEP #2:
IF SUBJECT TO THE H-1B CAP, THEN WHAT?

Here are the givens if a case is subject to the H-1B quota:

1. The H-1B case can be filed starting on April 1;
2. If approved, the foreign national can actually start working in the position in H-1B status on October 1;
3. H-1B filings will be accepted until the H-1B numbers are exhausted;
4. The H-1B numbers will probably not be ravenously depleted, but should remain available for some unknown period of time;
5. At some point though, the numbers will likely become exhausted; and
6. Given the uncertainty as to when the numbers will disappear, it still makes sense for employers to make prompt hiring decisions so as to file their H-1B Petitions in cap-subject cases as soon as possible while the H-1B numbers last.

There are three (3) steps involved in the H-1B filing process:

1. Obtaining a “Prevailing Wage Determination” since a cornerstone principle for H-1B purposes is that the wages (as well as the overall terms of employment) need to be fair and fully competitive with U.S. workers.
2. Filing a Labor Condition Application to the U.S. Department of Labor so as to establish that the H-1B professional will be employed under acceptable, competitive wage and working conditions; and
3. Filing an H-1B Petition to U.S. Citizenship and Immigration Services (USCIS) so as to show that the job is professional and that the H-1B beneficiary has the appropriate professional credentials and background for the job.

Traditionally, this filing process went quite quickly and smoothly. The turnaround time for a Labor Condition Application was around one day, and then USCIS implemented a program called Premium Processing through which an employer could get an adjudication of the H-1B Petition within 15 days. As a consequence, employers essentially could make last-minute hiring decisions and still make timely filings of H-1B Petitions.

While the underlying H-1B laws remain the same, the Department of Labor has instituted the following two (2) procedural changes that at least thus far have slowed down considerably the Labor Condition Application/H-1B process:

1. In order to receive a "safe harbor” prevailing wage determination, effective January 1, 2010, an employer now needs to file its prevailing wage determination to a centralized federal office that in its opening period of operation has been terribly slow and unresponsive. Previously, such prevailing wage determinations were filed with the states, which not only acted promptly but in most cases would actually discuss the nuances of a job so as to develop customized and responsive prevailing wage figures; and
2. There is a new Labor Condition Application process known as iCERT that centralizes and all too frequently bottlenecks the process for receiving approval of a Labor Condition Application.

My point here is that employers can no longer count on short lead times in order to timely file their H-1B Petitions. Rather, in order to file in the window of time prior to the exhaustion of H-1B numbers, employers will need to speed up their H-1B hiring decisions and then promptly and aggressively go through the Labor Condition Application filing process. Conversely, employers can no longer rely on being able to prepare and file an entire H-1B Petition in a matter of days; rather the initial clearance process through the Department of Labor alone will likely take a few weeks, and this vastly increased lead time needs to be factored into H-1B practice for cap-subject cases.

STEP #3:
EXEMPTING A CASE FROM THE H-1B QUOTA

Given the timing problems with cap-subject H-1B cases and the inevitability that H-1B numbers will become exhausted, there certainly are major benefits to qualifying new H-1B cases for an exemption from the H-1B quota. Some cases by their very nature will be subject to the quota, such as first-time H-1B requests by private, for-profit employers. But in many instances, some steps can be taken that conceivably could remove an H-1B case from the constraints of the quota.

In many instances, it may be possible to structure employment positions in a manner that will enable an employer to obtain H-1B cap-exempt benefits, such as:

• Structuring a joint position in which one of the employing parties is a university or a non-profit, university affiliated entity, even if there is only a fairly minimal (although legitimate) employment commitment (given that the law does not impose a specific number of hours);
• Even if there is no direct employment relationship, assigning the employee to regular and recurrent duties on the premises of (that is AT) a university or a non-profit, university affiliated entity;
• Assigning the employee specific duties and/or a job title (such as an academic appointment) that would underscore the H-1B employee’s contributions to the activity that qualifies for an exemption from the H-1B quota;
• Investigating thoroughly any affiliation arrangements that might exist between university programs and locations at which or for which an H-1B alien will be working;
• Looking backward in time to determine whether the foreign national held H-1B status without exhausting the full six-year limit, since that could be used as the grounds for claiming an exemption from the H-1B quota for the remainder of the six-year term.

Determining whether a case can be exempted from the H-1B cap can be a complex legal question that requires an examination of a range of factors, including: the history of the individual, the structure of the petitioning employer, the particular facts, and the nature of the job being offered. So, it certainly makes eminent sense to thoroughly analyze whether an H-1B request may qualify for an exemption from the H-1B quota since that determination impacts not only the time frame in which a case could be filed, but at some point in time also the likelihood of its approval.

PRACTICE POINTERS

Frankly, I don’t know of any employer that affirmatively aspires to serve as an H-1B sponsor much less deal with the immigration system unless there are real, meaningful benefits. But ultimately, business success relies on the recruitment and retention of the best, brightest, and most motivated employees. In select instances in which foreign professionals fill that type of need, an employer will need to grapple with our immigration laws. Our job is to make this immigration process as efficient as possible and to ensure that an employer’s actions are compliant with our immigration procedures and laws.

So, here are some thoughts on how to successfully hire and retain H-1B foreign professionals:

1. Allow Enough Lead Time. Given the delays and bureaucratic bottlenecks, make hiring decisions as soon as possible and immediately start the H-1B sponsorship process. For cap-subject filings, be aware of interim reports on H-1B visa number utilization since that will suggest the window of time in which to file the H-1B Petition.
2. Utilize Safe Harbor. An employer can establish the prevailing wage for H-1B purposes through alternative wage data. However, in this age of strong compliance pressures, we strongly recommend that employers get prevailing wage figures through the U.S. Department of Labor, since this will provide enhanced protection from a later collateral attack for substandard wage figures.
3. Plan then Build. In H-1B practice, the stakes are pretty high in determining if a case is subject to or exempt from the cap. While some cases are quite straightforward, there is considerable uncertainty in many instances, and the outcome determines the timing and approach to an H-1B filing. In short, make sure to figure out at the outset of a case whether or not the H-1B quota is an issue for concern.
4. Preventive Safe Harbor Filings. As noted above, getting a safe harbor prevailing wage determination can be time consuming in a system that is unforgiving of delays. What employers often overlook is that it is possible to get a safe harbor wage at the beginning of a recruitment – that is, at the time when an employer thinks that it might hire (or consider) foreign professionals for the position. In short, prevailing wage determinations can be banked for a stipulated period of time.
5. Monitor Ongoing H-1B Activity. Think of H-1B authorization as representing an agreed-upon arrangement between the employer and the U.S. Government on the terms and conditions of a foreign professional’s employment. During the course of the H-1B employment, an employer may (or may not) have additional filing obligations in the event that the H-1B employee’s duties change – such as changes in the worksites, job duties, salary, job title, etc. In short, keep up-to-date with job changes and communicate freely and fully with immigration counsel to figure out how to keep both you as the employer and your H-1B employees in full legal compliance.
6. Need for Employment Relationship. Remember: H-1B approval requires that there is an employer-employee relationship. Conversely, it does not cover independent contractor situations in which compensation appears on Form 1099. The cardinal rule is that an H-1B employee needs to receive a W-2 from the exact same entity that filed and gained approval of the H-1B Petition (although there are some limited exceptions in instances of corporate restructuring/successor-in-interest and unified employment positions, particularly if common paymaster status has been granted).
7. Document H-1B Filings. Given ongoing suspicions that the H-1B program is riddled with fraud, the various government agencies recurrently request strong confirmation of an employer’s existence, even for large, established companies. Typical requests would be for the FEIN, pictures of the employer’s premises, and proof of ongoing business. These are “grin and bear it” issues, in my opinion, but it is oftentimes wise to include this type of documentation at the time of initial filing.
8. Protect the Dependents. The spouse and unmarried children to age 21 can qualify for H-4 dependent status. But it is oftentimes necessary to affirmatively file for this status. Employers should take an active role in ensuring that the dependents of their H-1B employees hold valid immigration status. There is no more demoralizing, dispiriting situation (which we at this form unfortunately encounter all too often) than a family that becomes separated owing to an oversight in the immigration status of the dependent family members.
9. Passport Validity Dates. While H-1B status can normally be granted in three-year increments, under law, a foreign national needs to possess a valid passport good for at least six months beyond the period of nonimmigrant status. This problem often becomes acute and even dangerous when an H-1B employee reenters the United States following trips abroad. There are many instances when a passport’s validity date is shorter than the period of the approved H-1B petition, and the foreign professional, unbeknownst to the company, may be admitted in H-1B status for a truncated period of time.
10. H-1B Travel Issues. If a foreign national is already in the United States, H-1B status is established by the I-94 card affixed in the passport and there is no need for an H-1B visa stamp. If and when an H-1B employee travels, however, he/she needs to have a valid visa in the passport. This leads to a whole slew of issues concerning the U.S. Consulates abroad and the inspection process upon return. The general rule is that an H-1B employee should check in, even if only briefly, with immigration counsel to review his/her travel plans and to ensure that all documentation is in place to allow the travel to proceed without incident.

As always, please feel free to distribute this Newsletter to other interested recipients and by all means, please bring any questions or comments to our attention. It is always a pleasure to hear from those whom we serve.

Cordially,

ROBERT D. ARONSON

This memorandum is one of a series of communications prepared as a general public service to our clients and friends. The information herein presented is not intended nor should it be utilized as legal advice on any specific situation. Furthermore, given the rapid pace of change, the veracity of this information is constantly subject to modification and/or reversal. Rather, this piece represents a good faith attempt to orient clients and other interested parties served by Aronson & Associates to current immigration developments. This piece in no manner supercedes the need to seek competent legal advice when engaged in activities carrying possible immigration-related consequences.

Aronson & Associates, P.A.
1221 Nicollet Mall Suite 506
Minneapolis, MN 55403
Tel: 612-339-0517
Fax: 612-349-6059
info@aronsonimmigration.com

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