In a blow to employers, a federal district court has upheld a USCIS memorandum that set out factors to determine whether an employer-employee relationship existed for H-1B nonimmigrant visa petition adjudication purposes.

The case was brought by an IT staffing firm that, along with other IT staffing firms and trade associations, challenged the validity of the USCIS’s January 8, 2010, Memorandum for “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements” (HQ 70/6.2.8 AD 10-24) (“Neufeld Memo”). The case was dismissed, with prejudice, by the federal district court for the District of Columbia on August 13, 2010. Broadgate Inc. v. U.S. Citizenship and Immigration Services, No. 1:10-cv- 00941-GK, (D. D.C.). The Neufeld Memo set out 11 factors and hypothetical examples for when an employer-employee relationship did and did not exist for H-1B nonimmigrant visa petition adjudication purposes. The plaintiff argued that the Neufeld Memo failed to comply with the Notice of Proposed Rule Making requirements of the Administrative Procedures Act and, therefore, was invalid. Additionally, they argued the memorandum set out new substantive rules that were binding upon USCIS service center adjudicators. Siding with the USCIS, the Court found the Neufeld Memo to be valid as it is “interpretive” in nature and was intended to be used by adjudicators in the application of the five tests set forth in the regulation for determining whether the requisite employer-employee relationship had been satisfied by the petitioner.

It is no secret that with the current recession and corresponding high unemployment rate, there is intense government scrutiny of immigration-related filings by U.S. employers seeking to secure employment work visas for foreign workers. Statutory and regulatory requirements are now being applied strictly, as evidenced by the Neufeld Memo.

What is most troublesome with the Broadgate decision is that the door is now open for the USCIS to create potentially unlawful “interpretive” memorandums for the adjudication of such filings, leaving the employer with the ability to challenge their unlawfulness only when the filing has been erroneously denied. It is not uncommon for 24 or more months to elapse from the time of denial of an application by the Service Center and affirmation by the Administrative Appeals Office before the Petitioner can challenge the legality of the standard in federal district court. In agreeing with the government’s “interpretation defense,” the Court created a Trojan horse for the USCIS and other federal agencies, such as the Office of Foreign Labor Certification at USDOL, to render erroneous decisions that deny immigration benefits to those legally entitled to them.
 

Implementing a portion of the Border Security funding bill (Public Law 111-230) signed by President Barack Obama on August 13, USCIS has announced a new fee, in addition to existing fees, for certain H-1B and L-1 petitions. The new fee is $2,000 for certain H-1B and $2,250 for certain L-1 petitions.

The fee applies to petitioners who employ more than 50 workers in the U.S., with more than 50% of them in H-1B or L-1 status. The fee must be paid when an employer seeks an initial grant of H-1B or L-1 status, and when an existing H-1B or L-1 worker is seeking a change of employer.

USCIS notes that Form I-129, and accompanying instructions, will be modified to comply with the new law. In the interim, employers should address the fee requirement with a notation on their H-1B or L-1 applications.

See the USCIS announcement here:
http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=27eac9514bb8a210VgnVCM100000082ca60aRCRD&vgnextchannel=5b33aca797e63110VgnVCM1000004718190aRCRD
 

On August 9, 2010, the U.S. Department of Homeland Security (DHS) amended its regulatory definition of “dependents” for A or G principal aliens to include, in addition to spouses and unmarried sons and daughters, those who are not related to the principal alien by blood, marriage or adoption.
Previously, DHS regulations allowed only the following dependents habitually residing with the A or G principal to apply for employment authorization:

• Spouse;
• Unmarried children under the age of 21;
• Unmarried sons or daughters under the age of 23 who are full-time post-secondary school students;
• Unmarried sons and daughters under the age of 25 who are full-time secondary school students if a formal bilateral agreement permitting their employment in the U.S. was signed prior to November 21, 1988, and if such bilateral agreement does not specify 23 as the maximum age for employment of such sons and daughters; and
• Unmarried sons or daughters who are physically or mentally disabled to the extent that they cannot adequately care for themselves or cannot establish, maintain or re-establish their own households.

The recent DHS change was meant to correspond to last year’s regulatory expansion of the definition of “immediate family” by the U.S. Department of State (DOS) which include those who:

• Are not members of some other household;
• Will reside regularly in the household of the principal alien;
• Are recognized as immediate family members of the principal alien by the sending Government as demonstrated by eligibility for rights and benefits, such as the issuance of a diplomatic or official passport, or travel or other allowances; and
• Are individually authorized by the Department of State.

The regulations controlling the employment of aliens has also been amended to allow these dependents to now file an I-765 Application for Employment Authorization Document (EAD Card) pursuant to 8 CFR 274a.12(c)(1) and (4). Specifically, the amendments replace references to the “spouses” and “children” of A and G principal aliens with “dependent.”
 

On July 22, Judge Susan Bolton of the U.S. District Court in Phoenix heard arguments in two of the most highly publicized challenges to Arizona Senate Bill 1070: (1) the lawsuit filed by a coalition of civil rights groups and labor unions; and (2) the lawsuit filed by the U.S. Department of Justice (“DOJ”). The plaintiffs in both seek to enjoin SB 1070 from taking effect on July 29, 2010.

Judge Bolton does not intend to enjoin SB 1070 in its entirety. Stating that she considers SB 1070 to be an “enactment,” combining new laws and amending existing laws, rather than a “statute,” Bolton indicated she was considering whether to block all or parts of certain key provisions of SB 1070 and steered attorneys toward the more questionable portions of those provisions.

Judge Bolton voiced concerns regarding portions of SB 1070, including a provision that allows law enforcement officers to make warrantless arrests of people suspected of committing offenses that make them “removable from the United States.” At the hearing, Judge Bolton asked: “How can a police officer make a determination that a person has committed a removable offense when that decision can only be made by a federal judge?”

Attorneys for the DOJ argued that the provisions of SB 1070 are pre-empted by federal law. The agency’s lawsuit alleges that SB 1070 “will conflict and undermine the federal government’s care balance of immigration-enforcement priorities and objectives.”

Judge Bolton did not make any rulings at the hearings and has not said when she will issue a ruling. With the statute set to take effect in days, it is anticipated that she will rule quickly. Jackson Lewis will continue to monitor the legal developments surrounding SB 1070.
 

In April 2005 when Public Law 108-390 went into effect allowing for employers to sign and retain I-9 employment eligibility verification forms electronically, employers and immigration practitioners alike may have been justifiably confused as provisional guidance from the Department of Homeland Security’s ICE (Immigration Customs and Enforcement) division on their web page http://www.ice.gov/pi/news/factsheets/i-9employment.htm was introduced. ICE guided employers to “interpret the law”(!), and advised employers to “note that there is no single government-wide electronic signature or record-keeping standard. However, some federal agencies have provided electronic record-keeping standards for their own transactions with the public…[which] may serve as a helpful reference for employers until DHS issues regulations to govern the storage of Forms I-9.” For over a year, employers and their counsel had to guess about what standards would comply with the law and fit within the enforcement agency’s vague guidance. Despite tangible benefits in terms of paperwork reduction, many employers opted to wait for something more concrete before investing in an electronic I-9 program and institutional training.

In June 2006, ICE issued an interim rule which provisionally codified standards that employers wishing to use electronic I-9 completion and storage systems should observe. Building on their initial guidance, most of the standards outlined in the provisional rule reflected IRS electronic recordkeeping guidelines, and covered criteria such as accessibility, accuracy, security, and quality of data being captured and systems being used for electronic storage. http://edocket.access.gpo.gov/2006/E6-9283.htm.

Some four years later, an advance copy of final rules modifying 8 CFR 274a.2 has been issued (http://www.justice.gov/eoir/vll/fedreg/2010_2011/fr22jul10.pdf), so presumably interested parties have had sufficient time to comment on the interim rules prior to finalization, unlike some notorious instances of agency “legislation by decree” in which policy “clarifications” were later deemed to have unlawfully omitted the normal public comment period. http://www.jacksonlewis.com/legalupdates/article.cfm?aid=1579.

The final version of the rule contains standards which will be familiar to employers who currently use electronic I-9 systems and the vendors who market such systems. As before, the final rule “permits employers to complete, sign, scan, and store the Form I-9 electronically, as long as certain performance standards… are met.” Changes in the final rule are relatively minor, amounting in most instances to clarifications:
-employers must complete a Form I-9 within three business (not calendar) days;
-employers may use paper, electronic systems, or a combination of paper and electronic systems;
-employers may change electronic storage systems as long as the systems meet the performance requirements of the regulations;
-employers need not retain audit trails of each time a Form I-9 is electronically viewed, but only when the Form I-9 is created, completed, updated, modified, altered, or corrected; and
-employers may provide or transmit a confirmation of a Form I-9 transaction, but are not required to do so unless the employee requests a copy.

This rule does not include any changes to I-9 form content or acceptable documents, but an acceptable document change did occur in 2008 (73 FR 76505) and 2009 (72 FR 2838 – correction). Therefore, while there was nothing dramatic or surprising in the final rule, employers can now rest assured that electronic I-9 completion and storage standards appear to be final.
 

The scorching Texas summer is not the only heat Texas employers are feeling these days. According to a recent article in the Houston Chronicle, the United States Immigration and Customs Enforcement (ICE) has hit 23 Texas companies with civil fines exceeding $600,000 for hiring unauthorized workers, failing to comply with regulatory employment verification requirements, or both. Some of these employers are also facing criminal prosecutions.

It is no secret that the current administration has placed heavy emphasis on enforcing workplace laws and numerous employers have felt the brunt of it. Enforcing immigration laws that prohibit employers from hiring unauthorized workers and that require all employers to verify each new hire for work authorization and completion of the I-9 Employment Eligibility Verification Form is a part of the overall scheme. And, since there are budget deficits that must be made up, hefty fines for violations help.

Under this enforcement regime, employers are cast as the villains of the piece and the cause for the massive influx of illegal workers into this country. Rather than deporting apprehended illegal workers, the government now allows many to remain in the United States, where they are given employment authorization in return for their assistance in the investigation and prosecution of employers.
 

The U.S. Department of Justice has filed a challenge to the state of Arizona’s recently passed immigration law, S.B. 1070, in federal court.

The Arizona law, called the Support Our Law Enforcement and Safe Neighborhoods Act and scheduled to take effect on July 29, is already the target of at least five other lawsuits filed by civil rights and other groups.

In its suit, filed July 7, the DOJ charges that the Arizona law conflicts with federal law, would disrupt federal immigration enforcement, and would lead to local police harassment of those who cannot prove lawful status. DOJ officials expect a hearing within the next two weeks on their motion for a preliminary injunction blocking the law from going into effect.

The DOJ cites the legal doctrine of "preemption" in its complaint. Preemption is based on the U.S. Constitution’s supremacy clause and provides that federal law trumps state statutes. The DOJ argues that because the federal government has "preeminent authority to regulate immigration matters," the Arizona law must be struck down. Additionally, on the more practical side, the DOJ argues that the Arizona law would unduly burden federal agencies charged with immigration enforcement. Enforcement of the Arizona law would result in Arizona referring so many illegal immigrants for deportation, the lawsuit argues, that federal officials would lose focus on top priority targets, such as immigrants involved in terrorism or other crimes. The suit also claims that the Arizona law would overburden local law enforcement officials.

Although the lawsuit mentions potential "detention and harassment" of U.S. citizens and immigrants who do not carry identification documents, it does not argue that the law would lead to racial profiling.

An official press release, along with copies of the complaint and supporting documents, can be found at the Department of Justice website: http://www.justice.gov/opa/pr/2010/July/10-opa-776.html.
 

Comprehensive Immigration Reform (CIR) once more may have had new life breathed into it. President Barack Obama on July 1 called on Congress to act on CIR and fix our “broken” immigration system. As a part of this reform, he said that employers who take advantage of the underground labor market should continued to be punish, the estimated 11,000,000 undocumented aliens currently in the U.S. should be allowed a “path” to legal residency, and the delays hindering those pursuing legal immigration should be fixed. The president questioned Congress’ ability to pass such legislation, but indicated that action on CIR was urgent.

CIR has been pronounced dead more times than anyone can remember. Some see legislative priorities like healthcare reform, banking reform, the housing market, job loss and the economy as dominating the legislative agenda in the foreseeable future and CIR’s chances seem a long shot. Even in the wake of Arizona’s controversial immigration law, which many thought would force some sort federal action, reform seemed a long way off. Perhaps now with the Administration’s clear support, we will see progress in CIR.

We will continue to stay on top of developments as they arise.
 

Obama Nominee Finds Himself in I-9 Hot Water

A recent Washington Post report has succeeded in highlighting one of the more confusing compliance requirements for small business owners: the I-9 verification. It seems that Alan Bersin, the Administration’s nominee for (and current recess-appointed) Commissioner of Customs and Border Protection, the agency charged with protecting the nation’s borders, has failed to complete I-9s for the eight or nine household workers he has employed over the last eight years. According to the Washington Post, Acting CBP Commissioner Bersin was unfamiliar with the Form I-9 and his need to complete them as an employer. If the official responsible for protecting our borders (who is also a former “Border Czar” and U.S. Attorney) cannot fulfill his own I-9 obligations, does a small business owner stand a chance?

The I-9 or Employment Eligibility Verification Form is a requirement of the Department of Homeland Security’s U.S. Citizenship and Immigration Services. Employers must use it to verify an employee’s identity and to establish that the worker is eligible to accept employment in the country.

While the Commissioner’s failure to complete required I-9’s does not leave him open to risks such as a DHS raid, I-9 audit, or criminal investigation, a  business owner may not be so lucky. At the recent Jackson Lewis 20th Corporate Counsel Conference, an agent from U.S. Immigration and Customs Enforcement (“ICE”) said that in 2010 ICE will double the number of I-9 audits it conducted last year. The agent noted that approximately 33 percent of employers targeted in last year’s I-9 audits were found not in compliance and they were all sanctioned. The good news is that the majority of the employers targeted understood (or had good legal advisors) and were able to follow to the requirements.   These employers likely expended tremendous time and resources to get their I-9 files in order and to reply to the audit notices.

The Commissioner’s situation is instructive and should be another call to fix the I-9 process.  Common sense (not DHS handbook consisting of more than 80 pages to explain the one-page Form I-9) should control. When even President Barack Obama’s nominee cannot make out his I-9 obligations, we all have a problem. 

The government’s declarations of more enforcement and I-9 audits and threats of astronomical fines may make good politics, but they are no help to the honest businessman.   Education and simplification of the verification process would be welcomed. This does not require new laws and immigration reform. It’s all about forms and regulations. Add some common sense  and we might just get somewhere. Commissioner Bersin would probably agree.

Victor X. Cerda of our Washington, D.C. Region office authored this article.

The U.S. Immigration and Customs Enforcement (ICE) agency is stepping up its program to promote IMAGE (ICE Mutual Agreement between Government and Employers). IMAGE is a voluntary program under which ICE will “partner with companies representing a broad cross section of industries in order that these firms may serve as charter members of IMAGE and liaisons to the larger business community.”

IMAGE subjects a participating employer to standards far higher than normally required by the law that can pose unintended consequences for employers. Improper and inconsistent application of the complicated IMAGE employment-verification system could expose employers to claims of discrimination. Further, while adopting the “best practices” requirements through IMAGE is meant to enhance legal compliance, the additional requirements on participating employers could lead to a heightened risk of technical errors.

The initial steps for IMAGE require a participating employer to:

1) Complete a self-assessment questionnaire
2) Enroll in E-Verify
3) Enroll in the Social Security Number Verification Service (SSNVS)
4) Undergo a Form I-9 audit by ICE
5) Review and sign an official IMAGE partnership agreement with ICE

In addition, employers must take steps to comply with ICE’s “best practices,” which include:

1) Establishing a written hiring- and employment-eligibility verification policy
2) Establishing an internal compliance and training program that includes I-9 training, fraud detection and use of SSNVS and E-Verify
3) Restricting the conducting of I-9 and E-Verify processes to individuals who have received training
4) Arranging for annual I-9 audits by an external auditing firm or a trained employee not otherwise involved in the I-9 and E-Verify processes
5) Establishing a self-reporting procedure to report to ICE violations or discovered deficiencies
6) Establishing a procedure to report to ICE credible information of suspected criminal misconduct in the I-9 process
7) Establishing a program to assess subcontractors’ compliance with employment-eligibility verification requirements, encourage contractors to incorporate IMAGE Best Practices, and, when practicable, incorporate the verification requirements in subcontractor agreements
8) Establishing a tip line mechanism (inbox, e-mail, etc.) for employees to report activity relating to the employment of unauthorized workers and a protocol for responding to employee tips

According to ICE, the benefit to employers is credibility and access to training, including on the latest illegal schemes used to circumvent legal hiring processes. Furthermore, ICE will review the hiring and employment practices of IMAGE partners and “work collaboratively with them to correct isolated, minor compliance issues that are detected.”

While ICE claims that “Image Certified” will become the industry standard as it relates to unauthorized employment verification, since its inception nearly four years ago, adoption of the program by employers remains low (see attached is the list of “IMAGE Certified" Companies). Most companies reject IMAGE because of the many additional burdens it creates, many of which may result in additional costs and unnecessarily high standards.

Is it worthwhile for a company to become IMAGE Certified? Employers must weigh the risks and costs of the compliance obligations against the two primary benefits: (1) the value of the “IMAGE Certified” credential and (2) additional access to training and information. Employers should carefully review the new IMAGE initiative before deciding to participate.