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USCIS Issues Interim Final Rule Restricting Definition of H-1B Specialty Occupation

October 08, 2020

An Interim Final Rule, “Strengthening the H-1B Nonimmigrant Visa Classification Program,” issued by the US Citizenship and Immigration Services today will significantly alter and restrict the definition of a specialty occupation for H-1B petition purposes and make other important changes to the H-1B petition process. The rule will take effect 60 days from October 8.

Once effective, US Citizenship and Immigration Services (USCIS) officers adjudicating H-1B petitions will apply the more narrow definition of a specialty occupation, as well as the other restrictive provisions of the Interim Final Rule, with the probable result being that a large number of H-1B petitions, including some that had previously been approved, will be denied because the position to be held by the beneficiary is not considered a specialty occupation. The USCIS will accept public comments on the Interim Final Rule for 60 days from October 8, 2020.

The US Department of Homeland Security (DHS) states that the publication of the Interim Final Rule is pursuant to the Trump administration’s Buy American, Hire American initiative. It is likely that the Interim Final Rule will be challenged in court, with the result that an injunction prohibiting its application may be issued.

The following are the most important provisions of the Interim Final Rule.

More Stringent Criteria for H-1B Specialty Occupations

The Interim Final Rule amends the regulatory definition of an H-1B specialty occupation to require a “direct relationship” between the degree held by the beneficiary and the duties of the position. The Interim Final Rule notes that a position for which a bachelor’s degree in “any” academic field is sufficient to qualify for the position, or for which a bachelor’s degree in “a wide variety” of such unrelated fields is sufficient to qualify for such position, would not be considered a specialty occupation since it would not require the application of a body of highly specialized knowledge. The Interim Final Rule’s amended definition of a specialty occupation also indicates that a position will not qualify as a specialty occupation if attainment of a “general” degree, without further specialization, is sufficient to qualify for the position.

Under the Interim Final Rule, the petitioner will have the burden of demonstrating that there is the necessary direct relationship between the required degree in a specific specialty and the duties of the position, but the rule does note that the USCIS will not require a “singular” field of study for each specialty occupation. The USCIS will accept “multiple disparate fields of study” as a minimum entry requirement for a position, as long as the petitioner can establish how each field of study in a specific specialty directly relates to the duties of the position to be filled.

The Interim Final Rule also provides examples of requirements for a general degree without further specialization that will lead to an H-1B petition denial, including a “general engineering degree” and a bachelor’s degree in an unspecified “quantitative field” (which could include mathematics, statistics, economics, accounting, or physics) for a software developer position, as well as “a business administration or liberal arts” degree.

The Interim Final Rule also amends the H-1B regulation to make it clear that a degree must invariably be required for the position at issue. To this effect, the Interim Final Rule eliminates from the H-1B specialty occupation criteria the language that stated that a bachelor’s degree be “normally” required, or “common to the industry,” or that the knowledge required for the position is “usually associated” with at least a bachelor’s degree or equivalent.

The stated objective of the USCIS is to force petitioners to have to establish that the bachelor’s degree in a specific specialty is “always” a requirement for the position to be held by the H-1B beneficiary. The Interim Final Rule notes that USCIS officers will continue to refer to the Occupational Outlook Handbook (OOH) in adjudicating H-1B petitions; the practical result of this is that only occupations that are described by the OOH as requiring a degree without exception or qualification will be considered specialty occupations.

New Definitions of ‘Worksite’ and ‘Third-Party Worksite’

The Interim Final Rule introduces a new definition of a “worksite” as the physical location where the work is actually performed by the H-1B nonimmigrant and makes it clear that a worksite will not include any location that would not be considered a “worksite” for Labor Condition Application purposes. A “third-party worksite” is defined as a worksite other than, in recognition of a work-from-home arrangement, the beneficiary’s residence in the United States, and that is not owned or leased, and not operated, by the petitioner. The Interim Final Rule explains that its new employer/employee relationship definition (described below) specifically refers to the beneficiary’s worksite as a relevant factor in determining whether such relationship exists, and that the beneficiary’s presence at a third-party worksite may cast doubt on whether such a relationship exists.

New Definition of ‘United States Employer’

The Interim Final Rule replaces the current definition of a “United States employer” for H-1B purposes by removing the reference to a “contractor” in the definition by expanding upon the employer-employee relationship and the factors used to determine if a valid “employer-employee relationship” between the petitioner and the beneficiary exists or will exist. The Interim Final Rule observes that while third-party arrangements involving contractors may be a legitimate business model, contractual arrangements make it more difficult to assess whether the petitioner and the beneficiary have or will have the requisite employer-employee relationship.

In addition, the Interim Final Rule removes the phrase “as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee” from the current definition of a United States employer and replaces it with a more extensive definition of “employer-employee relationship” based on the USCIS’s interpretation of existing common law. The Interim Final Rule specifically notes that the petitioner’s “right to control” the manner in which the H-1B beneficiary works is not a dispositive factor, but only one of a number of factors. The following specific factors are itemized in the Interim Final Rule:

  • Whether the petitioner supervises the beneficiary and, if so, where such supervision takes place
  • Where the supervision is not at the petitioner’s worksite, how the petitioner maintains such supervision
  • Whether the petitioner has the right to control the work of the beneficiary on a day-to-day basis and to assign projects
  • Whether the petitioner provides the tools or instrumentalities needed for the beneficiary to perform the duties of employment
  • Whether the petitioner hires, pays, and has the ability to fire the beneficiary
  • Whether the petitioner evaluates the work product of the beneficiary
  • Whether the petitioner claims the beneficiary as an employee for tax purposes
  • Whether the petitioner provides the beneficiary any type of employee benefits
  • Whether the beneficiary uses proprietary information of the petitioner in order to perform the duties of employment
  • Whether the beneficiary produces an end product that is directly linked to the petitioner’s line of business
  • Whether the petitioner has the ability to control the manner and means in which the work product of the beneficiary is accomplished

Although the Interim Final Rule states that “no single factor is dispositive,” it adds that “all factors must be taken into consideration.” This means that all H-1B petitions filed in the future will presumably have to address each of these factors to establish that the requisite employer/employee relationship exists. The obvious target of the redefinition of the employer/employee relationship are the IT outsourcing or placement companies, but all employers should take note of this new definition and address it in their H-1B petitions.

Evidence of Work in Specialty Occupation in Third-Party Placement Situation

The Interim Final Rule requires “corroborating evidence” from the H-1B petitioner of nonspeculative work in third-party placement cases and of the fact that the petitioner will have an employer-employee relationship with the beneficiary. Such evidence may include contracts, work orders, or other similar evidence, such as a detailed letter from an authorized official at the third-party worksite to establish that the beneficiary will perform services in a specialty occupation at the third-party worksite.

Reflecting the USCIS’s general skepticism about third-party H-1B placements, the Interim Final Rule imposes a one-year maximum validity period for all H-1B petitions in which the beneficiary will be working at a third-party worksite. The Interim Final Rule does, however, require USCIS to provide a written explanation when the petition validity length granted is less than the validity period requested by the petitioner.

H-1B Site Visits

Although H-1B site visits have been occurring for some years now, the site visit program has never been formally recognized in USCIS regulations. The Interim Final Rule incorporates the site visit program into the agency’s regulations, making it clear that inspections may include, but are not limited to, an onsite visit of the petitioning organization’s facilities, interviews with its officials, review of its records related to compliance with immigration laws and regulations, and interviews with any other individuals or review of any other records that USCIS considers pertinent to verify facts related to the adjudication of the H-1B petition.

The new regulation also clarifies the locations of an inspection as including the petitioner’s headquarters, satellite locations, or the location where the beneficiary works or will work, including third-party worksites. The new regulation also states that if USCIS is unable to verify facts related to an H-1B petition or compliance with H-1B petition requirements due to the failure or refusal of the petitioner or third party to cooperate with a site visit, then such failure or refusal may be grounds for denial or revocation of any underlying H-1B petition, although petitioners will be placed on notice of the specific consequences of noncompliance, whether by them or by a contractual third party.

It is not clear if this formal inclusion of the site visit program will result in an increase in the number of site visits conducted by the USCIS. Although the incidence of such site visits has decreased since the coronavirus (COVID-19) pandemic began in March 2020, the USCIS appears to have resumed such visits in the past couple months. Employers of H-1B nonimmigrants should be aware of the possibility of such site visits, and should take all appropriate actions, including the development of a site visit protocol, to prepare for such visits.

It is notable that the Interim Final Rule refers only to site visits involving H-1B petitions. Although such site visits have been conducted in connection with petitions seeking other statuses (such as L-1 Intracompany Transferee status), the provisions of the Interim Final Rule will not affect site visits involving petitions other than H-1B petitions.

Contacts

If you have any questions or would like more information on the issues discussed in this alert, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Shannon A. Donnelly
Eleanor Pelta
Eric S. Bord

Miami
Laura C. Garvin

San Francisco
A. James Vázquez-Azpiri
Christina M. Gonzaga