RECENT (Jan 2010) actions / announcement by USCIS towards
Consulting companies





However, this is how many could read RECENT (Jan 2010) actions / announcement
by USCIS towards Consulting companies, which engages or merely places their
employees at the client sites for various projects.

 

·         No new H1B application will
be approved, as per the new guidelines provided USCIS on Jan 08, 2010
memorandum – for 3rd Party Consulting company.

·         No new H1B extension/stamping
will be approved, as per the new guidelines provided USCIS on Jan 08, 2010
memorandum – for 3rd Party Consulting company.

·         If an employee has H1B
approved or extension approved, and if he/she comes back to US from a vacation
or from an emergency, he/she would be deported back to his/her home country
from the Port of Entry (PoE) – for 3rd Party Consulting company.

 

Why?

 

Because of 2 recent events:

 

1)      USCIS gave new memorandum (which is now
guidelines for USCIS professionals working on the H1B petitions/extensions) on
Jan 08th, 2010. (Attached the PDF file for the memorandum).

2)      Recently (Jan 2010) several H1B Employees were
sent back (in some forum, its mentioned – all of them) to their home country
from Newark, NJ and JFK, NY Port of Entry – these were the H1B employees, who
went to spend Christmas/New Year vacation to their home countries.

 

What does the memorandum mention, specifically, about 3rd Party Consulting
companies?

 

Link to the memorandum (PDF attached) – http://www.uscis.gov/USCIS/Laws/Memoranda/2010/H1B%20Employer-Employee%20Memo010810.pdf

 

Employer-Employee Relationship:

 

As per the memorandum, some previous H1B Law defines, the definition of an “US
Employer”. Somewhere in that definition (Page 2 of memo), it mentions the word
“Employer-Employee relationship”. Till now, it seems that there was no clear
guidance on what kind of relationship was considered having Employer-Employee relationship.
So, it was being, probably, interpreted independently or ambiguously. Now, on
Jan 8th, 2010, USCIS has published this memorandum for TRAINING USCIS OFFICIALS
about understanding, Employer-Employee relationship. The memorandum seems to
have been prepared with a clear understanding about it, along with the specific
EXAMPLES.

 

Memorandum has given few specific examples, which would QUALIFY for having
Employer-Employee relationship, on Page 4-5 of the Memo – including the nature
of the job/business. On Page 5-6, memorandum gives few specific examples, which
would NOT QUALIFY for having Employer-Employee relationship. Third Party
Placement / “Job-Shop” (better version of “Body-shop”, probably) is NOT
QUALIFIED for meeting Employer-Employee Relationships – meaning, 3rd Party
placement (which most of the small consulting companies do) doesn’t meet H1B
requirement, as defined by the law – meaning for this job, the new H1B or
Extension or Stamping petitions CANNOT be approved!! Period !!

 

This is how memorandum has identified 3rd Party Placements and in Bold letters,
why it disqualifies for the H1B petitions (comments are in Red):

 

“The petitioner is a computer consulting company (which is what all small
consulting do). The petitioner has contract with numerous outside companies in
which it supplies these companies with employee to fulfill specific staffing
needs. The specific positions are not outlined in the contract between the
petitioner and the third-party company but are staffed on an as-needed basis
(this is nothing but, Service Agreement between the petitioner and the
mid-vendor!). The beneficiary is a computer analyst (which is what many small
consulting company’s employee are). The beneficiary has been assigned to work
for the third-party company to fill a core position to maintain the third-party
company’s payroll (this nothing but, Mid-Vendor’s or so-called Prime-Vendor’s
or Consulting Partner’s Revenue). Once placed at the client company, the
beneficiary reports to a manager who works for the third-party company (as it
happens, when Consulting partner hires employee as a contractor). The
beneficiary does not report to the petitioner for work assignments, and all
work assignments are determined by the third-party company (petitioner just
runs pay-rolls!). The petitioner does not control how the beneficiary will
complete daily tasks, and no propriety information of the petitioner is used by
the beneficiary to complete any work assignments (petitioner just runs
pay-rolls!). The beneficiary’s end-product, the payroll (payroll of
mid-vendor/prime vendor/consulting partner), is not in any way related to the
petitioner’s line of business, which is computer consulting. The beneficiary’s
progress reviews are completed by the client company, not the petitioner
(petitioner just runs pay-rolls!).  [Petitioner Has No Right to Control;
No Exercise of Control].”

 

Right to Control:

Supreme Court has stated the definition of Employer-Employee Relationship (Page
3 of Memo), and there it was mentioned to have “Right to Control” over the work
of the employee by the employer.  From the entire memo, it sounds that
Right control is well-established, ONLY WHEN, at least one supervisor from the
petitioner’s company works with the beneficiary at the end-client site, and supervises
beneficiary’s day-to-day work. So, big Consulting companies such as Wipro,
Infosys, Accenture, Deloitte etc. will be good, as they would meet “Right to
Control” and that way, they will satisfy H1B requirement by law, and their
petitions for similar 3rd party consulting work, will be APPROVED, but not in
case of, small consulting companies!! This is because, big consulting companies
such as Accenture – have their entire  or partial team – along with
managers etc. – working at the same client site, where the beneficiary would be
working, so they could supervise their work and so exercise control over their
work etc., but that cannot be the case with the small consulting – because,
their actual business has been, so far, to place employees and run pay-roll –
not to get the client projects!

 

Why one could think that there are slim chances for this memorandum to get
reversed in favor of small consulting companies?

This memorandum took care of big consulting companies such as Wipro, Infosys,
Cognizant, Accenture etc. – meaning, these companies and their employees are
NOT impacted. They can travel freely to-and-fro their home country etc. Since,
big companies are not impacted, there will not be any big lobbying or
oppositions to this memorandum, per say!! There don’t seem to be a platform for
small consulting companies to gather and lobby, plus most the small consulting
may not get involved, with fear of exposing themselves more to other issues!!
So, it might be east to assume that this memorandum is permanent and not
temporary. The recent deportation also indicates that the changes like this
memorandum is for serious, not just the warning!

 

How this memorandum relates to the recent deportation events from NY and NJ
airports?

 

There seems to be an anticipated link between these 2 events – Memorandum and
recent Deportations – kind of an indication about the current level of
government scrutiny and seriousness of the H1B program. Hence, there have been
advices by others that – each employer and employee should operate by strictly
following the H1B program requirements.

 

Link to Murthy.com front page
posting about this – http://www.murthy.com/nflash/nf_h1conc.html

 

What one could predict as happening sooner (trend)?

·         Since, it seems big
consulting companies (having their own consulting projects)/full-time
end-clients and their beneficiaries are not impacted with these changes – there
could be trend – employee moving from small companies to big companies for a
better shelter for full-time positions – especially, when small consulting
company’s immediate preventions / actions to this memo cannot ensure safety.

·         Big consulting companies
could buy small consulting companies or small consulting companies could sell
their companies to big consulting companies (having their own consulting
projects), to save their employee’s future/transition etc.

 

Regards,

Krishnaswamy Jagimoggala

Program Manager
(Startup Business Group)

Aditi Technologies