The USCIS Memo by Donald Neufeld dated January 8, 2010 has raised concerns with the staffing companies that hire employees and place them at client sites. As per this memorandum the staffing companies should be able to show control over these consultants in order to establish an employer and employee relationship. The memo lists eleven factors to be weighed in the determination of whether there is a genuine employer-employee relationship. No single factor is supposed to be required; the factors are supposed to be weighed by the USCIS in making a determination. Since the memo is fairly recent, it is too early to discuss any trends in the adjudication of H1Bs under this standard.

The memo gives the examples of weekly calls, reporting back to the main office routinely, or site visits by the petitioner. The answer depends upon the particular company's operations. However, those companies that conduct weekly calls or have routine reporting systems might not be able to document the practice, if it has not been established as policy. They may wish to improve systems for documenting contact requirements, dates of calls, content of calls, and any follow up or outcome. For example, you could have your employee send you a status report the duties that he/she performed for that pay period, along with the time sheet. You will than have to do regular appraisals of the employees work and you can send those appraisals to the Manager for comments and review along with the time sheet. Your employment contracts could include wording to the effect that the employee placed at an end client site must report to a manager at the employees premises and will be required to send regular status reports, based on which his/her work will be reviewed and the appraisals will be sent to the client for further confirmation. Based on this review the issues such as increase in pay, bonus and continuation of employment will be decided. Upon review of the employees work, if it is determined that the employee did not perform as per his contractual obligations, the employee will be fired etc..

We have received our first RFE on this issue and we intend to send out a strong response to the RFE. The memo is against common sense, business practices and existing case law. The regulation does not support it either. We are providing a multipoint response and if necessary we intend to take the case to the AAO.

The regulations  8 C.F.R. 214.2(h)(4)(ii) provide that a US Employer means:

"United States employer means a person, firm, corporation, contractor, or other association, or organization in the United States which: .
...
"(2) Has an employer-employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee..." [Emphasis added.]

The memo states that "Petitioner control over the beneficiary must be established when the beneficiary is placed into another employer's business, and expected to become a part of that business's regular operations. The requisite control may not exist in certain instances· when the petitioner's business is to provide its employees to fill vacancies in businesses that contract with the petitioner for personnel needs..." However, since the regulation states "OR otherwise control", in the regulation, "control" is optional. Therefore, investigations into who has "more" control, "primary" control, "day-to-day" control, or "right to" control, "manner and means" control, "when, where, and how" control or any other type of control is irrelevant

Moreover, where the petitioner is the only one who has the power to hire, fire, assign to projects, pay and provide benefits to the employee, then that should be sufficient. That is in line with the old guidance and case law also.

The Memo is not supported by Case Law. In the Supreme Court Case Clackamas that they refer to in the memo, the decision is based on the approach taken by the EEOC to determine the existence of an "employer-employee" relationship. In its enforcement guidance memo (EEOC Policy Guidance on Contingent Workers, Notice No. 915.002, Dec. 3, 1997), specifically cited with approval by the Supreme Court in Clackamas, the EEOC reached the following conclusion after reciting sixteen factors that should be taken into consideration:

"This list is not exhaustive. Other aspects of the relationship between the parties may affect the determination of whether an employer-employee relationship exists. Furthermore, not all or even a majority of the listed criteria need be met. Rather, the fact-finder must make an assessment based on all of the circumstances in the relationship between the parties.

Example 1: A temporary employment agency hires a worker and assigns him to serve as a computer programmer for one of the agency's clients. The agency pays the worker a salary based on the number of hours worked as reported by the client. The agency also withholds social security and taxes and provides workers' compensation coverage. The client establishes the hours of work and oversees the individual's work . The individual uses the client's equipment and supplies and works on the client's premises. The agency reviews the individual's work based on reports by the client. The agency can terminate the worker if his or her services are un-acceptable to the client. Moreover, the worker can terminate the re-lationship without incurring a penalty. In these circumstances, the worker is an "employee."

This shows that the very authority that the USCIS quotes in its memo, actually states that control need not be established in certain situations.