Definition of an H-1B Employer-Employee Relationship

On January 13, 2010, the U.S. Citizenship and Immigration Services (USCIS) issued a Guidance Memorandum to adjudication officers to clarify the requirements needed to establish an employer-employee Relationship in H-1B Petitions for foreign workers who will be placed at client work sites, self-employed individuals, business owners, and independent contractors. Per this new memorandum, an H-1B Employer who seeks to employ a temporary worker in an H-1B occupation is required to establish a valid employer-employee Relationship.

Employer-Employee Relationship

The USCIS will look at a number of factors to determine whether a valid employer-employee relationship exists. Engaging a person to work in the United States is more than merely paying the wage or placing that person on the payroll. In considering whether or not there is a valid "employer-employee relationship" for purposes of H-lB petition adjudication, the USCIS must determine if the H-1B Employer has a sufficient level of control over the employee. The USCIS has defined such a relationship to hinge on an H-1B Employer’s “Right to Control” the means and manner in which the work is performed. The H-1B Employer must be able to establish that it has the right to control over when, where, and how the beneficiary performs the job. The USCIS will consider the following to make such a determination (with no one factor being decisive):

1. Does the petitioner supervise the beneficiary and is such supervision off-site or on-site?
2. If the supervision is off-site, how does the petitioner maintain such supervision, i.e. weekly calls, reporting back to main office routinely, or site visits by the petitioner?
3. Does the petitioner have the right to control the work of the beneficiary on a day-to-day basis if such control is required?
4. Does the petitioner provide the tools or instrumentalities needed for the beneficiary to perform the duties of employment?
5. Does the petitioner hire, pay, and have the ability to fire the beneficiary?
6. Does the petitioner evaluate the work-product of the beneficiary, i.e. progress/performance reviews?
7. Does the petitioner claim the beneficiary for tax purposes?
8. Does the petitioner provide the beneficiary any type of employee benefits?
9. Does the beneficiary use proprietary information of the petitioner in order to perform the duties of employment?
10. Does the beneficiary produce an end-product that is directly linked to the petitioner's line of business?
11. Does the petitioner have the ability to control the manner and means in which the work product of the beneficiary is accomplished?

Third Party Placement Does Not Qualify

The USCIS has clearly stated that the following example of “Third-Party Placement / Job Shop” does NOT evidence an employer-employee relationship because the H-1B Employer neither has a Right to Control nor Exercise of Control over the employee:

“The petitioner is a computer consulting company. The petitioner has contracts with numerous outside companies in which it supplies these companies with employees 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. The beneficiary is a computer analyst. The beneficiary has been assigned to· work for the third-party company to fill a core posjtion to maintain the third-party company's payroll. Once placed at the client company, the beneficiary reports to a manager who works for the third-party company. The beneficiary does not report to the petitioner for work assignments, and all work assignments are determined by the third-party company. 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. The beneficiary's end-product, the payroll, 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.”

Documentation to Establish the Employer-Employee Relationship

Per this new memorandum, H-1B Employers must clearly show that an employer-employee relationship will exist between the employer and employee, and establish that the employer has the right to control the employee's work, including the ability to hire, fire and supervise the beneficiary. The petitioner must also be responsible for the overall direction of the beneficiary's work. Lastly, the H-1B Employer should be able to establish that the above elements will continue to exist throughout the duration of the requested H-IB validity period. The petitioner can demonstrate an employer-employee relationship by providing a combination of the following or similar types of evidence: 

1. A complete itinerary of services or engagements that specifies the dates of each service or engagement, the names and addresses of the actual employers, and the names and addresses of the establishment, venues, or locations where the services will be performed for the period of time requested;
2. Copy of signed Employment Agreement between the petitioner and beneficiary detailing the terms and conditions of employment;
3. Copy of an employment offer letter that clearly describes the nature of the employer employee relationship and the services to be performed by the beneficiary;
4. Copy of relevant portions of valid contracts between the petitioner and a client (in which the petitioner has entered into a business agreement for which the petitioner's employees will be utilized) that establishes that while the petitioner's employees are placed at the third-party worksite, the petitioner will continue to have the right to control its employees;
5. Copies of signed contractual agreements, statements of work, work orders, service agreements, and letters between the petitioner and the authorized officials of the ultimate end-client companies where the work will actually be performed by the beneficiary, which provide information such as a detailed description of the duties the beneficiary will perform, the qualifications that are required to perform the job duties, salary or wages paid, hours worked, benefits, a brief description of who will supervise the beneficiary and their duties, and any other related evidence;
6. Copy of position description or any other documentation that describes the skills required to perform the job offered, the source of the instrumentalities and tools needed to perform the job, the product to be developed or the service to be provided, the location where the beneficiary will perform the duties, the duration of the relationship between the petitioner and beneficiary, whether the petitioner has the right to assign additional duties, the extent of petitioner's discretion over when and how long the beneficiary will work, the method of payment, the petitioner's role in paying and hiring assistants to be utilized by the beneficiary, whether the work to be performed is part of the regular business of the petitioner, the provision of employee benefits, and the tax treatment of the beneficiary in relation to the petitioner;
7. A description of the performance review process; and/or
8. Copy of petitioner's organizational chart, demonstrating beneficiary's supervisory chain.

Extending an H1-B VISA

If an H-1B Employer is seeking to extend H-1B employment for an employee, the H-1B Employer must continue to establish that a valid employer-employee relationship exists. The H-1B Employer can do so by providing evidence that it continues to have the right to control the work of the employee, as described above. The H-1B Employer may also include a combination of the following or similar evidence to document that it maintained a valid employer-employee relationship with the employee throughout the initial H-1B status approval period:  

1. Copies of the beneficiary's pay records (leave and earnings statements, and pay stubs, etc.) for the period of the previously approved H-1B status;
2. Copies of the beneficiary's payroll summaries and/or Form W-2s, evidencing wages paid to the beneficiary during the period of previously approved H-1B status;
3. Copy of Time Sheets during the period of previously approved H-1B status;
4. Copy of prior years' work schedules;
5. Documentary examples of work product created or produced by the beneficiary for the past H-1B validity period, (i.e., copies of: business plans, reports, presentations, evaluations, recommendations, critical reviews, promotional materials, designs, blueprints, newspaper articles, web-site text, news copy, photographs of prototypes, etc.). Note: The materials must clearly substantiate the author and date created;
6. Copy of dated performance review(s); and/or
7. Copy of any employment history records, including but not limited to, documentation showing date of hire, dates ofjob changes, i.e. promotions, demotions, transfers, layoffs, and pay changes with effective dates.

If USCIS determines, while adjudicating the extension petition, that the petitioner failed to maintain a valid employer-employee relationship with the beneficiary throughout the initial approval period, or violated any other terms of its prior H-1B petition, the extension petition may be denied.