H-1B Employer Employee Memo of 8 January - Practice Hints

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I am reproducing material from our employers-only (by invitation only) conference call for tomorrow. These matters need to be in place for H-1 new applications, transfers as well as extensions.

In view of the Memo of 8 January 2010 from USCIS, employers in the consulting business need to prepare for some changes in the way they work and their documentation. In our community call for employers on 14 January 2010, I had touched on some of the changes in the way you do business. This memo will provide further advice. Treat this both as a document providing guidelines for change as well as a starting point for several discussion, we as a community, will have. Feel free to let me have your comments.
For our purposes, an H-1B is based upon formation (and continuation) of a valid employer-employee relationship between the petitioner and the beneficiary. Note what USCIS says how they will define this relationship.
We need to establish we have the right to control when, where and how the job is performed.
1. We need to establish that you continue to supervise the employee even when the employee is working off site
2. Establish work flows and document them to show how many times a week/month the employee reports to you. Create documentation that provides dates and substance of discussions with the employee.
3. Do you have to right to control the day to day work of the employee? In other words, do you get to tell the employee: the times they arrive and leave; the amount of work they must do each day; the quality standards for the work; how to do the work, etc.
4. Do you provide the tools or instrumentalities needed to perform the job? In many industries, that would men providing items like laptops, desktops, printers and job-related software. If yes, document that you do.
5. Do you have the ability to hire, pay and fire the employee? This can be documented through employment contract with the beneficiary or through the offer letter. There is no legal requirement that you must enter into an employment agreement with you employees, H-1B or otherwise.
6. Do you evaluate the work product of the employee? In the IT industry, you can think of as the review before user acceptance. But even if you do not, you should be able to meet this requirement by establishing periodic performance review (at least annual) criteria. You can create spreadsheets of various elements that can be assessed: technical proficiency; ability to learn new material; client satisfaction; communication skills, etc.
7. Do you claim the employee on your corporate taxes (W-2)? The answer will of course be yes for all consulting companies, because you are required to place employees on your payroll as W-2 employees.
8. Do you provide any employee benefits? These can be medical insurance, paid vacations, bonuses, travel allowances (per diem), etc.
9. Does the employee use any of your proprietary information to perform the job? So, for companies that are selling products bundled with consultation would have an easier time proving this element. For most consulting companies the answer would be no. Nevertheless, document any training you provide the employees. That could be relevant.
10. Is the work product directly related to your business? The answer here would be no for most consulting companies. But an argument could be made that the work product for consultants is consulting advice. If that is true, then the work product is indeed directly related to the business.
11. Do you have the right to control how the work product is produced? This is similar to some of the points above and deals with the control of how work is performed.

Additional suggestions:
1. Create company-wide performance guidance for all consultants, no matter where they are deployed. For IT companies, it could be something akin to creating good practices for the SLDC.
2. Provide reimbursement for travel and similar job-related expenses. Avoid reimbursement from end-clients to your employees.
3. Where possible, add terms in your contracts with end-clients and vendors that specify that you have:
a. The right to control and manage how the employee performs the work;
b. The exclusive right to reassign the employee and that no one else has that right during their employment with you
4. Get the assignments from the end-client and take responsibility for delegating them to your employees.
5. Remind me to speak with you all about distressing staffing including specific positions in contracts.
6. Remind me to also speak with you all about extensions of H-1, which will be problematic under this memo.

You can place all of the above workflows, processes and other factors in your employee handbooks if you are already using them.

Nonimmigrant Visas: 

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