US employers frequently employ H-1B workers and send them to work at a customer’s worksite (third party worksite). This can often occur in the IT space. While this is permissible, it raises some issues for both the employer and the customer where the H-1B visa holder is working. Further, worksite enforcement investigations have more than doubled this year, meaning the Immigration and Customs Enforcement (ICE) division of the Department of Homeland Security is visiting worksites on an unannounced basis to verify all employees are legally allowed to work, exposing both employer and customer to fines.
H-1B Employer Issues for Off-Site Employment
The H-1B employer is the petitioner to the United States Citizenship and Immigration Services (USCIS) for an H-1B petition for its prospective employee, the eventual H-1B visa holder. USCIS has become increasingly vigilant that the H-1B worker be employed in a “specialty occupation” regardless of the worksite. This is a threshold requirement for H-1B visa eligibility: that of possessing the minimum of a US bachelor’s degree, its foreign or experiential equivalent.* Improperly supervised H-1B workers at third party worksites may not be exclusively performing job functions of a specialty occupation, risking denial of the H-1B visa or its revocation.
Benching is inactive or nonproductive periods when there is no job assignment for the worker. This can be more likely when the H-1B employer’s business involves sending its employees to third party worksites. The H-1B employer must continue to pay its H-1B employee the required wage during any slack periods.
Another issue related to wages is the requirement that the employer pay at least the local median annual wage for that specialty occupation. If an H-1B worker is working at a third party worksite, it is the median annual wage at the worksite that must be met, not at the employer’s worksite. Thus, an H-1B worker employed by a firm in Raleigh, who works at its employer’s customer’s worksite in Boston, must be paid the median annual wage in Boston for that specialty occupation. Taking this requirement to its logical conclusion, since the H-1B petition must list all locations where the employee will work, the employee must be paid at least the highest median annual wage of all locations listed, or be paid at or above the median annual wage at each third party worksite.
The USCIS also examines if there is a true employer-employee relationship between the employer and the H-1B worker working at a third party worksite. Relying on the traditional common law principles and two leading Supreme court cases (Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318 (1992) and Clackamas Gastroenterology Assoc. v. Wells, 538 U.S. 440 (2003)), USCIS looks at a number of factors. The analysis includes who supervises when, where and how the H-1B worker will perform their work. If the H-1B worker is at a third party worksite, USCIS examines how the H-1B employer maintains adequate supervision, e.g. through weekly calls, routine reports or site visits. Darden clarifies that the H-1B employer must have a right to control, but not necessarily exert control, so this standard is somewhat looser than traditional common law. Another factor proving right to control is the evaluation of the work-product through progress and performance reviews by the employer, not the customer. The employer claiming the H-1B worker for tax purposes and providing benefits are further indicia of an employer-employee relationship. Finally, USCIS expects that the H-1B worker at the third party worksite produces an end-product that is directly linked to the employer’s business, not the customer’s.
Consider a not-infrequent scenario where the USCIS has determined that there is not a valid employer-employee relationship. The petitioner is a computer consulting company with customers to whom it sends its employees to fulfill staffing needs on an as-needed basis. The H-1B worker is a computer analyst assigned to work at a third party worksite to maintain that customer’s payroll. The H-1B worker reports to and receives all work assignments from the customer’s manager. The H-1B worker is not supervised by the employer as to daily tasks, and the worker’s end-product, the payroll, is not related to the employer’s business, computer consulting. This is an example of an illegal arrangement by both the H-1B employer and its customer, exposing both employer and customer to fines and revocation of the H-1B visa.
The USCIS also expects the H-1B petition to contain an itinerary for all offsite locations where the H-1B beneficiary will work. This should be accompanied by contracts or other documentation showing the scope of the off-site assignment and proof of continued supervision by the H-1B employer.
Issues for the Customer with H-1B Worker Working on its Premises
Just as the H-1B employer must control the H-1B worker, the employer’s customer should avoid controlling the H-1B worker. The agreement between the H-1B employer and the customer must clearly spell out the responsibilities of the H-1B employer and its employee to substantiate an employer-employee relationship.
Even with a proper employer-employee relationship between the H-1B employer and its employee working at the third party worksite, there is an important responsibility that falls on the customer. The Labor Condition Application (LCA) which is filed by the prospective employer online with the US Department of Labor (DOL) before filing the H-1B petition, must list all location(s) where the H-1B visa beneficiary will work and the annual wage(s) to be paid. In fact, a separate LCA must be filed for each location, and, as mentioned above, the salary must meet or exceed the median wage for each location. Shortly after the LCA is filed, the position must be physically posted at two conspicuous locations or electronically at every worksite where the H-1B worker will work, including third party worksites. The posting must contain the following information:
- job title
- annual salary
- whether full- or part-time
- anticipated period of employment
- location of employment
- address where the LCA is available for public inspection, so the employer’s address
- the following statement: “Complaints alleging misrepresentation of material facts in the labor condition application and/or failure to comply with the terms of the labor condition application may be filed with any office of the Wage and Hour Division of the United States Department of Labor.”
A responsible officer of the customer must sign a statement that this has occurred, and provide that statement and copies of the posting to the H-1B employer to keep in the public and nonpublic access files that the DOL requires be created and maintained for every H-1B worker. More than one customer with H-1B workers on its worksite has balked at this requirement, yet it is the law.
All of the above issues are important considerations for both the H-1B employer and its customer for any H-1B worker being sent to work at a third party worksite. The H-1B employer must retain its right to control, proven by a number of indicia, and list each location in the H-1B petition and in the LCA where its worker will perform services, paying median annual wages for each location. The customer must comply with the US Department of Labor job posting requirements, and not supervise the H-1B worker or require work that is not that of a specialty occupation.
*Work experience in the field of specialization can be equated with a US bachelor’s degree as determined by a reputable evaluation service. In very general terms, every three years of increasingly responsible experience in a field requiring a Bachelor’s Degree equals one year of US college-level coursework. Therefore, twelve years of increasing relevant experience could equal four years of US college — a US Bachelor’s degree. Often H-1B workers possess a combination of higher education and experience to reach the requisite H-1B threshold of “specialty occupation”, and this is permissible as well.