Employers Sue to Enjoin USCIS from Applying Definitions of the Employer-Employee Relationship Contained in the Neufeld Memo to H-1B Adjudications

On June 8, 2010, an application for preliminary injunction and complaint was filed in the U.S. District Court for the District of Columbia which challenges USCIS’s application of the January 8, 2010 Neufeld Memorandum‘s definition of employer-employee relationships. Stewart Rabinowitz, a Dallas-based immigration attorney, offers some pertinent insights.

On June 8, 2010, a group of IT staffing companies, whose H-1B petitions USCIS had denied, filed suit against USCIS in the U.S. District Court for the District of Columbia. The lawsuit Broadgate et al versus United States Citizenship and Immigration Services, et al, challenges the controversial Neufeld Memorandum of January 8, 2010, which allegedly clarifies employer-employee relationships within H-1B visa petition adjudications, but in practice has resulted in a preponderance of H-1B denials.

Individual plaintiffs in the case – Broadgate Inc., Logic Planet Inc., DVR Softek Inc., TechServe Alliance, and the American Staffing Association moved for a preliminary injunction to prevent the USCIS from implementing the policy announced in a January 8, 2010 memorandum issued by Donald Neufeld, Associate Director of USCIS. The memorandum declared that a third-party placement contractor is not a United States employer even though the company hires, pays, supervises, fires its employees, and shares control over them, and even though prior to the implementation of the policy initially announced in the memorandum, such an entity was deemed to be a United States employer. It was the preliminary injunction’s contention that this new policy is arbitrary and capricious, while it explicitly changes an existing regulation, limits USCIS’s discretion, and profoundly affects plaintiffs and others outside the government.

Plaintiffs in the suit allege that the Neufeld Memorandum was at odds with the plain language of the statute and its implementing regulations. The Neufeld Memorandum is premised on the assumption that an employee can have only one employer and that “the real employer” is the entity that exercises the greatest day-to-day control. It therefore proclaims that third-party placement contractors that have an overarching right to supervise their employees, that hire, fire and pay their employees and that share control of those employees nevertheless are not valid employees because they have “No Right to Control; No Exercise of Control.” This binding policy is inconsistent with the plain language of the INA which expressly includes contractors as United States employers.

Stewart Rabinowitz, a Dallas-based immigration attorney, concurs. “Broadgate appropriately challenges USCIS agency action on many grounds. Its Complaint alleges a violation of the Administrative Procedures Act (APA) by substituting a USCIS-issued memo by a person not authorized to issue a rule, instead of following the statutorily mandated notice and comment requirements of the APA.”

To learn more about Rabinowitz & Rabinowitz, P.C., call 1.972.233.6200 or visit http://www.rabinowitzrabinowitz.com.

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