This lawsuit focuses on the government’s H-1B visa review and processing procedures.  Since 2008, USCIS has implemented new, more stringent procedures for review and processing and has dramatically increased the frequency of unannounced worksite inspections – expected to reach 25,000 visits in 2010 alone – in connection with H-1B cases.  At the same time, USCIS has kept under secret the rules and guidelines related to the review process.   The lack of publicly available information on the government’s heightened scrutiny of H-1B applications makes it particularly difficult for businesses to anticipate and meet agency expectations during the application process.

The lawsuit seeks the release of policy and other agency memoranda regarding H-1B adjudication and enforcement.   Considering the full denial of AILA’s earlier FOIA request, it may be expected that the government will fight this lawsuit to prevent this disclosure.  We will continue providing updates and developments on this case.  Please stay tuned.

On June 25, 2010, the government filed a Memorandum in Opposition to the complaint.    The opposition is mainly based on technical arguments.  However, the government makes also the arguments that its policy-making ability pursuant to memoranda is exempt from the Notice and Comment requirements for rulemaking and that the plaintiffs have failed to show irreparable harm if the preliminary injunction were to be granted and, most interestingly perhaps, that agency memoranda are do not have the force of regulations and are just a suggestion to adjudicators on review criteria.

Subsequently, on July 9, 2010, the plaintiffs filed a reply to the government’s Memorandum of Opposition.  In it, the plaintiffs directly address the government’s arguments, including the argument that the policy memoranda does not constitute a regulation.   Plaintiffs argue that the policy guidance may not explicitly state that it is binding; however, in spirit and practice, it actually is.

We will continue to monitor the developments in this case as it affects a large number of our readers and clients.  Furthermore, the impact of this lawsuit may be broader than just the Neufeld Memorandum as the scope of the case may expand to cover other USCIS memoranda.   If you haven’t already, please subscribe to our free weekly newsletter to receive news and updates on this and related topics.

USCIS released the weekly FY2011 information on the numbers of cap-subject H-1Bs filed since April 1.   As of June 18, 2010, USCIS has received approximately 22,900 H-1B petitions counting toward the 65,000 cap (an increase of only 700 over the week).  Similarly, as of June 18, there were 9,700 H-1B visas filed subject to the U.S. Masters cap which has 20,000 limit (an increase of only 300 over the week).

H-1B Quota Trends

The numbers, as reported over the past few weeks – indicate that there was a very small weekly decrease in the number of H-1B filings for both the regular and Masters’s caps compared to the weeks prior.  The overall trend shows that the H-1B filings (for both regular and U.S. master’s caps) have been decreasing over the past few days.   As a result, although it is early to draw reliable long-term conclusions, if the current trend remains, we estimate that the H-1B quota will remain open for a considerable time.  We wish to caution potential H-1B employers and employees that as the U.S. economy is seen to recover and grow, it is possible that the pace of H-1B filings will increase.

We invite you to subscribe to our free weekly immigration newsletter to receive timely updates on this and related topics.  In the meantime, if you are considering filing a cap-subject H-1B petition as part of the FY2011 quota, please contact us as soon as possible — it is never too early to file a cap-subject H-1B petition.

The report is interesting because it covers partially the period when the economic crisis began.  Also, there are some interesting numbers.

Number of H-1B Petitions.  The number of H-1B petitions filed decreased 15 percent from 288,764 in FY2008 to 246,647 in FY2009.  This number includes all H-1B filings — new employment, amendment and transfers.   Although the report does not attribute the decrease in numbers, it is most likely due to the economic slowdown which started in 2008 and continued through 2009.

Number of H-1B Approvals.  The H-1B petitions approved decreased 22 percent from 276,252 in FY2008 to 214,271 in FY2009.  This does not mean that the rate of approval has changed by 22 percent – instead, the decrease of approvals is due to the decrease in filings.   In comparison, in FY2008, the rate of approval was 95 percent (based on calculating the number of FY2008 approvals out of number of FY2008 filings) and the FY2009 rate of approval was  87 percent, or 8 percentage points decrease.

Change of Status v. Consular Processing.  The breakdown of initial employment H-1B cases changed notably.  During FY2009, the number of aliens outside of the U.S. who applied for initial H-1B dropped by 40 percent from 56,000 in FY2008 to 33,000 in FY2009.   Initial H-1B applicants who were in the U.S. and applied for change of status from the U.S. remained steady at 53,000.

Country of Nationality.  Most H-1Bs were issued to Indian nationals – 48 percent, followed by China (10 percent), Canada (5 percent) and the Philippines (4 percent).

Age.  The report indicates that two-thirds of the H-1B petitions approved in FY2009 were for workers between the ages of 25 and 34.

Education.  Forty-one percent of the approved H-1B petitions were for workers with a bachelor’s degree, 40 percent had a master’s degree, 13 percent had a doctorate and 6 percent were for workers with a professional degree.

Salary.  The median salary of  beneficiaries of approved H-1B petitions increased from $60,000 in FY2008 to $64,000 in FY2009.

USCIS Sued to Prevent Enforcement of the Neufeld Memo Guidelines

In a five-count complaint filed by a coalition of staffing companies and representative trade associations, the USCIS is asked to stop temporarily and permanently from applying the Neufeld Memo in H-1B adjudications.  The case is Broadgate v. USCIS and is assigned to Judge Kessler at the U.S. District Court for the District of Columbia.

The complaint alleges that the Neufeld Memo abruptly altered long-standing agency policy which has permitted companies from placing H-1B workers at third-party job sites.  The complaint further alleges that existing USCIS guidelines specify that an employer-employee relationship does exists when the petitioner company may “hire, pay, fire, supervise, or otherwise control the work of any such employee.”  The plaintiffs in this case claim that the Neufeld Memo constitutes a legislative regulation because it sets forth new binding standards that prevent employers that place employees at third-party worksites, but which otherwise meet the regulatory definition, from sponsoring H-1B nonimmigrants.

The complaint alleges that the new policy (i) is contrary to existing law and regulations, (ii) is arbitrary and capricious because the government failed to articulate a policy justification, (iii) violates the Administrative Procedure Act notice-and-comment requirements, and (iv) should have been issued following a certification under the Regulatory Flexibility Act (which requires regulators to consider the potential impact of regulations on small business).

Conclusion: More to Follow

Our office has been very involved in this issue from the publication of the Neufeld Memo and we have seen the impact of the memo on H-1B adjudications and RFEs.   USCIS has been under some pressure to amend the Neufeld Memo, at least in some respects, and this lawsuit is certain to put more pressure on resolving this controversy.  We will continue monitoring this case and the Neufeld Memo developments coming out of USCIS and will provide updates.  In the meantime, please do not hesitate to contact us or subscribe to our free weekly newsletter.

H-1B Quota Trends

The numbers, as reported over the past few weeks – indicate that there was a very small weekly decrease in the number of H-1B filings for both the regular and Masters’s caps compared to the weeks prior.  The overall trend shows that the H-1B filings (for both regular and U.S. master’s caps) have been decreasing over the past few days.   As a result, although it is early to draw reliable long-term conclusions, if the current trend remains, we estimate that the H-1B quota will remain open for a considerable time.  We wish to caution potential H-1B employers and employees that as the U.S. economy is seen to recover and grow, it is possible that the pace of H-1B filings will increase.

We invite you to subscribe to our free weekly immigration newsletter to receive timely updates on this and related topics.  In the meantime, if you are considering filing a cap-subject H-1B petition as part of the FY2011 quota, please contact us as soon as possible — it is never too early to file a cap-subject H-1B petition.