angry man tearing paper.jpg[Bloggers Note:  My two-part blog post below first appeared in Seyfarth Shaw LLP's September 10 and September 12 "Employment Law Lookout" Blog]

The L-1 Intracompany Transferee Visa Facing Attack

– from All Branches of the Federal Government (Part I)  

By Angelo A. Paparelli

U.S. employers have likely grown accustomed to the longstanding controversy over the highly coveted  H-1B visa for workers in a “Specialty Occupation” — the nonimmigrant category whose annual quota for professional workers often is exhausted within a week of each year’s new allotment.  The H-1B controversy arose because of apocryphal or largely unproven allegations, fueled by media reports and some politicians, that employment of H-1B workers somehow undercuts job opportunities for American citizens and promotes the offshoring of jobs. As studies have shown, however, the H-1B actually creates job opportunities for citizen workers.

Many American employers, however, are less familiar with the comparable brouhaha now brewing over the L-1 or “Intracompany Transferee” visa.   The L-1 — a veritable Clydesdale of work visas — allows executives, managers and employees with specialized knowledge, gained at an overseas affiliate, subsidiary or parent, to enter the U.S. and work in a comparable capacity for a related company.

This two-part blog post will show why employers hoping to import L-1 workers must now be prepared to submit more thoroughly documented cases in the face stiff of opposition from government adjudicators, Congress and the federal courts, as this formerly flexible and useful visa category is assailed from all quarters.

New constraints on the L-1 visa category, as will be shown, stem primarily from two Senators (Chuck Grassley and Dick Durbin), a coterie of federal bureaucrats, immigration adjudicators, consular officers, and some federal judges who pay undue deference to the presumed expertise of the primary immigration agency, U.S. Citizenship and Immigration Services (USCIS).    

Introduction to the L-1 Visa Category and a Retracing of Recent History

Created in 1970, the L-1 visa was enacted to “help eliminate problems [then] faced by American companies having offices abroad in transferring key personnel freely within the organization’ in order to “meet the objective of American industry which has been seriously hampered in transferring personnel . . .” H.R. Rep. No. 91-851 (1970), reprinted in 1970 U.S.C.C.A.N. at 2753-54.

From 1970 to 2008, the L-1 visa worked well, pretty much as Congress intended, although start-up companies often encountered difficulty bringing foreign managers into the country (unless the new venture already employed two tiers of personnel — something start-ups rarely do). 

Congress tweaked and liberalized the L-1 in 1990.  It created a new “L-1A” subcategory that included a class of “function manager,” in addition to the two existing types of manager — (1) a manager of at least a double layer of subordinate personnel, and (2) a first-line supervisor of “professionals” (individuals who held at least a relevant bachelor’s degree or the equivalent in the relevant field). Congress also said that government adjudicators, when considering whether staffing functions are relevant in determining whether a candidate qualifies as an L-1A manager, must consider “the reasonable needs of the organization, component, or function in light of [its or their] overall purpose and stage of development.  Lastly, Congress specified two new alternative definitions of specialized knowledge under the “L-1B” subcategory.

The immigration agency at the time, Immigration and Naturalization Service (INS), provided regulations in 1990 acknowledging that Congress had adopted the new function manger classification and broadened the basis for  “specialized-knowledge” eligibility.  It also later offered two policy memoranda that liberally interpreted specialized knowledge and provided several real-world examples to demonstrate the concept.  The more detailed of the two L-1B  policy memoranda, issued by an INS administrator named James Puleo, thus became the “Puleo memorandum” and it stood unquestioned as agency policy (likewise followed by the Department of State) for several years.

With the INS regulations and the Puleo memorandum as guideposts, adjudicators generally approved well-documented L-1A and L-1B  visas with consistency and predictability, as long as managers “primarily” managed subordinates or functions (meaning that they spent abroad and would spend in the U.S. over half the time in management activities as defined under the INS regulations), and specialized-knowledge candidates satisfied one or the other of the liberal Puleo standards.  And employers mostly said, “It is good.”

But then, out of the blue, the successor to INS, USCIS, through its Administrative Appeals Office (AAO), issued a “non-precedent” decision in 2008 that came to be dubbed the “GST” caseGST essentially repudiated the Puleo memorandum on L-1B specialized knowledge without any change in law or regulations.

In addition, gradually over many years, before and especially since 2008, the L-1A also faced attack.  Despite the new “function manager” classification Congress created in 1990, USCIS adjudicators tended to insist that a function manager could not “primarily” manager the function, unless he or she supervised subordinates. Otherwise, the individual would be seen as performing the function rather than managing it, and be found ineligible for an L-1A.  This interpretation essentially eradicated the 1990 changes Congress made to liberalize L-1A manager eligibility.

These new constraints on L-1 visa eligibility came not from USCIS headquarters or newly published regulations signaling a change in agency interpretation, but from front-line case officers at agency’s Regional Service Centers, and then were blessed by the AAO in the supposedly non-binding GST L-1B case and in similarly restrictive AAO nonprecedent decisions interpreting the L-1A function manager category.

As Part II (appearing in two days) will show, this bottoms-up movement from within USCIS gradually has taken on the trappings of black letter law, and been copied and adopted by the U.S. Department of State’s Visa Office (which inexplicably reversed its earlier liberal interpretation),  U.S. consular officers at embassies and consulates abroad, and the Department of Homeland Security’s Office of Inspector General. Even more troubling, the Senate and the House have proposed new constraints on the L-1 visa. If enacted, these proposals will add an obligation to pay an artificially inflated prevailing wage, encourage L-1 investigations and worksite visits, and allow the filing of civil claims against employers of L-1A while drastically restricting multinational consulting and sourcing firms from using the visa category.  Part II will also suggest measures employers can pursue to continue using the L-1 to achieve their domestic and glob al business objectives. Stay tuned.