Stressed Man in a Suit.jpg[Bloggers Note:  The second of 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 II) 

By Angelo A. Paparelli

As noted in our last post, American businesses which offer U.S. secondments to their executives, managers and specialists from affiliated entities abroad must take proactive measures to address several ominous developments adversely affecting the tried-and-true L-1 work visa category for Intracompany Transferees.

Even if a U.S. company can’t tell an L-1 from an elbow, concern over this visa category is important if the business engages the services of third-party vendors and service providers whose personnel to be stationed at the customer’s worksite must rely — as is often the case — for employment authorization under the L-1 visa category.

As will be seen, L-1 troubles are brewing everywhere.

I.          U.S. Citizenship and Immigration Services (USCIS).  This component of the Department of Homeland Security (DHS) recently issued a policy memorandum (“Interim Policy Memorandum: PM-602-0086 Precedent and Non-Precedent Decisions of the Administrative Appeals Office (AAO)”), reaffirming that decisions which are not designated as precedent should only “apply existing law and policy to a unique factual record in an individual case,” and “[do] not create or modify agency guidance or practice.” Despite this policy, USCIS adjudicators continue to follow the reasoning of the 2008 GST case, which clearly articulated new, highly restrictive L-1B specialized-knowledge criteria and rejected an established and workable policy memorandum on visa eligibility for persons seeking L-1B classification. 

On the L-1A front, a visa category for foreign executives and managers, USCIS’s responses have been unpredictable and mostly problematic.  Some cases are approved without objection, typically if the company is large and hierarchical in its operational structure, while other cases (especially for managers in companies with flat organizational management) trigger the issuance of a burdensome and time-consuming requests for additional evidence which, after submission of more documentation, are far too often denied.  When cases are rejected, the denial typically states that “[a]n employee who primarily performs the tasks necessary to produce a product or to provide services is not considered to be employed in a managerial or executive capacity.” 

The agency’s rationale might be legitimate if it were based on regulations in force before enactment of the Immigration Act of 1990 (the 1990 Act).  Today, however, regulations issued in 1991 implementing the 1990 Act’s liberalized definition of L-1A “manager” by creating the function manager classification and embodying Congress’s intent to modernize the L-1A category to make it more flexible.  See Brazil Quality Stones v. Chertoff, accessible here.

Of particular significance, the pre-1990 Act regulations contained (but the 1991 regulations omitted) an express bar to L-1A visa eligibility for “an employee who primarily performs the tasks necessary to produce the product and/or to provide the service(s) of the organization.”  The only reasonable inference to be drawn from this intentional excision from the rule is that to qualify for an L-1A, persons who primarily manage functions need not be engaged in the management of people.  Rather, exercising responsibility for a critical function of the organization (which may involve “primarily perform[ing] the tasks necessary to produce the product and/or . . . provid[ing] the service(s) of the organization”) is nevertheless deserving of L-1A classification. 

Employer Takeaway: Employers seeking to establish L-1A function manager visa eligibility should therefore make sure their immigration counsel outline the relevant rulemaking history when submitting a function-manager petition.

II.        U.S. Department of State and Consular Officers.  In Fiscal Year 2012, U.S. consular officers issued 134,212 L-1 visas.  With the exception of American posts in India, consular officers have generally been quite willing to issue both individual L-1 visas, based on petitions pre-approved by USCIS, and blanket L-1A and L-1B visas for companies designated by USCIS as high-volume filers. American employers have reported, however,  that L-1 visa refusals by American consular posts in India have increased dramatically since 2006.  The concern over L-1 visa refusals in India, particularly under the L-1B category, is troubling because Indian citizens account for a material percentage of L-1 visas issued worldwide, as well as for such visas refused.   

As I learned from a visit last month with consular officials at the American Consulate in Chennai, the high L-1 refusal rate is attributable to several factors:

  • The time available for each L-1visa interview, ranging from 1.5 minutes to 6 or 7 minutes, and averaging 3 minutes,
  • The consular officers’ focus on the oral response of the visa applicants to questions posed about the individual’s prior employment history and proposed U.S. duties, as well as inquiries into how the prospective employer obtained the contract to provide services in the U.S. (a consideration of commodity work based on low price for which specialized skills are not needed versus unique, value-added services),
  • The absence of time for consular officers to read much, if any, of the documentation submitted by the petitioning employer to demonstrate L-1 visa eligibility,
  • Strict adherence to current State Department L-1 visa guidance, which relies upon the non-precedent GST case, and
  • The consular officer’s application of the “clearly approvable” standard for blanket L-1 visa issuance, which is seen as far higher than the “preponderance of the evidence” (more likely than not) standard of proof applied by USCIS.

 Employer Takeaway: Employers and customers of service providers who rely on access to L-1 workers should focus much more effort on preparing the visa applicant for the consular interview and perhaps less on supporting documentation which the consular officers may not have time to read, and which — according to one vice-consul with whom I spoke — include “cover letters [that] read like advertising materials.”

III.       The DHS Office of Inspector General (OIG).  At the request of Senator Chuck Grassley, the OIG last month issued a report, “Implementation of L-1 Visa Regulations,” which supplements a 2006 study, “Review of Vulnerabilities and Potential Abuses of the L-1 Visa Program.”  The OIG’s 2013 report is based on information gleaned from statements of government officials and fails to interview external stakeholders in the business community.  The OIG found high potential for fraud and abuse in the L-1 visa program, but failed to investigate or assess the economic benefits to American employers and U.S. workers under the L-1 program.  Without offering a legal analysis, the OIG report sided with the AAO in its GST non-precedent decision, and offered numerous process recommendations to make L-1 visas harder to obtain and keep, including site visits both before and after L-1 petitions are approved — a step USCIS has agreed to initiate.

Employer Takeaway: As noted, employers should consider placing less reliance on documentation and much more on preparing individuals applying for L-1 visas at American consular posts in India for foreseeable questions officers are likely pose during the interview.  Employers and customers of service providers who rely on access to L-1 workers should prepare for unannounced USCIS visits to company worksites by the agency’s Directorate of Fraud Detection and National Security (FDNS) to verify the representations made on visa petitions and applications.

IV.       Congressional Proposals.  Congress is also assailing the L-1 visa.  S. 744, the massive comprehensive immigration reform bill that passed the Senate over the summer, includes (among other restrictions) an entire section on L-1 visa changes that are patently more restrictive, “Title IV, Subtitle C—L Visa Fraud And Abuse Protections,” as described in the Senate Judiciary Committee’s section-by-section analysis (starting at page 141).  These proposed restrictions include: 

Section 4301. Prohibition on Outplacement of L Nonimmigrants. 

Section 4302. L Employer petition requirements for employment at new offices. 

Section 4304. Limitation on Employment of L Nonimmigrants. 

Section 4305. Filing Fee for L Nonimmigrants. 

Section 4306. Investigation and Disposition of Complaints against L Nonimmigrant Employers. 

Section 4307. Penalties. 

Employer Takeaway:  Directly and through business associations and trade groups, Employers should reach out to their Congressional representatives to let them know that the changes proposed and the administrative agency interpretations now in force are hurting their business operations and must be reversed.

V.  Judicial Interpretations. The federal courts are also taking aim at the L-1 visa category, usually deferring to immigration-agency determinations and providing little relief in response to erroneous agency action.  A recent example is Fogo De Chao Churrascaria, LLC v. Department of Homeland Security, which follows the GST case reasoning and defers to the presumed expertise of USCIS in immigration adjudication, even though that AAO decision, as shown above, is non-binding and contradicts prior established USCIS policy in the Puleo memorandum.

The district court in Fogo De Chao does not consider the Supreme Court’s immigration-law ruling in Judulang v. Holder, 132 S.Ct. 476 (2011), in which the Justices found arbitrary and capricious behavior by a tribunal (the Board of Immigration Appeals or “BIA”) in the government’s effort to remove a lawful permanent resident. The Court declined to follow the tribunal’s latest interpretation in part because the tribunal “has repeatedly vacillated in its method for applying” the law’s requirements. 132 S.Ct. at 488.  Speaking in terms that could apply equally to the USCIS’s current expression of its L-1B criteria, the Judulang decision found that the BIA had “repeatedly vacillated in its method for applying” a section of the Immigration and Nationality Act (INA), and therefore declined to defer to the BIA’s presumed expertise. 

Employer Takeaway: Employers who seek federal court review of erroneous L-1 decisions by USCIS should make sure their immigration counsel demonstrate to the court how USCIS has  “repeatedly vacillated in its method for applying” the eligibility criteria under the  INA’s L-1 definitions of executives, managers and persons with specialized knowledge, and urge as a result that court pay no deference to the agency’s changing L-1 determinations. 

* * *

Regrettably, the L-1 visa category is not the only employment-based benefit under attack by the three branches of the federal government.  Similarly arbitrary and capricious decisions are made every business day across the pantheon of nonimmigrant work visas and employment-based green cards.  Given these daunting challenges, employers and their internal counsel should reconsider the way they deal with their immigration-related business objectives.  Thus, if ever there is a time for improving the employer’s immigration portfolio management, it’s now.