"USCIS' actions are a thinly veiled attack on the IT staffing industry and its business model," said TechServe Alliance CEO Mark Roberts. Earlier this year, a document called the Neufeld memo reversed previous USCIS policy and determined that IT staffing firms are not "U.S employers," allegedly because they don't exercise control over their consultants. Based on this memo, the USCIS has been denying IT staffing firms' H-1B visa petitions, the TechServe Alliance reported. Requests for new H-1B visas and requests for renewals are both affected.
The memo is in contrast to other areas of law recognizing an employer-employee relationship between staffing firms and temporary workers, according to the TechServe Alliance. The suit argues the government improperly changed long-standing policy that allowed IT staffing firms to obtain H-1B visas on the same basis as other companies. It seeks a preliminary injunction to prevent the USCIS from enforcing the rule.
In addition, the lawsuit argues the USCIS didn't follow the proper notice-and-comment rulemaking process for the new rule, didn't conduct required analysis of the rule's impact on small entities, that the USCIS is exceeding its regulatory authority and that the rule is not authorized by law.
The suit also names Janet Napolitano, secretary of Homeland Security, and Alejandro Mayorkas, director of USCIS, as defendants.
Roberts said the TechServe Alliance tried to reach out to the USCIS prior to the lawsuit without any luck, and at one point USCIS officials canceled a meeting with them. "There's just no indication they are going to rescind this policy without this action," Roberts said. "We are aware of the filing but we don't comment on any potential litigation matters," USCIS spokesperson Bill Wright told Staffing Industry Analysts, the publisher of this newsletter.
Joining the TechServe Alliance in the lawsuit as plaintiffs are the American Staffing Association and three IT staffing firms -- Broadgate Inc., Logic Planet Inc. and DVR Softek Inc.
"The lawsuit had to be brought. The USCIS has changed decades of legal interpretation about whether a staffing firm is a real employer without going through the correct process," says Harvey J. Shulman, a tax and employment lawyer in Washington D.C. But it's not just about the process. Companies' business is being affected.
H-1B visas are a way to bring into the United States foreign workers with specific expertise. Companies either bring these workers in themselves or go through a staffing firm. If a staffing agency is unable to do so, not just is its business threatened, but its clients may not be able to fill certain job requisitions. As a result, companies may not be able to meet their business needs and some may ship jobs overseas. Either option is not good for the American economy.
Experts argue that most companies follow the law, but, as with any regulation, there are those that violate the H-1B visa rule by not paying the standard wage. But those companies are in the minority, claim industry insiders. "You can handle these violations by going after those companies and not throw the baby out with the bathwater," argues Shulman.
Many industry observers anticipate that TechServe alliance will win its case. Their argument: USCIS is not going to be able to demonstrate that it was reasonable to change rules regarding staffing firms after decades of rulings by state and federal agencies that staffing firms are legitimate employers.