Caution: Filing Multiple H-1B Petitions for the Same Employee May Lead to Denial

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Federal regulations prohibit “related entities” from filing more than one H-1B petition on behalf of a foreign national unless there is a legitimate business need to do so.  This rule is designed to prevent H-1B petitioners from seeking to exploit the random H-1B lottery system by filing multiple petitions in an effort to increase the chance of having one selected in the annual lottery.  

The applicable regulations do not define the term “related entities” other than by example, stating in relevant part: “related entities (such as a parent company, subsidiary or affiliate).” Some employers have taken the view that “related entities” only include entities that are legally related to each other, such as parent, subsidiary or affiliate companies. According to those who subscribe to this view, there is no prohibition against, for example, two legally unrelated staffing companies filing H-1B petitions for the same H-1B worker to fill the same position at the same end-client/employer location.  

In two cases decided this year, the USCIS Administrative Appeals Office (AAO) has taken the opposite view. In Matter of S-S- Inc. (AAO Jan. 11, 2018) and Matter of W-D-M- LLC (AAO Jan. 11, 2018), multiple petitions were filed by legally distinct employers for the same H-1B worker to work in the same position at the same location. In Matter of S-S- Inc., two staffing companies with separate FEINS, separate office locations, separate management, and separate ownership were found to be “related entities” because in separate H-1B petitions they both requested permission to employ the same H-1B worker to work in the same position for the same end-client during essentially the same period of time. In Matter of W-D-M- LLC, the petitioners were two legally separate companies (although they did have some common shareholders) located on the same floor of the same building that both filed nearly identical petitions for the same beneficiary and the same position using the same attorney.  

In both cases, the AAO held that the term “related entities” is not limited to legally related entities, but may also include vendors supplying personnel to the same end-client or other legally distinct employers having a “reasonable connection.” As stated by the AAO in Matter of S-S- Inc.:

For purposes of 8 CFR 214.2(h)(2)(i)(G), the term “related entities” must be construed broadly enough to include petitioners acting in concert to file multiple duplicative petitions for the same beneficiary.  Again, these petitioners do not have to be linked to each other as a parent company, subsidiary, or affiliate, or through other types of legally recognized corporate relationships.  If we were to limit [the definition of “related entities”] to only legally related entities . . .then the regulation’s primary purpose to curb abuse of the random lottery system could continue to be easily frustrated.

These cases reflect the USCIS’s continuing effort to crack down on perceived abuses of the H-1B system and should serve as a cautionary tale for any employer trying to short-circuit the lottery system by filing multiple petitions for the same H-1B worker. 

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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