DHS Report Signals New Challenges For L-1 Intracompany Transferees

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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The L visa allows qualifying multinational companies with a parent, subsidiary, branch, or affiliate abroad to transfer managers and executives (L-1A) and employees with “specialized knowledge” (L-1B) to work in the United States. To qualify, the transferee, within the three-year period preceding entry into the United States, must have been employed abroad in an executive, managerial, or specialized knowledge capacity by an affiliated entity of the U.S. employer for at least one continuous year. Since the creation of the L visa category in 1970, the L-1 statutory provisions have been modified several times and, in recent years, L-1 cases have been subject to heightened scrutiny both by the U.S. Citizenship and Immigration Services (USCIS) and the U.S. consulates abroad.

The Office of Inspector General (OIG) in the Department of Homeland Security (DHS) recently released a report on the L-1 visa program. The OIG conducts independent and objective inspections, audits, and investigations to provide oversight and promote integrity and accountability within DHS programs and operations. The report was issued in response to Senator Chuck Grassley’s (R-IA) concerns over fraud and abuse within the L-1 visa program. Below we explore some of the report’s findings and the OIG’s recommendations to improve the integrity of the program.

L-1 Trends and Comparisons

According to the OIG report, USCIS approvals of L-1 petitions peaked in FY 2007 at 57,218. However, L-1 approvals have declined each year since then, with a total of 33,301 L-1 approvals in FY 2011.

L-1 Visas as H-1B Substitutes

Despite concerns that the L-1 visa program (which has no numerical limit) may be used to avoid the more stringent H-1B program requirements, the OIG report finds that there is no conclusive evidence that the L-1 visa program is being used to avoid H-1B restrictions. Since FY 2008, the ratio of H-1B to L-1 visa petitions has actually increased, and more H-1B petitions were submitted per each L-1 petition in FY 2011 than in the previous six fiscal years.

The Statutory Definition of “Specialized Knowledge” Is Vague and Unclear

One of the difficulties with the L-1B visa is determining what constitutes “specialized knowledge.” In its report, the OIG notes that the L-1 definition contained in the Immigration and Nationality Act does not clearly distinguish between employees with and without specialized knowledge. As a result, “decision making for [L-1B] specialized knowledge petitions is inconsistent, and unsuccessful petitioners do not understand why their petitions are denied.”

Pointing out that there is a “vigorous public debate between stakeholders about what knowledge is specialized and what Congress intended when it legislated the L-1B visa,” the OIG follows the reasoning of the Administrative Appeals Office (AAO) that the 1990 statutory changes to the 1970 legislation, which established the L-1 visa program, did not alter the program’s original intent to benefit a small number of beneficiaries. Taking the view that these amendments appear to be an effort to clarify, rather than broaden, the definition of specialized knowledge, the OIG calls for the narrower legal interpretation advanced by the AAO, noting that a “liberal definition of specialized knowledge would open the category to an unlimited number of foreign workers.”

The report suggests that current USCIS guidance regarding the definition of “specialized knowledge” is not applied consistently. Accordingly, the OIG recommends that USCIS publish new guidance clarifying the agency’s interpretation of specialized knowledge that is “sufficiently explicit to give adjudicators an improved basis for determining whether employees of a petitioning entity possess specialized knowledge.”

Blanket L-1 Petitions Create Unease Among Adjudicators

Certain multinational companies may qualify for an L-1 “blanket” petition. Qualifying multinationals that obtain an L-1 blanket petition are not required to obtain USCIS approval as a prerequisite to L-1 visa sponsorship. Transferees may apply for an L-1 visa directly with their home U.S. consulate abroad.

The OIG report concludes that the blanket petition process creates “unease” among USCIS adjudicators and consular officers with the U.S. Department of State (DOS). Some USCIS officers are concerned that consular officers abroad may interpret “specialized knowledge” too loosely when considering an applicant’s visa under a blanket petition, while consular officers are troubled that applicants who are denied L-1 visas abroad under a blanket petition may later be approved under an individual petition filed by the same employer.

Consular officers use a “clearly approvable” standard in determining whether to grant L-1B visas to specialized knowledge applicants under blanket petitions, while USCIS adjudicators use a “preponderance of evidence.” These differing standards of proof create inconsistencies in L-1 adjudications: an individual denied an L-1B blanket visa under the consular process may be approved under an individual L-1B petition filed with USCIS. Although the second, individual petition is supposed to state the reason why the applicant was initially denied an L-1 visa under the blanket procedure and must specify the consular office that made the determination, according to the report, since the process depends on self-reporting, “vulnerabilities may ensue.”

As such, the report recommends that USCIS screen individual L-1B beneficiaries against a list of persons previously denied visas by DOS consular officers. The OIG advocates further that USCIS adjudicators and DOS consular officers develop broader working-level communications opportunities.

L-1 Petitions at Canadian Ports of Entry—Insufficient Training of Customs and Border Patrol Officers

Canadian citizens are eligible to submit an L-1 visa petition directly with any Class A port of entry (POE) at the U.S./Canadian border. L-1 border petitions are usually processed the same day. As Canadian citizens are visa exempt, they may seek admission into the United States in L-1 status immediately after the L-1 petition is approved.

L-1 petitions by Canadians are usually adjudicated at POEs by U.S. Customs and Border Protection (CBP) officers and, according to the OIG report, those petitions do not receive careful review or scrutiny due to insufficient training of CBP officers on the L-1 program. Moreover, applicants whose admissions are denied may withdraw their applications and reapply at another POE. Given the lack of adequate training and inconsistent adjudications, the results may be different.

The report, therefore, recommends that CBP provide thorough L-1 visa training to all CBP officers responsible for processing L-1 travelers at POEs or preclearance/preflight stations in Canada. Training should include determining the petitioner’s eligibility, L-1 fraud detection, correct assessment of fees, specialized knowledge, and the provisions of the Visa Reform Act.

Verifying the Legitimacy of New Office Petitions—Susceptible to Abuse

Multinational companies that are in the process of launching a new office in the United States may petition to transfer a managerial or executive employee to the United States for an initial period of one year.

The OIG concludes that new office petitions and extensions are “inherently susceptible to abuse” since much of the information in the initial petition is forward-looking and speculative. According to the report, new office petitions are sometimes erroneously approved. USCIS adjudicators may approve these petitions on the assumption that a new office L-1 extension petition can be subsequently denied. Even so, although new office extensions are exempt from the USCIS policy that gives deference to prior approvals, the report recommends that USCIS make a site visit a general requirement before renewing L-1 new office petitions.

Implementation of VIBE to Promote L-1 Visa Program Consistency—A Step in the Right Direction

The report praises USCIS’s Validation Instrument for Business Enterprises (VIBE), a program that gathers information on companies’ operational and financial viability in order to validate information provided in petitions and determine visa eligibility. The OIG, however, recommends that CBP officers also be provided with access to the system to aid in L-1 petition adjudications.

Visa Reform Act Anti-”Job-Shop” Provisions

The report examines USCIS’s application of the anti-”job-shop” provisions of the 2004 Visa Reform Act, which prohibit employers from petitioning for L-1B workers and then assigning them to third-party worksites, unrelated to the petitioning company, if the beneficiary will not be supervised and controlled by the petitioning entity (referred to as “labor for hire”). In its evaluation, the OIG found that USCIS does not apply the provisions consistently and that its guidance on the issue is limited and confusing, making the L-1 program further susceptible to fraud and abuse.

In that regard, the report recommends that USCIS issue a regulation concerning the anti-“job-shop” provisions that will increase consistency in decision making, and further that, in the interim, the agency update existing guidance that USCIS adjudicators can use while such a regulation is created.

Site Visits Assist Fraud Detection Efforts

Under current USCIS practices, there is no program to conduct post-L-1 adjudication site visits. Rather, USCIS officers or DOS consular officers can request a site visit to the prospective location of a new office to determine the legitimacy of that location. The site visit is conducted through the USCIS’s Fraud Detection and National Security (FDNS) unit. In addition, sometimes a USCIS officer will ask a consular officer at the U.S. embassy in the foreign country to conduct a site visit to verify the legitimacy of the petitioning foreign business.

The report finds that L-1 site visits have improved L-1 visa program integrity and that a provision in the USCIS regulation to allow new office extensions beyond the one-year period only following a successful site visit evaluation could deter future petitioners from abusing the new office regulation. As mentioned above, the report recommends that USCIS make a site visit a requirement before extending L-1 new office petitions.

Employers should note that, in responding to the OIG’s recommendations in this regard, USCIS stated that the FDNS expects to begin conducting post-adjudication, domestic L-1 compliance visits in the first quarter of FY 2014. Whether USCIS intends to extend these site visits to all L-1 petitions, not merely new office petitions, remains to be seen.

Additional Information

Ogletree Deakins is monitoring developments with respect to the L-1 visa program and will provide updates as more information regarding legislative and agency initiatives becomes available. Should you have any questions regarding the above, please contact the Ogletree Deakins attorney with whom you normally work, a member of our Immigration Practice Group, or the Client Services Department at clientservices@ogletreedeakins.com.

Note: This article was published in the September 3, 2013 issue of the Immigration eAuthority.

- See more at: http://www.ogletreedeakins.com/publications/2013-09-03/dhs-report-signals-new-challenges-l-1-intracompany-transferees#sthash.r6Z6Da9d.dpuf

The L visa allows qualifying multinational companies with a parent, subsidiary, branch, or affiliate abroad to transfer managers and executives (L-1A) and employees with “specialized knowledge” (L-1B) to work in the United States. To qualify, the transferee, within the three-year period preceding entry into the United States, must have been employed abroad in an executive, managerial, or specialized knowledge capacity by an affiliated entity of the U.S. employer for at least one continuous year. Since the creation of the L visa category in 1970, the L-1 statutory provisions have been modified several times and, in recent years, L-1 cases have been subject to heightened scrutiny both by the U.S. Citizenship and Immigration Services (USCIS) and the U.S. consulates abroad.

The Office of Inspector General (OIG) in the Department of Homeland Security (DHS) recently released a report on the L-1 visa program. The OIG conducts independent and objective inspections, audits, and investigations to provide oversight and promote integrity and accountability within DHS programs and operations. The report was issued in response to Senator Chuck Grassley’s (R-IA) concerns over fraud and abuse within the L-1 visa program. Below we explore some of the report’s findings and the OIG’s recommendations to improve the integrity of the program.

L-1 Trends and Comparisons

According to the OIG report, USCIS approvals of L-1 petitions peaked in FY 2007 at 57,218. However, L-1 approvals have declined each year since then, with a total of 33,301 L-1 approvals in FY 2011.

L-1 Visas as H-1B Substitutes

Despite concerns that the L-1 visa program (which has no numerical limit) may be used to avoid the more stringent H-1B program requirements, the OIG report finds that there is no conclusive evidence that the L-1 visa program is being used to avoid H-1B restrictions. Since FY 2008, the ratio of H-1B to L-1 visa petitions has actually increased, and more H-1B petitions were submitted per each L-1 petition in FY 2011 than in the previous six fiscal years.

The Statutory Definition of “Specialized Knowledge” Is Vague and Unclear

One of the difficulties with the L-1B visa is determining what constitutes “specialized knowledge.” In its report, the OIG notes that the L-1 definition contained in the Immigration and Nationality Act does not clearly distinguish between employees with and without specialized knowledge. As a result, “decision making for [L-1B] specialized knowledge petitions is inconsistent, and unsuccessful petitioners do not understand why their petitions are denied.”

Pointing out that there is a “vigorous public debate between stakeholders about what knowledge is specialized and what Congress intended when it legislated the L-1B visa,” the OIG follows the reasoning of the Administrative Appeals Office (AAO) that the 1990 statutory changes to the 1970 legislation, which established the L-1 visa program, did not alter the program’s original intent to benefit a small number of beneficiaries. Taking the view that these amendments appear to be an effort to clarify, rather than broaden, the definition of specialized knowledge, the OIG calls for the narrower legal interpretation advanced by the AAO, noting that a “liberal definition of specialized knowledge would open the category to an unlimited number of foreign workers.”

The report suggests that current USCIS guidance regarding the definition of “specialized knowledge” is not applied consistently. Accordingly, the OIG recommends that USCIS publish new guidance clarifying the agency’s interpretation of specialized knowledge that is “sufficiently explicit to give adjudicators an improved basis for determining whether employees of a petitioning entity possess specialized knowledge.”

Blanket L-1 Petitions Create Unease Among Adjudicators

Certain multinational companies may qualify for an L-1 “blanket” petition. Qualifying multinationals that obtain an L-1 blanket petition are not required to obtain USCIS approval as a prerequisite to L-1 visa sponsorship. Transferees may apply for an L-1 visa directly with their home U.S. consulate abroad.

The OIG report concludes that the blanket petition process creates “unease” among USCIS adjudicators and consular officers with the U.S. Department of State (DOS). Some USCIS officers are concerned that consular officers abroad may interpret “specialized knowledge” too loosely when considering an applicant’s visa under a blanket petition, while consular officers are troubled that applicants who are denied L-1 visas abroad under a blanket petition may later be approved under an individual petition filed by the same employer.

Consular officers use a “clearly approvable” standard in determining whether to grant L-1B visas to specialized knowledge applicants under blanket petitions, while USCIS adjudicators use a “preponderance of evidence.” These differing standards of proof create inconsistencies in L-1 adjudications: an individual denied an L-1B blanket visa under the consular process may be approved under an individual L-1B petition filed with USCIS. Although the second, individual petition is supposed to state the reason why the applicant was initially denied an L-1 visa under the blanket procedure and must specify the consular office that made the determination, according to the report, since the process depends on self-reporting, “vulnerabilities may ensue.”

As such, the report recommends that USCIS screen individual L-1B beneficiaries against a list of persons previously denied visas by DOS consular officers. The OIG advocates further that USCIS adjudicators and DOS consular officers develop broader working-level communications opportunities.

L-1 Petitions at Canadian Ports of Entry—Insufficient Training of Customs and Border Patrol Officers

Canadian citizens are eligible to submit an L-1 visa petition directly with any Class A port of entry (POE) at the U.S./Canadian border. L-1 border petitions are usually processed the same day. As Canadian citizens are visa exempt, they may seek admission into the United States in L-1 status immediately after the L-1 petition is approved.

L-1 petitions by Canadians are usually adjudicated at POEs by U.S. Customs and Border Protection (CBP) officers and, according to the OIG report, those petitions do not receive careful review or scrutiny due to insufficient training of CBP officers on the L-1 program. Moreover, applicants whose admissions are denied may withdraw their applications and reapply at another POE. Given the lack of adequate training and inconsistent adjudications, the results may be different.

The report, therefore, recommends that CBP provide thorough L-1 visa training to all CBP officers responsible for processing L-1 travelers at POEs or preclearance/preflight stations in Canada. Training should include determining the petitioner’s eligibility, L-1 fraud detection, correct assessment of fees, specialized knowledge, and the provisions of the Visa Reform Act.

Verifying the Legitimacy of New Office Petitions—Susceptible to Abuse

Multinational companies that are in the process of launching a new office in the United States may petition to transfer a managerial or executive employee to the United States for an initial period of one year.

The OIG concludes that new office petitions and extensions are “inherently susceptible to abuse” since much of the information in the initial petition is forward-looking and speculative. According to the report, new office petitions are sometimes erroneously approved. USCIS adjudicators may approve these petitions on the assumption that a new office L-1 extension petition can be subsequently denied. Even so, although new office extensions are exempt from the USCIS policy that gives deference to prior approvals, the report recommends that USCIS make a site visit a general requirement before renewing L-1 new office petitions.

Implementation of VIBE to Promote L-1 Visa Program Consistency—A Step in the Right Direction

The report praises USCIS’s Validation Instrument for Business Enterprises (VIBE), a program that gathers information on companies’ operational and financial viability in order to validate information provided in petitions and determine visa eligibility. The OIG, however, recommends that CBP officers also be provided with access to the system to aid in L-1 petition adjudications.

Visa Reform Act Anti-”Job-Shop” Provisions

The report examines USCIS’s application of the anti-”job-shop” provisions of the 2004 Visa Reform Act, which prohibit employers from petitioning for L-1B workers and then assigning them to third-party worksites, unrelated to the petitioning company, if the beneficiary will not be supervised and controlled by the petitioning entity (referred to as “labor for hire”). In its evaluation, the OIG found that USCIS does not apply the provisions consistently and that its guidance on the issue is limited and confusing, making the L-1 program further susceptible to fraud and abuse.

In that regard, the report recommends that USCIS issue a regulation concerning the anti-“job-shop” provisions that will increase consistency in decision making, and further that, in the interim, the agency update existing guidance that USCIS adjudicators can use while such a regulation is created.

Site Visits Assist Fraud Detection Efforts

Under current USCIS practices, there is no program to conduct post-L-1 adjudication site visits. Rather, USCIS officers or DOS consular officers can request a site visit to the prospective location of a new office to determine the legitimacy of that location. The site visit is conducted through the USCIS’s Fraud Detection and National Security (FDNS) unit. In addition, sometimes a USCIS officer will ask a consular officer at the U.S. embassy in the foreign country to conduct a site visit to verify the legitimacy of the petitioning foreign business.

The report finds that L-1 site visits have improved L-1 visa program integrity and that a provision in the USCIS regulation to allow new office extensions beyond the one-year period only following a successful site visit evaluation could deter future petitioners from abusing the new office regulation. As mentioned above, the report recommends that USCIS make a site visit a requirement before extending L-1 new office petitions.

Employers should note that, in responding to the OIG’s recommendations in this regard, USCIS stated that the FDNS expects to begin conducting post-adjudication, domestic L-1 compliance visits in the first quarter of FY 2014. Whether USCIS intends to extend these site visits to all L-1 petitions, not merely new office petitions, remains to be seen.

Note: This article was published in the September 3, 2013 issue of the Immigration eAuthority.

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.

© Ogletree, Deakins, Nash, Smoak & Stewart, P.C. | Attorney Advertising

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