H-1B AMENDMENTS POST-SIMEIO SOLUTIONS: WHY CIS SHOULD REVISE THE “DRAFT” GUIDANCE

As many are aware, putting an end to the confusion that prevailed among Immigration Practitioners for almost two decades, the Administrative Appeals Office (AAO), through a Precedent decision, Matter of Simeio Solutions, LLC, 26 I&N Dec. 542 (AAO 2015), clarified that an amended H-1B Petition, with the corresponding LCA, is required to be submitted to United States Citizenship and Immigration Services (USCIS) when there is a material change in the terms and conditions of employment.

In Simeio Solutions, the AAO specifically stated that when H-1B employees change their place of employment to a worksite location that requires employers to certify a new Labor Condition Application (LCA) for Nonimmigrant Workers to the Department of Homeland Security, this change may affect the employee’s eligibility for H-1B status; it is therefore a material change for purposes.

Because the decision was not very clear as to whether the AAO only referred to a move outside the Metropolitan Statistical Area (MSA), the DHS Ombudsman call on April 30, 2015, clarified that amended petitions will be required only for movement of H-1B workers outside the MSA listed on the LCA. Then, just when the new changes regarding H-1B amendments started to sink-in, came the surprise. On May 21, 2015, USCIS issued guidance instructing employers to submit an amended petitions for employees who changed worksite locations prior to the issuance of Simeio Solutions decision.

Specifically, employers were asked to submit amended H-1B petition(s) if they, in good faith, relied on prior non-binding agency correspondence and did not file an amended petition due to a change in an MSA or area of intended employment. The employers were asked to submit such amended petitions by August 19, 2015. Six days later, on May 27, 2015, USCIS updated its guidance to reflect that the guidance was in a “draft” form, and that comments would be accepted “for a limited period of time.”

Further, on June 9, 2015, USCIS Director Leon Rodriguez, at the Council for Global Immigration’s 2015 Symposium, told a group of immigration and HR professionals that the USCIS understands that the August 19, 2015, deadline to file potentially thousands of amended petitions “is a problem” and employers may soon get relief. He further stated that the agency is considering issuing a statement “very soon” that employers will only have to abide by the Matter of Simeio Solutions decision going forward and not retroactively. Mr. Rodriguez added that: “USCIS is working to build real protection, so that those of you [employers] who have made changes in relying on inconsistent [USCIS] pronouncements will have an adequate level of protection and comfort to move forward without necessarily needing to make an amended filing.” He also said that guidance related to the matter would be sharpened and intimated that the deadline may be extended.

The real questions to ask and analyze are: Why the agency wants take off the retroactivity aspect from the draft guidance which was issued earlier as a guidance; and Whether it is just a smokescreen to cover the wrong guidance which CIS should not have issued in the first place?

The basic tenets of administrative law suggest that administrative agencies such as USCIS may make both prospective and retroactive policies because they are vested with quasi-legislative and quasi-adjudicatory powers. In deciding whether to grant or deny retroactive force to a newly adopted administrative rule or guidance, reviewing courts look to the standard established by the Supreme Court in SEC v. Chenery Corp (Chenery II)[1]. The standard laid down in Chenery II specifically stated[2]:

“….[R]etroactivity must be balanced against the mischief of producing a result which is contrary to a statutory design or to legal and equitable principles. If that mischief is greater than the ill effect of the retroactive application of a new standard, it is not the type of retroactivity which is condemned by law

Deciphering what was stated in Chenery II, the D.C. Circuit in Retail, Wholesale and Dep’t Store Union, AFL-CIO v. NLRB[3] stated that: …”which side of this balance preponderates is in each case is a question of law, resolvable by reviewing courts with overriding obligation of deference to agency decision and courts have not infrequently declined to enforce administrative orders when in their view the inequity of retroactive application has not been counterbalanced by sufficiently significant statutory interests.”

Further, Judge McGowan in Retail, Wholesale laid down the following five (5) factor test that the Courts take into consideration to resolve the problem of permissible retroactivity. These include:

1. whether the particular case is one of first impression;

2. whether the new rule represents an abrupt departure from well-established practice or merely attempts to fill a void in an unsettled area of law;

3. the extent to which the party against whom the new rule is applied relied on the former rule;

4. the degree of the burden which a retroactive order imposes on a party, and

5. the statutory interest in applying a new rule despite the reliance of a party on the old standard.

This equitable formula focuses attention on the degree of “surprise,” the harm to the party burdened by the new policy, and the need, in terms of fulfilling the statutory goal, for retroactive effect. The test permits a flexibility that invites close case-by-case inquiry instead of broad generalization.

Keeping Chenery II and Retail, Wholesale, in perspective, if challenged in court of law, USCIS will face an uphill battle defending the retroactivity part in the draft guidance which specifically requires employers to submit H-1B amended petitions if their employees changed worksite locations prior to the issuance of Simeio Solutions decision[4].

Asking H-1B employers to submit an amended petitions who relied, in good faith, in the past on USCIS’ previous non-binding statements and/or correspondence, is unquestionably a case of “first impression” or commonly referred as “surprise.” In essence, such a move marks a clear departure from the previous practice[5] that many employers followed, correctly or incorrectly, for over a decade[6].

USCIS must be mindful of refraining from imposing significant financial burden on H-1B employer by asking them to submit H-1B amended petitions involving transfer of employees, outside the MSAs as indicated their LCAs, prior to the issuance of Simeio Solutions decision.

It is important to note here that the D.C. Circuit in Retail, Wholesale stated that:

“[u]nless the burden of imposing the new standards is de minimis, or he newly discovered statutory design compels its retroactive application, the principles which underlie the very notion of ordered society, in which authoritatively established rules of conduct may fairly be relied upon, must preclude its retroactive effect.” [emphasis supplied]

By no means is the additional burden of submitting H-1B amended petitions for employee(s) who changed work location(s) prior to May 21, 2015, is de minimis as it involves significant costs in terms of filing and legal fee in order to comply with the new CIS’s guidance. On the April 30, 2015, DHS Ombudsman teleconference, it was estimated that if an employer moves 50 workers three (3) times a year, that would be 150 amended petitions resulting in half a million dollars in legal fees and costs.

To conclude, as proposed by the Director, Leon Rodriguez, USCIS should consider revising the draft guidance that was issued post-Simeio Solutions decision. USCIS should consider taking off the retroactivity aspect of the guidance which would require the H-1B employers to submit amended petitions for employees working in H-1B status who previously moved outside the MSA indicated on the LCA. If USCIS refrains doing that and the guidance is challenged in a court of law, the affected individual/corporation may have a compelling claim that he or she lacked fair notice that the conduct in question was proscribed. Retroactivity concerns may prompt an argument that the use of adjudication is arbitrary and capricious and may rise to the level of due process violation.

[1] 332 U.S. 194 (1947).

[2] 332 U.S. at 203.

[3] 466 F.2d 380 (D.C Cir. 1972).

[4] specifically until May 21, 2015.

[5] of submitting and obtaining an approved LCA from the Department of Labor, and posting the LCA to the new worksite location outside the MSA without submitting an amended H-1B petition to CIS.

[6] See Letter from Efren Hernandez III, Dir., Bus. And Trade Branch, USCIS, to Lynn Shotwell, Am. Council on int’l Pers., Inc. (October 23, 2003).