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U.S. Immigration Strategies to Address Increased Scrutiny of L-1 Petitions Filed by IT Consulting Companies
Scott J. FitzGerald , Molly A. Carey
Monday, February 10, 2014
In recent years, global companies seeking to transfer key personnel to the U.S. have faced increasing scrutiny from U.S. Citizenship and Immigration Services (USCIS) and U.S. Consulates abroad. Specifically, denial rates, particularly for L-1B applications filed by information technology consulting companies on behalf of Indian employees to be placed at third-party client sites in the U.S., have dramatically increased in the past few years. This has resulted in costly delays for companies who require the expeditious transfer of employees to the U.S. to complete important client projects. This environment is fueled by the U.S. Government initiatives to keep skilled workers outside of the U.S., in an apparent effort to protect U.S. jobs. The high rate of denials and Requests for Evidence (RFEs), whereby the company must provide additional information before the application can be adjudicated, are, in fact, causing some companies to move the work outside of the U.S., to avoid the need to utilize the U.S. immigration system.

The L-1B visa classification enables a U.S. employer to transfer a professional employee with "specialized knowledge" from one of its affiliated foreign offices to the U.S. According to applicable U.S. immigration regulations, "specialized knowledge" means either special knowledge of the petitioning company's product, service, research, equipment, techniques, management or other interests and its application in international markets, or an advanced level of knowledge or expertise in the company's processes and procedures. Despite repeated requests from L-1B employers and immigration practitioners, there is little available guidance from USCIS regarding what constitutes "specialized knowledge" and how an employer can evidence it in an L-1B petition or application. The dramatic increase in the rate of denials of L-1B petitions over the past few years reflects USCIS's increasingly narrow interpretation of the regulatory definition of specialized knowledge.

Denial rates for initial and extension L-1B "specialized knowledge" petitions filed at USCIS, for example, rose from 7percent in FY2007 to 27percent in FY2011. It should also be noted that in FY2011, 63 percent of all L-1B petitions filed at USCIS received an RFE, which require the preparation and filing of time-consuming responses, and further delay employers' ability to fulfill contracts with clients. Some IT consulting companies currently report RFE rates as high as 74 percent.

There is also widespread concern that L-1B petitions filed on behalf of Indian visa applicants have been specifically singled out by USCIS and Department of State. USCIS denial rates for Indian beneficiaries increased from 2.8 percent in FY2008 to 22.5 percent in FY2009. Denial rates for beneficiaries from France, Germany, Japan and the U.K., on the other hand, rose within the range of 4.1 percent to 5.9 percent in FY2009. This increase in denials and RFEs has occurred despite the lack of any change in the legal standard for adjudicating such petitions.

Certain companies, particularly large multinational companies, are eligible for Blanket certification, which allows their employees to apply for a Blanket L-1 visa directly at a U.S. Consulate abroad, bypassing the need to file a petition with USCIS. Consular officers may grant L classification for "clearly approvable" applications. A gain, there is little guidance available to companies that clarifies what "clearly approvable" is in the context of "specialized knowledge." The U.S. Embassy and Consulates in India appear uncomfortable with this "clearly approvable" standard, and senior State Department officials in India have confirmed that the ability of the visa applicant to articulate his or her "specialized knowledge" during the visa interview is weighed significantly more heavily than the paper application. The denial rate at U.S. Consulates, however, is even higher than those filed at USCIS. In FY2013, U.S. Consulates denied 29 percent of L-1 visa applications filed. Anecdotal evidence suggests a current denial rate of over 40 percent for L-1 Blanket visa applications filed by IT consulting companies involving third-party placement.

Current U.S. law limits the number of H-1B visas available each fiscal year to 65,000, plus an additional 20,000 for applicants who have received a Master's degree from a U.S. university. Last year, for example, USCIS received approximately 124,000 H-1B petitions during the first week of the filing period. This lack of available H-1B visa numbers has led to increased use of the L-1B, especially Blanket L visa applications, over the past five years. By March 29, 2012, the U.S. Consulate General in Chennai processed 6,044 Blanket L visas - a 27 per cent increase over the same period in 2011.

What should companies do in this climate of severe H-1B shortages and widespread L-1B denials? There are several factors for a company to consider in determining whether and when to file L-1B visa applications, specifically for Indian employees.

An employer may file an initial or extension L-1B petition with USCIS. Once filed, standard USCIS processing times range from one to six months. USCIS has significantly increased its focus on L-1B petitions, even extensions of nearly identical petitions that were initially approved by USCIS. As noted above, the RFE rate for L-1B petitions filed in FY2011 is 63 percent, so companies must consider the costs of responding to complex, time-consuming RFEs. Companies may request Premium Processing (15 day adjudication) for L-1B petitions filed at USCIS, but should consider the substantial government filing fee of $1,225 and the possibility that requesting Premium Processing may increase the likelihood of receiving an RFE.

In the case of a Blanket L-1 visa application, it has already been determined by USCIS that the company qualifies for the issuance of the intra company transferee visa, so the individual visa applicant need only file a copy of the approved Blanket Certification, along with documents supporting their personal qualifications, with the U.S. Consulate. Filing an initial Blanket L-1B visa application has several benefits. If the Blanket L-1B visa application is approved at the interview, the visa stamp is typically issued within a few days of the interview and the employee can immediately enter the U.S. and begin working. Companies should consider, however, how well each applicant can articulate his or her "specialized knowledge," and that U.S. Consulates are denying 29 percent of all L-1 visa applications, with an even higher percentage for L-1 visa applications filed by IT consulting companies on behalf of Indian beneficiaries.

An employee may also apply to extend his or her L-1B status via a Blanket application at a U.S. Consulate, which requires travel outside of the U.S. Companies need to consider the business disruption of this travel and the possibility of further administrative processing of visa applications. This type of administrative processing, which may be for substantive or security-related reasons, can cause delays of a few weeks to several months, during which time the employee may not be permitted to re-enter the U.S. Moreover, if the visa application is ultimately denied, the U.S. Consulate may cancel any valid visas that would have otherwise allowed the applicant to return to the U.S. for the remainder of the initial L-1 validity period. A company should also consider whether the employee has dependent family members remaining in the U.S. pursuant to dependent L-2 status. A denial of a Blanket L application while the L-1 employee is outside of the U.S. can create significant logistical complications, including the international relocation of family members from the U.S. on very short notice.

Another important thing to note in considering whether to file an L-1 petition at USCIS versus a Blanket L application at the U.S. consulate is that if a Blanket L visa application is denied, a petition may be immediately re-filed at USCIS. However, the reverse is not true. If an employer files an L-1 petition (initial or extension) with USCIS, a Blanket L application cannot immediately filed at the U.S. Consulate. Filing a Blanket L visa first, in essence, allows for a "second bite at the apple."

In this climate of severe H-1B shortages and widespread L-1B denials, companies need to consider all available visa options and the related costs, timing and risks inherent in each. Unfortunately, the anti-business immigration sentiment exemplified by the high L-1B RFE and denial rate, especially for Indian visa applicants, will likely remain for the foreseeable future.

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