Michael D. Patrick
Michael D. Patrick ()

U.S. Citizenship and Immigration Services (USCIS) recently announced that it will begin the full rollout of a long-anticipated worksite inspection program of employers who sponsor foreign workers in L-1 non-immigrant status. Toward the end of 2013, USCIS indicated that it would begin conducting these random, unannounced worksite inspections. This announcement came on the heels of a report issued by the Department of Homeland Security’s Office of Inspector General in August 2013, which analyzed the implementation of the L-1 intracompany transferee program. Specifically, the report considered the L-1 program’s perceived vulnerability to fraud and misuse and recommended a series of measures ostensibly designed to reduce instances of such abuse.

Worksite inspections are only the latest development in over a decade’s worth of criticism of the L-1 non-immigrant visa category and a reflection of a larger trend toward increased scrutiny. Indeed, the government has effectively signaled that it has shifted its focus toward identifying improper use of the L-1 visa, which is a legitimate concern, but at the expense of a program originally intended to facilitate an efficient means of enhancing U.S. competitiveness in the global economy.

This article will explore the increasingly stringent standards of adjudication for L-1 petitions, the new worksite inspections, and recommendations for sponsoring employers and their counsel moving forward.

Means for Mobility

The L-1 visa was created in 1970 to facilitate the transfer of certain foreign employees of international companies with offices in both the United States and abroad. Specifically, the L-1 category was designed to allow for executives, managers, and employees with specialized knowledge to relocate to a parent, subsidiary, branch, or affiliate of a multinational company in the United States for a period of up to seven years if they enter as an executive or manager under the L-1A category, or up to five years if they enter as a specialized knowledge employee under the L-1B category.

Since its inception, the L-1 visa category has proven to be an invaluable tool for enhancing the global mobility and reach of multinational companies and as a way for companies to develop talented global staff. As such, the L-1 visa has encouraged the growth of international companies within the United States, thereby contributing to the U.S. economy.

There are three methods by which a multinational company may petition for foreign workers. An employer may file a non-immigrant petition with USCIS in the United States on behalf of a foreign beneficiary. Qualifying multinational companies may also file for what is called a “blanket petition” which pre-establishes a qualifying relationship between corporate entities abroad and in the United States. With an approved blanket petition, a foreign employee can visit the consular office in his home country with a non-immigrant petition based on the blanket to prove his eligibility for an L-1 visa. The blanket process provides for greater efficiency and flexibility in the L-1 adjudication process that is not available via the Service Center route. Finally, certain Canadian citizens may seek admission to the United States in L-1 status at a port of entry through U.S. Customs and Border Protection.

According to statistics published by the Department of State, approximately 67,000 L-1 visas were issued in 2013. Despite its success, the L-1 visa program is not without its critics in the government. For years, immigration critics in Congress have decried the L-1 visa program as rife with deep flaws. They claim that the program is poorly managed by the government agencies in charge and that significant dishonesty by employers and foreign employees is being disregarded or overlooked. Additionally, critics allege that adjudications of L-1 petitions suffer from a lack of consistency as a result of ambiguous legal standards and definitions. This is a particularly common refrain in the context of L-1B “specialized knowledge,” the definition of which has fluctuated over time, undermining attempts at creating a definitive standard for its application.

As with many other employment-based visa categories, the L-1 visa program is also criticized as displacing U.S. workers and undercutting U.S. wages. This reproach is amplified in the L-1 context given the lack of a wage requirement and the lack of a numerical cap. This is in direct contrast to the H-1B specialty occupation visa, another visa category oft criticized for negatively impacting domestic workers.

At the behest of immigration critics in Congress, the DHS Office of Inspector General issued a report in August 2013 formally addressing the concerns of perceived abuse within the L-1 visa program. While the report provides for a series of recommendations to reduce the potential instances of fraud and other misuse, which include the expansion of worksite inspections to employers of L-1 visa holders, no significant findings of fraud were explicitly identified.

To this author, this trend of significantly increased scrutiny is concerning given the lack of hard evidence that any meaningful fraud or abuse actually exists. As a result, the original purpose of the L-1 visa program—that is, streamlining knowledge and skill transfer within a multinational company to increase U.S. competitiveness—has suffered. We need only to look to the numbers to see the detrimental effects the scrutiny has caused.

Scrutiny of Adjudications

Since 2003, the number of denials of L-1B petitions by USCIS has increased at a dramatic rate from 9 percent to 35 percent in 2013, despite an overall decrease in the aggregate number of petitions filed during that same period. This startling increase in denial rates is particularly significant in the L-1 context, given that it was originally intended to serve as an efficient and predictable mechanism for transferring foreign workers to the United States. The disruptions caused by denials undermines that purpose and can prove costly to employers who make business decisions based on the assumption that such resources will be available to them.

Similar trends are evident in USCIS’s Requests for Evidence (RFE), which are issued by USCIS adjudicators to obtain more information from employers. The RFE rate for L-1A petitions increased from just 4 percent in 2004 to a staggering 51 percent in 2011. Similarly, the RFE rate for L-1B petitions increased from just 2 percent in 2004 to 63 percent in 2011. While RFEs do not necessarily result in denials, the delays caused by RFEs can similarly disrupt business operations and cause uncertainty, which can result in unnecessary costs incurred by the employer.

As the numbers clearly indicate, the scrutiny of L-1 petitions at Service Centers has increased dramatically. As a result, certain eligible employers have turned to blanket petitions and the consular processing of their foreign workers. The consular process has typically applied a more relaxed standard in the adjudication of L-1 petitions as compared to Service Center-based adjudications. Yet, this has begun to change as well. As scrutiny over the L-1 visa category has become a more visible issue, government agencies have begun to collaborate more closely, resulting in tougher stances on L-1 adjudications across all agencies including consular posts. Moreover, new regulatory changes prevent L-1 visa renewals from being issued via consular processing, thereby redirecting all extension petitions to Service Centers where scrutiny is still effectively greater.

Worksite Inspections

Since 2009, worksite inspections conducted by USCIS have become a routine fixture in immigration compliance in the context of the H-1B non-immigrant visa category for foreign employees holding “specialty” (professional) occupations. The stated purpose of worksite inspections is to verify that the petitioning employer and the foreign beneficiary are complying with the terms of the approved non-immigrant petition. USCIS is also driven by the larger goal of rooting out fraud and developing a comprehensive fraud detection database. However, of the approximately 15,000 H-1B site inspections conducted each year, only about 1 percent have been referred for fraud-related investigations.

Now, just recently, USCIS has begun the implementation of worksite inspections of employers of L-1 non-immigrants. According to the government, targets for worksite inspections will be randomly selected. The government says it does not rely on any fraud indicators or other specific criteria in choosing petitions for inspections.

What to Expect

The USCIS auditor will typically arrive at the workplace unannounced and ask to speak to an employer representative, the foreign beneficiary of the petition in question, and the foreign beneficiary’s direct supervisor or manager. In verifying the validity of the information provided in the non-immigrant petition, the auditor will generally ask a series of standardized questions relating to the employer’s business and the foreign beneficiary’s job duties and salary. For example, the auditor will seek to verify that the foreign beneficiary actually works at the represented worksite location, that the beneficiary is actually working for the petitioning employer, and other related compliance issues. Responses to such inquiries should be accurate and consistent with the representations made in the petition. There may be additional requests as well, such as taking a tour of the premises and examining additional documentation.

There will be certain inquires unique to the L-1 context. For example, the employer and the foreign beneficiary should be prepared to respond to questions regarding the beneficiary’s job duties and specifically, whether he or she is fulfilling a managerial or executive role. Relatedly, the auditor may also request to see an organization chart that illustrates the foreign beneficiary’s specific standing in the company and ask to speak to the beneficiary’s subordinates and direct supervisor or manager. While there is no salary requirement in order to obtain an L-1A visa, the auditor may nonetheless request to see the beneficiary’s payroll documents. A low salary figure for a manager or executive may raise suspicion and result in additional inquiry even though no explicit salary requirement exists.

While worksite inspections are technically voluntary, employers are strongly urged to cooperate with USCIS auditors. By submitting petitions for immigration benefits, employers subject themselves to reasonable inquiries from the government. The key here is, of course, “reasonable,” and certain inquiries or requests may be declined by the employer if they are outside the scope of the immigration petition and in other specific circumstances.

Following a worksite inspection, USCIS may follow up with the employer or foreign beneficiary for additional information. When inconsistencies or perceived inconsistencies are identified, USCIS may grant the employer an opportunity to explain or correct such discrepancies. If a material discrepancy is identified and cannot be resolved, the auditor will provide a summary of her findings to a USCIS officer, who can request additional information from the employer, move to revoke the L-1 petition, or refer the matter for criminal fraud investigation.

While there is a precedent for worksite inspections generally, they raise a unique set of compliance challenges within the L-1 visa context as opposed to the more familiar H-1B context. For example, under the L-1 visa classification, foreign beneficiaries are allowed greater flexibility in their ability to travel intermittently and to work out of locations not explicitly reflected in the petition. These differences add a layer of complexity to the audit process.

Given the new worksite inspections program, scrutiny of an L-1 non-immigrant visa petition does not cease after adjudication and upon approval of the petition. With the augmentation of USCIS’s worksite inspection program into L-1 petitions, government scrutiny and oversight will persist. However, with the advice of legal counsel and the right strategy in place, employers can proactively implement best practices to ensure compliance with immigration regulations and to avoid potential liability.

Looking Ahead

Given the potentially costly consequences of non-compliance, or even perceived non-compliance, employers of foreign workers in L-1 non-immigrant status should be prepared for the possibility of worksite inspections. We recommend that employers be proactive in developing and implementing a comprehensive L-1 compliance strategy. As part of that strategy, employers should familiarize their personnel with the possibility of worksite inspections and train them on the appropriate course of action should an inspection occur.

Employers should maintain complete immigration documentation, which should be readily accessible in the event of a worksite inspection. Legal counsel should also be immediately contacted once an employer is made aware that a worksite inspection will be conducted.

Additionally, and most importantly, employers should implement internal auditing processes. Internal auditing before a worksite inspection will ensure that immigration documentation is in order, that L-1 employees are performing appropriate responsibilities, and that there are no lapses in compliance. Internal audits will also reveal the existence of any potential compliance issues such as technical violations, whereupon corrective measures can be taken well ahead of any government audit.

Michael D. Patrick is a partner at Fragomen, Del Rey, Bernsen & Loewy. Samuel Chow, an associate at the firm, and Nancy Morowitz, counsel at the firm, assisted in the preparation of this column.