Neufeld memo: US Court scraps old memo used to deny H-1B visas

The United States court for the District of Columbia invalidated the ‘Neufeld Memo’ used since 2010 by the US Citizenship and Immigration Services (USCIS) to establish an employee-employer relationship, in order to delay or deny work permits to technology workers, a majority of whom are Indian nationals.

The ruling is being viewed as a shot in the arm for Indian IT services companies that have been denied H-1B applications in recent years, with increasingly more rejections.

The court asked the USCIS to explain its rationale in denying or issuing the three-year work permits for a shorter period, saying the agency cannot ask petitioners to produce client work assignments for H-1B approvals.

According to Amar Varada, the National President for 2020 of ITServe Alliance, that represents over 1,250 small and medium staffing and IT firms in the US a decision like this was long overdue and finally the judicial system has agrred with the employers that USCIS has been out of bounds for a long time. The members of the Alliance do combined business worth over $5 billion, with companies including Google and Bank of America.

In fact, the ITServe members have taken the USCIS head on over the last two years, filing over 130 cases challenging visa denials. It expects all pending petitions to be approved following this verdict.

According to Brad Banias, Partner of law firm Wasden Banias which had filed this lawsuit on behalf of the ITServe Alliance, the court’s order is a huge blow to USCIS’s efforts to fundamentally change the H-1B program.

Most of the visa denials in the last few years have been directed against companies who place employees at third-party locations.

The USCIS had been long denying a large number of H-1B visa applications on the grounds that a valid employer-employee relationship had not been established, which the ITServe Alliance contended was illegal.

According to a recent study of USCIS data by the National Foundation for American Policy – a US based think tank, the denial rates of firms providing consulting services to other companies was over 30% for financial year 2019, as against technology product companies, where it ranged from 2% to 7%.

US District Court Judge Rosemary M Collyer said that the current USCIS interpretation of the employer-employee relationship requirement is inconsistent with its regulation and had been applied without rulemaking and therefore could be enforced. The judge also ruled that the requirement to provide proof of non-speculative work assignments for the duration of visa period was not supported by statute or regulation.