A recent report conducted by the DHS Inspector General has prompted debate over alleged abuse in the L visa program. The report claimed that the L program has several vulnerabilities, and could be exploited by dishonest petitioning employers wishing to bring improperly qualified employees to the US or to bypass the restrictions of the H-1B program.

The OIG report has already come under criticism in a report issued by the National Foundation for American Policy (http://www.bibdaily.com/%2Fpdfs%2FNFAP%20L-1%203-06.pdf) which says that the report doesn’t adequately consider recent changes made by Congress to address the abuses cited in the DHS report. The NFAP report also levels a number of other criticisms that are discussed later in this article.

The L visa was designed to facilitate the temporary transfer of management, executive, and “specialized knowledge” employees from a foreign national company to a US parent, branch, subsidiary, or affiliate company. The L-1A visa is given to employees who are in a managerial or executive position, while the L-1B visa is given to those whose employment involves “specialized knowledge.” “Specialized knowledge” is knowledge of a product in international markets, or an advanced level of knowledge of the petitioning employer’s processes and procedures. Additionally, that knowledge must be uncommon, noteworthy, or distinguished by some unusual quality and not generally known by practitioners in the alien’s field of endeavor.

The DHS Inspector General’s report stated that USCIS adjudicators feel that the L category is subject to fraud and abuse, and lacks the proper regulatory guidance on adjudication procedures. The report identified three specific problems with the L visa program. Based in part on input from USCIS adjudicating officers, the report found that it is often difficult to verify the managerial or executive duties of the beneficiary, that the regulatory definition of “specialized knowledge” is too broad, and that it is difficult to verify the legitimacy of the foreign entity.

The Inspector General’s report indicated that experienced petitioners and immigration attorneys submit applications that are vague or too technical, thus making it hard to verify that applicants have legitimately done, or will actually do, the managerial or executive level work as claimed in the application. 

In interpreting the definition of “specialized knowledge,” USCIS adjudicators felt that they have very little regulatory guidance, and would prefer a bright-line test to determine whether or not an applicant possesses “specialized knowledge.” The report stated that the current definition is too broad, and appears to allow virtually limitless applicants to qualify as possessing specialized knowledge since USCIS adjudicators cannot objectively determine if knowledge in certain sectors (such as high tech) is specialized or merely general.

The L visa permits foreign entities to transfer L beneficiaries to the US to open new branch, subsidiary, or affiliate companies. USCIS adjudicators said that it is very difficult to verify the legitimacy of the foreign entity in this “new office” application because there is not yet a US counterpart to review. Foreign companies supply evidence of their existence in the application, but this evidence usually consists of foreign financial and business documents that an adjudicating officer in the US is unfamiliar with. However, officers who suspect fraud can forward the suspect information to the US consulate office in the applicant’s country or to the USCIS Fraud Detection Center.

In response to these three major concerns, the Inspector General’s report recommended that better procedures be established for obtaining verification of overseas petitioning companies and of the employment positions of overseas beneficiaries, such as new cooperative verification programs between USCIS and ICE and USCIS and DOS. Additionally, the report requested a change in regulations to ensure that the beneficiary will be used as a manager or executive, to further define “specialized knowledge,” and to clarify what criteria or proof is required to obtain “new office” L.

The DHS Inspector General’s report also stated that the Department of State has expressed concern over the L-1B visa program in particular, commenting that employers are using the L-1B visa as a substitute for the H-1B visa due to the fact that the L program is much more attractive to petitioning employers. The L-1B is similar to the H-1B, but the L visa is numerically unrestricted and does not have a prevailing wage limitation. Some believe that workers who enter on an L are circumventing the H-1B program and are displacing US workers. However, the report indicated that the DOS’ concerns are somewhat unfounded, and that this phenomenon does not seem to represent a “significant national trend.” The report cited evidence that Ls are not being widely used as alternatives to Hs, illustrating that in 2004, H-1B numbers were significantly reduced but no increase in L receipts or approvals was noticed.

USCIS Acting Deputy Director Robert Devine issued a memo on January 10, 2006 conceding that the adjudication of L-1 applications was difficult and that the category has the potential for abuse. The Deputy Director states that the USCIS plans to conduct a benefit fraud assessment to determine the nature and extent of fraud in the L program, but indicates that the suggested changes are not completely practical.

The USCIS memo seems to indicate that a change in regulatory definitions is unnecessary, and summarizes the current regulatory definitions and agency interpretations of personnel managers, functional managers, and executives. In interpreting these definitions, the memo points out that the USCIS does not discriminate against small companies who have a few, or only one, employees in determining managerial or executive status, and that the reasonable needs of the company should be considered if staffing levels are examined. The memo also states that adjudicators should focus on whether or not the beneficiary has and will primarily engage in qualifying managerial or executive duties.

There is no bright line test that identifies “specialized knowledge,” because Congress intentionally did away with a bright line test under IMMACT. “Specialized knowledge” is determined on a case-by-case basis, but there are specific guidelines to assist adjudicators in making the determination. A prior USCIS memo from 2004 requires that the petitioner demonstrate the complexity of knowledge, that the knowledge is not generally found in the industry, and it would be economically disruptive if petitioner had to hire someone else. The memo states that despite the concern over “broad definitions,” the current standards are reasonable, a relatively low number of L-1Bs are granted annually, and that there is no indication of using L-1B to circumvent the H-1B cap.

The USCIS memo comes down hard on the report’s critique of “new office” applications. It states that there are safeguards in place to insure that just any foreign company cannot send any worker to the US to open an office. The company is required to show that they are currently doing business, that they are able to support the beneficiary while in the US, that the beneficiary’s services will be temporary, and that the company will remain in business while the beneficiary is present in the US. Furthermore, the petitioner must be a qualifying entity in that they have a related operation in the US. Therefore, some steps toward establishment of the US operation must have already been taken by time of application to ensure that business establishment has at least begun. Additionally, a new office petition is valid for only one year and at the time of extension the petitioner must demonstrate that business is viable and running within the US. The petitioner must also explain any deviations in business plan from first application to extension.

In response to the Inspector General’s report, USCIS will conduct an assessment, but feels that it is better to use the current DOS system and the Office of Fraud Detection and National Security. USCIS states that it will look into working with ICE, but notes that ICE does not have offices in the top five L-1 petitioning countries. The DOS suggests in response to the report that standard operating procedures be developed for the USCIS to request that the DOS investigate L fraud allegations.

As noted above, the National Foundation for American Policy (www.nfap.net), a non-profit, non-partisan public policy research organization focusing on trade and immigration policy, has issued its own report criticizing the DHS Inspector General’s findings. Among the NFAP findings:

• No evidence exists that L-1 visas are being widely used to circumvent restrictions on L-1 visas for skilled professionals. The NFAP reports cites DHS’ own admission that L-1 visa approvals have declined by more than 20% in the last five years even with the H-1B cap being hit in several of those years.
• The NFAP report also refutes claims of widespread displacement of US workers. It notes that the DHS report admits this when it stated “While many of the claims that appear in the media about L-1 workers displacing American workers and testimony may have merit, they do not seem to represent a significant national trend.
• DHS failed to interview any companies or their attorneys about L-1 visa adjudication.

According to the NFAP, had DHS interviewed users of the program, they would have found “that rather than being too lenient, companies are frustrated by denials of L-1 visa petitions for seemingly capricious reasons due to adjudicators’ poor understanding of interna­tional business or technology.”

The NFAP report also faulted DHS for not accounting for recent changes passed by Congress that are designed to cut down on abuse in the L-1 visa program. The examples of abuse cited by DHS all preceded the legislative changes and the report recommended waiting to see the impact of the new law before making further policy changes. Instead, the report recommended DHS focus more on training its examiners to make quality adjudications.

Another government report that indirectly supports the L-1 visa was issued by the Department of Commerce this week. The report, entitled “Foreign Direct Investment (FDI) Creates New Jobs: US Affiliates of Foreign Companies (majority owned) employ 5.0 million US workers, or 4.7% of private industry employment. According to the Commerce Department, foreign employers pay higher salaries to US workers than their American-owned counterparts. According to the report, the difference may be as much as 15%. Most of these foreign corporations rely on the L-1 visa in order to send managers, executives and key employees to the US. US employees of these corporations, based on figures in the report, likely outnumber sponsored visa holders at these companies by 100 to 1.