J-1 Foreign Exchange Visitor Program: New Burdens

Thursday, October 23, 2014 - 13:50

When the amended Foreign Exchange Visitor Program regulations take effect in early January 2015, all organizations that act as sponsors or host organizations will have new obligations. Recently, highly publicized incidents have exposed some organizations’ misuse of the exchange program. Sponsors were employing workers to perform menial tasks rather than fostering a cultural exchange. As a result, the Department of State has published amendments to 22 C.F.R. §62, the regulations that govern the Foreign Exchange Visitor Program. The regulations will now mandate that all organizations that provide an exchange program undergo higher levels of scrutiny and disclosure in an attempt to make the programs more transparent. Therefore, whether your organization acts as a sponsor or as a host, if you have a J-1 program, your organization will be affected by the new regulations.

What Will The New Regulations Mandate?
  • Annual reports: annual reports previously only required submission by Au Pair sponsors, but will now be required by all eight categories of J-1 sponsors and host organizations. Therefore, every organization that has or hosts an exchange program will be required to submit an annual report.
  • Audits: all organizations providing an exchange program will be required to submit annual independent audits. These will review the organizations’ internal controls and identify any weaknesses in the operation of the programs.
  • More frequent review: the redesignation process under the new regulations will allow for more frequent reviews of the redesignation ability of all sponsors and host organizations. The original redesignation cycle was five years, but under the amended regulations, the redesignation cycle will be one to two years. The Department of State will have full discretion to subject an organization to a redesignation review each year.
  • Internal review of program personnel: all current and potential Responsible Officers (“ROs”) and Alternate Responsible Officers (“AROs”) must undergo criminal background checks. ROs and AROs will also be required to be thoroughly familiar with the amended regulations, immigration, state and local laws.
  • Increased disclosure: all organizations that offer an exchange program will be required to maintain lists of foreign and domestic third parties with whom they have written agreements. Although it will not be mandatory to submit these lists, the Department of State may request them during the redesignation process.
  • Enhanced notification requirements: all organizations that act as a sponsor or as a host must update SEVIS (Student and Exchange Visitor Program), within ten days, regarding the exchange visitor’s early departure and any changes in the sites, addresses, phone numbers, or e-mails of the exchange visitors and their spouses and dependents.
  • Increased medical coverage: the required medical coverage for all exchange visitors will be increased from $50,000 to $100,000. This increase will apply to all spouses and dependents. This amendment will require organizations to enter into new contracts.
How Will The Regulations Impact Your Company’s J-1 Activities?

In anticipation of the amended regulations, organizations should:

  • Strategize and develop effective and consistent processes: the enhanced notification requirements, required background checks, annual reports and third party lists will require all organizations to maintain comprehensive records. Maintaining these records will take a significant amount of time. Therefore, it is prudent for organizations to develop efficient methods to record all information and ensure that all records are updated.
  • Prepare for tight deadlines: organizations will be under more pressure to meet numerous deadlines. All sponsors and hosts will have only ten days to update information in SEVIS and must be prepared to submit annual reports. Also, all organizations must be prepared to perform background checks on employees every four years.
  • Anticipate additional costs: the independent audits will be costly, and each individual organization will bear that financial burden each year. Just as organizations will need to develop effective processes in order to comport with many of the amended regulations, they may need to develop training programs to ensure compliance with the regulations and familiarize the ROs and AROs with the law. The development and implementation of the processes and training programs may pose an additional high cost.
  • Expect internally imposed obligations: sponsors may impose additional requirements on host organizations to ensure that the hosts comply with the regulations.
  • Avoid adverse consequences: the Department of State is concerned with the treatment of the exchange visitors and the financial capabilities of all of the organizations that offer exchange programs. Therefore, the amended regulations will require that the operation of the programs be much more transparent. Sponsors and host organizations must understand that if they are unwilling to comply with the new regulations, the Department of State may impose sanctions, suspend, or revoke designations.

Although these long-awaited regulations have garnered a significant amount of commentary, they will go into effect in early January 2015. Therefore, organizations that offer an exchange program should begin to develop effective measures to ease compliance now. 

Michael D. Patrick is a Partner at Fragomen, Del Rey, Bernsen & Loewy, LLP, resident in its New York office. Pamela Frederick, a law clerk and Nancy Morowitz, Counsel at the firm, assisted in the preparation of this column. To learn more about Fragomen, please visit http://www.fragomen.com.

Please email the author at mpatrick@fragomen.com with questions about this article.