A transnational economy may be many things, but it is not conducive to clarity of legal issues. This is especially true in immigration law, which has taken on increased significance and complexity under "globalization." One specific area of law that requires additional clarification is what constitutes "employment" in the immigration context. Although I will not presume to offer the needed clarification in this article, at least three topics should be brought to the attention of employers and corporate counsel when dealing with possible "employment" matters in immigration.
With the publication of the Department of Homeland Security's (DHS') supplemental proposed rule on "Social Security no-match letters" at the end of March, employers are again scrambling to make sure that their I-9 employment verification files are in order. See 73 Fed. Reg. 15944. Every employer should be aware at this point that the Immigration Reform and Control Act of 1986 (IRCA) prohibits employers from knowingly hiring or continuing to employ persons who are not authorized to work in the United States. IRCA places the burden of verifying employment authorization on employers by requiring them, among other things, to complete and retain a Form I-9 for each employee.
The regulations implementing IRCA require employers to verify the employment of "employees," that is, individuals who provide services or labor for an employer for wages or other remuneration. See 8 C.F.R. § 274a.1(f). This definition does not include "independent contractors." Id . The regulations define independent contractors as individuals "who carry on independent business, contract to do a piece of work according to their own means and methods, and are subject to control only as to results." 8 C.F.R. § 274a.1(j). The administrative case law in this area has not relied completely on the regulatory factors, but has incorporated the "economic realities" test set forth by the U.S. Supreme Court in U.S. v. Silk , 331 U.S. 704 (1947), which looks to the amount of independence the worker has towards the employer. The case law generally teaches that no single factor is determinative, although it does appear that the degree of control that the employer has over the worker is often given the greatest weight. See U.S. v. Hudson Delivery Service, Inc ., 7 OCAHO 945 at 385 (1997). So, for example, a gardener who had verbally agreed to do "work" for a company using his own tools and who sets his own hours was found to be an independent contractor and not an employee for I-9 purposes. See U.S. v. Mr. Z. Enterprises, Inc. , 1 OCAHO 288 at 1912 (1991). Yet, delivery people who wore the company's uniform and were directed when and how to work were found to be employees. See Hudson Delivery Service, supra.
Although IRCA may not require employers to verify the employment authorization of independent contractors, employers may nonetheless run afoul of other requirements under the Immigration and Nationality Act, as amended (INA), when dealing with foreign nationals who may be considered "consultants" or contractors. Determining the "status" of a foreign national who is in the United States and who has a relationship with a U.S. company or organization is not always easy. The INA does not provide a definition of employment, and the IRCA regulations and case law are specific to the I-9 context and cannot offer the proper guideline for determining employment in the immigration context.
This issue is important because many U.S. companies have corporate relationships with overseas parent, subsidiary or affiliate companies, which invariably lead to visits by foreign national executives, managers, engineers and other professionals. Often these visits are brief in duration, but they may involve multiple entries into the United States for various purposes. Although the U.S. company may not view the time spent by foreign nationals from related overseas entities as involving employment in the United States, this assumption may be incorrect, given the requirements of the INA.
Many provisions of the INA turn on the concept of employment, but the INA lacks a definition of the same. For example, the INA prohibits foreign nationals from immigrating to the United States to perform "labor" here, unless the Department of Labor (DOL) certifies that there are no able, willing, available and qualified U.S. workers to perform the contemplated labor. See INA § 212(a)(5). Presumably the details of these statutory terms are to be filled in by the agency delegated to implement the statute, but this helps very little, because the agency in this case, the DOL, simply requires that certification be based on sponsorship by an employer that has an "employment relationship" with a foreign national employee, see 20 C.F.R. § 656.10(a), which simply means "full-time work by an employee for an employer other than oneself." 20 C.F.R. § 656.3. (Investment is excluded. Id .) At least in the labor certification context, employment means "labor" or "work" to be performed at the behest of some employer.
The regulations governing labor certification turn on a basic concept in immigration law that sponsorship to perform work in the United States requires an employer that will employ the foreign national. For example, the sponsorship of a temporary worker in a specialty occupation (requiring a bachelor's degree) under the H-1B program requires an employer-employee relationship, which is determined under common law principles. See 20 C.F.R. § 655.715; 8 C.F.R. § 214.2(h)(1)(ii). In other words, sponsoring a foreign national for temporary work or permanent work in the United States excludes independent contractors and self-employment. So in the H-1B context, it is clear that the foreign national's ownership interest in the company may jeopardize the requisite employer-employee relationship. See Administrator v. Avenue Dental Care , 2006-LCA-00029 (OALJ 2007). Yet, this simply means that for purposes of sponsoring a foreign national to work in the United States, the sponsoring entity is required to certify that there is an employer-employee relationship between the company and the foreign national. See, e.g., Matter of United Investment Group , 19 I & N Dec. 248 (Comm. 1984). It does not answer the question of when a foreign national will be considered an employee for purposes of determining whether a foreign national has engaged in unauthorized employment.
Neither the DOL nor DHS will permit employers to sponsor foreign national "independent contractors" to work in the United States, but DHS will find that a foreign national performing work for a company in the United States as an "independent contractor" is in fact an employee for purposes of finding the employer and the foreign national in violation of the INA. For example, anyone who receives some compensation in return for their efforts on behalf of a U.S. company while in the United States will be considered an employee who otherwise required sponsorship to be in the United States. See Matter of Hall , 18 I & N Dec. 203 (BIA 1982).
The one countervailing concept to "employment" under the INA is the statutory term "business." The INA provides for a category of visitor (classified as B-1) "having a residence in a foreign country which he has no intention of abandoning and who is visiting the United States temporarily for business." INA § 101(a)(15)(B). The administrative case law has read the term "business" to apply to visitors who come to the United States to engage in "intercourse of a commercial character." Matter of Hira , 11 I & N Dec. 824, 827 (A.G. 1966). One of the factors used to determine if the temporary visitor is engaging in permissible business activities is whether "the principal place of business and the actual place of eventual accrual of profits, at least predominantly, remains in the foreign country." Id .
The Hira decision involved a tailor who came to the United States principally to take orders and measurements for clothing that would be fabricated completely outside the United States. In addition, the tailor was paid by a company outside the United States. Under these circumstances, the tailor was not employed in the United States but was coming here to engage in commerce. The Department of State, which is responsible for issuing B-1 visas, has read Matter of Hira to permit only activities that are incidental to work that will principally be performed outside of the United States. See 9 FAM § 41.31 N7(b).
Consistent with the Hira decision, the Customs and Border Protection (CBP) will admit B-1 visitors to the United States where they are "coming to engage in commercial transactions which do not involve gainful employment in the U.S." Inspector's Field Manual § 15.4(b)(1)(B). Consultation with business associates, including attending meetings of the board of directors of the U.S. corporation, is also permitted. Id . Yet, CBP goes further and allows for some work to be performed in the United States, as long as it is contractually limited to commerce that originated overseas. For example, foreign nationals may come to the United States under a B-1 to install, service or repair commercial or industrial equipment purchased from a company outside the United States, but in such cases the contract of sale must require the seller to provide such services. Id .
Reading the regulations, case law and agency manuals together, it is safest to conclude that any foreign national who comes to the United States to engage in activities that go beyond attending business meetings or collecting information to fill orders that will be completed overseas is engaging in unlawful employment in the United States, unless and until such a person is given work authorization by DHS. Companies should be aware that allowing their foreign national associates from overseas to engage in activities in the United States that go beyond "business," within the regulatory meaning of that term, opens the foreign national and the company to sanctions for violating the INA. Where in doubt, the company should sponsor the individual to work in the United States and receive the appropriate documents from DHS.
Geoffrey Forney is an Associate in WolfBlock's Employment Services Practice Group and is a member of the group's Immigration Services Team. Geoffrey handles all aspects of immigration and nationality law, including employment and family-based immigration, removal (deportation) defense and asylum.