By: Gladys Gervacio

On May 1, 2018, Small and Medium Enterprise Consortium, Inc., Nam Info, Inc., And Derex Technologies, Inc. filed a Motion for Temporary Restraining Order and Preliminary Injunction against USCIS in the U.S. District Court in Newark, New Jersey. Plaintiff companies challenge USCIS Policy Memo PM-602-0157 which imposes severe restrictions on assigning H1-B workers to third-party work sites.

Plaintiff Small and Medium Enterprise Consortium, a non-profit trade association, represents close to three hundred staffing and consulting companies that provide IT services. Plaintiffs argue, among others, that the new definition of “employer” and “specific non-speculative” assignment requirement is not explicit or evident in the statute or regulation, and that the language does not closely track the statute or regulation. Plaintiffs claim that the Policy Memo has severely affected their small businesses as they are unable to compete against Indian IT giants.

According to plaintiffs, “based on USCIS definition, if the H-1B employee is placed at a third-party location, the employer has no control over the day-to-day activities of the H-1B employee. Hence, IT staffing companies are not eligible for H-1B sponsorship. This is completely against the definition of an employer by the Department of Labor. DOL is authorized to define who an employer is and not the USCIS. USCIS by defining who an employer is usurping the powers of the DOL.”

Plaintiffs seek a temporary restraining order and preliminary injunction enjoining USCIS from enforcing new “unlawful requirements,” defining employer, itineraries, and “specific and non-speculative” assignments, among others.

Hundreds of H-1B petitions have been denied and these denials have severely impacted the IT community.

Chugh, LLP will continue to monitor and provide updates on this case.