Immigration Dispatch

October 2004
Frost Brown Todd LLC

Update On US·VISIT And The Visa Waiver Program

For the past year, U.S. Customs and Border Protection (CBP) has used a new US·VISIT program to digitally photograph and fingerprint all foreign nationals who come to the U.S. using visas issued by U.S. consulates around the world.   However, citizens of the 27 Visa Waiver Program countries were initially exempt from US·VISIT because they do not need to have U.S. visas in their passports.  The Visa Waiver Program countries are countries with the highest historical rate of compliance with U.S. immigration laws.

As of September 30, 2004 citizens of the 27 Visa Waiver countries have been enrolled in US·VISIT (meaning fingerprint-scanned and photographed at the U.S. port of entry).   In addition, effective October 26, 2004, citizens of Visa Waiver Program countries must carry passports that meet the definition of machine readable.  The definition is as follows:

A machine readable passport has biographical data entered on the data page according to international specifications. The size of the passport and photograph, and arrangement of data fields, especially the two lines of printed OCR-B machine readable data, meet the standards of the International Civil Aviation Organization, Doc 9303, Part 1 Machine Readable Passports. OCR-B means the type is Optical Character Reader size B.

There is a second new requirement that was to be phased in at about the same time which would require citizens of Visa Waiver Program countries to also possess passports that meet the definition of a "biometric" passport.  However, President Bush recently signed a one-year extension (until September 2005) of that latter requirement because too many Visa Waiver countries had not yet developed such passport technology. 

Our unscientific research suggests that virtually all of the Visa Waiver Program countries now issue machine readable passports.  Therefore, the "typical" potential headache that the new machine readable requirement may create is if, for example, someone obtained a passport eight years ago before the issuing country converted to machine readable passport technology.  In this case, if the traveler is unaware of the new passport requirement, U.S. Customs and Border Protection would turn back the visitor and direct him or her to obtain a new passport (or alternatively a U.S. visa) before returning to the U.S. 

There is a "buzz" in the immigration community that the substantive requirements for entering the U.S. as a business visitor or tourist under the Visa Waiver Program has increased as a result of US·VISIT and the machine readable requirement.  This is technically untrue as these are just document security provisions.  The only kernel of truth is that, as with all situations in the post 9/11 U.S. immigration world, the level of scrutiny is higher.

For further information, please consult the U.S. State Department’s website at: http://travel.state.gov/visa/tempvisitors_novisa_waiver.html#4


Extensions of Nonimmigrant Status and the Law’s “Section 222(g)”
By Mary M. Godar

When nonimmigrant foreign nationals apply for admission to the United States, U.S. Immigration admits most individuals until a specific date (known as a date certain) and records this date on a Form I-94 – Arrival/Departure Record issued to the foreign national and affixed to the foreign national’s passport.   Foreign nationals who overstay the date certain recorded on their I-94s are subject to the law’s Section 222(g). 

Section 222(g) says that if a nonimmigrant remains longer than the date certain recorded on his or her I-94, the “visa” in the foreign national’ passport becomes immediately void.   In addition, the foreign national is then required to apply for all future visas in his/her country of nationality.  So, if an H-1B nonimmigrant possesses an H-1B visa valid to December 31, 2006, but is admitted to the U.S. only until November 1, 2004 and remains without permission in the U.S. beyond November 1, the H-1B visa (that  otherwise appears to be valid until December 31, 2006) becomes void, and any future applications for any kind of nonimmigrant visa forever will after have to be made in the person’s country of nationality.

However, the filing of an extension of stay petition or application may effect whether Section 222(g) is applicable.  The following are common scenarios which can occur and a brief discussion of whether Section 222(g) applies:

Hypothetical #1:   Ali holds L-1B intracompany transferee visa status.  His I-94 will expire March 10, 2005.  On January 20, 2005, an L-1B extension petition is filed on his behalf by his employer.  Ali remains in the U.S. after March 10, 2005, when his I-94 card expires.  Ali does not travel while the extension of status petition is pending.  On March 30, 2005, the L-1B extension petition is approved.  Ali is not subject to Section 222(g).  A foreign national is not subject if the extension of status is filed prior to the expiration of the I-94, the person does not travel, and the extension request is approved. 

Hypothetical #2:   Maria holds H-1B specialty worker status.  Her I-94 will expire February 2, 2005.  Her employer, ABC Company files an H-1B extension petition on her behalf on January 31, 2005.  Maria does not leave the U.S. while the extension petition is pending.  On April 30, 2005, USCIS approves the H-1B petition, but denies the extension of status because Maria violated her status by working for XYZ, Inc. – an unrelated employer – without authorization.  Maria is subject to 222(g) because she has remained in the U.S. beyond the date on her I-94, without permission.

Hypothetical #3:  Vlad held H-1B specialty worker visa status until his I-94 expired on May 1, 2004.  Vlad’s employer, Z$P Company, filed an extension of status petition on March 15, 2004.  An emergency arose while the extension of status was pending and Vlad returned to his home country on June 1, 2004 while the H-1B extension petition was pending with USCIS.  USCIS approved the H-1B extension petition on June 30, 2004.  Vlad is subject to 222(g).  Foreign nationals who depart after expiration of their I-94, but before USCIS issues a decision on the extension petition are subject to Section 222(g).  However, the U.S. Department of State has said  that foreign nationals who depart after the end validity date on the I-94 but before the application for extension of status has been approved shall be subject to a blanket exemption from Section 222(g) if the application was filed in a "timely manner" and is "non-frivolous" in nature.  The application will be considered non-frivolous “if it is not, on its face, a groundless excuse for the applicant to remain in the U.S. to engage in activities incompatible with his or her status.”  A petition can be shown to be filed in a “timely manner” by either the Receipt Notice from USCIS or a cancelled check for the petition filing fee, coupled with evidence of the expiration of the prior status, such as a copy of the previous I-94 (which in Vlad’s case had a May 1, 2004 expiration date. 

Hypothetical #4.   Li holds B-1 business visitor status.  Her I-94 will expire November 10, 2005.  Li is hospitalized due to an emergency appendectomy on October 28, 2005 and is not released from the hospital until November 11, 2005.  Li files an application to extend her B-1 visa in order to attend business meetings, that were re-scheduled due to her hospitalization.  USCIS accepts the late filing because Li was able to establish that the late extension filing was for good cause and that she is otherwise eligible for a retroactive approval.  USCIS approves her application to extend her B-1 status to December 31, 2005.  Li is not subject to 222(g).  A foreign national who for good cause files a late extension application that USCIS accepts and approves, is not be subject to 222(g).

The scenarios above demonstrate that travel and the timing of the extension of status can have an impact on the applicability of Section 222(g).   Therefore, if travel is required while an extension of status petition or application is pending, it is very important that the foreign national and employer determine the impact of that foreign travel and the applicability of Section 222(g) or consult with counsel to reach an understanding of the impact of the overstay. 


Social Security Administration’s Employer Correction Request or “No Match” Letter
By  Hector A. Chichoni

From time to time the U.S. Social Security Administration (SSA) send to employers what are referred to as “no-match” letters.   No match letters are triggered by the lack of a match between the name of an employee and the social security number (SSN) reported by the employer for that employee.  In response to one of these letters, an employer may be tempted to ask the employee for new documents or suspend (or even terminate) the employee if he or she cannot produce a new SSN.  Employers should first take steps to ensure that they have properly discharged their responsibilities before suspending or terminating their affected employees.

Understanding Why
Each year, employers must provide every employee with Form W-2 Wage and Tax Statement and transmit a copy to the Internal Revenue Service (IRS).   The SSA often is unable to post earnings to a worker's SSA account because the SSN is invalid or because the name is inconsistent with the one associated with the SSN in SSA’s records.

To date millions of records cannot be matched and billions of dollars cannot be credited to particular SSN holders.   SSA holds these reported earnings in "suspense accounts."  These accounts now exceed $300 billion and are awaiting identifying information to credit the funds to the worker’s SSA account.  SSA tries to avoid payments into these suspense accounts due to the comprehensive administrative costs involved with correcting suspense account earnings.

To reduce the number and amount of suspense account postings, the SSA began issuing Employer Correction Request or “no match” letters to employers in 1993.   The letter notifies the employer of SSA’s inability to correctly post earnings due to discrepancies between the employee's name and the SSN as reported on Form W-2.  SSA has no ability to penalize employers either for supplying incorrect SSN information or for failing to respond to the mismatch letter and, as such, the letter, especially the latest version, politely “requests” an employer’s response within 60 days.  However, SSA can provide “no match” information to the IRS.

Fines and Penalties
While SSA has no enforcement authority, IRS can fine employers $50 for each W-2 Form filed with an incorrect SSN.   The maximum an employer can be fined is $250,000 per year or $100,000 for smaller employers with gross receipts of less than $5 million.  If it is determined that failures occurred due to intentional disregard of the information reporting requirements, the penalty is $100 per return or 10 percent of the amount to be reported correctly, with no annual limit.

An employer may escape liability under the Internal Revenue Code if the failure to comply was due to reasonable cause.   In the context of SSN “no-match” or mismatch, the “events beyond an employer’s control” would require the employer to show the error resulted from the employee's failure to provide the correct SSN on which the employer relied in good faith.  The employer must also establish it acted in a responsible manner, both before and after the failure occurred. 

Avoiding Liability by Acting in a Responsible Manner
The following process should be followed if an employer wishes to avoid liability in the context of SSN “no-match”:

  1. Check Your Records.  Upon receipt of an SSA “no match” letter check your records for a discrepancy in recording the information, comparing the employee’s W-4s to the SSN reported to SSA.  Employers may also informally request employees to re-present their social security cards in order to correct the employer’s records or the employee’s W-4.
  2. Provide Initial Written Notice to the Affected Employees.  If after attempting to correct the records, the employer find that the SSNs still do not match, the employer should provide notice to the affected employees and former employees (to their last known address) that their names and numbers do not match the SSA records and ask the employees to correct the discrepancies with SSA and advise the employer of the results of their correction efforts with the SSA.
  3. Report SSN Corrections Back to SSA.  All information reported back by employees should be used to correct the employer’s records and to provide a report to the SSA.  If discrepancies persist or employees do not report changes back to the employer, then the employer must take the next step.
  4. Year-End Follow Up.  The employer should again notify those employees it has not heard from by the end of the current tax year.  The employer may send a “form” notice to the affected employees asking for corrected SSN information to overcome the mismatch.
  5.  Written Follow up in the Next Year.  The employer should send another notice at the end of the next tax year.  The language in this notice may be the same as in the previous step, but should indicate that the employer has previously sent notice to the employee or former employee.

The decision to terminate an employee for failure to respond to the request should be governed by the employer's policy on termination.   Counsel should be contacted in developing this policy prior to taking any adverse action against an employee.  However, if an employee directly advises the employer that he or she is unauthorized to work, this likely constitutes sufficient reason for the employer to conclude that the employee is no authorized to work and that the employee should be dismissed.  If the employer receives other credible information that the employee may be unauthorized, the employer has an obligation to inquire further and possibly  to reverify the employee's employment eligibility. 

With respect to the employees who do not respond at all, legacy Immigration and Naturalization Service (now U.S. Citizenship and Immigration Services) General Counsel indicated that it would be much more likely to consider that the employer violated the I-9 provisions if it continues the employment without taking appropriate steps to reverify work authorization and if the employee is indeed unauthorized, again suggesting that re-verification might be appropriate. 

In summary, SSA’s no-match reports trigger a due diligence obligation by most employers.   The safest course of action is to begin compliance procedures to avoid IRS penalties.  Employers should not, however, immediately undertake to reverify the employment eligibility of those persons flagged by SSA’s no-match report as this action likely would be construed as document abuse discrimination in light of the INS General Counsel opinion.  Similarly, employers should not set a deadline for a worker to produce a new social security card because to do so is to require more documents than are necessary for the employee to comply with the I-9 requirements and therefore is also document abuse.


 A Guide To Navigating The H-1B World Now That The H-1B Cap Has Hit

On Friday October 1, 2004, U.S. Citizenship and Immigration Services (“USCIS”) announced that it had already reached the H-1B quota for the federal year (2005) that began on October 1, 2004 and extends through September 30, 2005.

What Does This Mean?
This means that a U.S. employer wishing to sponsor an employee for H-1B work authorization who is subject to the H-1B cap (annual quota) cannot secure a USCIS Approval Notice with an effective start date earlier than October 1, 2005.   USCIS rules allow U.S. employers to begin submitting H-1B petitions requesting an October 1, 2005 start date beginning on April 1, 2005.

This gap may present a serious problem for U.S. employers that face a variety of situations in which they need to hire a foreign national.   These situations include but are not limited to: (a) a student in F-1 status whose employment authorization will expire before October 1, 2005 will have a gap in his or her employment and may, in certain circumstances, need to return abroad; (b) an exchange visitor whose J-1 status work authorization expires before October 1, 2005 may face the same “gap” situation and consequences; and (c) a foreign national stationed abroad who does not qualify for another type of visa such as an E (treaty trader or investor) visa or L (intracompany transferee) visa may be unable to obtain an H-1B visa and enter the U.S. to start work until close to October 1, 2005.

Are All Employees and Employers Subject to the H-1B Cap?
Not all employees or employers are subject to the H-1B cap.   Employees are exempt if they have been previously approved for H-1B status within the past six years and have not left the U.S. for more than one year (because if this is the case they have been effectively “counted” for H-1B cap purposes).  Therefore, all employees in H-1B status who are seeking H-1B extensions are exempt as are some foreign nationals who converted from H-1B to another status and are still in the United States.  It is even possible that some beneficiaries of H-1B approvals who are currently abroad may be exempt under limited circumstances.

With respect to employers, H-1B petitions filed by certain institutions of higher education or a related or affiliated nonprofit entity may be exempt.   In addition, certain nonprofit research organizations or government research organizations are exempt.

Some Possible Strategies for Employers and Employees to Bridge the Gap
There are a variety of strategies that may lessen or even eliminate the negative impact caused by the present unavailability of H-1B approvals.   Some of the major planning opportunities may be as follows:

Some Observations If the Gap In F-1 Student Employment Is Relatively Small
If the F-1 student’s employment authorization document (EAD) expires after August 1, 2005, he or she can stay in the U.S. in a nonwork capacity during the gap period if desired.   The employee may be on a leave of absence and continue to receive benefits.  In addition, the U.S. government may authorize F-1 students to remain in the U.S. for more than the 60 day grace period if it publishes a notice in the Federal Register.  Similarly, there is a 30 day grace period (nonwork) for J-1 students.

Possible Relief on the Horizon
There is some apparent discussion in Congress about carving out some further exemptions from the H-1B cap.   One exemption under discussion would apply to graduates of U.S. colleges and universities who earn a graduate degree.  However, it is unlikely that anything will transpire prior to the November 2 election.  In addition, the anti-business immigration lobby is apparently pressing for trade-offs in the forms of restrictions on the L category which U.S. employers will find to be contrary to their need to transfer in certain types of managers and specialists. 

Conclusion
The purpose of this article is to provide a “birds-eye” view of the major considerations and options with respect to the H-1B cap situation that employers and employees face.   However, each case has its own nuances and it is critical to seek timely legal advice about the particular situation that you need to plan for.

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