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IT staffing firms file suit over new H-1B rules

June 9, 2010 01:55 PM ET

The net impact of the memo has been to block the transfer of H-1B workers to new sites so they can take on new projects.

When an H-1B employee moves from job to job, they typically transfer their H-1B visa to a different company. Since the memo was issued, the USCIS has been blocking those transfers, said Mark Roberts, the CEO of the TechServe Alliance.

The immigration service has also been rejecting some initial applications for H-1B workers.

Roberts said the USCIS action is having "a chilling effect on the industry" because consultants with H-1B visas are now fearful of moving to a different company, which is causing some contracting deals to fall apart.

"All this will lead, ultimately, to more offshoring -- companies always get done what they need to get done. [Now] they will get it done offshore," said Roberts.

The tech industry has argued that staffing firms fill technology gaps; critics say the IT staffing firms can bring in less costly H-1B workers who displace U.S. workers.

"If the mere requirement that people actually work for their employer will put many companies out of business, that demonstrates the extent of the rampant abuse in the H-1B program," said John Miano, founder of the Programmers Guild. "When Congress created the H-1B program it expected that such visas would only be used when U.S. workers cannot be found and as a last resort."

A USCIS spokesman said the agency won't comment on the lawsuit.

Eleanor Pelta, first vice president of the American Immigration Lawyers Association, said the USCIS took direct aim at the IT staffing companies with the memo. She called it "an attempt to carve out staffing companies from being eligible for H-1Bs."

The Neufeld memo redefines the concept of worker control, requiring that an employer must be "directly over the shoulder of the employee" in order to have an employer-employee relationship.

The USCIS has been under pressure from some in Congress, particularly Sen. Charles Grassley (R-Iowa) and Dick Durbin (D-Ill.), who have called on the agency to implement more controls and scrutiny of the use of H-1B workers.

The use of H-1B staffing agencies has long been a point of contention with in the H-1B debate, and the lawsuit may well bring the issue to a head.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at Twitter@DCgov, or subscribe to Patrick's RSS feed Thibodeau RSS. His e-mail address is

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