State Department proposes to eliminate controversial “B–1 in lieu of H-1B” policy

For many years, U.S. employers have benefited from the “B–1 (Business Visitor) in lieu of H” policy. The policy allowed a business visitor to come to the United States as an employee of and on behalf of a foreign employer in connection with an international transaction that primarily benefits the foreign employer. In limited circumstances, the business visitor could also perform local, productive work.

But the U.S. Department of State issued proposed regulations last week that would eliminate the use of a B-1 visa as a substitute for an H-1B visa.

Background

A business visitor generally cannot perform productive, local work. For that, a U.S. employer would have to petition for an employee – for example, by filing an H-1B petition or H-3 trainee petition. However, business visitors have been allowed in certain circumstances for specific and limited duration, typically a few months. A similar policy has been applied to allow the entry as business visitors of persons of distinguished merit and ability, particularly in the entertainment or athletic fields.

Although the policy has existed for many years, it has been a subject of debate, and the State Department and Customs and Border Protection have given increased scrutiny to “B-1 in lieu of H-1B” visitors and have frequently denied admission.

The proposed regulations would eliminate the policy entirely as applied to new “B-1 in lieu of H-1B” visas. Current, valid visas with this annotation would not be invalidated or revoked. However, applicants may be subject to independent review by the CBP in evaluating whether the foreign national will be paid the prevailing wage.

Proposed regulations

The proposed regulations would remove language defining the term “business” that allowed the B-1 visa category to be used to admit individuals who otherwise would require H-1B or H-3 visas, as well as individuals of “distinguished merit and ability.” Individuals in the latter category would still be eligible to apply for O or P petitions and work visas.

The specific language that the proposed regulations would eliminate is as follows:

B-1 in lieu of H-1B:  “An alien seeking to enter as a nonimmigrant for employment or labor pursuant to a contract or other prearrangement is required to qualify under the provisions of 22 CFR 41.53 . . . which is the regulation governing H nonimmigrant temporary workers or trainees.”

“Distinguished merit and ability”: “An alien of distinguished merit and ability seeking to enter the United States temporarily with the idea of performing temporary services of an exceptional nature requiring such merit and ability, but having no contract or other pre-arranged employment, may be classified as a nonimmigrant temporary visitor for business.”

The State Department contends that this language is outdated due to changes in the law since 1952, when the language was adopted, and is confusing based on today’s statutory scheme. The preamble to last week’s proposed regulations indicates that removal of this language not only conforms to the applicable statutory framework, but also furthers the goals of the Executive Order 13788 (“Buy American and Hire American”).

The State Department views the current B-1 regulations as a loophole to the requirement that individuals who are doing productive work in the United States must have an employer, petitioning sponsor, and the requisite work visa.

There is, of course, a specific statutory and regulatory framework to the H-1B program that is avoided by use of the B-1 in lieu of H visa. These provisions include, as the preamble states,

(1) Restricting H–1B classification to nonimmigrants coming temporarily to perform services in a specialty occupation (as defined in INA section 214(i)(1), 8 U.S.C. 1184(i)(1)), or as a fashion model of distinguished merit and ability; (2) adding the requirement of a labor condition application filed with respect to the nonimmigrant by the intending employer under INA section 212(n)(1), 8 U.S.C. 1182(n)(1), with the Secretary of Labor; and (3) limiting the number of aliens who may be issued H-1B visas or otherwise provided H-1B nonimmigrant status during any fiscal year.

There are also specific statutory and regulatory provisions that apply to the H-3 trainee visa, and to the O and P visas.

Next steps

The State Department is accepting comments about the proposed regulations through December 21. The process for finalizing regulations typically takes several months, and any future developments could be affected by the November elections.

If the proposed regulations become final, employers will no longer be able to use B-1 visa holders as a convenient and expeditious alternative to complying with the applicable work visa requirements. This is especially problematic because new H-1B visas are subject to a cap, and a lottery process. The initial filing deadline is March 1 for H-1B visas that would become valid on October 1.

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