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The New H-1B Visa Transfer Rules: New Ethical Challenges for Immigration Attorneys
by David H. Nachman

It has been some time since the passage of The American Competitiveness in the 21st Century Act ("AC-21"), and it appears that the dust may have settled. Or has it? It is true that AC-21 brought relief to U.S. Hi-Tech businesses that seek workers with difficult to find technology "skill-sets." H-1B aspirants were pleased with AC-21 because there are now going to be 195,000 H-1B nonimmigrant visas for "professional and specialty occupation workers" available in fiscal years 2001, 2002, and 2003, respectively. Immigration lawyers were happy with the prospect of increased H-1B visa work for the next three years. Employers were thrilled that the new legislation provides prospective H-1B workers with the ability to start a new job without having to wait for the Immigration and Naturalization Service ("INS") to formally approve the H-1B petition which could take between six to eight weeks (the "Portability Provisions")(See Section 105 of AC-21).

However, as it is the case with most things that are "too good to be true," with AC-21, it is probably because they are. For lawyers, the recent changes to the H-1B nonimmigrant visa laws in AC-21 appear to be relatively easy to interpret and administer. For H-1B employers and prospective H-1B employees, AC-21 appears to be packed with significant business opportunities. Upon close analysis, it is clear that AC-21 is a revolutionary immigration law statute. AC-21 is the "sledgehammer" that drives the "wedge" between the practice of "general immigration law" practice and what has developed as the sub-specialty of "business immigration law" practice.

H-1B employers must carefully consider the potential impact and liabilities to their organizations as a result of using the Portability Provisions. For an assessment of such risks, H-1B employers may seek counsel from attorneys who engage in a form of joint representation of both the H-1B employer and the prospective H-1B employee. Now, the question arises as to whether or not an attorney can ethically represent both the H-1B employer and the prospective H-1B employee when the parties seek to utilize the Portability Provisions. To jointly advise the H-1B employer and the prospective H-1B employee where the parties utilize the Portability Provisions would place the attorney in a position of a clear conflict of interest if the H-1B is subsequently denied. Without a solid conflict waiver in-place before such undertaking, an attorney may be begging for trouble.

Most immigration cases involve issues of "dual representation." In its purest form, "dual representation" occurs when two parties request that an attorney pursue the same result for both of those parties. For example, dual representation occurs when an attorney is requested to provide joint legal counsel to an organization and to a prospective H-1B nonimmigrant in connection with the preparation of an H-1B nonimmigrant visa. It is a well-established proposition of legal ethics that an attorney shall not represent multiple parties unless the attorney (1) reasonably believes that each clients' representation will not be adversely affected; and (2) each client consents.

The use of the Portability Provisions in AC-21 purports to allow a prospective H-1B employer to hire a prospective H-1B nonimmigrant when the H-1B petition has been "properly filed" with the INS. The statutory definition of "properly filed" appears to be when the H-1B petition is date-stamped and the fees are paid in connection with the petition. The term properly filed is defined in the Code of Federal Regulations. If the H-1B petition is approved by the INS, then everyone should be happy. As previously stated, the significant issues arise under AC-21 if the H-1B should be denied. And since no attorney can (or should) guarantee a result with respect to any matter the risks associated with the denial of the petition must be considered at the outset of the representation.

The way Section 105 of AC-21 is written, if the parties choose to utilize the Portability Provisions and the H-1B is subsequently denied, the prospective H-1B employee would immediately be deemed to be working in the United States without proper work authorization. This could result in a subsequent determination by the INS that the individual could not be admissible as a lawful permanent resident since working while out of status is a basis for the INS to find that the individual is inadmissible (unless the individual was grandfathered under Section 245(i) (a bona fide I-140, I-130, I-360 or Labor Certification Application were filed prior to April 30, 2001), elgible for 245(k) or he/she married a U.S. Citizen, in which case they could adjust pursuant to Sections 245(a) of the Immigration and Nationality Act ('INA).

The former H-1B employer is unlikely to take the employee back because, due to the employee's jump, the former employer may feel that any hope of future loyalty by the employee has been shattered. Additionally, the long awaited regulations of The American Competitiveness and Workplace Improvement Act of 1998 (ACWIA) have now taken effect as Interim Final Rules. As opposed to the past practice (pursuant to which there was no affirmative obligation on an employer to report to the INS that an H-1B nonimmigrant left his/her employ), the ACWIA regulations have established guidelines that provide incentives for employers to notify the INS that an H-1B is terminated (to avert a potential claim by the H-1B nonimmigrant for back wages). The implementation of these rules is likely to make it difficult, if not impossible, for the prospective H-1B to return to the former H-1B employer, thus leaving the prospective H-1B nonimmigrant out-of-status.

Since the prospective H-1B nonimmigrant would be out-of- status and would have little chance of returning to the former H-1B employer, the prospective H-1B employee is likely to be extremely unhappy and (as with most disgruntled workers/individuals) may try to allege that the subsequent H-1B employer "induced" or "lured" the prospective employee to leave the employ of the former H-1B employer. The "reliance" argument is likely to have its genesis in the fact that the prospective H-1B employer neglected to inform the prospective H-1B employee about the risks of using the Portability Provisions.

This type of claim by the prospective H-1B employee is the textbook example of "Promissory Estoppel" or "Equitable Estoppel." And this is only one of the potential causes of action that the prospective H-1B employee may be able to bring against the subsequent H-1B employer. It is for this reason (as well as the fact that regulations have not yet been promulgated to interpret AC-21) that it is strongly recommended that the Portability Provisions not be utilized without taking the appropriate steps to implement safeguards against the potential for a denial of the H-1B nonimmigrant visa transfer.

From a practical standpoint, as soon as either party makes the immigration attorney aware that the Portability Provisions are to be utilized, the attorney should step away from the representation of one or both of the parties. However, in the event that both parties decide that joint representation should ensue, there are two recommended safeguards for practitioners to consider. First, have the both parties (the subsequent H-1B employer and the prospective H-1B employee) sign a conflict waiver pursuant to which it is made clear to both parties that the attorney has explained the risks involved with a potential denial of the H-1B petition by the INS. Second, have the prospective H-1B employee sign an indemnification agreement that fully indemnifies the subsequent H-1B employer against any and all liabilities that may result in the event that the H-1B petition is denied by the INS.

Our nation's desire to continue to attract the world's top talent in the 21st Century appears clear. To this end, AC-21 does have global relevance. For example, countries like Germany and Canada that are dependent upon tight U.S. immigration laws will now loose their edge and Information Technology industries in countries like India are likely to suffer a loss of labor. But as much as the impact of AC-21 is international in scope, it also touches the day-to-day practice of immigration law and it provides us, as attorneys, with new ethical challenges for protecting ourselves and our clients.


About The Author

David H. Nachman, is a principal in the firm of Grotta, Glassman & Hoffman. He advises on the full array of business immigration law issues. His clients include a wide range of new media, pharmaceutical, health care, transportation, education, manufacturing and retail entities.

Mr. Nachman is a member of the Bar of Bergen County, the State of New Jersey, the United States Court of International Trade, and the United States Court of Appeals for the Third Circuit. He also is the Speaker Liaison for the New Jersey Chapter of the American Immigration Lawyers Association (AILA), and serves as a mentor to national AILA members on the subjects of special religious workers, foreign medical graduates, and employment authorization.

He received his BS from Georgetown University and his JD from Case Western Reserve University, where he also received a Master of Business Administration degree.



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