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Procedural And Policy Changes For I-140 Petitions

by Romulo E. Guevara

In an on-going campaign for backlog reduction, the U.S. Citizenship and Immigration Services (USCIS) has issued two memoranda directing procedural changes and policy clarifications on employment-based petitions, known as a Form I-140 petition.

A previous article (USCIS CLARIFIES ITS POLICIES ON RFEs) addressed two memos issued by William Yates, Associate Director of Operation, on the significance of prior approvals in extension contexts, and procedural guidance with regard to Requests for Evidence (RFE).

This article will focus on the two recent memoranda on I-140s discussing (1) the adjudication of concurrently filed Form I-140 Immigrant Petition for Alien Worker1 and Form I-485 Application for Adjustment of Status, and (2) the determination of financial ability to pay under 8 C.F.R. Section 204.5(g)(2) when an employer files the Form I-140 petition.2

1. USCIS Finally Moves Towards Concurrent Adjudication of I-140/I-485s

As background, on July 31, 2002, legacy Immigration and Naturalization Service (INS) promulgated an Interim Final Rule allowing Form I-485, Application to Register Permanent Residency or Adjust Status, to be concurrently filed with Form I-140, Immigrant Petition for Alien Worker. Until the promulgation of this interim rule, Form I-485 could not be filed simultaneously with Form I-140. The Form I-140 had to be approved before Form I-485 could be filed. The Interim Rule allowed the simultaneous filing of Form I-140 and Form I-485 under the employment-based first, second and third preferences. If Form I-140 was filed before July 31, 2002, Form I-485 could be filed with a copy of Form I-797, Notice of Action, establishing prior receipt and acceptance of Form I-140 petition.

The advantage of the Interim Rule centered on the instant availability of all adjustment of status benefits, such as obtaining employment authorization and advanced parole, at the time of filing Form I-140. The Interim Rule also allowed eligible family members, such as the spouse and minor children, to file Form I-485 applications provided each applicant had a visa number currently available and each applicant maintained lawful nonimmigrant status. In the event that lawful nonimmigrant status was not maintained, applicants could potentially seek protection under Sections 245(i) or 245(k), which are provisions that permit those who have violated status to file for adjustment of status under specific circumstances.

The emergence of concurrent filing was, in this writer’s opinion, an incomplete benefit. Once processing of Form I-140 was complete and an Approval Notice was issued, applicants had to endure the extensive backlogs of Form I-485 processing. As of this writing, the four USCIS Service Centers process Form I-485 in approximately two years from receipt, regardless of the approval of a concurrently filed Form I-140.

The Ohata Memo of March 31, 2004

Fujie Ohata, Director of Service Center Operations, issued a memorandum on March 31, 2004 outlining procedural instructions for concurrent adjudication of concurrently filed Form I-140 and Form I-485s. The memorandum directs the Service Centers to use I-140 processing times as the tracking mechanism for concurrently filed Form I-485, rather than the local I-485 processing times. Therefore, the USCIS will now consider concurrently filed Forms I-140 and I-485 a separate workload from stand-alone Forms I-485.

Beneficiaries of concurrent employment-based filings will greatly benefit from this change in adjudication procedure. The memorandum suggests that I-140 processing dates will be controlling, which is a more favorable measure. With the exception of certain categories in the Vermont Service Center,3 all the service centers process Form I-140 in approximately two to seven months. Subsequently, when an I-140 approval is issued, the memorandum requires the immediate adjudication of the accompanying Form I-485. However, concurrent adjudication of Form I-485 will take place only if security clearances have been issued (fingerprints and name checks have cleared).

In the event that a Request for Evidence (RFE) must be issued in the I-140 case, the memorandum states that the adjudicator should also review the I-485 filing to determine if it requires additional evidence as well. Because of potential legal conflicts, I-140 and I-485 will have separate RFEs issued, rather than combining the RFE into one document. Each RFE will be mailed separately. If Form G-28 is in the file, both RFEs will be sent together to the attorney or accredited representative of record. The memorandum makes clear that if the I-485 applicant submits a timely response, but the petitioner does not, both Form I-140 and I-485 will be denied. Likewise, if the petitioner files a timely response, but the applicant does not, Form I-140 will be adjudicated on the merits, while Form I-485 will be denied for failure to respond to an RFE. The Service Center Directors have been given a thirty-day moratorium from the date of the memorandum to make implementation procedures in each center.

The Ohata memorandum is a welcomed measure that was long overdue. The concept of concurrent filing should have included the concurrent adjudication procedures of the Ohata memorandum at the time the Interim Rule was promulgated in July 2002. Hopefully, implementation of the memorandum will spark greater speed in adjudication of adjustment of status applications in concurrently filed cases and further reduce the overburdening backlogs at the Service Centers.

2. Fine-Tuning Form I-140 Financial Ability Determinations

A contributing factor to the current backlogs at the service centers has been the unnecessary issuance of RFEs. One area that has been subjected to these roadblocks has been the issue of whether a prospective U.S. employer has the ability to pay the proffered wage in certain employment-based immigrant petitions.

The relevant regulation states:

“(2) Ability of prospective employer to pay wage. Any petition filed by or for an employment-based immigrant which requires an offer of employment must be accompanied by evidence that the prospective United States employer has the ability to pay the proffered wage. The petitioner must demonstrate this ability at the time the priority date is established and continuing until the beneficiary obtains lawful permanent residence. Evidence of this ability shall be either in the form of copies of annual reports, federal tax returns, or audited financial statements. In a case where the prospective United States employer employs 100 or more workers, the director may accept a statement from a financial officer of the organization which establishes the prospective employer's ability to pay the proffered wage. In appropriate cases, additional evidence, such as profit/loss statements, bank account records, or personnel records, may be submitted by the petitioner or requested by the Service.”4

In a memorandum by William Yates on May 4, 2004, policy guidance was issued in anticipation of regulatory amendments to 8 C.F.R.§204.5(g)(2). A discussion of the memo follows.

The Yates Memo on Financial Ability

The Financial Ability memo states that a petitioner must submit the regulatory required evidence of annual reports, federal income tax returns, or audited financial statements as initial evidence of financial ability. It also discusses the circumstances where discretionary evidence may or may not be used.

Required Evidence. Adjudicators must first review the file for any missing initial evidence. Upon review of any one of these items, adjudicators must issue an RFE if any of these initial documents is missing from the record. Second, adjudicators must review Form I-140 for completeness. A mandatory RFE must be issued if Form I-140 is incomplete with regard to the date the petitioning company was established, the current number of employees, and gross and net annual income.

Consistent with the companion memo, Yates states that if the record is complete with respect to all the required initial evidence, adjudicators are not required to issue RFEs for additional evidence to support the financial ability decision on the record and may deny the I-140 petition without an RFE.

After the required evidence of annual reports, federal income tax returns, or audited financial statements is submitted with the I-140 petition, the memo shows how a petitioner can have financial ability to pay the proffered wage through three ways: First, if the net income is equal to or greater than the proffered wage, there is financial ability. Second, if the net current assets are equal to or greater than the proffered wage, financial ability exists. Finally, a finding of financial ability can also be made by evidence of the employment of the beneficiary by the petitioner at the proffered wage level. If any one of these options are not met, the case can be denied.

Unfortunately, the memo disregards long accepted practices, which have permitted a showing of financial ability using a combination of any of the three options listed. For example, let’s assume the proffered wage in an I-140 skilled worker case is $90,000 per year. The beneficiary received wages of $60,000 in the year the priority date was established, with minor increases in subsequent years leading to the RFE. Under the first option in the Yates memo, if the petitioner’s net income was $20,000, the petitioner would not meet the financial ability test because of a $10,000 defecit. Consequently, the case would be denied. If the third option is used, financial ability test would also fail because the beneficiary was paid less than the proffered wage. The second option is the most limited in that it uses the net current assets analysis in a substantially narrower way than accepted practices.

The Yates memo should have implemented principles established in the minutes of the Eastern Service Center (ESC)/AILA Liaison Teleconference of November 16, 1994,5 where the then Director of the Vermont Service Center offered these helpful observations:

“(1) If the taxable income on the petitioning company’s submitted tax return, for the period covering the priority date for the I-140, is at least as high as the wage offered, the ESC will generally assume that it can afford to pay the wage,

(2) If the taxable income is negative even though the beneficiary is not yet employed by the petitioner, ESC will generally assume that the petitioner can handle the additional salary if, according to its tax return, it has a favorable enough ratio of total current assets to total current liabilities.

(3) In the case of a sole proprietorship, the ESC may consider the proprietor’s personal assets and liabilities.

(4) It will look closely however at the argument that the hiring of the beneficiary will turn an unprofitable company into one that can pay his or her salary.

(5) A positive retained-earnings figure does not guarantee the ability to meet a larger payroll.

(6) Depreciation can generally be considered with taxable income in evaluating the ability to pay the additional employee.

(7) Where the evidence is not self-explanatory, pertinent figures should be highlighted and guidance offered on how the documentation establishes the ability to pay.” (Emphasis added).

The Yates memo unnecessarily limits the financial ability examination to the following equation:

Net Current Assets > Proffered Wage = Financial Ability.

Item two (2) above suggests that the ratio analysis can be used if there is negative net income and the beneficiary is not yet employed by the petitioner. The rationale is that a favorable ratio suggests the petitioner can handle an additional salary even when there is a loss in the tax year.

However, this writer suggests that the Current Ratio Analysis could be used to determine ability to pay, regardless of negative net income and employment of the beneficiary. According to generally accepted accounting principles, the Current Ratio and the Quick Ratio are basic measures for determining the liquidity of a company. The Current Ratio is determined when dividing the current assets with the current liabilities. The Current Ratio assumes (1) a regular cash flow and (2) that both accounts receivable and inventory can be readily converted into cash. A ratio of 2.0 is a common indicator of healthy financial viability. When the Current Ratio falls lower than 1.0, it indicates a company’s financial difficulties. Therefore, the Current Ratio Analysis is a more realistic means to test financial ability than the net asset test described in the memo.

Similarly, depreciation should be added to net income, wages paid to the beneficiary, and the ratio analysis. Depreciation by definition is not considered a loss.

Discretionary evidence. The regulation states, “In a case where the prospective United States employer employs 100 or more workers, the director may accept a statement from a financial officer of the organization which establishes the prospective employer’s ability to pay the proffered wage.”6 Subsequently, the regulation lists discretionary evidence which may be asked for by the Service or submitted by the petitioner in appropriate cases. By using the phrase, “in appropriate cases,” the drafters intended for the financial ability regulation to have different tiers.

Taken as a whole, the regulation has three tiers: (1) Required evidence; (2) Discretionary evidence for companies with 100 or more employees; and (3) Discretionary evidence in general.

The memo interprets the regulation to permit the submission of additional financial evidence in lieu of the initial required evidence where the petitioner employs more than 100 employees (tying the second and third tiers). Additional financial evidence has always been submitted to bolster either the required evidence or for companies with 100 employees or more. But more disturbing is the expansion of this requirement. Yates states, “regardless of the number of employees the petitioner employs, CIS adjudicators are not required to accept, request, or RFE for additional evidence. Acceptance of these documents by CIS is discretionary.” The conclusion is: if the initial evidence submitted does not establish petitioner’s financial ability to pay the proffered wage, adjudicators are permitted to outright deny the petition.

The discretionary evidence refers to (1) profit/loss statements, (2) bank account records, or (3) personnel records.7 The memo leaves the acceptance of this kind of evidence to the adjudicator. If he or she decides to accept the discretionary evidence, Yates states that the evidence must clearly establish petitioner’s financial ability. He suggests that each piece of evidence must conclusively show financial ability, rather than allow an adjudicator to make a pragmatic assessment based on the totality of the circumstances.

An employment-based immigrant petition is, in essence, an offer of future employment. The petitioner is not obligated to pay the proffered wage until the beneficiary’s legal permanent residence is granted. Therefore, the employer should be allowed to show financial ability from the date the priority date is established to the grant of the beneficiary’s permanent residence status.8

Suppose an adjudicator chooses not to accept additional discretionary evidence in a particular case. Petitioners have commonly demonstrated financial ability by an examination of bank statements for each calendar year, beginning in the year the priority date was established and continuing onwards. The average of the ending bank balance in a twelve month period, added to the beneficiary’s paid wages, and net income or net assets, ordinarily shows financial ability. Petitioners have also used profit/loss statements and personnel records to show available cash flow and ability to meet its payroll obligations. In today’s economy, it is unrealistic to expect a single financial document to establish a petitioner’s ability to pay without permitting a petitioner the opportunity to provide additional evidence as the regulations allow. A totality of the circumstances test should be used rather than the narrow single-document analysis promulgated by the memo.

It is hoped that the backlog reduction initiatives are implemented in a way that is not detrimental to petitioners and beneficiaries. The concurrent adjudications memo by Ohata is a welcomed measure. But, the Yates memo, on the other hand, offers too narrow a system for determining financial ability. The memo should be reconsidered and broadened to reflect realistic ability to pay valuation methods using the totality of the circumstances test. To do otherwise is to sacrifice legitimate financially viable cases for the sake of backlog reduction.


About The Author

Romulo E. Guevara is the senior associate attorney at Cyrus D. Mehta & Associates, PLLC. He received his J.D. from Hofstra University School of Law in 1996. Prior to joining the firm, he practiced business immigration law and represented clients before Immigration Courts, the Board of Immigration Appeals and consular offices abroad.


The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.


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