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Tech Companies File $350 Million Lawsuit Over H-1B Visa Fees

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A new lawsuit alleges U.S. Citizenship and Immigration Services (USCIS) has unlawfully charged technology companies $350 million in H-1B visa fees. A victory in the case for the plaintiffs would give many technology companies a chance to recoup millions of dollars from the federal government.

“Defendant (“the Agency”) has unlawfully charged United States companies approximately $350 million dollars in visa fees (likely more) over the past six years,” according to a complaint filed on January 26, 2020, in the U.S. District Court for the District of Columbia. “Plaintiffs now seek a refund. For the reasons below, this Court must set aside visa denials based on the nonpayment of this unlawful fee, enjoin the Agency from continuing to charge this fee, and refund all payment of these fees for the past 6 years.”

The plaintiffs in the case, represented by Jonathan Wasden and Bradley Banias of Wasden Banias LLC, are ITServe Alliance, iTech US, SmartWorks and Saxon Global. The defendant is USCIS in the person of Ken Cuccinelli, senior official performing the duties of the director, U.S. Citizenship and Immigration Services.

The lawsuit will succeed if plaintiffs can convince the court that USCIS is unlawfully charging “50/50” companies [businesses with at least 50 employees and 50% of their workforce is in H-1B or L status] a $4,000 fee for H-1B visa holders who change status inside the United States – when, the plaintiffs argue, the fee should only be charged when an H-1B professional enters the United States.

In 2010, the House of Representatives passed a bill, which became law (PL 111-230), that included language identical to an amendment from Sen. Charles Schumer that passed the U.S. Senate.

The text of PL 111-230 reads: “[D]uring the period beginning on [September 30, 2010] and ending on September 30, 2014, the filing fee and fraud prevention and detection fee required to be submitted with an application for admission as a nonimmigrant under section [H-1B] of the Immigration and Nationality Act shall be increased by $2,000 for applicants that employ 50 or more employees in the United States if more than 50% of the applicant's employees are such nonimmigrants or [L visa] nonimmigrants.” (“Nonimmigrants” have a temporary status. Green card holders have permanent residence.)

On December 18, 2015, Congress passed a bill (PL 114-113) that increased the fee to $4,000 and extended it until 2025. On February 8, 2018, Congress passed another bill (PL 115-123) that extended the fee through September 30, 2027. (A legal analysis released by the National Foundation for American Policy concluded the fee likely violates America’s commitments under the General Agreement on Trade in Services.) 

What makes the lawsuit interesting is its outcome rests on courts interpreting one phrase: “application for admission.”

The text of the Immigration and Nationality Act (INA) states: “The term ‘application for admission’ has reference to the application for admission into the United States and not to the application for the issuance of an immigrant or nonimmigrant visa.” Elsewhere in the INA the language reads: “The terms ‘admission’ and ‘admitted’ mean, with respect to an alien, the lawful entry of the alien into the United States after inspection and authorization by an immigration officer.”

The plaintiffs pair these two definitions together, along with the text of the law, to argue, “Thus, based on the plain language of PL 111-230 and the INA’s definitions, Congress intended to charge the Border Admission Fee to 50/50 companies when its H-1B employees sought physical admission to the United States at a port of entry.” (Emphasis added.)

USCIS charged the $2,000 fee, and then the $4,000 fee, for H-1B professionals entering the U.S. at a port of entry and when companies apply for a “change of status” to H-1B status, such as for an international student changing his or her status to H-1B. “An application for a change of status is not an application for admission,” argue the plaintiffs.

“The Agency ignored the difference between these two distinct concepts and charged the Border Admission Fee to all H-1B applications for initial status or a change of employer filed by 50/50 companies regardless of whether they were seeking admission or a change of status,” according to the plaintiffs. They point out that on the I-129 form, “an employer must indicate whether the H-1B employee will seek admission or a change of status.” (Emphasis added.)

The plaintiffs ask the court for two remedies.

First, ITServe Alliance, iTech, SmartWorks and Saxon Global argue that charging the fee for H-1B change of status petitions should be ruled “arbitrary and capricious” and must be “enjoined, set aside, and declared unlawful.”

Second, the plaintiffs and, once the class is certified, other 50/50 companies, ask the court to “order the Agency to pay restitution or refunds in the actual amount of unlawful fees collected for the past 6 years from today or back to January 14, 2014.” (The plaintiffs do not seek damages.)

Even though the fee has been in effect since 2010, “The federal civil statute of limitations limits us to the past 6 years,” said Jonathan Wasden in an interview. The plaintiffs estimate the amount owed to companies is $350 million.

Wasden said USCIS should provide a more precise figure during discovery. He recommends companies “should scrub their records for which employees were change of status cases.”

A related complaint from ITServe Alliance and Advansoft International asks the court to order USCIS to stop denying H-1B change of status applications (and set aside earlier denials) for nonpayment of the $4,000 fee.

Today, employers pay government-imposed fees and attorney costs of between $3,400 and $16,560 for an initial H-1B petition, and $6,300 to $28,620 for the combined cost of an initial H-1B petition and an extension, according to an analysis by SHRM Council for Global Immigration and the National Foundation for American Policy. Also, employers must pay H-1B visa holders the higher of the prevailing wage or actual wage paid to “all other individuals with similar experience and qualifications for the specific employment in question.”

If the plaintiffs in this case prevail, it will make history. For the first time, USCIS will write a check to tech companies.

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