The L-1 Visa Reform Act of 2004 - Immigration America

In the closing days of Congress in Fall 2004, the L-1 Visa Reform Act of 2004 (“Act”)was included in the Fiscal Omnibus Appropriations bill (H.R. 4818). The Act was doubtless spurred by numerous reports and testimony to Congress that the L-1 visa – especially the L-1B – was being misused by employers to bring in cheap professional foreign labor to displace US workers.

The Act was signed into law by the President on December 8, 2004. At the same time, Congress also passed another work-related immigration measure, regarding H-1b work visas, which is also discussed in the article The H-1b Visa Reform Act of 2004 on this website.

As background, the L-1 is a non-immigrant (temporary, not “Green Card”) visa which allows an employee (beneficiary) to live and work for a US employer (petitioner) for a specified purpose, and for a specified period of time. There are two sub-classes in the L-1 category: L-1A “Intercompany Manager or Executive” transferee and L-1B “Specialized Knowledge” transferee. [Note: for additional details and background about the L-1 visa category, please read the other articles on non-immigrant visas on this website, including “The L-1A Visa: Backdoor to Permanent Residency?“]

First of all, the changes proposed by the Act will not take effect until 180 days after the President has signed the bill into law. The President signed the bill into law on December 8, 2004. This will put the effective date of the L-1 Reform Act to June 6, 2005.

The reform Act does not impose a requirement that the employer pay or attest to the prevailing wage declaration as required of H-1b’s, and neither is there any cap on the number of L-1’s, as remains with the H-1b category.

Changes imposed by the L-1 Reform Act of 2004:

L-1B Reform: Eliminates use of L-1B’s in lieu of H-1b’s [or to skirt the prevailing wage regulations]:

The L-1b employer (petitioner) cannot place the L-1B employee (beneficiary) at the workplace of another employer in cases where the employee will be controlled and supervised by an unaffiliated employer. Placement also cannot be made if employee is to provide labor for the other employer, rather than to provide the specialized knowledge and skills in the petitioner’s business for which the employee was accorded the L-1B in the first place.

The Act affects new, extended, or amended L-1B petitions. In other words, even L-1B renewals which come up after the effective date of the Act will be affected by and evaluated under the above restrictions.

Prior Continuous employment:

Prior law permitted the beneficiary of a L-1 (either A or B) visa under a “Blanket” approval to receive L-1 status if he or she had worked for the multinational employer for at least six months prior to seeking L-1 status. That requirement has now been extended to one year of employment with the petitioner overseas. This will affect both L-1A and L-1B employees.

This one-year requirement will be imposed only on applications filed after the effective date of this Act. It does not apply to renewals or extensions of status for current L-1 visa holders.

New Fee:

In addition to the base fee for the application which typically has already been paid by the employer, the H-1B Reform Act also imposes a “Fraud Prevention and Detection Fee” of $ 500.00 on any L-1 either applying for initial L-1 status in the USA or for initial entry to the USA at a consulate overseas. The fees will be placed into an account earmarked for combating H-1 and L-1 visa fraud. This fee will become effective 90 days after enactment, or for applications filed on and after March 8, 2005. This fee is in addition to the L-1 application base fee, which is currently $ 185.00.

Possible enforcement:

The Act is silent on direct enforcement, but provisions in the Act reflect Congress’ intention to keep a firm grip on the L-1 category with a view to preventing large scale abuse of the system. Two specific provisions of the L-1 Reform Act lead to this conclusion:

Once the Act is effective, the DHS (Department of Homeland Security) is required to maintain statistics on L-1B’s, including total number of visas issued and number of placements at off-site locations. Obviously, the raw data may be used to institute investigations if there is sufficient cause to believe a particular employer is abusing the L-1B process. The Inspector General of the DHS is required to report to Congress within six months of the effective date of the act to assess the “vulnerabilities and potential abuses” of the L-1 visa program.

In order to prevent L-1 visa fraud and misuse, Congress has also required that the DHS, the Department of State and the Department of Justice create an L Visa Interagency Task Force which will report to Congressional committees both with respect to policy matters and recommendations as well as agreement or disagreement with the DHS Inspector General’s findings.

Obviously with the increased user fee of $ 500 per initial L-1 application, the various agencies will also have the necessary funding to support investigation and prosecution of violators.
New Regulations:

The DHS will have to promulgate regulations or memoranda which will affect the manner in which petitioners apply for L-1 classification. Once the bill is signed into law, the DHS will have to promulgate these regulations, or at the very least, memoranda guiding employers and USCIS (United States Citizenship and Immigration Service – benefits section of the former INS) adjudicators on how to properly file L-1 petitions after the effective date of the Act.

Practical effect of the Act:

My assessment of the L-1 Visa Reform Act of 2004 at this point:

First, employers seeking to obtain L-1B visas for their employees for work at off-site locations will have to draw a strong, clear connection between the services they provide to the off-site employer, and the employee.s specialized knowledge to provide those services.

Second, the DHS will probably have to revise the I-129 and or the Supplement “L” form in some way so as to obtain data from the employer as to where the employee will work or be placed.

Third, employers will need to maintain detailed records, documenting the work done by their L-1 employees, both in L-1A (managerial / executive) capacities or L-1B (specialized knowledge) positions in order to justify extensions, amendments, or DHS inquiries. Specific job duties, copies of timesheets, project reports, correspondence, written assignments and other documentation of a similar nature will be helpful in this regard.

In conclusion, with careful drafting, and with deliberate and honest attention to both the letter and the spirit of the L-1 category, it will be possible for the petitioning employer to continue to use this very effective employment visa provision of the Immigration and Nationality Act.