The “Buy American and Hire American” (BAHA) Executive Order which is being implemented
by federal agencies to “protect” U.S. workers from foreign competition has ramifications on
many areas of business immigration practice. Companies that displaced U.S. workers while
outsourcing work to contractors on H-1B or L-1 visas have been cited by senior Trump administration officials as part of the impetus for BAHA.
The question for companies who use contractors is whether the agencies will implement BAHA
to reach the client in a contractor/client relationship. In other words, can companies that
“outsource” work to contractor employees be held liable for non-compliance by the contractor or
be considered the “employer” for immigration compliance purposes? The answer to this
question is closely tied to the interpretation of a concept common in labor and employment law:
Per the Department of Labor (DOL), “Joint employment exists when an employee is employed
by two (or more) employers such that the employers are responsible, both individually and
jointly, to the employee for compliance with a statute.” The I-9 rules set forth a definition of
“employer” that recognizes the existence of independent contractors. The test for whether a person is an independent contractor includes whether the person in question supplies the tools or
materials; makes services available to the general public; works for a number of clients at the
same time; has an opportunity for profit or loss as a result of labor or services provided; invests in the facilities for work; or directs the order or sequence in which the work is to be done and
determines the hours during which the work is to be done. A company that uses a contract to
knowingly employ a person who is not authorized to work will be considered to be the employer
for I-9 compliance purposes.
In the H-1B context, a USCIS memo established guidelines for determining who is the employer
for purposes of petitioning a contract worker. However, this memo focuses on whether a
contractor company claiming to be an employer satisfies the criteria for H-1B sponsorship rather
than on whether the client company was a joint employer.
The concept of joint employment was expanded during the Obama Administration, most notably
in a decision by the National Labor Relations Board (NLRB), Browning-Ferris, but also in
informal DOL guidance. Browning-Ferris had allowed the NLRB to consider indirect or
reserved control that had not necessarily been exercised as indicia of joint employment,
expanding the universe of “employers” who could be required to enter into collective bargaining.
Many employers breathed a sigh of relief when DOL withdrew its guidance last July, and
relaxed further when NLRB overturned Browning-Ferris in December 2017 in the Hy-Brand
Industrial Contractors Ltd. Decision. However, on February 26, 2018, the NLRB vacated HyBrand
because one of the members who voted in the case should have recused himself. NLRB
is now back to the Browning-Ferris standard of “indirect control,” making it easier to find joint
Despite these head-spinning developments, the concept of joint employment was never
abandoned. Even in Hy-Brand, the NLRB found the two companies in question to be joint
employers under the “direct control” analysis to which it returned. The fact that a company does
not issue a W-2 to a person performing work is only the beginning of the inquiry regarding that
person’s employment status.
Whether DOL’s current stance on joint employment will affect immigration compliance
interpretations is unclear. Only a small portion of immigration compliance is overseen by DOL.
U.S. Citizenship and Immigration Service (USCIS) and Immigration and Customs Enforcement
(ICE) handle most other aspects, including I-9 compliance. The concept of joint employment
could be useful to these agencies in some circumstances.
Employers entering into contract worker arrangements should consider immigration compliance
when establishing both the terms of the contract and internal policies for management and
supervision of on-site contractors. At a minimum, liability and indemnification for worker
qualification should be addressed in the contract. Managers should be trained on the necessity of maintaining the contractor/employee distinction, including limiting direct supervision. In some
scenarios, more comprehensive measures, such as audits of subtractor processes, may be in
order. Often contractors or their employees ask for letters of support to include in visa petitions.
Client companies should design processes to ensure those letters accurately reflect the
contractual relationship and actual practices between the parties.
As recent events show, the definition of joint employment will continue to make the news and
could be bad news for your clients if not adequately addressed.
Root Law Group offers a free legal consultation with our experienced immigration attorneys. Call our office at (323) 456-7600 to schedule your appointment.
Source: AILA Doc. No. 18030740.