Digging Deeper:

History of B-1 in lieu of H-1


The B-1 in lieu of H-1B subclass is not mentioned in the Immigration and Naturalization Act, the law that creates nonimmigrant visas.65 Neither do regulations specify a particular B-1 in lieu of H-1B distinction.66 The U.S. State Department’s Foreign Affairs Manual, which guides consular officers with visa processing matters, specifies a subclass for the B-1 in lieu of H-1, along with other types of B-1 visa-holders who are allowed to work in the U.S.67 While it is unclear when that subclass was first delineated, the “concept” was created in the 1960s in a joint effort of the Immigration and Naturalization Service and the U.S. State Department.68
The B-1 in lieu of H-1 subclass was further explained in a cable issued by the Immigration and Naturalization Service (INS) in 1982.69 That cable apparently referred to a case in which the agency had denied B-1 visitor visas to computer workers from India and apparently was hoping to disavow that decision.70 The agency clarified that a B-1 visitor visa could be issued to foreign workers as long as their compensation comes from their foreign employer, they do not intend to immigrate to the U.S., would otherwise qualify for H-1 status, and “[t]he services to be provided are necessary to the integrated international production, marketing, and service system of the corporation, its subsidiaries, and affiliates, and so [does] not involve the reassignment of an alien to an employer in the United States.”71
In 1993, federal agencies proposed regulations, which would have eliminated the B-1 in lieu of H subclass.72 A few years prior, Congress passed the Immigration Act of 1990, which created the H-1B visa, imposed an annual cap and added the requirement that employers submit a labor condition application.73  Some perceived the proposed regulations as an effort to stop employees of so-called “body shops” from obtaining B-1 visas.74 When nonimmigrant workers are employed at a third party worksite that is not owned, operated or controlled by the direct employer, the primary employer is in the role of a middleman, and is commonly referred to as a staffing company or “body shop” or “job shop.”  Several large Information Technology (IT) companies routinely place thousands of their H-1B workers at third-party worksites instead of at their own places of business.75  This practice has been problematic.76 Nevertheless, the 1993 rule changes were never passed. 
In 2011, a manager with Infosys alleged that the company was bringing its employees to the U.S. with B-1 visas specifically to circumvent the H-1B protections and raise profits.77 Congressional scrutiny followed.  The U.S. State Department pledged a thorough review.  In October 2012, the U.S. State Department sent an explanatory cable to consular officers regarding the B-1 in lieu of H-1B subclass.  As a result of the Infosys manager’s case, the federal government investigated that company for B-1 visa fraud and reached a record $35 million settlement in October 2013.
  • 65. 8 U.S.C. § 1101(1)(15)(b).
  • 66. See, e.g., 8 C.F.R. § 214.1(b), Visitors, and 22 C.F.R. § 41.31, Temporary visitors for business or pleasure.
  • 67. 9 FAM 31.41 Note 11.
  • 68. S. Bernsen, The Proposed Restriction of the “B-1 in Lieu of H-1” Concept, 70 Interpreter Releases 35, 1189-92 (September 13, 1993). The author of that article, Sam Bernsen, worked for INS at that time and was involed in creating the concept.
  • 69. Id., footnote 8; see also A. Paparelli and S. Wehrer, Business Visitors from Abroad - Tips and Traps for the HR Department, Immigration Daily, available at http://www.ilw.com/articles/2000,1018_Wehrer.shtm.
  • 70. Id.
  • 71. Id.
  • 72. 58 Fed. Reg. 40024-30 (July 26, 1993).
  • 73. Id., see Immigration Act of 1990, Pub. L. No. 101-649, 104 Stat. 4978 (1990); for a thorough listing of legislative history of the H-1B program see also GAO-11-26, Appendix V., at 100-102.
  • 74. Kehrela Hodkinson, Reggie Pacis and Edward Rios, CBP/Consular Processing Issues, American Immigration Lawyers Association (2012), available at http://www.ailadownloads.org/seminars/seminar120911resources.pdf (last visited August 2013).
  • 75. Paula Chakravartty, Weak Winners of Globalization: Indian H-1B Workers in the American Information Economy, AAPI Nexus, Vol. 3, No. 2, p. 59, 64-67 (Winter 2005) (Describing first-hand exploitation of Indian H-1B employed by body shops).
  • 76. Id. When multiple places of employment are contemplated by an employer importing H-1B workers, the U.S. Department of Labor (USDOL) regulations state that “[a]ll intended places of employment shall be identified on the [Labor Condition Application (LCA)]; the employer may file one or more additional LCAs to identify additional places of employment.” 20 C.F.R. § 655.730(c)(5). Because USDOL has no role in the B-1 program, this regulation does not apply to any B-1 workers.
  • 77. See D. Rather, Visa Loophole, Huffington Post (March 25, 2011), available at http://www.huffingtonpost.com/dan-rather/business-visitor-visa-fraud_b_8... J. Preston and V. Bajaj, Indian Company Under Scrutiny Over U.S. Visas, N.Y. Times (June 21, 2011), available at http://www.nytimes.com/2011/06/22/us/22infosys.html?pagewanted=1&ref=us.