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IT Firms Say Government Collected Millions in Unlawful H-1B Fees

Jan. 27, 2020, 4:05 PM

Multiple companies that rely on H-1B high-skilled guestworker visas to provide workers for the IT sector say they have unlawfully been required to pay thousands of dollars per visa application.

The U.S. Citizenship and Immigration Services has collected over $350 million in unlawful visa fees over the last six years from IT staffing and similar businesses, ITServe Alliance, a trade association representing over 1,200 information technology companies that brought the lawsuit, said in a complaint filed Sunday in the U.S. District Court for the District of Columbia.

Companies with at least 50 U.S.-based employees that have 50% or more of their workforce on H-1B or L visas say they have had to pay a $4,000 border admission fee for all new and change-of-status visa applications since 2015. But the fees shouldn’t have applied to instances where an individual was already in the U.S. and thus not crossing the border, the companies alleged.

A large percentage of each year’s initial H-1B applications are for foreign nationals getting master’s degrees from U.S. universities in STEM fields, said Jonathan Wasden, an attorney involved in the case. Once they finish their studies in science, technology, engineering, or math and their optional practical training time expires, many employers of these F-1 student visa holders will apply for H-1B visas for these workers, and pay the associated border admission fee, he said.

“These individuals are not the demographic that Congress was anticipating would be paying this fee,” Wasden said. The way the border admission fee statute is written, it should only apply to people who are coming from another country and seeking admission to the U.S., he said.

The case was brought by ITServe Alliance Inc., iTech US Inc., SmartWorks LLC, and Saxon Global Inc. A separate amended complaint was also filed Jan. 26 for staffing firm Advansoft, which had first sued the USCIS over the border admission fees in mid-December.

The USCIS declined to comment Monday.

Agency Changes Mean More Money

Changes in the H-1B visa program are likely to increase instances where companies are paying the border admission fee in error, according to the complaint.

Companies seeking H-1B workers are being asked to prove the workers will have definite assignments for the full three-year term of the visa, and in some cases the USCIS is only giving short-term approvals for visa applications that don’t account for the full term.

A proposed final rule increasing fees would require employers to pay the border admission fee in instances where a company is filing an extension for an H-1B worker.

A scenario could arise where an employer is applying for multiple H-1B visa extensions per year, and paying an additional $8,000 to $12,000 in border admission filing fees, Wasden said. “It makes the H-1B program unworkable and financially devastating for a lot of employers who are in that position.”

Cause of Action: Unlawful fees under the Administrative Procedure Act

Relief: Class certification; declaration that border admission fees as interpreted by the USCIS are unlawful; injunction from payment of further fees for change of status visa applications; reimbursement of $350 million in unlawfully charged fees

Response: A representative for the USCIS declined to comment.

Attorneys: Wasden Banias LLC represented the IT firms.

The case is ITServe Alliance Inc. et al v. Cuccinelli, D.D.C., No. 1:20-cv-00201, complaint 1/26/20.

To contact the reporter on this story: Genevieve Douglas in Washington at gdouglas@bloomberglaw.com

To contact the editors responsible for this story: Karl Hardy at khardy@bloomberglaw.com; Terence Hyland at thyland@bloomberglaw.com

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