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Impact Of Satyam Scandal On H-1B Employees

by Danielle Rizzo

The unfolding scandal surrounding Satyam founder, B. Ramalinga Raju, has far-reaching consequences for the IT industry in India and the United States, not least for H-1B workers employed by the company. reported on January 19, 2009 that insurance giant State Farm cancelled its contract with Satyam for IT consulting services. It is possible that other Satyam clients may follow suit. This leaves Satyam's H-1B employees, whose services may no longer be required by the company, in a difficult situation for a number of reasons.

First, Satyam employees may not have enough time left in H-1B status to transfer to another employer. H-1B status is limited to six years except in limited circumstances. Section 106 of the American Competitiveness in the Twenty First Century Act ("AC21") permits post-6th year H-1B extensions in one-year increments for foreign nationals on whose behalf a labor certification was filed at least 365 days ago, and who has not yet received a final determination on the labor certification, I-140 petition or I-485 application. Section 104 of AC21 also permits post-6th year H-1B extensions in three-year increments for foreign nationals on whose behalf an I-140 petition has been approved, and whose priority date is not current.

Satyam employees may or may not be able to take advantage of these provisions to get time past the end of their sixth year in H-1B status. If Satyam did sponsor the person for permanent residence, they may be able to avail themselves of the benefits of AC21 to obtain a post sixth year extension where necessary. However, this benefit may not last past the first extension of H status. It is possible that Satyam's I-140 petitions, whether pending or approved, will be denied or revoked for fraud. An essential piece of an I-140 petition is the petitioner's showing that it has the ability to pay the beneficiary's proffered wages. Satyam has admitted to accounting fraud, meaning that the I-140 petitions all necessarily relied on fraudulent documents. If Satyam employees quickly file new H-1B petitions, they may be able to do so, past the end of their sixth year, on the basis of AC21. If USCIS grants the H-1B extensions to these employees based on the underlying green card application with Satyam, the H-1B should still be valid even if, during the validity period of the extended petition, the underlying labor certification and/or I-140 petition are denied. The employee's new H-1B petitioner will then, in many cases, need to be willing to immediately begin the labor certification process all over again in order to leave time for post sixth year H-1B extensions to again become available under AC21 on the basis of the new petitioner's green card application.

Some Satyam employees who are running short on H-1B time, may be able to recapture time. USCIS permits nonimmigrants to "recapture" time spent abroad during the validity of an H-1B or L-1 petition, by filing a petition for extension of stay.

The second major issue that Satyam employees will face also relates to the company's fraudulent financial documents submitted in support of I-140 petitions. In addition to providing post sixth year H-1B extensions, AC21 provides for permanent portability. That is, foreign nationals on whose behalf an I-140 petition has been approved and whose I-485 application has been pending for 180 days may change employers if the new job is in the same or a similar occupational classification. Many Satyam employees may be facially eligible to take advantage of permanent portability. However, in memoranda, USCIS has stated that an I-140 petition is no longer valid for porting purposes if the I-140 is revoked or withdrawn, except if it is withdrawn after the I-485 has been pending for 180 days.1 Under the memo, revocation for fraud is not a withdrawal; thus the I-140 would no longer be valid for permanent portability purposes. Based on the high likelihood that Satyam's I-140 petitions will all be revoked, the safest course of action for former Satyam employees would thus be to start a new green card application from scratch as soon as possible with a new employer, starting with a new PERM application.

Revocation of an approved I-140 for fraud also results in the beneficiary losing the priority date established by the petition and underlying labor certification. 8 CFR 204.5(e) allows beneficiaries of approved I-140 petitions to transfer the priority date to a later-filed I-140 petition. The Adjudicator's Field Manual, Chapter 22.2, section (d)(1), provides that a priority date thus established is only lost if the underlying I-140 petition is revoked for fraud or material misrepresentation. Again, because Satyam's financials were fraudulent, the I-140 petitions they filed are likely to be revoked, resulting in loss of the beneficiary's priority date. Satyam employees who find new U.S. employers can start the green card process afresh with a new PERM application. They may request retention of their old priority date if they previously had an I-140 petition approved with Satyam. However, if the Satyam I-140 petition is revoked prior to their receipt of a green card, the earlier priority date is likely to be lost.

One final issue for former Satyam employees relates to those who previously entered the U.S. in L-1 status but seek change of status to H-1B with a new employer. First, if those employees ever previously held H-1B status, and have any time in their six years remaining, they can use up the remainder of their six years with a new employer and would not be subject to the cap. They would also appear to be eligible to start working for the new employer upon the filing of the new petition using H-1B portability, upon a plain reading of section 105 of AC21. It should be noted that time spent in L-1 status counts against the six year allotment of H-1B time. For those who are in L-1 status with Satyam and never previously held H-1B status, the only option may be to have a new employer file an H-1B cap case. If the employee can maintain L-1 status with Satyam up until October 1, they could then start working immediately on October 1 for the new employer, assuming they are lucky enough to win the H-1B lottery. If they cannot maintain their L-1 status for that long, they may need to leave the U.S. for a period until their H-1B is approved, and reenter with the new H-1B visa and approval notice at the end of September to start work on October 1.

In short, Satyam's fraud has created a minefield of immigration problems for its foreign national employees in the United States. It would appear that as U.S. companies terminate their contracts with Satyam, there will be U.S. consulting companies vying for those contracts who are more than willing to sponsor former Satyam employees for nonimmigrant status and potentially also for new green card applications. Because of the legal complications created by Satyam's fraud, however, each of these cases must be carefully analyzed by an immigration attorney. Satyam employees who have changed or are in the process of changing companies would be well advised to seek a consultation with a competent attorney.

End Notes

1See Memorandum, Yates, Associate Director for Operations, USCIS (May 12, 2005), posted on AILA InfoNet, Doc. No. 05051810 (May 18, 2005)

About The Author

Danielle Rizzo is an associate attorney at the Law Offices of James D. Eiss located in Buffalo, NY. She limits her practice primarily to employment-based immigration law and frequently represents foreign nationals seeking admission at the ports of entry in the Buffalo area.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.