The recently issued U.S. Citizenship and Immigration Services (USCIS) final policy memorandum on L-1B visas clarifies the requirements for a sponsoring multinational organization transferring international personnel to the United States to demonstrate that an employee possesses “specialized knowledge.” This policy memorandum follows from the “Immigration Accountability Executive Actions” reforms that President Obama ordered in November 2014. The policy memorandum takes effect on August 31, 2015, and provides important evidentiary guidance to employers seeking to utilize this visa category. It also consolidates and supersedes prior authoritative guidance issued by the Legacy Immigration and Naturalization Service (INS) and the USCIS on the definition of “specialized knowledge”. The Homeland Security Act of 2002 (Public Law 107-296) abolished the INS, established the Department of Homeland Security (DHS), and authorized the USCIS to take on many of the adjudicative functions of the INS. 

Background About the L-1 Visa Category

The L-1 nonimmigrant visa classification was established by Congress in 1970 to permit the transfer of key personnel from foreign locations to the United States and was enacted in response to demand from U.S. companies with multinational operations. The L-1A category allows multinational companies to transfer managers and directors (executive level positions) to the United States from a foreign qualifying organization (parent, branch, subsidiary, or affiliate) if the person has worked abroad in such capacity for at least one of the past three years. The L-1B category contains similar evidentiary criteria but permits the intracompany transfer of employees with “specialized knowledge” rather than executives. The L-1 visa category is not subject to a cap or quota, and is available throughout the year. 

The L-1B visa has been legislatively amended twice, first through 1990 legislation defining “specialized knowledge” and 2004 legislation that impacted the adjudication of L-1B petitions involving the placement of personnel at third-party sites in a “labor for hire” scheme. 

The 1990 Immigration Act provides the current statutory definition of specialized knowledge: 

An alien is considered to be serving in a capacity involving specialized knowledge with respect to a company if the alien has a special knowledge of the company product and its application in international markets or has an advanced level of knowledge of processes and procedures of the company.

Since 1990, Legacy INS and USCIS have issued at least four policy memoranda establishing guidelines for the interpretation and application of this definition and subsequent 2004 legislative changes to the L-1B visa program. These memoranda have occasionally introduced new evidentiary criteria to the program which were unsupported by statutory language and resulted in increasingly restrictive L-1B adjudication policies. The restrictive policies have in turn led to high denial rates, and the L-1B became an underutilized visa category notwithstanding the great demand created by quotas on other available visa categories such as the H-1B specialty occupation visa. For example, a March 2015 National Foundation for American Policy report indicated that denial rates in FY2014 for the L-1B were at 35%, reflecting a steady increase in L-1B denial rates over the past decade, and statistics also confirm that L-1B applicants from India experience a disproportionately high number of denials. 

The Definition of Specialized Knowledge in the New Policy Memorandum

The USCIS’s new policy memorandum illustrates the statutory definition of specialized knowledge by reference to their common dictionary definitions: 

Special Knowledge is knowledge of the employer’s product, service, research, equipment, techniques, management, or other interests and its application in international markets that is distinct or uncommon in comparison to that generally found in the particular industry.

Advanced Knowledge is knowledge of or expertise of the foreign employee in the employer’s specific processes and procedures that is not commonly found in the relevant industry and is greatly developed or further along in progress, complexity and understanding than that generally found within the employer.

The boldfaced language captures a significant aspect of the USCIS definitions, namely the comparative pool for assessing the existence of such knowledge.

Employer Insights

Based upon our review of the memorandum and prior guidance, we have distilled the following key points to help employers considering the transfer of personnel from a foreign qualifying organization to the U.S.

1)  Demonstrating that an individual possesses “specialized knowledge”:

The standard for adjudicating an L-1B petition is preponderance of the evidence, which is a lower burden of proof by comparison to the “clear and convincing evidence” and “proof beyond a reasonable doubt” standards. USCIS has instructed adjudicators to give significant weight to a petitioner’s statement that is “detailed, specific, and credible”. Employers considering an L-1B visa application should provide a detailed explanation of the specific nature of the industry or field involved, the nature of the employer’s products or services, the nature of the beneficiary’s specialized knowledge, and the need for his/her specialized knowledge at the U.S. entity.

Although an employer statement carries great weight, the policy memorandum also suggests that the agency may continue to demand independent evidence corroborating these statements such as: 

• Documentation of training, work experience, or education establishing the number of years the individual has been using or developing the specialized knowledge as an employee of the petitioning organization or in the industry
• Evidence of the impact, if any, the transfer of the individual would have on the petitioning organization’s U.S. operations.
• Contracts, statements of work, or other documents showing that the beneficiary possesses knowledge that is particularly beneficial to the petitioning organization’s competitiveness
• Correspondence or reports demonstrating the employee’s employment abroad in a capacity that has significantly improved the employer’s productivity, competitiveness, image, or financial position
• Training records that show that the claimed specialized knowledge can only be gained through prior experience or training with the petitioning organization
• Evidence of knowledge of a product or process that cannot be easily transferred or taught to another individual without significant economic cost or inconvenience such as curricula and manuals for internal training courses or financial documents
• Patents, trademarks, licenses, or contracts awarded to the petitioning organization due to the beneficiary’s work
• Payroll documents, wage statements, resumes, and organizational charts documenting the positions held and the compensation provided to the beneficiary and parallel employees in the organization 

This list is meant to be illustrative rather than exhaustive. 

2)  An L-1B does not require a labor market test. 

The L-1B visa does not require a labor market test, and thus does not require the employer to show that others in the marketplace do not have such knowledge. The employer also does not need to show that the individual possesses knowledge that is “proprietary or unique” to the petitioning organization to be considered “specialized“. 

3)  Knowledge need not be narrowly held at the employer. 

The L-1B visa does not require the employer to show that only a few employees possess knowledge to be considered “specialized”, although the USCIS does authorize adjudicators to compare the foreign worker’s knowledge to knowledge held by others at the company in determining whether it is “advanced”. 

Additionally, when multiple individuals at a company possess “advanced” knowledge of a company’s product or processes, the employer can demonstrate a need for the worker by pointing out the impracticalities or business costs associated with transferring other workers with such knowledge. For example, a consulting business employing multiple workers possessing advanced knowledge of a particular product or process can successfully establish its need for an L-1B worker on a particular project by pointing out the commitment of other workers with advanced knowledge to other projects and the significant business disruption that would result from moving them.

4)  Role, title, and compensation are relevant factors but not determinative of specialized knowledge.

The policy memorandum reminds adjudicators that role, title, and compensation are not determinative of whether an individual possesses specialized knowledge, although it authorizes adjudicators to consider rank and compensation as “factors.” Nevertheless, the non-determinative nature of these factors should allow an employer such as a start-up business (for example) to demonstrate that a worker’s salary is low not because he/she lacks specialized knowledge but because of its limited earnings.

Significantly, the policy memorandum authorizes adjudicators to consider not only a salary but also other guaranteed forms of payment in assessing total compensation. These forms of compensation could be money, a commodity, per diems, housing, and guaranteed bonuses. Additionally, where significant wage discrepancies exist between employees of the petitioning organization’s U.S. operations who share the beneficiary’s specialized knowledge and the beneficiary, adjudicators are instructed to consider legitimate business reasons for such a discrepancy.

Conclusion

The new policy memorandum provides employers with multinational operations good reasons to consider adopting the L-1B as a viable tool in their global immigration strategy, and to use the policy memorandum as a guide in documenting the legal and business justification for such transfers. It will be critical to continue monitoring the USCIS’s adjudication of these applications to determine whether adjudicators will continue to demand over-documentation or will reject L-1B applications as a result of second-guessing an employer’s definition of specialized knowledge. U.S. employers deserve a realistic opportunity to utilize the L-1B visa. Hopefully, the publication of this memorandum means that the USCIS agrees.