USCIS has released its long-awaited guidance on the L-1B “specialized knowledge” visa category, intended to provide clarification on how L-1B employer-petitioners may demonstrate that an employee possesses specialized knowledge. The L-1B visa category is one of few tools available to multinational companies to transfer staff with specialized knowledge from one company office to another related office. The memo also provides greater clarity regarding off-site employment. Issued as a draft, the agency will accept comments through early May and the final version will go into effect at the end of August, 2015. Since 2012, USCIS has pledged to issue this memo, a pledge President Obama repeated in November 2014.

As background, in 1970, Congress created the L-1 visa program after concluding that immigration laws at the time unduly restricted the transfer and development of foreign personnel vital to the interests of U.S. businesses. Congress designed the L-1 classification to enable employers to more effectively transfer such personnel within their organizations. The L-1A classification would be used for executives and managers, and L-1B for personnel with “specialized knowledge.” While the legislative history indicates that Congress intended for the class of eligible persons to be narrowly drawn, Congress also anticipated that the L petition process would be administered in an efficient way to facilitate qualifying personnel transfers for U.S. businesses. However, the 1970 Act did not define “specialized knowledge.” The regulations did, defining specialized knowledge in terms of “special” or “advanced” knowledge. But they provided little further guidance. Over time, interpretation of these terms developed through a series of agency memoranda and precedent decisions, which generally imposed new and increasingly restrictive requirements. In addition to increased rigidity, uneven, inconsistent adjudication of L-1B visa petitions over the last several years resulted in skyrocketing denial rates (see below), and U.S. employers witnessed a negative impact on their ability to increase jobs, innovation and production in the United States and compete globally. It is against this backdrop that USCIS released this guidance.

The new draft policy memo reiterates and expands on many of the principles in previous memos. However, the fifteen-page memo further explains what special knowledge and advance knowledge mean by adding language to regulatory text and providing a detail discussion and list of factors that USCIS may consider when determining that the beneficiary’s knowledge is specialized.  Guiding principles include: (1) knowledge will not be generally considered specialized if it can be easily imparted from one person to another (economic cost however would be considered); (2) specialized knowledge need not be proprietary or unique to the petitioning organization; (3) testing the U.S. labor market is not required; (4) special or advanced knowledge need not be narrowly held within the petitioning organization; (5) the beneficiary need not be of a certain rank or salary compared to his or her peers within the organization or the particular industry; and (6) eligibility for another nonimmigrant classification does not render the beneficiary ineligible for L-1B visa status. 

With respect to off-site employment, the memo reiterates that the beneficiary must be controlled and supervised principally by the petitioning organization but provides latitude in how to demonstrate such control and supervision.

Significantly, the memo states that USCIS officers should give deference to USCIS’s prior approval of an L-1B petition, and should reexamine a finding of L-1B eligibility only where a material error was made in the previous approval; where there has been a substantial change in circumstances since that approval; or where there is new material information that adversely impacts the petitioner’s or beneficiary’s eligibility. This is huge: according to  latest statistics, USCIS denies L-1B extension petitions at a higher rate (41 percent in FY 2014) than initial applications (32 percent).

Indeed, recent denial rates for L-1Bs have been staggering.  Based on recently released data from USCIS, the National Foundation for American Policy found that the denial rate for L-1B petitions increased to an historic high of 35% in FY2014, up from a denial rate of 6% in FY2006 and 34% in FY2013. (The denial rate for L-1B petitions for Indian employees is 56 percent for FY 2012 through FY 2014, compared to an average denial rate of 13 percent for all others.) The report also found that the number of applications received by USCIS dropped by 23 percent between FY 2012 and FY 2014, further demonstrating that denials have discouraged U.S. employers from transferring individuals into the United States.

In releasing its memo, USCIS states that it seeks to serve the purpose of the L-1B program and to recognize the fluid dynamics of the business world in which petitioning organizations operate. The key, of course, will be a more seamless, straightforward, and consistent adjudication system for L-1B visas. Training USCIS adjudicators on the guidance laid out in the memo will be critical to making a real difference in how petitions are evaluated and whether common sense adjudication will prevail.