Policy Memo Defines ‘Affiliate’ and ‘Subsidiary’ for Purposes of Determining ACWIA Fee

The United States Citizenship and Immigration Services (USCIS) issued a new policy memorandum regarding the definitions of affiliate and subsidiary for the purposes of H1B filing fee determinations. The policy is being instituted to clarify a previously ambiguous portion of the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA). The new policy will help to ensure the correct application of the ACWIA rules and to encourage consistent adjudications.

Background on ACWIA Fees for H1B Petitions

Pursuant to ACWIA, an H1B petitioner with 25 or fewer full-time equivalent employees (FTE), including the employees of any subsidiary or affiliate of the petitioner, must generally include a fee of $750 with each H1B petition. If the petitioning employer has more than 25 FTE employees, then the petitioner must pay a $1,500 fee.

The ACWIA fee has been permanent since 2004, but has caused some confusion. The ACWIA does not define the terms subsidiary or affiliate. As a result, there have been questions as to exactly how to calculate the number of FTE employees in order to determine the necessary ACWIA fee. The August 9, 2017 memo was issued to resolve this ambiguity.

Definitions to Mirror L-1 Requirements

The policy memo dictates that the definitions of affiliate and subsidiary for ACWIA fee purposes should follow the definitions used in the L-1 context. Affiliates are defined in the regulations as:

One of two subsidiaries both of which are owned and controlled by the same parent or individual, or one of two legal entities controlled by the same group of individuals, each owning and controlling approximately the same share or portion of each entity.

In order to determine the total number of employees, in accordance with this definition, the petitioner should add the number of FTE employees working directly for the petitioner and the number of FTE employees of its affiliates. Any employees of the petitioning employer’s parent company should not be counted.

A subsidiary, for ACWIA purposes, must meet any one of the following criteria:

1. A firm, corporation, or other legal entity of which a parent owns, directly or indirectly, more than half of the entity and controls the entity

2. A firm, corporation, or other legal entity of which a parent owns, directly or indirectly, half of the entity and controls the entity

3. A firm, corporation, or other legal entity of which a parent owns, directly or indirectly, half of the 50 percent of a 50-50 joint venture and has equal control and veto power

4. A firm, corporation, or other legal entity of which a parent owns, directly or indirectly, less than half of the entity, but in fact controls the entity

The calculation of total FTE employees should include the petitioning employer’s FTE employees and the FTE employees of any subsidiaries, as well as any subsidiary or affiliates of the subsidiary companies, when applicable. As with affiliates, the FTE employees of the parent company should not be included.

Conclusion

This policy memo provides crucial guidance for employers who plan to submit H1B petitions. The use of already established regulatory definitions should make the implementation of these definitions more seamless, as adjudicators are already familiar with the definitions’ application.

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