Introduction: Determining Whether L1A Beneficiary Will Manage “Essential Function”

On April 14, 2016, the United States Citizenship and Immigration Services (USCIS) designated as an adopted decision the Administrative Appeals Office’s decision in the Matter of Z-A-, Inc., Adopted Decision 2016-02 (AAO Apr. 14, 2016) [see PM-602-0131]. The USCIS’s decision to designate the Matter of Z-A-, Inc., establishes the decision as policy guidance that is binding on all USCIS employees. However, the decision is only binding on USCIS officers.

The Matter of Z-A-, Inc., deals with determining when the beneficiary of an L1A [see article] petition will “primarily manage an essential function” of the petitioning employer. The decision sets forth that the USCIS must weigh all of the relevant factors in the case, including, if applicable, evidence of the beneficiary’s role within the wider qualifying international organization. Specifically, the adoption of the decision establishes that in certain cases, the USCIS may be required to consider evidence presented by a petitioner of personnel employed by a related entity within the qualifying organization who perform day-to-day non-managerial tasks for the petitioning entity.

In this article, we will review the facts of the underlying case and the broader effect of the new policy guidance on similar determinations in the L1A adjudications context.

Facts of the Case and Procedural History

The Petitioner is a U.S. subsidiary of a Japanese parent company first established in December of 2011;
The Petitioner imports, markets, and distributes packaging solutions designed and manufactured by the Japanese parent company;
The Beneficiary had been granted L1A status to be the Vice President and Chief Operating Officer of the Petitioner, heading the Petitioner’s U.S. operations based on his previous overseas management experience with the Japanese parent company;
The Beneficiary reported to the General Manager of the parent company’s international department, who in turn reported to the Chief Operating Officer of the Japanese parent company.

The AAO stated that the Beneficiary’s duties at the Petitioner included the following:

Directing and managing the Petitioner’s financial, legal, trade, administrative, and sales activities;
Establishing financial and budgetary plans and goals;
Reviewing and monitoring sales activities performed by the Petitioner’s sales manager;
Liaising with the parent company; and
Interacting with customers and outside service providers.

The AAO explained that the Petitioner employed a sales manager and an administrative specialist at the U.S. office. The record of the case showed that eight employees located within the parent company’s headquarters at its Japanese office directly supported the Beneficiary’s work. Furthermore, the Beneficiary “closely” coordinated and interacted with the parent company’s International Department.

The Petitioner filed a Form I-129, Petition for Nonimmigrant Worker, to extend the Beneficiary’s stay in L1A status in the United States. This was a new office extension petition because the petitioner had originally been granted L1A status to help open a “new office” in the United States [see section].

The USCIS District Director denied the extension petition on the basis of the conclusion that the Petitioner did not establish that it would employ the Beneficiary in a qualifying “managerial capacity” as required by section 101(a)(44)(A) of the Immigration and Nationality Act (INA) for L1A status. The District Director had found that the Petitioner lacked the “organizational structure” to support the Beneficiary’s L1A managerial or executive petition, and that the Beneficiary would primarily perform sales duties, which would not qualify him for L1A status. Notably, the District Director’s decision considered the two U.S. payroll employees working for the Petitioner in the United States, but it did not consider the duties performed by the eight foreign staff located at the parent company’s headquarters in Japan.

On appeal, the Petitioner argued to the AAO that the District Director had both mischaracterized the Beneficiary’s responsibilities and “disregarded his placement within the corporate group’s organizational hierarchy.” The Petitioner argued that the evidence established that the Beneficiary primarily managed an “essential function” of market development in the United States, and that his specific role necessitated his reliance on services from the eight Japanese foreign staff members whose duties directly supported the Petitioner. The Petitioner also argued that the evidence established that the Beneficiary influenced decision-making at the highest level of the parent company, and that his duties did not primarily involve non-managerial duties that would not qualify him for L1A status.

Analysis and Decision

General Principles

The question before the AAO was whether the Petitioner had established that the Beneficiary would be employed in a qualifying “managerial capacity” [see section] as defined in section 101(a)(44)(A) of the INA and 8 C.F.R. 214.2(l)(1)(ii)(B). Specifically, the AAO needed to determine whether the Beneficiary would be managing an “essential function” within the Petitioner’s organization (the Petitioner did not assert that the Beneficiary would be managing personnel). The AAO explained that its inquiry would focus on whether the USCIS must consider evidence presented by the Petitioner of the services performed by personnel employed by another related entity within the qualifying organization who perform day-to-day non-managerial tasks for the petitioning entity in determining whether the Beneficiary would be managing an essential function within the organization.

First, the AAO examined the term “managerial capacity” as it relates to primarily managing an “essential function within the organization.” The AAO explained that the first step in the inquiry is examining a petitioner’s description of the job duties to be performed by a beneficiary. The AAO listed the following factors that must be considered in such an examination:

The nature and scope of the petitioner’s business;
The petitioner’s organization structure;
Staffing levels;
The beneficiary’s position within the organization;
The scope of the beneficiary’s authority;
The work performed by other staff within the petitioner’s organization; and
Any other relevant factors.

The AAO explained that it must determine in such a case whether the beneficiary would manage, rather than perform, the essential function. Under the Matter of Church Scientology Int’l, 19 I&N Dec. 593, 604 (Comm’r 1988) [PDF version], if an L1A function manager uses his or her expertise to perform “some operational or administrative tasks,” the L1A function manager’s duties must nevertheless be primarily at a managerial or executive level in order to qualify for L1A status.

The AAO explained that under section 101(a)(44)(C) of the INA, when staffing levels are used as a factor in determining whether a person will act as a “manager,” the USCIS must take into account evidence in the record concerning the “reasonable needs of the organization as a whole” (quote from the decision). This means that the USCIS must consider the needs of any related entities within the qualifying organization. Accordingly, the AAO explained, “it is reasonable for a petitioner to assert that the organizational needs include those of its related foreign components.” In order to support such a claim, the AAO stated, the petitioner has the burden of submitting evidence “to establish the reasonable staffing needs of the organization and how those needs are material to whether the beneficiary will act as a manager.”

Application to the Instant Case

The AAO found that the Petitioner had, based on the totality of the evidence, established that the Beneficiary would manage an essential function. The AAO reached this conclusion for the following reasons:

1. The Beneficiary would manage the implementation of policies and strategies pertaining to the importation, sales, and marketing of the parent company’s products into the U.S. market (establishing management of an essential function as required by sections 101(a)(44)(A)(i)-(ii) of the INA);
2. The Beneficiary would function as a member of the senior management team for the Americas region (functioning at a senior level within the organizational hierarchy and with respect to the function managed as required under section 101(a)(44)(A)(iii)); and
3. The Beneficiary had significant discretionary authority in his position (as required under section 101(a)(44)(A)(iv)).

The AAO found that the District Director had erred in focusing exclusively on the small size of the Petitioner while neglecting to address the Petitioner’s evidence relating to the support provided by the eight overseas staff members located at the parent company’s headquarters in Japan. Specifically, the AAO found that the District Director had failed to consider “all relevant evidence” when basing his decision in large part on the staffing levels of the Petitioner. The AAO cited to the Matter of Leacheng Int’l, Inc., 26 I&N Dec. 532, 535 (AAO 2015) [PDF version], which requires that, for the similar immigrant classification for “multinational executives and managers” found in section 203(b)(1)(C) of the INA, adjudicators must consider the petitioning organization as a whole in determining whether the “doing business” requirement is satisfied.

The AAO held that the Petitioner had established that it had, for the 16 months since its establishment, worked closely with the Japanese parent company’s International Department. It also established that the eight employees with the International Department with whom the Beneficiary was going to work were “dedicated exclusively to supporting the group’s business in the Americas.” Additionally, the Petitioner provided evidence showing that, despite its small staff, it had “achieved revenues of nearly $600,000 in the previous eight months.”

The AAO explained that while staffing levels can be a relevant consideration, they cannot when viewed in isolation necessitate the conclusion that a beneficiary would not be working a capacity where he or she would be performing, rather than managing, an essential function. In the instant case, the AAO found the Petitioner’s evidence regarding its relationship with the parent company’s International Department and the overseas employees who directly supported the Petitioner sufficient to show that the Beneficiary’s job would be to primarily manage an essential function of the organization.

Finally, the AAO held that the Petitioner had established “a reasonable need” for a senior-level employee to manage its brands and help expand its presence in the United States, notwithstanding the fact that the Petitioner only employed two other U.S. employees. The AAO also held that, while the Beneficiary may be required on occasion to perform operational or administrative tasks, the Petitioner had established by the weight of the evidence that the Beneficiary’s primary job would be to manage an essential function, while the majority of the day-to-day non-managerial tasks would be performed by the other two U.S.-based employees of the Petitioner and the overseas staff located at the parent company’s International Department.

Accordingly, the AAO withdrew the District Director’s denial and approved the petition.

Conclusion

This new policy guidance clarifies that, if a petitioner’s small staffing levels are a factor in determining whether an L1A beneficiary will be performing an essential function of the petitioning organization, the USCIS must also consider all other relevant evidence. In this case, the AAO established that the District Director had been in error in not considering the functions performed by overseas employees of the parent company in support of the petitioner in finding that the beneficiary would not be primarily performing an essential function. The new policy guidance does not create a new basis for the approval of an L1A petition for a beneficiary who would manage an essential function, but it rather clarifies the relevant factors that the USCIS must consider in making a determination when staffing levels are a consideration.

Because the petitioning process is complicated and requires the submission of substantial evidence, a petitioner seeking to employee L1A status or a different employment status on a beneficiary should first consult with an experienced immigration attorney for assistance in determining the best immigration solution for the specific case, and guidance through the entire petitioning and application process.