H-1B Rules for Third-Party Client Sites Explained

In today’s fast-moving tech environment, it’s increasingly common for H‑1B workers to be placed at third-party client sites rather than working in-house. Whether you’re a startup engaging consultants or a staffing firm deploying talent across industries, these arrangements offer operational flexibility.

However, they also come with considerable compliance risk. Both the U.S. Department of Labor (DOL) and U.S. Citizenship and Immigration Services (USCIS) monitor these placements closely, with particular focus on employer control, job clarity, and proper documentation. Missteps in these areas frequently lead to Requests for Evidence (RFEs) or outright denials.

The key is not to avoid third-party placements but to manage them carefully. Let’s discuss what USCIS actually expects, and how employers can stay compliant while keeping up with modern business demands.

What USCIS Looks for in Third-Party H‑1B Arrangements

A third-party placement occurs when an H‑1B employee works at a location not owned or controlled by the sponsoring employer. For example, a software developer embedded within a client’s IT department. These cases receive added scrutiny because they can blur the lines of the legal employer-employee relationship.

The foundational guidance on this issue stems from the USCIS 2010 memorandum on employer-employee relationships. This memo outlines several critical factors used to assess whether the sponsoring employer truly controls the H‑1B worker:

• Who assigns and supervises the employee’s daily tasks?

• Who sets their schedule and controls the work environment?

• Who supplies the tools or equipment?

• Who evaluates their performance and has the authority to terminate employment?

If the client answers all of these questions, USCIS may conclude the employer does not retain sufficient control, which could jeopardize the petition.

Building a Strong Compliance Case Through Documentation

To satisfy regulatory expectations, employers must establish that they maintain control over the H‑1B worker, even if that worker is based at a client site. The best way to demonstrate this is through well-prepared documentation.

1. Comprehensive Contracts Across All Parties
USCIS expects to see executed contracts between the employer, client, and any staffing intermediaries. These agreements should spell out:

• Project scope and expected deliverables

• Specific duties assigned to the H‑1B worker

• The address of the worksite

• The duration of the assignment

It’s important to avoid vague language. Generic master service agreements (MSAs) that fail to reference the employee or define job responsibilities will likely be viewed as insufficient. In fact, as discussed in Littler Mendelson’s overview of H‑1B oversight requirements, clarity and specificity are crucial to proving control.

2. A Work Itinerary for Project-Based Assignments
When H‑1B workers are scheduled to rotate between different client sites or projects, a detailed itinerary becomes critical. This itinerary should include:

• Specific dates and durations for each worksite

• Job functions performed at each location

• The corresponding client or project name

Even in single-client assignments, providing an itinerary helps demonstrate that the assignment is structured and well-documented.

3. Evidence of Day-to-Day Oversight
Perhaps the most persuasive evidence USCIS considers is proof that the sponsoring employer continues to oversee and manage the employee. This could include:

• Email records or messaging logs showing regular check-ins

• Assigned tasks tracked through project management software

• Performance reviews conducted by the employer

• Records of deliverables submitted to and approved by the petitioner

A notable example from 2021 illustrates that petitions can succeed, even with off-site assignments, if there is strong documentation showing the employer maintains active involvement in the work.

Additional Considerations for Staffing Firms

Staffing companies face heightened scrutiny in these cases because they often serve as intermediaries, placing workers at client locations for extended periods. To remain compliant, staffing firms must ensure they are not merely acting as “paper” employers.

Client Letters
Always request a formal letter from the client that outlines:

• The project the H‑1B worker will support

• The work location(s)

• Job duties in detail

• Estimated project duration

These letters must align closely with what is stated in the H‑1B petition and on the LCA.

LCA Posting Obligations
The Labor Condition Application (LCA) must be posted at every location where an H‑1B employee works. If physical posting isn’t feasible, this can be common with remote or hybrid setups, then electronic posting is permitted. The Department of Labor’s Field Assistance Bulletin No. 2019-3 provides clear instructions for how to post notices electronically, such as via intranet or email, as long as they are accessible to affected workers for at least 10 business days.

Maintaining records of these postings (screenshots, delivery confirmations, etc.) is essential in case of an audit. If the worksite changes mid-assignment, new postings and possibly a new LCA filing may be required.

Monitoring Role Changes Over Time
Staffing firms should establish a system for monitoring the employee’s role throughout the project. This includes:

• Periodic reviews of the job duties (every 6–12 months)

• Verifying whether the same level of employer oversight exists

• Updating USCIS filings when the nature of the job changes substantially

For example, transitioning from a testing role to a managerial position may require filing an amended petition, especially if job duties or locations change.

Treating Compliance as a Living Process

Many companies mistakenly assume that once a petition is approved, their compliance obligations are fulfilled. In reality, compliance must be sustained throughout the H‑1B worker’s employment. Any shift in job role, location, or supervision can trigger new obligations, and failing to respond appropriately can lead to costly setbacks.

Consider the following ongoing questions:

• Are the H‑1B worker’s duties still consistent with what was filed?

• Does the petitioner still maintain control over the work?

• Are LCAs current and accurately posted for every worksite?

• Has any part of the assignment changed significantly?

Keeping this level of oversight requires deliberate effort but pays dividends in reduced risk and stronger immigration outcomes.

Final Thoughts and Resources for Further Reading

As remote and third-party work become standard across the tech industry, understanding and managing H‑1B compliance is more important than ever. Third-party placements are legal, but only when accompanied by rigorous documentation, clarity in contracts, and ongoing oversight.

For deeper insight into the policy and legal frameworks discussed here, consider reviewing these excellent resources:

• USCIS Memo on Employer-Employee Relationship in H‑1B Petitions

• DOL Field Assistance Bulletin on LCA Posting Rules

• Littler’s Legal Analysis of H‑1B Compliance at Third-Party Sites

These links offer practical, detailed strategies to ensure your compliance practices are defensible, up-to-date, and audit-ready.