H-1Bs and Self-Employment – Why Not?

This year, USCIS, and in particular, the Vermont Service Center (VSC), has been denying hitherto approvable H-1B petitions for single-member limited liability corporations (LLCs) where the beneficiary is the sole member of the LLC.  In the past, USCIS had found that the LLC was a legally distinct entity that could sponsor the beneficiary for professional employment (Matter of Aphrodite, Matter of X) and defined the requisite employer-employee relationship more liberally.  However, following a new dangerous and wrong-headed trend, the VSC is now strictly defining an employer-employee relationship as one where the employer may hire, fire, supervise or otherwise control the employee. 

While it should be acknowledged that the treatment of single-member LLC as a true traditional employer-employee relationship was a stretch, it was rational and beneficial to the US economy.  There is no reason that there should be a prohibition against self-employment for H-1B petitions.  So long as the beneficiary is working in a professional position for a genuine company and paying herself the prevailing wage, why should she not be able to contribute to our economy and generate jobs?  Some may argue that there is an E-2 treaty investor visa for that, but there are formidable restrictions to obtaining an E-2 visa, including being a foreign national of country that has a qualifying treaty with the US (India has no such treaty) and requiring a significant initial investment.

US immigration law needs a wholesale revision to make the US competitive in this precarious global economy.  Why not start with eliminating the bar to self-employment for H-1B petitions?