IT staffing firms such as TechServe Alliance, Broadgate, Inc. and Logic Planet, Inc., have filed a joint suit against the U.S Citizenship and Immigration Services (USCIS) seeking an injunction against acting on a memo released early this year. The Neufeld Memo states that an employer must be “directly over the shoulder of the employee” in order to have an employer-employee relationship.

This is problematic for the staffing firms who employ those with H-1B visas and assign them to third-party work sites where they can’t directly control them. In addition, when H-1B employees move from one job to another, they usually transfer their H-1B visa to the next company. Since the memo was issued, the USCIS has been blocking those transfers, according to Mark Roberts, the CEO of the TechServe Alliance. The IT staffing firms are estimating that this action would cost their industry over $100 million in business annually.

Critics of the IT staffing firms say not putting restrictions on H-1B visas means the firms can continue to bring in less costly H-1B workers which will displace U.S. workers.

The H-1B debate has been raging for a while but this lawsuit may be a defining moment.