On May 21, 2026, U.S. Citizenship and Immigration Services issued Policy Memorandum PM-602-0199, reframing adjustment of status under section 245 of the Immigration and Nationality Act as an “extraordinary” form of relief and a matter of “administrative grace” not designed to supersede the regular consular visa process. For H-1B and L-1 visa holders pursuing employment-based permanent residence through Form I-485, this memo represents a meaningful shift in how USCIS officers are instructed to weigh discretionary factors. While the memo concedes that dual-intent categories are different, a footnote walks the concession back by stating that maintenance of dual-intent status, on its own, is not sufficient to warrant a favorable exercise of discretion. The message to practitioners and applicants is clear. Every employment-based I-485 file should now be built not only to satisfy statutory eligibility but to affirmatively persuade the officer that the applicant merits the exercise of administrative grace.

A practical caveat at the outset. The recommendations in this article reflect best practices in light of the memo’s stated framework, but it remains to be seen how USCIS adjudicators will actually apply PM-602-0199 in individual cases. Officer-level implementation, RFE patterns, and denial trends will develop over the coming months, and our approach will be refined as the adjudication picture becomes clearer. In the meantime, the prudent course is to build the affirmative discretionary record now rather than wait for adverse outcomes to signal what USCIS expects.

This article walks through what H-1B and L-1 applicants and their families can prepare to submit alongside the standard I-485 package to build the strongest possible discretionary record under the framework established by Matter of Blas and Matter of Mendez-Moralez.

Why Discretion Now Matters More Than Eligibility

Under longstanding doctrine, adjustment of status applicants must show both statutory eligibility and that the favorable exercise of discretion is warranted. In the past, for clean employment-based files with approved I-140 petitions and uninterrupted nonimmigrant status, the discretionary analysis was often a formality. PM-602-0199 changes the posture. The memo instructs officers to weigh the totality of the circumstances and to consider, among other factors, whether the applicant’s conduct after admission as a nonimmigrant has been consistent with the purpose of that status. It also directs that any denial based on an unfavorable exercise of discretion must include a written analysis of the positive and negative factors and an explanation of why the negative factors outweigh the positive ones.

For H-1B and L-1 applicants, the practical effect is that even files with no eligibility issues should now affirmatively document the positive equities. The Mendez-Moralez balancing framework is the right organizing principle. Officers are instructed to weigh adverse factors evidencing the applicant’s undesirability as a permanent resident against the social and humane considerations presented on the applicant’s behalf. The applicant’s job is to fill the positive side of that scale with concrete, documented evidence.

Lawful Immigration History and Compliance With Status

The single most important category of evidence for H-1B and L-1 applicants is documentation showing that the applicant and any dependents have complied with the terms of their nonimmigrant admission. The memo treats failure to comply with status conditions, failure to depart when expected, and unauthorized employment as significant negative factors. The corresponding positive showing is an unbroken record of compliance.

Applicants should compile the complete I-797 approval notice history for every H-1B or L-1 petition and extension, all prior visa stamps from the passport, every I-94 record from the CBP travel history portal, and copies of all passport biographic pages covering the period of nonimmigrant status. For dependents, the parallel set includes H-4 or L-2 documentation, any I-765 employment authorization documents issued under the L-2S or H-4 EAD categories, school enrollment records for children, and immunization records. Where the family entered on prior dual-intent or non-immigrant categories, including F-1, OPT, STEM OPT, or J-1, all corresponding documentation should be assembled to demonstrate an unbroken record of lawful status. If there were any gaps, technical violations, or status reinstatements, the file should address them affirmatively with corroborating documentation rather than leaving them to be discovered during adjudication.

Tax Compliance as a Proxy for Good Moral Character

Tax compliance is one of the most powerful discretionary factors available to employment-based applicants because it documents both lawful conduct and economic contribution. Officers treat a clean tax record as evidence of good moral character and adherence to U.S. legal obligations.

Applicants should obtain IRS account transcripts and IRS return transcripts for every year of U.S. presence, not merely the most recent three years. State tax returns and state tax transcripts should be included where the applicant resided in a state with income tax. Property tax payment records corroborate homeownership and civic contribution. For applicants or spouses with self-employment income or pass-through entity tax obligations, the corresponding business tax filings should be included. A current letter from the applicant’s CPA confirming full tax compliance ties the documentary record together and gives the officer a clean summary statement to anchor the analysis.

U.S. Residence, Property, and Financial Stability

Length of residence and depth of community integration are weighty positive factors under Mendez-Moralez, but they need documentary corroboration to be credited. A chronological U.S. residence history covering the entire period of nonimmigrant status, supported by leases, mortgage statements, and utility bills, gives the officer a clear picture of the applicant’s physical presence and ties.

Property ownership is particularly persuasive. Deeds, HUD-1 or closing disclosure settlement statements, mortgage records, and property tax payment records demonstrate the kind of long-term commitment to U.S. residence that supports a favorable exercise of discretion. Vehicle titles and registrations, bank and brokerage statements, retirement account statements including 401(k) and IRA records, and U.S. life insurance policies all corroborate financial integration and the expectation of permanent residence. For L-2 or H-4 spouses with employment authorization who have started U.S. businesses, business licenses, EIN documentation, and business tax filings demonstrate independent economic contribution.

Employment History and Economic Contribution

The applicant’s economic contribution to the United States is among the strongest positive factors in an employment-based case, but it is often understated in I-485 filings because the I-140 petition has already established the underlying employment. The discretionary submission should affirmatively quantify the applicant’s contribution rather than rely on the officer to infer it.

W-2s and pay stubs covering the entire period of H-1B or L-1 employment should be included. Performance reviews, promotion records, and salary progression documents demonstrate growth and employer investment. The most persuasive documents are employer letters that quantify the applicant’s specific contributions, including revenue generated, products developed, teams built, U.S. workers hired or supervised, patents or publications produced, and clients served. For L-1A managers and executives, evidence of organizational impact is particularly important. For L-1B specialized knowledge employees, evidence of the unique knowledge actually applied to U.S. operations, including project deliverables and internal recognition, builds the equity narrative.

For dependent spouses with H-4 or L-2 employment authorization, parallel documentation of the spouse’s U.S. employment, including W-2s, employer letters, tax filings, and any business ownership records, demonstrates a two-earner household contributing to the U.S. economy. This is often a significant equity that I-485 files fail to capture.

Family Ties in the United States

USCIS officers are expressly directed to weigh family ties, and for H and L families this category is frequently understated. The dependents are documented in the petition but their integration into U.S. life is not affirmatively presented.

Birth certificates and U.S. passports for any U.S. citizen children should be prominently included, with a brief narrative explaining the children’s ties to the United States. School enrollment records, report cards, and any documentation of academic awards or extracurricular involvement establish duration of U.S. education and community ties. Pediatrician and family medical records corroborate ongoing healthcare relationships. Evidence of U.S. citizen or lawful permanent resident parents, siblings, or extended family residing in the United States is a positive factor, particularly where there are caregiving relationships or shared households. Photographs documenting family life, holidays, school events, and community involvement humanize the file in a way that documents alone cannot.

Community Ties and Civic Engagement

Community integration is a positive discretionary factor that is often overlooked by employment-based applicants who assume their professional contributions are sufficient. They are not. Officers are looking for evidence that the applicant is a member of the community, not merely a worker in it.

Religious community membership letters, volunteer work documentation, charitable contribution receipts to U.S. organizations, professional association memberships, and evidence of participation in industry mentoring, pro bono work, or continuing education all contribute to the discretionary record. Letters of recommendation from U.S.-based colleagues, neighbors, religious leaders, community members, and professional contacts should be solicited and included. Four to six well-chosen letters carry more weight than a larger volume of generic ones. Each letter should speak to specific character traits, community contributions, and the applicant’s integration into U.S. life.

Good Moral Character and Background

A clean background record is the baseline expectation, but it should be affirmatively documented rather than assumed. A current FBI identity history summary obtained directly by the applicant, state and local criminal background checks for every state of residence during the period of nonimmigrant status, and certified court dispositions for any arrests, citations, or charges, including matters that were dismissed or expunged, should be assembled. Even where there is no criminal history, the affirmative background documentation forecloses any concern and saves the officer the work of inferring a clean record from the absence of information.

Health and Humanitarian Considerations

Health and humanitarian considerations are explicitly part of the Mendez-Moralez balancing framework but rarely appear in employment-based files. Where they exist, they should be documented. Medical records establishing any conditions requiring continuity of U.S.-based care for the applicant, the spouse, or any child are persuasive equities. Documentation of U.S.-based specialists or treatment protocols not readily available in the country of nationality strengthens the humanitarian showing. Evidence of any disability accommodations in place at U.S. schools for dependent children is particularly weighty. Where extended family in the United States provides or requires caregiving support, affidavits and medical documentation should be included.

Direct Response to the Memo’s Reasoning

Because PM-602-0199 specifically identifies the use of adjustment of status over consular processing as an adverse factor, employment-based applicants should affirmatively address why the AOS pathway is consistent with congressional intent in their case. For H-1B and L-1 holders, the answer is that Congress created the dual-intent framework precisely to allow these workers to pursue permanent residence without disrupting U.S. employment or family life.

A short discretionary analysis memorandum included in the file can walk the officer through the relevant equities and respond directly to the memo’s framework. For L-1 cases, a statement from the petitioner confirming that the original transfer was made in good faith for legitimate business reasons unrelated to immigration strategy is useful. Evidence that the I-140 petition was filed promptly after the applicant became eligible, rather than years into nonimmigrant status, undercuts any inference that nonimmigrant status was used as a vehicle to circumvent consular processing. Evidence that the U.S. operation has grown or that the applicant’s continued presence is required by ongoing business needs reinforces the legitimacy of the AOS choice. For applicants with U.S. citizen children, school-age dependents, or pending real estate or medical commitments, a brief explanation of the practical reasons consular processing was not feasible addresses the memo’s framework on its own terms.

Petitioner Equities

The employer’s interest in the applicant’s adjustment is itself a positive factor that should be documented at the I-485 stage rather than left to the underlying I-140. A current employer support letter confirming continued employment intent at the time of the I-485 adjudication, evidence of the petitioner’s investment in the applicant through training and specialized knowledge transfer, evidence of the petitioner’s broader U.S. operations and workforce, and a letter from a senior executive attesting to the applicant’s importance to U.S. operations all reinforce the discretionary balance. For applicants whose roles support U.S. worker employment, evidence quantifying those downstream jobs should be included.

Organizing the Submission

To create the strongest I-485 files now, consider including a dedicated discretionary evidence tab with a brief discretionary analysis memorandum that walks the officer through the positive factors and addresses any adverse factors head-on. The Mendez-Moralez balancing structure works well as the organizing principle, with positive factors presented first and any negative factors addressed with offsetting equities. The memorandum should be written in plain English and should make the officer’s job easier by summarizing the record and citing to the corresponding exhibits.

The Bottom Line for H-1B and L-1 Families

PM-602-0199 does not change the statutory eligibility requirements for adjustment of status. It does change the posture of adjudication. Employment-based applicants who have done everything Congress authorized, including maintaining dual-intent nonimmigrant status while pursuing permanent residence, now need to affirmatively document the equities that support a favorable exercise of discretion. The good news is that most H-1B and L-1 families have a strong factual record on these equities. They have paid taxes, raised families, contributed to U.S. employers, integrated into communities, and complied with the terms of their nonimmigrant admission. The work is in surfacing that record in the file rather than assuming the officer will infer it.

The cost of building this record affirmatively is modest. The cost of failing to build it, in a policy environment where USCIS has announced it will scrutinize discretionary factors more closely, is an unnecessary denial of an otherwise approvable case. Employers and applicants should treat every employment-based I-485 filing going forward as an opportunity to build the strongest possible discretionary record, not merely to satisfy the statutory checklist.

If you have an H-1B or L-1 adjustment of status filing pending or planned, now is the right time to build the equity record before the I-485 is submitted or, for already-filed cases, gather these documents to prepare for a potential Request for Evidence, Notice of Intent to Deny, or interview.

By: Emily Neumann

Emily Neumann is Managing Partner at Reddy Neumann Brown PC with over 15 years of experience practicing US immigration law providing services to U.S. businesses and multinational corporations. Emily has helped transform the firm from a solo practice to Houston’s largest immigration law firm focused exclusively on U.S. employment-based immigration.  She received her Bachelor’s degree in Biology from Central Michigan University and her Juris Doctorate degree from the University of Houston Law Center. Emily has been quoted in Bloomberg Law, U.S. News & World Report, Inside Higher Ed, and The Times of India on various hot topics in immigration. She is a member of the American Immigration Lawyers Association and Society for Human Resource Management.