However, since the hospital contracts out coverage of its emergency department to a contracting agency, I am paid by that agency for any work in the emergency department. My original contract with the hospital who sponsored my H1B included a provision allowing me to work in their emergency department. I am concerned because even though I have worked only for the original sponsoring hospital and my contract includes this extra emergency work, I am paid for the emergency work through the separate contracting agency. I do not want my adjustment of status denied on this kind of technicality. Unfortunately, it is possible.
Adjustment of status is discretionary.
The uncertain issue is whether you have engaged in unlawful employment. Based on traditional rules of agency and employment law previously recognized by the INS, control rather than salary appears to be the most important factor for determining whether an employment relationship exists. If yes, you may very well have engaged in unlawful employment. In such a situation, the contracting agency would have been expected to file a concurrent petition for H-1B status on your behalf. They did not.