h-1B aUDIT

EMPLOYEr QUESTIONS.....

Click on the questions to learn important information about Employer requirements and obligations under the H-1B program.

What are the basic provisions and requirements of the H-1B program?

What are the qualifying criteria for H-1B employment?

Who is an H-1B employer?

Who is an H-1B-dependent employer?

What is a “willful violator” employer?

What is displacement?

Must an H-1B employer recruit U.S. workers before seeking H-1B workers?

When recruiting, must an employer use procedures that meet “industry-wide” standards?

What are “exempt” H-1B nonimmigrants?

What does “place of employment” mean?

What is the short-term placement option?

At which point must an H-1B employer secure a new Labor Condition Application (LCA) when the location of work changes?

Must an H-1B worker be paid a guaranteed wage?

Must an H-1B employer pay for nonproductive time?

What are the rules concerning deductions from an H-1B worker’s pay?

What benefits must be offered to H-1B workers?

What is the filing process for H-1B employment?

How long is an H-1B visa valid?

What is “Portability” and to whom does it apply?

What changes were instituted by the H-1B Visa Reform Act of 2004?

What is good faith compliance or conformity?

What is an H-1B Audit and how is it conducted?

H-1B Audit Expectations & Etiquette:

What penalties or sanctions can an H-1B employer face for non-compliance of the H-1B program requirements?

What is the Department of Labor’s Wage and Hour Division’s enforcement authority under the H-1B program?

When and to whom must a public inspection file be made available?

Where must a public inspection file be kept?

What documentation must be available for public inspection?

What supporting documentation is not for public inspection?

 

What are the basic provisions and requirements of the H-1B program?

The Immigration and Nationality Act (INA) allows employment of alien workers in certain specialty occupations, generally those requiring a bachelor's degree or its equivalent. Alien workers such as engineers, teachers, computer programmers, medical doctors, and physical therapists may be employed under the H-1B visa classification, as may fashion models of distinguished merit and ability. H-1B visas are capped at 65,000 during a fiscal year, subject to certain exceptions.

The INA sets forth certain prerequisites for employers wishing to employ H-1B nonimmigrant workers. To obtain H-1B status approval, the employer must first file a Labor Condition Application (LCA) with the Department of Labor. The employer must attest that it will:

1. Pay the nonimmigrant workers at least the local prevailing wage or the employer's actual wage, whichever is higher; pay for non-productive time in certain circumstances; and offer benefits on the same basis as for U.S. workers;

2. Provide working conditions for H-1B workers that will not adversely affect the working conditions of workers similarly employed;

3. Not employ an H-1B worker at a location where a strike or lockout in the occupational classification is occurring, and notify the Employment and Training Administration (ETA) of any future strike or lockout; and

4. On or within 30 days before the date the LCA is filed with ETA, provide notice of the employer's intent to hire H-1B worker(s). The employer must provide this notice to the bargaining representative of workers in the occupation in which the H-1B worker will be employed. If there is no bargaining representative, the employer must post such notices in conspicuous locations at the intended place(s) of employment, or provide them electronically.

Additional rules apply to H-1B-dependent employers and willful violators of the H-1B rules. These rules sunset for H-1B employment under LCAs filed after September 30, 2003 but were restored effective March 8, 2005 by the H-1B Visa Reform Act of 2004.

 An H-1B-dependent employer is, roughly, one whose H-1B workers comprise 15% or more of the employer's total workforce; different thresholds apply to smaller employers. H-1B-dependent employers who wish to hire only H-1B workers who are paid at least $60,000 per year or have a master's degree or higher in a specialty related to the employment can be exempted from these additional rules.

H-1B-dependent employers and “willful violator” employers must attest to the following three elements addressing non-displacement and recruitment of U.S. workers:

1. The employer will not displace any similarly employed U.S. worker within 90 days before or after applying for H-1B status, or an extension of status for any H-1B worker;

2.  The employer will not place any H-1B worker employed pursuant to the LCA at the worksite of another employer unless the employer first makes a bona fide inquiry as to whether the other employer has displaced or intends to displace a similarly employed U.S. worker within 90 days before or after the placement of the H-1B worker; and

3. The employer, before applying for H-1B status for any alien worker pursuant to an H-1B LCA, took good faith steps to recruit U.S. workers for the job for which the alien worker is sought, at wages at least equal to those offered to the H-1B worker. Also, the employer will offer the job to any U.S. worker who applies and is equally or better qualified than the H-1B worker. This attestation does not apply if the H-1B worker is a "priority worker" (defined as a person with extraordinary ability, or outstanding professors or researchers, or certain multi-national executives or managers) within the meaning of Section 203(b)(1)(A), (B), or (C) of the INA.

After the Department of Labor certifies the LCA, the employer will apply to the U.S. Citizenship and Immigration Services (USCIS) for approval to employ an alien worker under H-1B status so that alien workers may be hired.

What are the qualifying criteria for H-1B employment?

To hire a foreign worker on an H-1B visa, the job must be a professional position that requires, at a minimum, a bachelor's degree in the field of specialization. The occupation for which the H-1B classification is sought must also normally require a bachelor's degree as a minimum for entry into the occupation.

Each employer seeking an H-1B nonimmigrant worker has several responsibilities:

1. The employer shall submit a completed Labor Condition Application (LCA) in the manner prescribed by the regulations. By completing and signing the LCA, the employer agrees to several attestations regarding an employer's responsibilities, including the wages, working conditions, and benefits to be provided to the nonimmigrant.

2. The employer shall make the LCA and necessary supporting documentation available for public examination at the employer's principal place of business in the U.S. or the place of employment within one working day after the date on which the LCA is filed with ETA.

3. The employer may then submit a copy of the approved LCA to U.S. Citizenship and Immigration Services (USCIS) with a completed petition requesting H-1B classification.

4. The employer shall not allow the nonimmigrant worker to begin work until USCIS grants the worker authorization to work in the U.S. for that employer or, in the case of a nonimmigrant who is already in H-1B status and is changing employment, to another employer until the new employer files a petition supported by a certified LCA.

5. The employer shall maintain documentation to meet its burden of proof with respect to the validity of the statements made in its LCA and the accuracy of information provided, in the event that such statement or information is challenged. The employer shall also maintain such documentation at its principal place of business in the U.S. and shall make such documentation available to DOL for inspection and copying upon request.

 

 Who is an H-1B employer?

An H1-B employer is a person, firm, corporation, contractor or other organization or association which files the following:

1. A Labor Condition Application (LCA) with the Department of Labor’s Employment and Training Administration; and

2. A Petition for Nonimmigrant Worker with the Department of Homeland Security’s U.S. Citizenship and Immigration Services (USCIS).

 

Who is an H-1B-dependent employer?

The following criteria establish that an employer is H-1B-dependent:

1. Employer has 25 or fewer full-time equivalent employees and at least eight H-1B nonimmigrant workers; or

2. Employer has 26-50 full-time equivalent employees and at least 13 H-1B nonimmigrant workers; or

3. Employer has 51 or more full-time equivalent employees of whom 15 percent or more are H-1B nonimmigrant workers.

What is a “willful violator” employer?

“Willful violator” or “willful violator employer,” means an employer that meets all of the following standards:

1. A finding of violation by the employer is entered in either of the following two types of enforcement proceeding:

   1. A Department of Labor proceeding under the Immigration and Nationality Act (INA) § 212(n)(2); (8 U.S.C. § 1182(n)(2)©; or
   2. A Department of Justice proceeding under INA § 212(n)(5); (8 U.S.C.§ 1182(n)(5)).

2. The agency finds that the employer has committed either a willful failure or a misrepresentation of a material fact; and

3. The agency’s finding is entered on or after October 21, 1998. A willful violator employer must comply with additional attestations under any LCA it files within five years of the willful violation finding. The only exception is when an LCA is filed for and used exclusively for exempt H-1B workers.

Willful violators and H-1B-dependent employers which file an LCA must meet the following additional requirements:

1. The employer has not displaced a U.S. worker at the time of filing an H-1B visa petition;

2. Before placing an H-1B worker at a secondary employer’s work site, the employer has inquired as to the secondary employer’s intent to displace a U.S. worker;

3. The employer has taken good faith steps to recruit U.S. workers; and

4. The employer has offered the job to any equally or better qualified U.S. worker who applies for the job for which the H-1B worker is sought.

Willful violators are subject to random investigations by the Department of Labor for a period of up to five years from the date that the employer is determined to be a willful violator. The Wage and Hour Division maintains a current list of such H-1B willful violators.

 

What is displacement?

A U.S. worker is displaced from a job if the employer lays off the U.S. worker from a job that is essentially equivalent to the job for which an H-1B worker is sought. It applies to both an employer’s own workforce as well as a secondary employer with which an H-1B worker might be placed. An H-1B employer can be assessed a civil money penalty up to $35,000 for any willful violation.

Must an H-1B employer recruit U.S. workers before seeking H-1B workers?

The H-1B employer is not required to recruit U.S. workers, unless it is H-1B-dependent or a previous willful violator. Such employers must take good faith steps to recruit U.S. workers for any job for which they seek H-1B workers.

A “U.S. worker” is any employee who is a citizen or national of the United States, or any alien who is lawfully admitted for permanent residence in the United States, is admitted as a refugee under § 207 of the Immigration and Nationality Act (INA), is granted asylum under § 208 of the INA, or is an immigrant otherwise authorized to be employed in the United States.

The term “recruitment” means the process by which an employer seeks to contact or to attract the attention of any person who may apply for employment. Recruitment includes soliciting, receiving, considering, and reviewing applications.

In conducting recruitment of U.S. workers, an employer must apply selection criteria which are legitimate criteria, meaning criteria which are legally recognized and do not violate any applicable laws; relevant to the job; and normal and customary to the type of job involved. An employer which recruits in good faith must offer fair and nondiscriminatory opportunities for employment to U.S. workers. H-1B workers must not be favored over U.S. workers. The Wage and Hour Division of the U.S. Department of Labor enforces the recruitment requirements for H-1B-dependent and willful violator employers.

When recruiting, must an employer use procedures that meet “industry-wide” standards?

The term “industry” means the set of employers which primarily compete for the same types of workers that are being sought under a Labor Condition Application. An employer may determine industry-wide recruiting standards by utilizing sources such as trade organization surveys, studies by consultant groups, or reports/statements from trade organizations. The recruitment must utilize methods and media which are normal, common, or prevailing in the industry, and have been shown to successfully recruit U.S. workers.

Additionally, the employer’s recruitment must include as a minimum both internal and external recruitment; and at least some active recruitment, whether internal such as training the employer’s U.S. workers for the positions or external such as utilizing recruitment agencies or college placement services.

What are “exempt” H-1B nonimmigrants?

An exempt H-1B nonimmigrant worker is one who receives at least $60,000 annual wages or has attained a master’s or higher degree (or its equivalent) in a specialty related to the H-1B employment.

H-1B-dependent and willful violator employers which employ only exempt H-1B workers on a Labor Condition Application (LCA) have the advantage of being relieved from the additional obligations they would otherwise be required to comply.

What does “place of employment” mean?

The term “place of employment” means the worksite or physical location where an H-1B nonimmigrant worker actually performs his or her work. A Labor Condition Application (LCA) must be filed for the geographic area where an employer intends an H-1B worker to be employed. The LCA will apply to any worksites within this “area of employment,” and thus will control the prevailing wage determination, posting, and other worksite-related obligations of an employer. Certain temporary work performed by an H-1B worker, however, does not require an LCA for that geographic area so long as the work meets the circumstances discussed below.

A location where an H-1B worker temporarily performs job duties will not be considered a worksite and no new LCA needs to be filed when the worker travels to a location (a) for employee developmental activity or (b) to fulfill the requirements of a particular job function. With regard to the latter activity, each of the following conditions must be met if the employer chooses to use an existing LCA – one that applies to a different geographic area:

1. The H-1B worker’s presence at the different location is casual and on a short-term basis (i.e., any single visit does not exceed five (5) consecutive workdays for any worker who travels frequently or ten (10) workdays for any worker who travels occasionally);

2. The H-1B worker is not at the location as a “strikebreaker”; and

3. The nature and duration of the H-1B worker’s job function (rather than the nature of the employer’s business) mandates his/her short-time presence at a different location. For example, in the following situations, an employer could choose to rely on an existing LCA: a computer engineer is sent out to customer locations to “troubleshoot” complaints regarding software malfunctions; a sales representative makes calls on prospective customers or established customers within a “home office” sales territory; or a physical therapist provides services to patients in their homes within a geographic area of employment.

The employer must have an LCA on file for each place of employment, with the exception of the short-term placement option. By filing the LCA, the employer establishes the prevailing wage for the worksite, provides notice to workers, and specifies the scope of the strike/lockout prohibition.

 The employer need not obtain a new LCA for another worksite within the geographic area of intended employment where the employer already has an existing LCA for that area. However, while the prevailing wage on the existing LCA applies to any worksite within the geographic area of intended employment, the notice to workers must be posted at each individual worksite, and the strike/lockout prohibition also applies to each individual worksite.

The U.S. Department of Labor’s Wage and Hour Division would seriously question any situation which appears to be contrived or abusive in determining the H-1B worker’s geographic “place of employment.” The Wage and Hour Division would seriously question any situation where the H-1B worker’s purported “place of employment” is a location other than where the worker spends most of his/her work time, or where the purported geographic “area of employment” does not include the location where the worker spends most of his/her work time.

What is the short-term placement option?

An employer who needs to temporarily place an H-1B nonimmigrant worker in a place of employment that is not listed on an existing certified Labor Condition Application (LCA) may do so under the short-term placement provision without filing a new LCA for the temporary geographic area of employment. The short-term placement option is not available for a geographic location where the employer already has an LCA on file. The short-term placement option may only be used for an H-1B nonimmigrant worker who is already in the United States and working for the employer.

For every day the H-1B worker is placed in the new undesignated area of employment, the employer must pay that worker:

1. The required wage rate applicable to the permanent work site on the supporting LCA;

2. The actual cost of lodging for each workday and non-workday; and

3. The actual cost of travel, meals, and incidental or miscellaneous expenses for each workday and non-workday.

An employer may place an H-1B worker in short-term placement only if all of the following conditions are met:

1. There is no strike/lockout in progress in the H-1B worker’s occupation at the short-term location;

2. The employer does not already have an LCA on file for the geographic area of employment; and

3. Placement of the individual H-1B worker at any site in an area of employment does not exceed 30 workdays within a one-year period. Such placement may be for an additional 30 workdays, but for no more than 60 workdays, in a one year period, where the employer is able to show that the H-1B nonimmigrant maintains ties to the home worksite and the worker spends a substantial amount of time at the permanent worksite.

A workday is any day in which an H-1B worker performs any work – at least one hour – at any worksite within the geographic area of employment.

After 30 workdays, or 60 workdays if applicable, if the employer still has no LCA on file for the geographic area of employment, the employer must remove the H-1B worker from the temporary worksite. If any worker exceeds the 30- 60- day work limits, the employer may no longer use the short-term placement option in that geographic area of employment.

At which point must an H-1B employer secure a new Labor Condition Application (LCA) when the location of work changes?

If the location worksite changes and is outside the geographic area (metropolitan statistical area) designated in the existing Labor Condition Application (LCA) and the work does not constitute short-term placement under the guidelines, the employer must obtain an LCA for the new location and pay the H-1B worker the prevailing wage of that location.

Must an H-1B worker be paid a guaranteed wage?cation of work changes?

The employer must pay H-1B worker(s) at minimum the “required” wage which is the higher of the prevailing wage or the employer’s actual wage for similarly employed workers.

The prevailing wage rate is set for the occupational classification in the geographical area of employment by a union contract, if applicable, or according to the weighted average of wages paid to similarly employed workers in the geographic area of employment. A common prevailing wage source is the State Workforce Agency operating in each U.S. state.

An H-1B worker’s wage can be hourly or salaried. The guaranteed minimum number of hours to be paid to the H-1B worker for all pay periods is the number of hours that the employer reports in Part 5 of the Petition for Nonimmigrant Worker.

The employer must pay the guaranteed minimum hours unless the H-1B worker is unavailable for work due to non-work related factors. The Department of Labor’s Wage and Hour Division enforces the H-1B wage provisions and has the authority to order an employer to pay the required wage.

Must an H-1B employer pay for nonproductive time?

Employers are required to pay workers for all nonproductive time resulting from conditions related to employment including lack of assigned work, lack of a permit, or time incurred studying for a licensing exam. Payment is not required for nonproductive time due to reasons not related to employment such as a worker’s voluntary absence or hospitalization, etc.

Please note that employers are obligated to comply with the Immigration and Nationality Act and other statutes relating to employment such as the Family and Medical Leave Act. Nonproductive pay requirements begin at the earliest of the following applicable events:

1. the H-1B worker first makes them self available for work or comes under control of the employer including reporting for orientation or studying for licensing exam,

2. no later than 30 days after H-1B worker is admitted into U.S. pursuant to H-1B petition,

3. no later than 60 days after the H-1B worker becomes eligible to work for the employer based on the approval date on Form I-797 Notice of Action, or

4. for an H-1B worker already in the U.S., on the date of filing the Petition for Nonimmigrant Worker by sponsoring employer under portability provisions.

What are the rules concerning deductions from an H-1B worker’s pay?

Under no circumstances can an H-1B worker be required to pay the following:

1. Any penalty as defined by state law for worker’s failure to complete the full employment period

2. Any part or portion of the statutory Department of Homeland Security’s U.S. Citizenship and Immigration Services petition filing or fraud prevention fees; and/or

3. Any deduction for the employer’s business expenses that would reduce an H-1B worker’s pay below the required wage rate, including: expenses or attorneys’ fees related to the filing of the Labor Condition Application and/or H-1B petition; tools and equipment; and travel expenses while on employer’s business.

Deductions, other than those excluded above, may be made, even if they reduce the H-1B worker’s pay below the required wage rate, only when the deductions satisfy one of these three categories:

1. Required by law, such as the withholding of income taxes; or

2. Reasonable and customary such as union dues or insurance premiums; or

1. There is a voluntary, written authorization by the employee;

2. For a matter principally for the benefit of the employee, such as reimbursement for travel to the United States or payment for food and lodging not incurred while traveling on the employer’s business;

3. For an amount that does not exceed the fair market value or the actual cost of the matter covered; and

4. The amount does not exceed the limits for garnishments set by the Consumer Credit Protection Act.

What benefits must be offered to H-1B workers?

An employer must offer H-1B workers benefits on the same basis, and according to the same criteria, as the employer provides to similarly employed U.S. workers.

No benefits need be offered to an H-1B worker placed in the U.S. for 90 or fewer continuous days if the worker remains on the home country payroll and continues to receive home country benefits without interruption.

What is the filing process for H-1B employment?

H-1B status requires a sponsoring U.S. employer; an individual cannot gain status on his or her own. First, the employer completes preliminary actions prior to filing an application with the Department of Labor (DOL). It must determine the prevailing wage for the position using one of the following:

1. Using a determination for the occupation and area issued under the Service Contract Act of the Davis-Bacon Act;

2. Using a rate set forth in a collective bargaining agreement;

3. Requesting that a SWA prevailing wage determination be made;

4. Using a survey conducted by an independent authoritative source; or

5. Using another legitimate source of information.

The employer must also inform U.S. workers of the intent to hire a foreign worker by posting the completed Labor Condition Application (LCA) for the position. Posting may occur in one of two methods: hard copy or electronic notice. The hard copy notice must be given to the bargaining representative for workers in the occupation or, if there is no bargaining representative, be posted for 10 consecutive days in at least two conspicuous locations at each place of employment where any H-1B nonimmigrant will be employed. A copy of the LCA must also be provided to each nonimmigrant

On April 15, 2009, the DOL began implementing a new web portal system called iCERT for the filing of LCA applications. All employers and attorneys or agents who file LCAs through iCERT will be required to set up new accounts in the system, as no current LCA login data will transfer from the previous online system. The DOL began processing LCAs through the iCERT system on April 15, 2009, and will require all LCAs to be filed through the system as of May 15, 2009.

Note: LCA processing may take longer than previously experienced. The DOL has stated that since the new system will incorporate a higher standard of review before certification is granted, LCA processing will not be as instantaneous as it under the former online system. The DOL reserves the right to use the full seven-day processing period referenced in the regulations.

LCAs will be returned not certified to the employer or the employer's authorized agent or representative when either or both of the following two conditions exist:

1. When the LCA is not properly completed. Examples of not properly completing LCA include instances of the following:

1. Where the employer has failed to mark the attestations; completing LCA include instances of the following:

2. Where the employer has failed to state the occupational classification, the wage rate, period of intended employment, or prevailing wage; or

3. Where the application does not contain the signature of the employer or the employer's authorized agent or representative - applicable only to those applications submitted via U.S. Mail.

2. When LCA contains obvious inaccuracies. Examples of obvious inaccuracies are shown below:

   1. The employer files an application in error;

   2. The Administrator, Wage and Hour Division, Employment Standards Administration has notified ETA in writing that the employer has been disqualified from employing H-1B nonimmigrants under section 212(n) of the INA.

   3. Stating a wage rate below the Fair Labor Standards Act's minimum wage;

   4. Submitting an LCA earlier than six months before the beginning date of the period of intended employment;

   5. Identifying a wage rate which is below the prevailing wage listed on the LCA; or

   6. Identifying a wage range where the bottom of the range is lower than the prevailing wage listed on the LCA.

If the LCA is returned for correction, the employer may correct or resubmit their original application. Any resubmissions will be processed as if they are new requests.

Upon DOL certification of the LCA, the employer files the USCIS Form I-129, Petition for a Nonimmigrant Worker, the required filing fee, and other supporting documentation including the approved LCA to USCIS. Unless specifically exempt under the law, the employer must pay USCIS filing fees.

Employers must keep the LCA in its public file and provide a copy to workers for whom the LCA supports their visa

How long is an H-1B visa valid?

The H-1B certification is valid for the period of employment indicated on the Labor Condition Application (LCA), for up to three years.

A foreign worker can be in H-1B status for a maximum continuous period of six years. After the H-1B expires, the foreign worker must remain outside the U.S. for one year before another H-1B petition can be approved. Certain foreign workers with labor certification applications or immigrant visa petitions in process for extended periods may stay in H-1B status beyond the normal six-year limitation.

What is “Portability” and to whom does it apply?

The portability provision is intended to preserve the legal status of an H-1B nonimmigrant who is already in the U.S. Portability allows the H-1B worker to enter into employment with a new employer when the new employer has (a) filed a Petition for Nonimmigrant Worker for the employment of the H-1B worker before the expiration of worker’s authorized period of stay and (b) the new employer has submitted an unexpired, approved Labor Certification covering the work the individual is being hired to perform.

An H-1B nonimmigrant who is employed under a valid LCA with one employer can accept new employment upon the filing by the prospective employer of a new petition on the H-1B worker’s behalf. The H-1B worker does not need to wait for the petition to be adjudicated before beginning work for the new employer; employment may commence upon the filing’s receipt by USCIS.

What changes were instituted by the H-1B Visa Reform Act of 2004?

The Immigration and Nationality Act (INA) as amended by the Immigration Act of 1990 (IMMACT) and various subsections among other things, created the H-1B classification for temporary employment of foreign workers in the United States in specialty occupations or as fashion models. The intent of the H-1B provisions is to help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce by authorizing the employment of qualified individuals who are not otherwise authorized to work in the United States. The law establishes certain standards in order to protect similarly employed U.S. workers from being adversely affected by the employment of the nonimmigrant workers, as well as to protect the H-1B workers.

The H-1B Visa Reform Act of 2004 reinstated certain enforcement and fee requirements of the H-1B law that had sunset on September 30, 2003, and amended the law in several other respects:

1. The H-1B-dependent/willful violator employers’ special attestation requirements are reinstated as of March 8, 2005. Such employer must attest on the Labor Condition Application (LCA) that it will:

   1. Not displace any similarly employed U.S. worker within the period beginning 90 days before and ending 90 days after the date of petition filing;

   2. Not place any H-1B worker with any other employer or at another employer’s worksite unless first making a good faith inquiry of the employer at the secondary worksite and obtaining assurances that the other employer will not displace a U.S. worker within 90 days before or after placement of the H-1B worker;

   3. Take good faith steps to recruit a U.S. worker for the position for which the H-1B worker is sought; and to offer the job to any U.S. worker who applies for the job and is equally or better qualified.

2. The 95% rule is eliminated. Employers must pay at least 100% of the prevailing wage.

3. Survey wage levels are increased from two to four. Surveys used or made available by the Department of Labor (DOL) for prevailing wages purposes will include four levels commensurate with experience, education, and level of supervision.(3) Survey wage levels are increased from two to four. Surveys used or made available by the Department of Labor (DOL) for prevailing wages purposes will include four levels commensurate with experience, education, and level of supervision.

4. Department of Labor (DOL) investigative authority is expanded. The DOL may now investigate when the Secretary of Labor personally certifies that there is reasonable cause to believe that the employer is not in compliance and authorizes the investigation, or when a credible source provides information that includes allegations that within the past 12 months an employer has willfully failed to meet an LCA condition, has engaged in a pattern or practice of violations, or has committed a substantial failure to meet an LCA condition that affects multiple employees.

5. New Good Faith Compliance Defense. H-1B employers are considered to have complied in good faith with the program requirements notwithstanding a “technical or procedural failure” to meet such requirements, if the employer:

   1. Made a good faith attempt to comply;

   2. Voluntarily corrected the failure within 10 business days of having it explained by the DOL or another enforcement agency; and

   3. Has not engaged in a pattern or practice of willful violations.

6. Recognized Industry Standards Defense. H-1B employers that have established that the prevailing wage used was calculated consistent with recognized industry standards and practices will not be assessed fines or penalties for prevailing wage violations.(6) Recognized Industry Standards Defense. H-1B employers that have established that the prevailing wage used was calculated consistent with recognized industry standards and practices will not be assessed fines or penalties for prevailing wage violations.

7. The training and processing fee is modified and made permanent for nonexempt employers as of December 8, 2004. H-1B employers with 25 or fewer full-time employees will pay $750; H-1B employers with more than 25 full-time employees will pay $1500

8. New $500 anti-fraud fee for enforcement effective March 8, 2005. All employers that file an H-1B petition will now pay a $500 fraud prevention and detection fee.

What is good faith compliance or conformity?

An employer is “considered to have complied” in good faith with the H-1B program requirements notwithstanding a “technical or procedural failure” to meet such requirements if:

1. Employer made good faith attempt to comply

2. Employer voluntarily corrects compliance breach within 10 business days of notification by the Department of Labor or other enforcement agency; and

3. Employer has not demonstrated a pattern or practice of willful violations.

What is an H-1B Audit and how is it conducted?

An H-1B Audit is conducted by the Wage and Hour Division of the U.S. Department of Labor (DOL) to find out whether an H-1B employer is in compliance with the existing H-1B laws and regulations. The Labor or H-1B Audit could arise from any sources including but not limited to Employee Complaint, US Embassy Referral, or Random Audit. As a par t of this Audit, the DOL would send a letter requesting the employer to produce the public access file along with the immigration and wage records.

Preparing the supporting documentation for the Labor Condition Application (LCA) is the core of the employer’s responsibility. The employer must be careful to meet the DOL requirements for the content of that documentation and for its retention and availability. The DOL recognizes two types of supporting documentation: (1) documentation which must be made available in a public inspection file within one working day after the date of filing the LCA with the DOL, and (2) documentation which must be made available to DOL investigators “upon request.” It is important for employers to distinguish between the two types of documentation, and put into the public inspection file only the documentation required by regulation to be there.

H-1B Audit Expectations & Etiquette:

In most instances, the Employer will receive written notification approximately one week prior to the scheduled start of an H-1B Audit. The notice will detail the name of the Investigator, the date s/he will begin the investigation, and request documents and information for review. An Employer undergoing an H-1B Audit should expect additional documents and information to be requested through the course of the investigation, and should be prepared to provide the materials in a timely fashion. Please be aware that there may be circumstances where no advance H-1B Audit notification will be provided to an Employer.

There is an expectation of voluntary compliance with an H-1B Audit, and it will behoove the Employer to proactively take any steps required to comply with all requests. It is important that an Employer engage legal counsel to ensure appropriate compliance.

There are several practical actions that any Employer facing an H-1B Audit should take, including:

1. Inform all staff that they are to be courteous and professional with the Investigator;

2. Designate an Audit Liaison, or 1 or 2 senior employees or an attorney, to be responsible for all contact and communication between the Employer and Investigator, and to facilitate compliance;

3. Provide the Investigator a dedicated workspace;

4. `

   Provide the Investigator access to a copy machine; and

5. Have legal counsel prepare any employee prior to a requested interview, and have counsel attend the interview

Providing a comfortable environment for an Investigator to conduct the audit, as well as all requested materials in an organized and timely fashion, will help demonstrate an Employer’s good-faith intention toward H-1B program compliance.

What penalties or sanctions can an H-1B employer face for non-compliance of the H-1B program requirements?

When violations are found, the Administrator of the Department of Labor’s Wage and Hour Division may assess civil money penalties with maximums ranging from $1,000 to $35,000 per violation, depending on the type and severity of the violation. The Administrator may also impose other remedies, including payment of back wages

Within 15 days of the date of the determination, any interested party may request a hearing on the Wage and Hour Administrator's determination before an administrative law judge. Within 30 days of the decision by an Administrative Law Judge (ALJ), an interested party may request a review of the ALJ's decision by the Department's Administrative Review Board.

Employers found to have committed certain violations may also be precluded from future access to the H-1B program and other immigrant programs for a period of at least one year.

Effective March 8, 2005, an H-1B employer will be considered in compliance notwithstanding a technical or procedural failure if such employer:

1. Makes a good faith attempt to comply;

2. Voluntarily corrects violations within 10 business days of being advised by an enforcement authority; and

3. Has not engaged in a pattern or practice of willful violations; and

4. For prevailing wage violations, can establish that the wage was calculated consistent with recognized industry standards and practices.

What is the Department of Labor’s Wage and Hour Division’s enforcement authority under the H-1B program?

When authorized to investigate, the Department of Labor Employment Standards Administration’s Wage and Hour Division is responsible for ensuring that workers receive wages defined on the Labor Condition Application (LCA) and are working in the occupation and at the specified location. The Wage and Hour Division can initiate an H-1B-related investigation in response to one of the four following situations:

1. A complaint is filed by an aggrieved individual or organization; or

2. The Wage and Hour Division receives some other specific credible information from a reliable source indicating that the employer has failed to meet LCA conditions; or

3. The Secretary of Labor has found that an employer, within the last five years, has committed a willful failure to meet a condition of the LCA or willfully misrepresented a material fact in the LCA; or

4. The Secretary of Labor has reasonable cause to believe the employer is non-compliant.

When violations are found, the Wage and Hour Division may assess civil money penalties with maximums ranging from $1,000 to $35,000 per violation. Other remedies such as the payment of back wages may also be imposed. Employers found culpable of certain violations may also be denied access to the H-1B and other immigrant programs for a period of at least one year.

When and to whom must a public inspection file be made available?

The public inspection file must be available to the public within one working day after the date on which the Labor Condition Application (LCA) is filed with a Department of Labor (DOL) regional office. Any member of the public may request access to the file. Access is not limited to “aggrieved parties” or “interested parties.” The employer must make the file available to the requester within one working day of the request.

Where must a public inspection file be kept?

The file may be kept at the employer’s principal place of business in the United States or at the actual place of employment for the H-1B worker. It is good practice to maintain the public inspection file regarding an H-1B worker separate from that worker’s personnel file.

Some employers may choose to maintain a separate public inspection file for each H-1B worker admitted under an LCA, while other employer’s may opt to keep all of their LCAs and related documentation in one public inspection file. By maintaining public inspection files separately for each H-1B worker - or at a minimum, each LCA when multiple workers are included in the same LCA - the employer is able to provide access limited to those files actually requested by a member of the public.

What documentation must be available for public inspection?

The public inspection file must include the following elements:

1. A copy of the completed LCA. If the LCA is submitted by facsimile transmission, the original signed version must be maintained by the employer but it need not be included in the public access file. Once the LCA is returned with the DOL certification, the employer may want to replace the copy already in the file with a copy of the certified version of the LCA.

2. A statement of the wage rate to be paid to the H-1B worker or workers admitted under the LCA. The LCA may include the initial wage rate to be paid the H-1B worker, and is sufficient initial documentation of the wage rate in that case. If the LCA contains a wage range, however, in the case of a single H-1B non-immigrant or in cases involving multiple H-1B non-immigrants included on the same LCA, the employer should include a separate statement listing the specific wage rate to be paid to each H-1B non-immigrant admitted under the LCA. In addition, the wage rate information must be current for every H-1B non-immigrant admitted under an LCA.

3. An “actual wage” pay system memorandum. The DOL rules require that the public inspection file contain a “full, clear explanation of the system” that the employer used to set the “actual wage” paid to workers in the occupation for which the LCA is filed. The explanation must be in the form of a “memorandum summarizing the system or a copy of the employer’s pay system or scale.”

   Actual wage is the wage paid by the employer to all individuals with similar experience and qualifications for the specific employment in question. In evaluating “similar experience and qualifications” many factors such as experience, qualifications and education, etc., may be taken into account.

   Important Note: DOL Enforcement Policy. Experience with DOL enforcement efforts shows that the DOL expects detailed information, and that without ample justification of discrepancies between experience and education levels and wage rates, it will suspect the worst of the employer’s intentions. Particularly if the H-1B worker’s wage rate within the pool places him or her beneath any of the U.S. workers, a thorough explanation of the factors leading to that wage rate is imperative. An employer should remember that the more it does by way of analysis at the pre-filing stage, and documents that analysis for the LCA file, the less likely it will be that the DOL will find evidence of willfulness in a failure to meet the wage attestation

4. A copy of prevailing wage documentation. The DOL rules require the public inspection file to contain a copy of the documentation used to establish the prevailing wage. The rules elaborate that “a general description of the source and methodology is all that is required to be made available for public examination.” In particular, the “underlying individual wage data” used to determine the prevailing wage rate need not be included in the public inspection file, but must be available to DOL investigators in an enforcement action.

   What the employer includes in the public inspection file depends on the source for its prevailing wage determination. If the employer relies on a State Employment Security Agency (SESA) determination, a copy of the determination should be included. If the employer uses an “independent authoritative source” or a “legitimate source of information,” it may want to include copies of the title page of the survey and the extract from the survey containing the prevailing wage. The employer should prepare an explanatory memorandum to go with the survey to explain its choice of occupational classification within the survey. Choice of occupational classification becomes a major issue when the job titles of the employer and survey differ and it appears that the employer has classified the job at a lower pay level. Information concerning the methodology used should be included in the explanatory memorandum as well as a statement concerning the lack of workers in the area of intended employment necessitating the expansion of the area surveyed if applicable.

5. Documentation regarding offer of benefits to H-1B workers. The public access file must include a summary of the benefits offered to U.S. workers in the same occupation as the H-1B workers. A statement explaining how employees are differentiated for benefit purposes when not all employees are offered or receive the same benefits must also be included in the file. Finally, the file must include note memorializing any workers left on “home country” benefits, if applicable.

6. A copy of the notification documents. The public inspection file must also include documentation that the employer has met the requirement that it provide notice of the LCA filing to the relevant bargaining representative, or to its own employees in cases in which there is no bargaining representative for the occupational classification at the place of employment.

   In a case involving a bargaining representative, the file must include a copy of the dated notice given to the bargaining representative, which must include the information specified in 20 C.F.R. §655.734(b)(1)(i). The file must also include the name and address of the bargaining representative to whom the notice was provided.

   In a case without a bargaining representative, the file must include a copy of the actual notice physically posted in two locations at each place of employment listed on the LCA or posted electronically, e.g., through the firm’s intranet or e-mail system. The notice must include the information specified in 20 C.F.R. §655.734(b)(1)(ii). The file must also include the dates when each notice was posted, the locations where each notice was posted, and the physical place within the location where each notice was posted.

   The employer’s notice may be an exact copy of the LCA, or its may be a statement including the information listed in the regulatory sections cited above.

7. Sworn statement regarding assumption of LCA obligations in corporate restructuring situations. When the employer undergoes a change in corporate structure and chooses to assume the LCA obligations of the previous employer, include the following in the public access file: (a) a sworn statement by a responsible official of the new employing entity that it accepts all obligations, liabilities and undertakings under the LCAs filed by the predecessor employing entity; (b) the employer identification number (EIN) of the new entity; (c) a list of each affected LCA and its date of certification; and (d) a description of the actual wage system of the new employing entity. The H-1B worker must remain in the same location and continue to perform the same job duties if he or she is to remain on the old LCA. Remember that the old LCAs cannot be used to support petitions or extensions filed by the new entity even when it agrees to assume the obligations under those filings. As a result, the entity will need to file a new LCA in order to file new petitions or extensions on behalf of H-1B workers.

8. List of entities comprising “single employer” when employer uses definition of “single employer” to determine H-1B-dependency. When the employer utilized the definition of “single employer” to determine its H-1B-dependency status, the employer must prepare a list of any entities included as part of the single employer in making the determination. Under ACWIA, an employer may then use the definition of “single employer” in the Internal Revenue Code (IRC) to make a calculation of its H-1B-dependency taking into account the number of workers employed by related business entities in the United States. ACWIA provides that any group treated as a single employer under Internal Revenue Code § 414(b), (c), (m), or (o) is to be treated as a single employer for purposes of determining H-1B-dependency

9. List of “exempt” H-1B employees when LCA will be used to support only “exempt” employees. When the employer is an H-1B-dependent employer or a willful violator, and indicates on the LCA(s) that only “exempt” H-1B nonimmigrants will be employed, a list of such “exempt” H-1B workers must be included in the public access file. If an LCA claiming exempt status for its employees is used to support a petition or extension of status for a non-exempt employee, the employer will be found to have violated the non-displacement and recruitment requirements.

10. Summary of recruitment methods when employer is subject to recruitment attestation. If the employer is H-1B-dependent or a willful violator and the LCA will be used to support petitions for non-exempt employees, a summary of methods used to recruit U.S. workers and the time frames of such recruitment must be prepared. Such information may consist of either a memorandum by the employer or copies of pertinent documents. This documentation must relate to the period prior to the filing of the LCA. In addition, each time the employer files a petition or extension supported by the LCA, the employer will need to update the file to include information regarding its recruitment prior to the filing of the petition or extension.

What supporting documentation is not for public inspection?

The employer must be careful not to include the following documents in the public inspection file, even though they must be made available to DOL investigators “upon request.”

1. Records showing the wage rate for all other employees for the specific employment in question at the place of employment. This documentation must be maintained for all such employees beginning with the date the LCA was filed and continuing throughout the employment period. This documentation is basically the payroll records for the employees in the same job at the place of employment, and must include (a) the employee’s full name; (b) the employee’s home address; (c) the employee’s occupation; (d) the employee’s rate of pay; (e) the hours worked each day and each week by the employee if the employee is paid on other than a salary basis (e.g., on an hourly rate) or with respect to part-time H-1B workers; (f) the total additions and deductions for each pay period; and (g) the total wages paid each pay period, the date of pay, and the pay period covered by the payment. The coverage of this documentation requirement includes all other employees in the same job and not just employees in the same job with experience and qualifications similar to the H-1B non-immigrant.

2. Data used to establish the actual wage rate for the H-1B nonimmigrants. This information is the underlying data used to prepare the actual wage memorandum in the public inspection file. The data must show how the wages set for the H-1B nonimmigrants relate to the wages paid to all other employees with similar experience and qualifications for the specific employment in question at the place of employment. The employer may prepare a more detailed version of the actual wage memorandum including the actual wage data for all comparable employees in the same job to establish how the employer’s pay system works and how it was used to set the H-1B nonimmigrants wages. When adjustments are made in the pay system during the validity period of the LCA, the employer must also retain documentation explaining the adjustments and showing that after the adjustments were made, the H-1B nonimmigrants continue to receive at least the greater of the prevailing wage or the actual wage paid to similarly employed workers.

3. Documentation supporting the employer’s prevailing wage determination. In the public inspection file, the employer must include documentation giving a general description of the source and methodology used in reaching its prevailing wage determination. In many cases, the public inspection documentation will encompass all of the employer’s prevailing wage evidence, e.g., the prevailing wage finding from a SESA. In cases involving other prevailing wage surveys, however, the employer is not required to include the entire survey or the raw data from the survey in the public inspection file. This documentation must be maintained, however, for DOL inspection upon request.

4. Documentation on offer of benefits. Documentation of the employer’s offer of benefits to the H-1B worker should include: (a) copies of documents given to employees describing the benefits offered to employees and rules for eligibility and participation, (b) documents describing any rules the employer has for differentiating among employees with regard to benefits, (c) evidence as to the benefits chosen by and provided to employees, and (d) evidence of any “home country” benefit plans if the H-1B worker remained on such a plan.

5. Evidence of notification to the H-1B non-immigrant. The regulations impose a requirement on employers to provide an H-1B nonimmigrant admitted pursuant to an LCA with a copy of the certified LCA no later than the date he or she reports to work. Evidence that this requirement has been fulfilled must be placed in the file.

6. H-1B-dependency calculation. With regard to employers that claim that they are not H-1B-dependent but were required to make full calculation of their H-1B-dependency under the DOL rules, the dated copy of such calculation must be retained. An employer claiming that it is no longer H-1B-dependent after an LCA filing as a result of change in its workforce must also retain a copy of its calculation.

H-1B-dependent and willful violators subject to the additional attestations relating to the displacement and recruitment of U.S. workers must also retain the following:

1. Information regarding departures of U.S. workers. The employer is required to retain all records the employer created or received concerning the circumstances under which the U.S. worker, in the same locality and same occupation as any H-1B worker hired, left its employ in the period from 90 days after the filing date of the employer’s petition for the H-1B worker. The employer must retain at least the following documents:

   1. The employee’s name, last-known mailing address, occupational title and job description;

   2. Any documentation concerning the employee’s experience and qualifications, and principal assignments;

   3. All documents concerning the departure of the employee, such as notification by the employer of termination of employment prepared by the employer or the employee, and evaluations of the employee’s job performance; and

   4. A record of the terms of any offers of similar employment to such U.S. workers and the employee’s response to the job offer.

2. Information regarding secondary displacement. If the employer placed any employees with other employers, documentation must be retained concerning how they satisfied the requirements that they make inquiries to other employers about the displacement of U.S. workers. Normally, this documentation will consist of the written assurance from the secondary employer, a note to the file contemporaneous with oral assurances received from secondary employer, contract with secondary employer containing displacement clause. Evidence of further inquiries may be necessary if the employer has information available to it that lay-offs may have occurred at the secondary worksite.

3. Recruitment documentation. The employer must retain documentation of the recruiting methods used, including the places and dates of the advertisements and postings or other recruitment methods used, the content of the advertisements and postings, and the compensation terms if such are not included in the content of the advertisements and postings. The employer must also retain documentation the employer received or prepared concerning the treatment of applicants, such as copies of applications and/or related documents, test papers, rating forms, records regarding interview, and records of job offers and applicants’ responses.