DOL Wage and Hour Audits of the H-1B Program and LCA Requirements


Overview of the H-1 Program and LCA Requirements

The Immigration and Nationality Act (INA) as amended by the Immigration Act of 1990 (IMMACT) and various subsections (e.g., § 212(n) and § 214) of the INA (8 U.S.C. §§ 1182(n),1184) 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 themsH-1B Program and LCA Requirementselves.

 

The H-1B program responsibilities are divided among various agencies:  the Department of Labor’s (DOL) Employment Training Administration (ETA); the Department of Homeland Security’s U.S. Citizenship and Immigration Service (USCIS); the U.S. Department of State (DOS); and the DOL Employment Standards Administration’s Wage and Hour Division (WH).

 

Under the law, ETA certifies the conditions to which an employer must attest on the Labor Condition Application (LCA).  Once ETA has certified the LCA, the employer must provide it, along with Form I-129, Petition for Nonimmigrant Worker, to the USCIS.  The petition includes some of the same information as the LCA does, and as part of its review, the USCIS reviews information on both documents to determine whether the job meets the requirements of a specialty occupation and whether the petition indicates that the qualifications of the prospective H-1B worker meet the statutory requirements in that specialty occupation.  The DOS is responsible for providing foreign workers located outside the United States with a visa to work in the United States for a specific employer for a designated period of time.  Once an employer obtains the certified LCA and the approved petition, WH enforces the attestations within the LCA, which include the material facts and labor condition statements.

 

Wage and Hour Enforcement[1]

 

While most of the news involves ICE and employment sanctions, employers must still be vigilant with regard to LCA requirements because WH continues to act on complaints.

 

Under the H-1B program, when authorized to investigate, WH is responsible for ensuring that workers are receiving the wages disclosed on the LCA and are working in the occupation and at the location specified.  WH can only initiate H-1B-related investigations through one (1) of four (4) processes:

 

  • Aggrieved party complaints;[2]
  • Credible Source investigations;[3]
  • Secretary-certified investigations;[4] and
  • Random investigations of willful violators.[5]

 

What violations may the Administrator investigate?

The Wage and Hour Administrator (WHA) may investigate and make determinations regarding the following types of violations:[6]

 

  • An employer files a labor condition application with ETA that misrepresents a material fact;
  • An employer fails to pay wages (including benefits provided as compensation for services), as required by LCA regulations (including payment of wages for certain nonproductive time);
  • An employer fails to provide working conditions as required by LCA regulations;
  • An employer files a labor condition application for H-1B nonimmigrants during a strike or lockout in the course of a labor dispute in the occupational classification at the place of employment;
  • An employer fails provide notice of the filing of the labor condition application;
  • An employer fails to specify accurately on the labor condition application the number of workers sought, the occupational classification in which the H-1B nonimmigrant(s) will be employed, or the wage rate and conditions under which the H-1B nonimmigrant(s) will be employed;
  • A U.S. worker is displaced (including when a U.S. worker employed by a secondary employer at the worksite where an H-1B worker is placed is displaced);
  • An employer fails to make the required displacement inquiry of another employer at a worksite where H-1B nonimmigrant(s) were placed;
  • An employer fails to recruit in good faith;
  • An employer displaces a U.S. worker in the course of committing a willful violation of any of the conditions, described above, or willful misrepresentation of a material fact on a labor condition application;
  • An employer requires or accepts from an H-1B nonimmigrant payment or remittance of the additional $750/$1,500 fee incurred in filing an H-1B petition with the DHS;
  • An employer requires or attempts to require H-1B nonimmigrant to pay a penalty for ceasing employment prior to an agreed upon date;
  • An employer discriminates against an employee because the employee has disclosed information to the employer, or to any other person, that the employee reasonably believes evidences a violation of the H-1B Program, or has cooperated or has sought to cooperate in an investigation or other proceeding concerning the employer’s compliance with H-1B requirements;
  • An employer fails to make available for public examination the application and necessary document(s) at the employer’s principal place of business or worksite:
  • An employer fails to maintain documentation relating to regulated H-1B employment actions; and
  • An employer fails otherwise to comply in any other manner with the provisions governing Labor Condition Applications; requirements for employers seeking to employ nonimmigrants on H-1B visas in specialty occupations; or the enforcement of H-1B Labor Condition Applications.

What remedies may be ordered if violations are found?

 

Upon determining that an employer has failed to pay required wages or provide required fringe benefits, WH may order the employer to pay back wages and/or fringe benefits to any H-1B workers that have been unlawfully denied wages or fringe benefits.[7] The WH Administrator may also exercise his/her discretion to order any other remedies s/he deems appropriate, including but not limited to return of any money paid by the employee in violation of H-1B regulations, reinstatement of workers who were discriminated against in violation of the protections against employer retaliation, reinstatement of displaced U.S. workers, back wages to workers who have been displaced or whose employment has been terminated in violation of these provisions, or other appropriate legal or equitable remedies.[8]

 

WH may also assess civil monetary penalties (CMPs).  CMPs may be assessed as follows:

 

  1. An amount not to exceed $1,000 per violation for:[9]
    • Violations pertaining to strikes/lockouts or displacement of U.S. workers;
    • Substantial violations pertaining to notifications, labor condition application specificity, or recruitment of U.S. workers;
    • Misrepresentations of material fact on the labor condition application;

 

For these types of violations, WH may also bar the employer from participating in H-1B program for at least one (1) year.[10]

 

  • Early termination penalties paid by the employee;
  • Payment of the employee of the additional $750/$1,500 filing fee; or
  • Violations regarding public access requirements (See 20 C.F.R. § 655.760) that impede the ability of WH to determine whether a violation has occurred or the ability of the public to have informational needed to file complaint or report information regarding a potential violation.

 

  1. An amount not to exceed $5,000 per violation for:[11]
    • Willful failures pertaining to wages/working conditions, strike/lockout, notification, labor condition application specificity, displacement (including placement of an H-1B nonimmigrant at a worksite where the other/secondary employer displaces a U.S. worker), or recruitment;
    • Willful misrepresentations of a material fact on the labor condition application; or
    • Discrimination against an employee, in violation of protections from employer retaliation.

 

“Willful failure” means a knowing failure or a reckless disregard with respect to whether the conduct violated the requirements of the H-1B program.[12]

 

For these types of violations, WH may also bar the employer from participating in H-1B program for at least two (2) years.[13]

 

  1. An amount not to exceed $35,000 per violation where an employer (whether or not the employer is an H-1B-dependent employer or willful violator) displaced a U.S. worker employed by the employer in the period beginning ninety (90) days before and ending ninety (90) days after the filing of an H-1B petition in conjunction with any of the following violations:[14]
    • Willful violations of any of provisions # 2-9, described above, which pertain to wages/working condition, strike/lockout, notification, labor condition application specificity, displacement, or recruitment; or
    • Willful misrepresentations of a material fact on the labor condition application.

For these types of violations, WH may also bar the employer from participating in H-1B program for at least three (3) years.[15]

 

 

In determining the amount of the CMP to be assessed, WH will consider the type of violation committed and other relevant factors, including the following:[16]

  • Previous history of violation, or violations, by the employer under the rules of the H-1B program;
  • The number of workers affected by the violation(s);
  • The gravity of the violation(s);
  • Efforts made by the employer in good faith to comply with the rules of the H-1B program;
  • The employer’s explanation of the violation(s);
  • The employer’s commitment to future compliance; and
  • The extent to which the employer achieved a financial gain due to the violation(s), or the potential financial loss, potential injury or adverse effect with respect to other parties.


Wage & Hour Investigations


Deadline for Filing an Actionable Complaint
[17]

Complaints and information relating to potential violations must be submitted within twelve (12) months of last alleged violation.[18]


Investigation Overview

Investigations are conducted by WH in an adversarial manner and every determination is subject to appeal.[19] Within thirty (30) days of determining that an aggrieved party complaint provides reasonable cause to conduct an investigation, WH must conduct the investigation, issue a determination letter, and notify the employer that it has the opportunity to a hearing, which is conducted sixty (60) days after the determination of violation.[20] Secretary-certified and credible source investigations may be conducted for up to sixty (60) days, and WH must provide the employer with notice and opportunity for a hearing within one hundred twenty (120) days of the determination of the violation.[21] The 30/60-day time limits are merely advisory, and can be (and usually are) extended when WH determines that more time is needed to conduct a thorough investigation.[22]


Aggrieved Party Complaints and Credible Source Allegations

Aggrieved parties (persons or entities whose operations or interests are adversely affected by the employer’s alleged non-compliance) may submit complaints alleging violations of the H-1B Labor Condition regulations.[23] In addition, non-aggrieved parties may report information relating to certain enumerated types of violations (described in § 655.805(a)(1), (2), (3), (4), (7), (8), and (9)).[24] Neither type of party must submit a particular form, and complaints/information can be submitted to WHD in writing or orally.[25] In both cases, complaints/information must be submitted within twelve (12) months of last alleged violation.[26]

 

Within ten (10) days after an aggrieved party submits a complaint and it is received by WH, WH must determine whether reasonable cause to believe that the violation occurred exists.[27] If WH determines that probable cause exists, WH must conduct an investigation and issue a determination within thirty (30) days of the date of filing, although this time limit has been found to be merely advisory and directional.[28]

 

When a non-aggrieved party provides information suggesting a possible violation, WH must report the allegation to the employer (unless notification would interfere with WH’s ability to secure the employer’s compliance), who then has the opportunity to respond within ten (10) days.[29] The WH Administrator must promptly review any response and may then recommend investigating the potential violation to the Secretary, who must authorize investigation and certify that reasonable cause exists.[30]


Scope of Investigation
[31]

When conducting an investigation, WH will review violation issues alleged in the complaint.  In addition, even if not included in the complaint allegations giving rise to reasonable cause, WH will review the following:[32]

 

  1. Wage and benefit provisions for all H-1B workers, except in “last paycheck” violations, unless the District Director (DD) determines that the review of all H-1B workers would not achieve the WH goal of securing maximum compliance while insuring effective use of investigation resources;
  2. The public access file;
  3. Verification of the employer’s dependency status;
  4. If the employer is H-1B dependent or a willful violator, the employer’s compliance with recruitment, secondary employer inquiries, and non-displacement provisions.

 

WH may expand the scope of the investigation, as findings provide reasonable cause to investigate other violations, as long as those actions were taken within the twelve (12) months preceding the investigation period, discussed below.[33]


Investigation Period
[34]

If during the twelve (12) month window, the employer failed to correctly pay a certain H-1B worker, the investigation will be extended “backwards” on that individual until a calendar period is reached where the individual was no longer paid incorrectly.[35] While collecting wage information regarding such incorrectly paid individuals, the investigation may uncover other H-1B workers who were underpaid prior to the twelve (12) month window but never during the twelve (12) month window; these payments may be pursued.[36]

 

Violations other than wage violations found to have occurred within the initial twelve (12) month investigation period may be pursued “backwards” beyond the window to include the entire period in which the violation occurred and for which reliable evidence is available.[37] On the other hand, the imposition of larger CMP amounts, the establishment of additional debarment offenses, or the identification of technical violations and/or inadvertent omissions or errors are not valid reasons to extend the investigation beyond the twelve (12) month window.[38]

 

Initial contact with employer; investigative techniques[39]

At minimum the Wage and Hour Investigator (WHI) will request access to the following documents:[40]

 

  1. The employer’s public access file (including any missing documentation of compliance with LCA notice requirements);
  2. Payroll records for the employees in the relevant categories for the last two (2) years;
  3. The complete petition package for every H-1B worker employed by the employer in the last two (2) years, including the Form I-129/I-129W and the Form I-797; and
  4. If the employer’s dependent status is part of the investigation:
    • Computations of the employer’s H-1B dependency, including computations of the “snap-shot” test or the full computation; and
    • Records relating to displacement and recruitment of U.S. workers including documentation of the non-displacement inquiry the employer has made of any secondary employer worksite at which the H-1B workers were placed.

 

WHIs may also question the manager about their employment of nonimmigrant workers, the compensation of those nonimmigrant workers, and about any subjects that could lead to findings of violations.  WHIs may interview current and former employees, request written statements from them, and request copies of their personal, financial and employment records.

 

Credible Source Investigations commence with WH initially notifying the employer of the allegations.[41] After the employer has been afforded the opportunity to respond, further investigation, if pursued by WH, will follow these same procedures.[42] Secretary-certified Investigations will follow these procedures to the extent the Secretary’s certification has not modified them.[43] Initial contact during Random Investigations of willful violators will be conducted in the manner described above.[44]

 

Requirements of the Administrator’s Determination[45]

Upon review and approval of any findings and remedies (if any), the Joint Review Committee (JRC), comprised of the WHI, DD/ADD, Regional Immigration Coordinator, and DOL Solicitor, a determination letter will be served upon the employer, complainant (if any), and other known interested parties.[46] The determination letter sets forth WH’s reason(s), and, in the case of a finding of violation(s) by the employer, prescribes any remedies assessed.[47] The determination letter must also notify interested parties that they may request a hearing before an Administrative Law Judge (ALJ).[48]


Request for a Hearing
[49]

Employers and other interested parties may request a hearing where WH determines, after investigation that the employer has committed violation(s).[50] In such a proceeding, the Administrator shall be the prosecuting party and the employer shall be the respondent.[51]

 

Complainants and other interested parties may also request a hearing.  This is permissible where WH determines, after investigation, there is no basis for a finding that an employer has committed violation(s).[52] In such a proceeding, the party requesting the hearing shall be the prosecuting party and the employer shall be the respondent; the Administrator may intervene as a party or appear as amicus curiae at any time in the proceeding, at the WH Administrator’s discretion.[53]

 

To request a hearing before an ALJ, parties must ensure that requests are received by the Chief Administrative Law Judge within fifteen (15) calendar days of the date of the determination.[54] The proper address of the Chief ALJ will be provided in the determination letter.[55] Requests for hearings must be dated, written, addressed, and signed; specify the issue(s) giving rise to such a request; and state the specific reason(s) why the requesting party believes that the determination is erroneous.[56]


Appealing Decision of Administrative Law Judge
[57]

After receipt of a timely request for a hearing, the Chief ALJ appoints an ALJ to hear the case.[58] Within seven (7) calendar days of assignment, that ALJ must notify all interested parties of the date, time, and place of the hearing.[59] The hearing must occur within sixty (60) calendar days of the issuance of the determination letter.[60] The date of the hearing may only be postponed if all parties issue a joint request and the ALJ finds the reasons compelling.[61] The ALJ may control deadlines for prehearing briefs and other written statements, which must be served on all parties involved.[62] The ALJ may also exercise the discretion to allow the parties to submit post-hearing briefs and control the scope and timing of post-hearing briefs, if permitted.[63]

 

Applicable Hearing Rules[64]

For the rules governing these hearings, refer to the “Rules of Practice and Procedure for Administrative Hearings Before the Office of Administrative Law Judges” (29 C.F.R. § 18).[65] Although the Federal Rules of Evidence do not apply to these hearings, the ALJ may refer to principles designed to ensure production of relevant and probative evidence in excluding evidence that is immaterial, irrelevant, or unduly repetitive.[66]

 

Determination of the ALJ[67]

The ALJ must issue a decision within sixty (60) calendar days of the hearing, and must include a statement of findings and conclusions, with reasons and bases therefor, relating to each material issue presented on the record.[68] The ALJ will either affirm, deny, reverse, or modify (in whole or in part) the determination of the WH Administrator and explain his/her reasoning for the order.[69]

In the event that the Administrator’s determination of wage violation(s) and computation of back wages are based upon a wage determination obtained by the Administrator from ETA during the investigation and the Administrative Law Judge determines that the Administrator’s request was not warranted, the Administrative Law Judge must remand the matter to the Administrator for further proceedings on the existence of wage violations and/or the amount(s) of back wages owed.[70]

 

Appeal of ALJ Decision[71]

Within thirty (30) days of the decision by an ALJ, an interested party may request a review of the ALJ’s decision by the DOL’s Administrative Review Board.[72] Review by the Administrative Review Board is discretionary.[73]

 

The request must follow the same requirements as the request for ALJ review, described above, and must include an attached copy of the ALJ’s decision and order and other record documents relevant to the appeal.[74] In addition, an original and two (2) copies of all documents must be filed with the Administrative Review Board, Room S-4309, U.S. Department of Labor, Washington, DC 20210.[75] Documents are not deemed filed with the Board until actually received by the Board.[76] Documents must also be served on relevant parties.[77]

 

The Administrative Review Board will render a final decision within one hundred eighty (180) calendar days from the date it provides notice of its intent to review to case.[78]

 

Conclusion

Because WH investigations present the risk of significant monetary penalties (up to $35,000 per violation) and other penalties, including payment of back wages and disbarment from the H-1B program, employers and their attorneys should be sure to maintain documentation of LCAs for each worksite, notices of termination, and payment of nonproductive time wages, and be conscience of the issues presented by laying off U.S. workers from jobs that are essentially equivalent to jobs for which H-1B workers are sought and strikes and lockouts.  When WH investigates these issues, the burden is on the employer to produce documentation and demonstrate a legal basis for any challenged employer actions, including deductions from an H-1B worker’s pay.  Failure to produce documentation is often the basis for WH’s decision to impose the penalties, discussed above.

 


[1] See Fact Sheet #62U: What is the Wage and Hour Division’s enforcement authority under the H-1B program?, U.S. Department of Labor Wage and Hour Division (Revised July 2008).

[2] DOL Wage and Hour Field Operations Handbook (FOH) 71b01; 8 U.S.C. § 1182(n)(2)(A); 20 C.F.R. § 655.806.

[3] FOH 71b02; 8 U.S.C. § 1182(n)(2)(G)(ii); 20 C.F.R. § 655.807.

[4] FOH 71b02; 8 U.S.C. § 1182(n)(2)(G)(i); 20 C.F.R. § 655.807(h).

[5] FOH 71b03; 8 U.S.C. § 1182(n)(2)(F); 20 C.F.R. § 655.808.

[6] 20 C.F.R. § 655.805(a)

[7] 20 C.F.R. § 655.810(a)

[8] 20 C.F.R. § 655.810(e)

[9] 20 C.F.R. § 655.810(b)(1)

[10] 20 C.F.R. § 655.810(d)(1)

[11] 20 C.F.R. § 655.810(b)(2)

[12] 20 C.F.R. § 655.805(c)

[13] 20 C.F.R. § 655.810(d)(2)

[14] 20 C.F.R. § 655.810(b)(3)

[15] 20 C.F.R. § 655.810(d)(3)

[16] 20 C.F.R. § 655.810(c)

[17] FOH 71b06; 20 C.F.R. §§ 655.806(a)(5), 655.807(c)

[18] 20 C.F.R. § 655.806(a)(5); 20 C.F.R. § 655.807(c)

[19] FOH 71c00(a)

[20] FOH 71c00(c)(1)

[21] FOH 71c00(c)(2)

[22] FOH 71c00(c)(3); Administrator, WHD v. Synergy Systems, Inc., ARB No.04.046, ALJ No. 2003-LCA-022, slip op. at 7 (ARB June 30, 2006).

[23] 20 C.F.R. § 655.806

[24] 20 C.F.R. § 655.807

[25] 20 C.F.R. § 655.806(a)(1); see 20 C.F.R. § 655.807(a)

[26] 20 C.F.R. § 655.806(a)(5); 20 C.F.R. § 655.807(c)

[27] 20 C.F.R. § 655.806(a)(2)

[28] Administrator, WHD v. Synergy Systems, Inc., ARB No.04.046, ALJ No. 2003-LCA-022, slip op. at 7 (ARB June 30, 2006).

[29] 20 C.F.R. § 655.807(f)(1)

[30] 20 C.F.R. § 655.807(d)

[31] FOH 71c01

[32] FOH 71c01(a)

[33] FOH 71c01(c)

[34] FOH 71c02

[35] FOH 71c02(d)

[36] Id.

[37] FOH 71c02(e)

[38] Id.

[39] FOH 71c03

[40] FOH 71c03(a)(2)

[41] FOH 71c03(b)

[42] Id.

[43] Id.

[44] FOH 71c03(c)

[45] 20 C.F.R. § 655.815

[46] FOH 71h00(a); 20 C.F.R. § 655.815(a)

[47] 20 C.F.R. § 655.815(c)(1)

[48] 20 C.F.R. § 655.815(c)(2)

[49] 20 C.F.R. § 655.820

[50] 20 C.F.R. § 655.820(b)(2)

[51] Id.

[52] 20 C.F.R. § 655.820(b)(1)

[53] Id.

[54] 20 C.F.R. § 655.820(d)

[55] 20 C.F.R. § 655.815(c)(4)

[56] 20 C.F.R. § 655.820(c)

[57] 20 C.F.R. § 655.835

[58] 20 C.F.R. § 655.835(a)

[59] 20 C.F.R. § 655.835(b)

[60] 20 C.F.R. § 655.835(c)

[61] Id.

[62] 20 C.F.R. § 655.835(d)

[63] Id.

[64] 20 C.F.R. § 655.825

[65] 20 C.F.R. § 655.825(a)

[66] 20 C.F.R. § 655.825(b)

[67] 20 C.F.R. § 655.840

[68] 20 C.F.R. § 655.840(a),(b)

[69] 20 C.F.R. § 655.840(b)

[70] 20 C.F.R. § 655.840(c)

[71] 20 C.F.R. § 655.845

[72] 20 C.F.R. § 655.845(a)

[73] See 20 C.F.R. § 655.845(c)

[74] See 20 C.F.R. § 655.845(b)

[75] 20 C.F.R. § 655.845(f)

[76] Id.

[77] 20 C.F.R. § 655.845(g)

[78] 20 C.F.R. § 655.845(h)