Employer Obligations Related to the H-1B Labor Condition Applications and the H-1B Process

This article covers the basic procedures to obtain H-1B work authorization.  The H-1B petition process requires two basic actions.  First, the employer must apply to the Department of Labor for certification of a Labor Condition Application (LCA).  This is done electronically and generally takes one week.  Second, the petition for H-1B classification is filed with the U.S. Citizenship and Immigration Services (“USCIS”), where processing normally takes several months.  An expedited “Premium Processing” service is available with the USCIS for a surcharge.

It should be remembered that if the worker is outside the United States, he or she will normally need to apply to a U.S. consular post abroad for an H-1B visa before coming to the U.S.  (Canadian citizens are exempt from the visa requirement.) If the worker is already in the U.S., such application may be necessary the first time he or she leaves the country.

 

  1. Preparing the Labor Condition Application: Wage Determination

The main focus of the Labor Condition Application (“LCA”) is the wage that the company proposes to pay.  The law requires that this wage be equal to or greater than the higher of the “actual wage” for the particular occupation at the place of employment or the “prevailing wage” for the occupation in the general geographical area.  An employer may put a salary range on the LCA form, but the lower end of the range must be at least the higher of the actual or prevailing wage rates.

The initial task in preparing an LCA is thus to determine both the actual wage and the prevailing wage for the position in question.

The actual wage means the wage paid by the employer to employees with experience and qualifications similar to the worker for the specific occupation in question at the work site.  If there are other such employees at the company, and if they are paid more than the proposed salary for the worker, it is necessary to justify the discrepancy based on a difference in such factors as educational attainments, years of experience, particular skills and abilities, responsibilities and functions, seniority with the company, etc.  If there is no such basis to justify the discrepancy, then the worker must be paid at least the same amount as the other employees with similar experience and qualifications for the position.  To perform an actual wage analysis, it is thus necessary to refer to information concerning the other individuals who are employed by the company in the same position.  An employer of H-1B workers must also be able to explain the actual formula or methodology the company uses to calculate wages.

The prevailing wage means the average rate of wages for the specific occupation in the geographical area.  Usually the best way of establishing the prevailing wage is by reference to published salary surveys that provide sufficient data for the position and location, or by utilizing the Department of Labor’s Online Wage Library.  Our office has various surveys, and we will work with you to obtain the prevailing wage for the position at issue.

 

  1. Employer Attestations on Labor Condition Application

On the LCA form one indicates the wage (or a wage range) to be paid to the H-1B worker, the prevailing wage and its source, the job title, and the period of need.  In signing and filing an LCA, an employer also makes the following attestations:

  • For the entire period of authorized employment, the wage paid to an H-1B employee will be at least the higher of the actual wage or the prevailing wage. Additionally, the H-1B employee must be offered the same benefits that the company offers to its U.S. workers.
  • The employer will provide “working conditions” for H-1B nonimmigrants which will not adversely affect the working conditions of similarly employed workers in the geographical area. Working conditions refer to such matters as hours, shifts, vacation periods, and fringe benefits.  The H-1B worker should be offered the same conditions as U.S. workers.
  • On the date the LCA is signed and submitted there is no strike, lockout, or work stoppage at the place of employment. (If a strike occurs after filing the LCA, you have three days to notify DOL of this occurrence.)
  • A copy of the LCA must be provided to the H-1B worker on or before his/her first date of employment in H-1B classification.
  • Notice of the filing must be given to the collective bargaining representative, or where there is no collective bargaining representative, posted in hard copy or electronic format at each worksite. (Our office will prepare and provide this notice.) The notice must indicate that H-1B nonimmigrants are sought; the number of such nonimmigrants the employer is seeking; the occupational classification; the wages offered (a range may be stated but the bottom of the range must equal or exceed the higher of the actual or prevailing wage); the period of employment; the location(s) at which the H-1B nonimmigrants will be employed; and that the LCA is available for public inspection at the H-1B employer’s principal place of business in the U.S. or at the worksite. The notice shall also include the statement: “Complaints alleging misrepresentation of material facts in the labor condition application and/or failure to comply with the terms of the labor condition application may be filed with any office of the Wage and Hour Division of the United States Department of Labor.” The employer must keep a record of the dates and locations the notice was posted, and must keep a copy of the notice.

 

  1. Location Where Services Performed, and Material Changes in Job Title and Duties

If the employment involves performing work in more than one location, (whether the new worksite is another establishment of the employer, or is the worksite of another entity such as a customer of the employer), the employer must meet the prevailing wage for the occupation in each geographic area. This may involve filing LCA(s) for several locations and the posting of notices at additional job sites.

If it becomes the case that an employee will need to spend time at a place of employment that was not originally contemplated, and thus was not included on the initial LCA,  the rules are quite complex and we should be advised before the travel occurs so that we can determine if a new LCA and posting is required.

A change in the position, location of employment or employer’s corporate structure, may be deemed a material change in the terms of employment and require approval from the Department of Labor (a new LCA) and/or Citizenship and Immigration Services (an amended H-1B petition).  For this reason, we ask that you consult with our office prior to making any changes in the employment.

It is important to note that if an individual is employed under an LCA/H-1B petition that was filed for full-time employment, then the individual must be guaranteed full-time wages during the entire validity period specified on the LCA, even if he/she is not engaged in productive work for employment-related conditions such as lack of work (“benching”), training periods, or other such reasons.  Naturally, if the employee is terminated, wage obligations cease.

 

  1. Record Keeping Requirements

Within one working day of filing an LCA, certain records must be made available to the public upon request including a copy of the LCA, an explanation as to how the actual and prevailing wages were determined, and evidence that the required notice was posted.  This file, referred to as a “Public Access File” (PAF) must be ready within 24 hours of the filing of the LCA.  Our office generally prepares such a file containing a memorandum, and copies of the LCA, the prevailing wage documentation, and the posted notice.

The employer must also maintain payroll records on all employees in the occupational classification of the H-1B worker.  This obligation begins with the date the LCA is submitted and continues through the period of employment.  Payroll records must identify the employee, home address, occupation, rate of pay, hours worked, earnings on a daily or weekly basis at the regular rate, overtime compensation by week, total additions to or deductions from pay, and total wages paid each pay period, date of pay, and pay period covered by the payment by employee.  Such records should be retained for three years from the date of creation.  The purpose of this requirement is to be able to document that your H-1B worker has not been paid less than other employees in the same position.  Most employers already keep this documentation.  (These payroll records need not be made available for public inspection.)

 

  1. H-1B Dependent Employers

Additional LCA attestations are required of H-1B dependent employers and employers who have committed a willful failure or misrepresentation.  An employer is “H-1B dependent” if it has 25 or fewer full-time employees and more than seven of them are H-1B personnel; or if it has between 26 and 50 personnel and more than 12 of them are H-1Bs; or over 50 employees, and at least 15% of them are H-1Bs.  If this applies to your organization, you must let us know prior to preparation of a petition.  Likewise, if your organization’s status changes from non-dependent to dependent or vice versa, please notify us as soon as possible.

 

  1. Return Transportation

If the employer dismisses an H-1B worker from employment before the end of the period requested and authorized by the petition, then the employer is liable for the individual’s return transportation abroad.  The USCIS does not enforce this provision, and no penalty is contained in the regulations.  If the worker leaves of his own accord, there is no return transportation liability.  Also, it is often the case that employees who are terminated seek other employment in the U.S. and do not leave the country.

 

  1. Violations of LCA Conditions

The Labor Department has detailed regulations regarding the conduct of investigations against employers that have failed to meet the conditions attested in the LCA or have engaged in other prohibited conduct related to the LCA process.  Such investigations are normally complaint-driven.  Violations may result in penalties against the employer, including awards of back pay, monetary penalties, and debarment from filing immigrant petitions for a period of up to three years.  Obviously, the severity of any penalty depends upon how serious the violation was.  An employer’s good faith efforts to establish and meet the required wage rate tend to be a strong mitigating factor in any investigation and imposition of penalties.

 

  1. H-1B Petition

We have primarily discussed the LCA, since the main employer obligations relate to this application.  As regards the H-1B petition, the basic requirements for H-1B classification are that the position be a professional one, normally requiring a specialized degree at least at the baccalaureate level for entry into the occupation; and that the individual possess qualifications, usually through the education, to perform services in the occupation.  H-1B classification is initially granted for a period of three years, and may be renewed for three additional years for a cap of six years.  (Extensions in one-year increments, and sometimes three-year increments, may be available if the person is far enough along in the process of obtaining permanent residence, i.e., a green card.)

 

In addition to the basic petition filing fee of $325, the employer must pay the following fees when filing an H-1B petition:

  • $1,500 H-1B Training Fee applicable to all new petitions, changes of employer and the first extension filed by the employer. (Employers with 25 or fewer employees pay a reduced fee of $750. Institutions of higher education and related nonprofit entities, nonprofit research organizations and governmental research organizations are exempt from this fee.)
  • $500 Fraud Prevention and Detection Fee applicable to initial H-1B and L-1 petitions, including change of status and change of employer.

Fees for premium processing service requests are additional to the fees noted above.  The USCIS charges a $1,225 filing fee for premium processing, but in return guarantees a 15 calendar day update.  Employers may consider the extra $1,225 fee worth it as expedited adjudication can facilitate travel and visa issuance for the employee and dependents, and avoids the uncertainty of regular processing times.

 

If there are any questions related to the above, please do not hesitate to contact us.

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