August 07, 2008 - The Department of Labor recently issued several decisions regarding H-1B Labor Condition Application (LCA) issues and employer liability. The holdings in the decisions below adhere to DOL’s fervent posture toward enforcement of the immigration processes. Every employer who participates in the H-1B program or in the hiring of nonimmigrant workers should take heed with respect to the obligations and responsibilities prescribed by the immigration programs. A proactive approach in recordkeeping and H-1B LCA compliance will help limit an employer’s liability to civil penalties imposed for the violations discussed below.

Wage & Hour Div. v. Clean Air Technologies International Inc., 2006-LCA-00009 (6/18/07) AILA Doc. No. 0782564

SUMMARY:

The Department of Labor (DOL) Administrative Law Judge (ALJ) addressed several H-1B LCA issues stemming from Complainant’s assertion of alleged violations by Respondent employer, including: the timeliness of a claim; the time period for the calculation of back wages; back wages owed; termination; accusation of understatement of duties; and retaliation through termination and withdrawal of an I-140 Petition.

Under the Regulations, an aggrieved party must file a complaint with the Wage & Hour Division not later than 12 months after the latest date on which the alleged violation was committed. Because Complainant filed his complaint within 12 months of latest alleged violation, his claim was timely. Further, because the Immigration and Nationality Act (INA) contains no express language limiting the period for back pay recovery for an H-1B nonimmigrant, the DOL ALJ found that the maximum period for back pay recovery is six years as that is the maximum amount of time an H-1B nonimmigrant may be admitted to the U.S. The DOL ALJ also found back wages were due and noted that employers must pay the required wage, ‘cash in hand, free and clear, when due’ to their H-1B employees beginning with the date the employee ‘enters into employment’ and until there has been a ‘bona fide termination of employment’. To effectuate a bona fide termination of employment, an employer must notify Citizenship and Immigration Services (CIS) that it has terminated the employment relationship and provide the employee with payment for transportation home. Finally, while the Complainant alleged that Respondent had understated the job duties and retaliated through wrongful termination and withdrawal of an I-140 petition, the DOL ALJ found that the job duties were accurately reflected and that the withdrawal of the petition – which occurred nearly two months after Complainant was terminated – was required by law since Respondent no longer wished to make an offer of permanent employment to the employee.

Robinson v. Help Foundation of Omaha, Inc., 2005-LCA-00037 (8/29/06). AILA Doc. No. 08072566

SUMMARY:

Under the Immigration and Nationality Act (INA), the entity named as the employer on the LCA is liable for the underpayment of wages. (Note: approval of an LCA is a necessary step in the lawful hiring of an H-1B nonimmigrant; LCA attestations include rate of wage, classification of occupation, etc.) However, the owner of the entity may be found to be personally liable under either a corporate veil piercing analysis or as an “employer” under the statutory definition of the term.

Using the corporate veil piercing analysis, the DOL ALJ found that Respondent used Help Foundation of Omaha, Inc. – the petitioning entity – as an alter ego for his own business activities since Respondent maintained total control of all operations, mixed funds and resources between different corporations of which he was an officer, ignored corporate formalities and By-Law directives, and used corporate funds for non-business expenses. Further, using the employer definition analysis, the DOL ALJ found that Respondent met the definition of “employer” since he exercised complete control over the hiring entity and the business’ employees, including hours, rate of pay, hiring decisions, and decisions concerning business operations. Accordingly, the DOL ALJ determined that Respondent Help Foundation of Omaha, Inc. was liable for the payment of H-1B LCA back wages and further found that Respondent was individually and directly liable under both the corporate veil piercing analysis and “employer” status analysis.

Wage & Hour Division v. Kutty, ARB No. 06-136, 01-LCA-010-025 (DOL ARB, 5/31/05) AILA Doc. No. 08072576.

SUMMARY:

The DOL Administrative Review Board (ARB) affirmed a finding that required Respondent to reimburse the costs of J1 waivers and H-1B visa costs to the employees. In so holding, the ARB found that the Respondent’s deduction of those costs – considered business expenses – from the employees’ wages constituted an impermissible deduction as it resulted in the employee’s cash wage to be below the prevailing wage attested to in the LCA.

The DOL ARB also affirmed that the Respondent had discriminated against the employees through wrongful termination and failure to pay wages. H-1B employers may not discharge or discriminate against an employee because the employee has disclosed information to the employer, or any other person, that the employee reasonably believes evidence of a violation. In this case, the Respondent terminated the employees after he had knowledge of their complaint. The ARB concluded that the assessment of civil penalties and debarment for two years from petitioning for nonimmigrant workers as a result of H-1B LCA violations and discrimination was reasonable and affirmed Respondent’s individual liability for penalties and back wages under the corporate veil piercing analysis.

Arramreddy v IK Solutions, Inc., 2006-LCA-00020 (11/15/06) AILA Doc. No. 08072565.

SUMMARY:

Under its “no benching” provisions, the INA requires an employer to pay the H-1B employee the required wage specified on the Labor Condition Application (LCA) even if the employee is in a non-productive status because of a lack of assigned work or some other employment-related reason. However, an employer is not required to pay wages to H-1B employees in non-productive status at their ‘voluntary request and convenience’ such as a requested leave of absence.

In this case, the DOL ALJ dismissed the employee’s appeal of the Administrator’s assessment of back wages owed. Specifically, the DOL ALJ found that the Respondent did not have to pay the employee the wages demanded because the employee’s unavailability and non-productive status (during which time, no wages distributed) were due to conditions unrelated to employment.

Administrator, Wage & Hour Div. v Avenue Dental Care, 2006-LCA-00029 (6/28/07) AILA Doc. No. 08072560.

SUMMARY:

The DOL ALJ found Respondent liable – both as the petitioning entity and individually liable using the corporate veil piercing analysis – for the back payment of H-1B LCA wages. It also found that the employer, not the employee, is responsible for adhering to the LCA requirements including payment of wages, posting and notice requirements, recordkeeping, and duty to notify DOL of changes in the terms of employment. Additionally, all wage deductions related to the acquisition of the LCA and H-1B visa status must be reimbursed if the deductions result in a cash wage less than required wage stated in the LCA.

The DOL ALJ also upheld the assessment of civil penalties against the Respondent for willful failure to pay the required wages and failure to maintain proper public access files (which was considered failure to cooperate in the investigation). Because the violations were found to be willful, Respondent was also debarred from participation in the H-1B program for a period of two years.

Administrator, Wage & Hour Div. v. Geysers International, Inc., 2006-LCA-00005 (12/11/06).

SUMMARY:

To effectuate a bona fide termination of employment, an employer must notify both the employee and Citizenship and Immigration Services (CIS) that it has terminated the employment relationship and provide the employee with payment for transportation home. Until a bona fide termination of employment occurs, an employer is liable for payment of H-1B LCA back wages. In this case, the DOL ALJ found that Respondent liable for back wages as he had not effectuated a bona fide termination of employment because he neither notified the Immigration Service or the employee of the termination nor provided transportation costs for the employee’s trip home.

The DOL ALJ further noted that while an employer may, under some circumstances, convert per diem wages into salary, Respondent in this case had not met the requirements. Specifically, the conversion of per diem wages to meet the prevailing wage is permitted where both wages and per diem were paid during the same pay period and the total of two exceed the prevailing wage. In the instant case, Respondent had attempted to impermissibly convert per diem wages to meet the prevailing wage for pay periods in which no wages were paid.