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Summary of Department of
Labor December 20, 2000
Interim Final H1B Regulations (ACWIA 1998)
Excerpted from the American Immigration
Lawyers Association
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NOTE: This regulation is extensive,
complex and highly detailed. This summary touches on only some
of the issues raised by the regulation-there are many other
items that are not covered here. This summary is cannot serve
as a substitute for an attorney’s review and analysis of the
regulation and should be read strictly as an attempt to highlight
some of the many changes initiated by the new DOL regulation.
This summary covers provisions of general applicability;
see also summary of provisions concerning H1B-dependent
employers.
FILING THE LCA
Filing the LCA.
A new, 3-page form is included in the regulation. The form can
be filed via faxback system using an “800” telephone
number, or can be submitted by mail to the Philadelphia DOL
Regional Office post office box (no private carriers). Individual
regions will no longer process LCAs. If the form is mailed in,
it will be scanned into the faxback system. There will be a
transitional period, from January 19, 2001 until February 5,
2001, during which the faxback system will not be useable, and
LCAs can be submitted only by mailing the new form to the Philadelphia
address. However, after January 19, 2001, only the new
three-page form published with the regulation will be accepted.
The new form removes the actual text of the attestation elements
to a new “cover page” which does not need to be submitted
to DOL, but must be included in the public access file, be part
of any posting of the form (electronic or hard copy) and be
provided to the H1B employee. The form will be available for
download (along with a form filler program) from DOL’s website
at http://ows.doleta.gov.
Back to top.
H1B PORTABILITY
H1B portability.
The regulation indicates that AC21’s H1B portability provision
cannot be used until a petition is filed with INS that is supported
by a certified LCA. Back to top.
CORPORATE RESTRUCTURING
AND AMENDED PETITIONS
Corporate reorganizations.
As long as the conditions specified by the DOL are met, no new
LCA must be filed to continue employment of existing H1B employees
when a corporate reorganization occurs. However, the new entity
will be required to maintain a list of the H1B employees transferred
to it, and to maintain in the public access file a list of the
affected LCA numbers and their dates of certification, a description
of the new entity’s actual wage system, the EIN of the new entity,
and a sworn statement from an authorized representative of the
new entity expressly assuming the liabilities and obligations
of the existing LCAs and containing certain specified language
(including, according to the preamble, assumption of liability
for any violations by the previous entity under the LCA). According
to the regulation, the new entity “shall not” employ
any of the predecessor’s H1B employees unless either this statement
is executed and placed in the public access file or new LCAs
and petitions are filed. Successors will not be able
to use existing LCAs of the predecessor company to file new
petitions or extend existing petitions. If the restructuring
results in a change in the company’s dependency status, there
will be no effect on the employer’s obligations with respect
to existing H1B employees, but any new H1B hire or extensions
of status for existing H1Bs would be subject to whatever rules
would now apply to the company (dependent or non-dependent.)
Back to top.
TRAVELING H1B EMPLOYEES
Traveling employees.
A multi-tiered inquiry is involved in determining
what, under the regulations, needs to be done when H1B employees
travel. The first tier involves the question of whether the
travel needs to be of concern at all. Essentially, if the employee’s
travel does NOT involve going to a new “place of employment”
or “worksite,” one need not be concerned with any
special traveling employee rules. The regulation includes a
new, detailed definition of “place of employment.”
It is not a “place of employment” if the “nature
and duration” of the employee’s job functions necessitate
frequent changes of location with little time at any one place.
To meet this criterion, the job (as opposed to the employer’s
business) must be peripatetic in nature, the duties must require
that most work time be spent at one location but occasional
travel for short periods is needed to other locations, AND the
travel must be on “a casual, short-term basis, which can
be recurring but not excessive (i.e., not exceeding five consecutive
workdays for any one visit by a peripatetic worker, or 10 consecutive
workdays for any one visit by a worker who spends most work
time at one location and travels occasionally to other locations).”
Examples cited that could meet these criteria
for not being a new place of employment include computer engineers
who troubleshoot at customer sites; physical therapists making
home visits “within an area of employment;” or sales
representatives making customer calls. Examples of those not
meeting these criteria, and therefore going to “places
of employment,” include computer engineers who work on
projects for weeks or months at a time; physical therapists
who “fill in” for other therapists for extended periods
or who are placed by contractor companies; or a sales representative
who is assigned on a continuing basis to a location away from
the home office. It is also not a “place of employment”
if the H1B employee is temporarily at a different location for
developmental activity (seminars, etc.), unless he or she is
an instructor or a member of support staff who “continuously
or regularly” performs duties at such locations. There
is no time limit for attendance at a different location for
developmental activity according to the preamble.
Where the person travels to a location that
does not constitute a new “place of employment,” under
these rules, then the LCA obligations are tied to the regular
work location. Employers are required to reimburse for travel
expenses during such travel.
If, however, the travel constitutes going to
a new “place of employment,” a second tier of inquiry
is necessary. If the travel is within the same area of intended
employment, Section 655.734 requires that notices be posted
at new worksites within that area on or before the date that
the H1B employee reports to that site. If the travel is outside
the area of intended employment shown on the LCA, the new Section
655.735 is invoked. In essence that section requires that either
a new LCA must be filed before the travel can take place, or
detailed “short-term placement” rules must be followed.
Those rules limit short-term placements to 30 workdays at any
worksite not listed on the LCA in any given fiscal or calendar
year. However, a short-term placement can be for up to 60 workdays
in a one-year period if the H1B employee continues to maintain
a work station at the “permanent” worksite and spends
a substantial amount of there during the year, and if the employee’s
place of abode is in the area of the permanent worksite. The
regulation prohibits employers from making the employee’s initial
assignment at a short-term placement location. It also prohibits
use of the short-term placement rules in any area of employment
where the employer has a certified LCA for that occupational
classification. In that case, the employer must apply the conditions
of that LCA (wage rate, strike or lockout) to the new H1B employee.
The preamble states that if the employer’s LCA has open “slots,”
nothing more must be done. However, if the employer moves more
H1B employees into the area than it has available “slots,”
DOL states in the preamble that it expects the employer will
take steps to correct the situation by filing new LCAs. In an
enforcement context, DOL may, “in its discretion, overlook
‘overcrowding’ of the LCA, if it is not substantial.”
Employers choosing to use the short-term placement
rule (rather than filing a new LCA) for areas where they do
not already have an LCA must continue to pay the required wage
based on the permanent worksite, and must pay the employee’s
actual cost of travel, lodging, meals and incidentals for workdays
and non-workdays at the short-term site. The employer is not
required to meet GSA per diem schedules, but, according to the
preamble, in an enforcement proceeding if the employer cannot
document the actual expenses, DOL will use the GSA schedules
to determine appropriate reimbursement.
Once the workday limit is reached at a location,
the employer must either file an LCA for that site (the language
of the regulation is vague as to whether the LCA must be certified
at the time the limit is reached) or remove the employee. If
any employee exceeds the time limit, or the employer in any
other way “violates the terms of” the LCA, and the
short-term placement option cannot thereafter be used by that
employer for any H1B employees in that occupational classification
in that area of employment. Employers also are “cautioned”
against continuously rotating H1B nonimmigrants to an area of
employment “in a manner that would defeat the purpose of
the short-term placement option.” Back to top.
PREVAILING AND ACTUAL
WAGE ISSUES
Prevailing wage-Service Contract
Act wages. For purposes of SCA wage
determinations, it is irrelevant whether the worker is employed
on an SCA-subject contract, and whether the worker would be
exempt from the SCA under the “professional employee”
exemption test. Also, if an SCA wage determination for a computer
professional states a rate of $27.63 per hour, that rate may
not be used (due, according to the regulation, to a quirk in
the SCA system). This provision appears to be effective immediately
(the regulation indicates that Section 655.731(a)(2) is effective
immediately, but there are two subparagraphs with that same
number. The other subparagraph (a)(2)-relating to prevailing
wages for institutions of higher education and others-most likely
is the one intended to be effective immediately, but DOL may
have meant to also make this subparagraph effective immediately).
Back to top.
Prevailing and actual wage
when new prevailing wage is obtained.
The regulation indicates that the prevailing wage as to any
particular H1B employee is governed by the LCA that supports
that individual’s petition, and that prevailing wage determinations
on later LCAs for the same occupation do not operate as an “update”
of the prevailing wage of earlier LCAs. However, the regulation
seems to indicate that, because the DOL views actual wage as
a “dynamic” matter, an increase in pay for new employees
because of an increase in the prevailing wage could cause the
actual wage to also rise and create an obligation to increase
the wages of the H1B employees under old LCAs. Back to top.
Actual Wage Documentation.
The Interim Final Rule also drops the entire Appendix A
from the Notice of Proposed Rulemaking (“NPRM”), which
contained DOL’s “guidance” regarding documentation
of the actual wage. The requirement from the NPRM that employers
must have an objective wage system “sufficiently detailed
to enable a third party to apply the system to arrive at the
actual wage rate computed by the employer for any H1B nonimmigrant”
has been deleted. In the preamble to this Interim Final Rule,
DOL states that the system does not have to be “objective”
but must only use “legitimate business factors.” DOL
is “persuaded that some subjective factors, such as an
evaluation of performance levels,” may be legitimate. Also,
the documentation must only be detailed enough that a third
party can “understand how the employer applied its pay
system to arrive at the actual wage for its H1B nonimmigrant(s).”
The preamble also states that the description in the public
access file should, at a minimum, contain the business-related
factors that are used in setting wages and the manner in which
they are implemented (e.g., the wage/salary range for the position
and the pay differentials for various factors such as education
and job experience). Back to top.
Prevailing wage for employees
in higher education, Governmental or nonprofit research organizations.
In this notice, the DOL amends the regulations on this subject
for both LCAs and the permanent labor certification process.
To qualify to use the separate prevailing wage categories for
this grouping, institutions of higher education must be accredited
or pre-accredited. Governmental research organizations, which
must be U.S. government entities, and nonprofit research entities
must have a primary mission of performance or promotion of basic
or applied research, which can include sciences, social sciences
or humanities. This provision is effective immediately, and
is retroactive as to prevailing wage determinations “that
were not final as of October 21, 1998.” Back to top.
EMPLOYEE BENEFITS
Employee Benefits.
ACWIA requires that benefits be offered to H1B nonimmigrants
on the same basis, and in accordance with the same criteria,
as they are offered to the employer’s U.S. workers. The regulation
defines this to mean that H1Bs must be offered the same benefit
package as U.S. workers, cannot be subjected to stricter eligibility
criteria, and cannot be treated as “temporary employees”
for benefits purposes by virtue of their nonimmigrant status.
The benefits received by the H1B employee do not have to be
identical to those received by U.S. workers, as long as the
same benefits package was offered and the H1B voluntarily chose
different benefits (and the employee actually receives the benefits
elected). Multinational companies can keep transferred employees
on the foreign payroll and offer “home country” benefits
under certain circumstances.
The regulations require that employers retain,
as documentation of the benefits attestation, a copy of benefit
plan descriptions provided to employees, a copy of the benefit
plans themselves and any rules used for differentiating benefits
among groups of employees, evidence as to what benefits are
actually provided to U.S. workers and H1B nonimmigrants, and
the benefit elections made by those employees. If the employer
is a multinational employer providing “home country”
benefits, evidence of the benefits provided to the H1B nonimmigrant
before and after the move to the U.S. also must be maintained.
For violations of this provision, the DOL gives
itself authority in Section 655.810 to assess payment of “back…fringe
benefits.” The preamble discusses the DOL view that certain
benefits “are in the nature of compensation for services
rendered” and have a monetary value (such as paid vacations
and holidays, bonuses and termination pay, which are taxable
to the employee when earned, and health, life and disability
insurance, deferred compensation such as retirement plans and
stock options funded by employers). The preamble also states
DOL’s view that these items are more “in the nature of
wages than working conditions” and the department will
enforce violations of these under the wage. Back to top.
BENCHING (NON-PRODUCTIVE
EMPLOYEES)
Benching. If
an H1B employee is in a nonproductive status due to a “decision
by the employer,” which includes lack of work assignments
and lack of a permit or license, the employee must nevertheless
be paid the full pro-rata amount due. Part time employees in
nonproductive status must be paid at least the number of hours
indicated on the petition. If a range of hours is indicated
on the petition, then the employee must be paid for the average
number of hours he or she ordinarily works. The preamble indicates
that if an employee regularly works more than the designated
number of part-time hours stated on the petition, DOL might
charge the employer with misrepresentation.
If the nonproductive period is due to “conditions
unrelated to employment” at the employee’s “voluntary
request and convenience” (such as caring for a sick relative
or touring the U.S.) or due to circumstances like maternity
leave that render the employee unable to work, the employer
is not obligated to pay the employee, provided the period is
not subject to pay under the employer’s benefit plan or under
other statutes. The preamble makes clear that DOL cannot “forgive”
employers from compliance with this rule due to annual plant
shutdowns or holidays or other events that affect both U.S.
workers and H1B nonimmigrants. However, DOL indicates its view
that laying off U.S. workers in such situations while retaining
H1B nonimmigrants may violate other nondiscrimination laws.
Such an action would also be a violation of the ACWIA layoff
attestation for H1B dependent employers, in the DOL’s view.
These obligations begin once the H1B employee
“enters into employment,” which is deemed to occur
when the individual first makes him or herself available. The
regulation indicates that “even if the nonimmigrant has
not yet ‘entered into employment’,” once the petition is
approved, the required wage must start to be paid 30 days after
the nonimmigrant is first admitted to the U.S., or if he or
she is already here, 60 days after the nonimmigrant first becomes
eligible to work for the employer. The latter is deemed to be
the later of the start date set forth on the petition or the
date INS renders a status decision. Payment obligation ends
if there has been a “bona fide” termination of the
employment relationship. While the language of the regulation
itself is less than clear on this point, the preamble indicates
that a “bona fide” termination will be deemed to have
occurred only when the employer notifies the INS of the termination,
the H1B petition is canceled, and the return fare obligation
is fulfilled. Back to top.
ATTORNEY FEES
Attorney fees.
The effect of this regulation is to make it a violation
of the required wage provisions if the H1B employee pays “attorney
fees and other costs connected to the performance of H1B program
functions which are required to be performed by the employer
(e.g., preparation and filing of LCA and H1B petition)”
such that, when deducted from the employee’s wage, the wage
would be below the higher of the actual or the prevailing wage.
(If such payments would not reduce the employee’s wage beneath
the required wage, such payments are permissible.) The regulation
at Section 655.731(c)(9)(iii)(C) terms the deduction of such
fees and costs from the employee’s wages as a “recoupment
of the employer’s business expense,” and then at Section
655.731(c)(12) deems the act of “imposing on the employee”
such an expense to be an unauthorized deduction from wages.
These provisions were included in the NPRM’s Appendix B, which
has now been eliminated, and are now incorporated in the actual
regulatory text. Back to top.
PENALTIES AND LIQUIDATED
DAMAGES
The “no penalty”
penalty. ACWIA prohibits the requirement
of payment of a penalty for the H1B employee ceasing employment
prior to an agreed date, except that the employer may receive
liquidated damages in such a case. The interim regulation does
not contain the requirement that was in the proposed regulation
that a court order would be necessary for a repayment to constitute
liquidated damages, instead defining liquidated damages by reference
to state law. However, the regulation indicates that liquidated
damages cannot be collected by deduction from the employee’s
paycheck. The preamble states that recoupment of attorneys fees
may be included in liquidated damages. In any event, the regulation
indicates that the $1,000 “training” fee could never
be a part of liquidated damages and cannot be recouped in any
form. Back to top.
POSTING NOTICE OF H1B
WORKERS
Notice requirement.
The regulation reinstates the requirement, struck down by the
NAM lawsuit, that notices must be posted at new worksites within
the area of intended employment on or before the date that the
H1B employee reports to that site. It also explicitly requires
postings not only in the employer’s own facility, but at third
party worksites. Electronic notice is allowed, either by a one-time
direct notice (such as email) to employees in the occupational
classification at the place of employment or by making the notice
available for 10 days by electronic means such as a company
intranet or bulletin board. Back to top.
COMPLAINTS
Complaints by non-aggrieved
parties. For the first time, ACWIA
authorized the DOL to conduct investigations, under certain
specified circumstances, based on information received from
persons who would not be considered aggrieved parties. The regulation
sets forth a process for receiving such information, which the
DOL will then review to determine whether the source is likely
to possess relevant knowledge, whether the information provided
is specific and credible and provides reasonable cause to believe
that the employer has committed a violation, and whether the
alleged violation is willful, involves a pattern or practice,
or involves substantial violations affecting multiple employees.
The regulation specifies that “information” does not
include information from DOL employees unless obtained in the
course of a lawful investigation. In the preamble, DOL provides
a lengthy discussion of its belief that this new authority does
not in any way diminish its ability to conduct “directed”
investigations without a complaint. However, the preamble also
states that during the period when this new “other source”
investigative authority is in place, it intends to investigate
only under a complaint from an aggrieved party (including information
obtained during an investigation under the INA or any other
law) and random investigations of willful violators (as authorized
by ACWIA). Back to top.
VIOLATIONS,
PENALTIES AND INVESTIGATIONS
New violations and penalties;
investigations. The regulation creates
a new rule by which a violation of other rules that “impede”
the ability of the DOL to investigate or the ability of members
of the public to obtain information needed to file a complaint
can make an employer subject to a $1,000 civil penalty. The
preamble indicates this penalty will apply for violations preventing
public access or record-keeping violations. The preamble also
contains a lengthy discussion of DOL’s interpretation that it
has the authority to order “make whole relief” including
reinstatement of dismissed employees, as part of its “administrative
remedies.” DOL also gives itself the authority to interview
complainants and extend the 30-day period for investigations
if due to reasons “outside of the control” of DOL
and additional time is necessary to obtain information from
the employer or other sources. Back to top.
KEY DATES
Key dates.
Unless otherwise noted, the provisions of this regulation are
effective January 19, 2000. Comments are due February 20, 2001,
except for comments on a new proposed form for collecting information
to determine if a violation has been committed. Comments on
that form are due January 19, 2001. Back to top.
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