Attention 
H-1B Sponsoring Employers and Immigration Attorneys

H-1B Labor Condition Application.

Wages
Work conditions
Benching
Labor disputes
Notice
Displacement
Recruitment
Dependent employer
H1B requirements

On December 20, 2000, the Department of Labor issued new regulations regarding the H-1B labor condition application ("LCA"), Form ETA 9035. This article includes information about the new regulations.

The LCA is a document that must be filed with the Department of Labor's Employment and Training Administration. A new, three page form is now available and must be used on all new cases after January 19, 2001. The new form can be filed via facsimile or to a post office box, although the government advises that its new faxback system will not be usable from January 19 to February 5. The approved LCA must accompany each H-1B petition or petition extension. The LCA indicates the proposed job title, the number of H-1B workers sought, the rate of pay, the anticipated employment period, and job site.

In addition to submitting the LCA form to the Department of Labor for approval, employers are required to provide notice of the LCA to the union or collective bargaining representative at the job site, or, if there is none, to post a notice in two places of the LCA at the job site for ten consecutive business days.

Although current DOL regulations prohibit employers from requiring H1B professionals pay a penalty in cases where the professional stops employment before the H1B petition expires, employers and employees may agree to liquidated damages. Employers should take care should be taken in drafting such provisions, however. Such provisions may put the employer at a competitive disadvantage in attracting workers and DOL regulations contain specific prohibitions regarding how these damages may be calculated and collected.

An employer seeking to employ an H-1B worker states on the LCA Form ETA 9035 that the H-1B worker will receive the required wage. The required wage is the higher of the actual wage rate or the prevailing wage.

The actual wage rate is the wage paid by the employer to all other individuals with similar experience and qualifications for the job offered. Experience, qualifications, education, responsibility, job function, special knowledge, and other legitimate business factors may be considered.

The prevailing wage is determined by reference to wages paid by other employers to individuals with similar experience and qualifications in the area of intended employment. Employers may generally rely on survey data obtained from:

• state employment agencies;
• an independent authoritative source; or
• other legitimate source.

Survey Data from State Agencies. The appropriate state employment agency responsible for the place of employment sometimes has prevailing wage survey data the employer can obtain on request. Such determinations are accepted by the ETA as a matter of regulation. Unfortunately, the state agencies often lack the required survey data and there can be considerable processing delays if they need to conduct a survey. Furthermore, many employers have questioned the accuracy of the survey data reported by state agencies. There is a process to challenge the state agency's data, but the employment of the H-1B worker is delayed during the challenge and there is no guarantee of ultimate success.

Survey Data from Independent Authoritative Sources. Independent authoritative sources include wage information published in a book, newspaper, periodical, loose-leaf service, newsletter or other similar format. The date of publication must be within 24 months of the date the LCA is filed. The survey must show the average wage paid to similarly employed workers in the area of intended employment. The data must have been collected within 24 months of the date the survey was published. The employer can only rely on the most recently published findings of that source.

Survey Data from Other Legitimate Sources. Employers may utilize any legitimate source of wage information so long as the data reflects the weighted average wage paid to similarly employed workers in the area of intended employment. The data must be the most recent and accurate information available and be consistent with standards acceptable in producing a prevailing wage.

Note that the wage information is specific to the area of intended employment. Special rules apply where the H1B professional works at multiple job sites or is sent to a new job site. If the job requires the professional generally work at one site but with occasional short travel to other locations on a casual, short-term basis (not exceeding 5 consecutive workdays for any one visit for professionals that frequently travel or 10 consecutive days for professionals who travel only occasionally), then only wage information for the main site is required. Otherwise employers may be required to take further action. For example, if the new site is still within the same geographic area for wage survey purposes, then the employer may be required merely to post notices at the new site on or before the professional reports there. However, if the new site is outside the original geographic area, then the employer must generally file a new LCA before the assignment begins or comply with the DOL's short-term placement rules (up to 30 workdays per fiscal or calendar year or up to 60 if substantial time is spent at the original site and the professional maintains the home in that area). Further, the initial assignment cannot be at a short-term location, nor can the short-term rule be used for any site where the employer already has an LCA. Note that during short-term placements, the DOL requires employers to pay the required wage and actual cost of travel, lodging, meals and incidentals.

In calculating whether the wage offered is at the correct level, the DOL's new regulations take into account whether the H1B professional or the employer pays attorneys fees and other costs connected to the performance of H1B program functions required by the employer (e.g., preparation and filing of the LCA and H1B petition). Generally, either the professional or the employer may retain the attorney. But if the professional pays these legal fees and other costs, then this amount must be deducted from the employee's wage in calculating the wage paid for prevailing wage purposes. If this results in reducing the wage below the higher of the actual or prevailing wage, then the DOL will consider this unauthorized deduction from wages.

Employee benefits must be offered to H1B professionals on the same basis and criteria as to the employer's US workers. H1B professionals may elect voluntarily for different benefits. DOL regulations now recognize that multinational companies can keep transferred employees on the foreign payroll and can generally offer home country benefits.

Record keeping Requirement. The employer must retain documentation about the wage rate for all other employees for the employment in question at the work site beginning with the date the LCA was filed and continuing throughout the period of employment. There payroll records shall be kept for each such employee and must include their: name; residence address; occupation; rate of pay; hours worked; all additions and deductions from pay; and total wages. Further, the employer must show how it was determined that the wage set for the H-1B worker relates to the wage paid to other similarly employed workers. The employer must also retain documentation of how the prevailing wage rate was determined. This may include a copy of the prevailing wage determination issued by the appropriate state agency of a copy of the survey published by an independent authoritative source, etc. A copy of the benefit plan provided to employees, documentation of benefits provided to all workers and any benefit elections must be retained.

An employer seeking to employ an H-1B worker states on the LCA Form ETA 9035 that the employment of the H-1B worker will not adversely affect the working conditions of workers similarly employed in the area of intended employment.

"Similarly Employed" Defined. "Similarly employed" means having substantially comparable jobs in the occupational classification at the work site and in the area of intended employment. If no such workers are so employed, "similarly employed" means having jobs that require substantially similar skill levels in the area of intended employment. If there are no such workers in the area, the regulations require employers to look outside the area of intended employment.

"Working Conditions" Defined. "Working conditions" include hours, shifts, vacations, fringe benefits, etc.

Record keeping Requirement. The regulations do not provide much guidance as to what documentation should be maintained by the employer. The employer must be able to show that working conditions of similarly employed workers were similar before the employment of the H1B worker.

On the LCA, the employer promises to pay the H1B professional at a specific rate and on the H1B petition, the employer designates whether employment is full- or part-time (if part-time, then a range of hours can be indicated). Under the DOL's new regulations, even H1B professionals without a work assignment (i.e., benched) must be paid for at least the number of hours indicated on the petition or, if the petition indicates a range, the average number of hours ordinarily worked.

Benching rules do not apply where the employee is voluntarily not rendering services to the employer, such as maternity leave, unpaid vacation, etc.

These rules take effect within 30 days after the H1B professional enters the US or, if already in the US, within 60 days after the professional becomes eligible to work for the employer (based on petition start date or INS approval, which ever is later).

Benching does not take place after the employment relationship is terminated. The DOL's notice in the Federal Register states that termination occurs only when the employer notifies the INS and the petition is canceled. This point is not expressly addressed in the regulations, however.

Record keeping Requirement. Documentation of any voluntary request for leave by the employee, if granted, should be retained. For terminations, the notice to the INS and subsequent revocation should also be retained.

An employer seeking to employ an H-1B worker states on the LCA Form ETA 9035 that there is not strike or lockout in a labor dispute at the place of employment for the job classification offered to the H-1B worker.

The only labor disputes covered are those involving employees of the H-1B employer working at the place of employment listed on the LCA Form ETA 9035 in the occupational classification named on the LCA.

Labor Disputes After the LCA is Certified. If there is a strike of lockout after the LCA is certified, then the employer must submit to the ETA written notice of that labor dispute within three days. During the period of the LCA's validity, the employer cannot place or otherwise contract out an H-1B worker to any place where there is such a labor dispute. The certified LCA cannot be used by the employer in support of any H-1B visa petition filings until the ETA determines that the dispute has ended.

Record keeping Requirement. There are no special types of documentation required by the ETA to for the employer to prove that the relevant types of labor disputes never occurred, however, the burden of proof will be on the employer to prove this fact if there is an investigation. If an employer experiences any types of labor disputes similar to those relevant to the LCA, records should be kept of the start and stop dates, place of dispute and occupational class(es) affected.

An employer seeking to employ an H1B worker states on the LCA Form ETA 9035 that the employer provided notice of the filing of the LCA to the bargaining representative or, if there is no such bargaining representative, posted notice of the filing in conspicuous locations in the employer's establishment in the area of intended employment.

Posting. Where there is no bargaining representative, the employer shall on or before before the date the LCA is filed with the DOL post notice of the filing in at least two conspicuous locations at each place of employment. The DOL requires the posting even if the job site is at another company's premises. The notice must be of sufficient size and visibility that the employer's workers can easily read the notice. The notice can be placed in such locations as the wage and hour notices or the occupational safety and health notices that employers are required to post under other regulations. Notices must remain posted for a total of 10 working days. Alternatively, the notice may be posted by email or on a company intranet to employees in the same occupational classification as the H1B foreign professional.

With the December 20, 1994, revisions to the regulations, the employer must provide the H1B foreign professional with a copy of the LCA certified by the ETA on or before the day the H1B worker begins employment.

Record keeping Requirement. If there is a bargaining representative, the employer must retain a copy of the dated notice and the name and address of the bargaining representative to whom the notice was provided. If there is no representative, the employer must retain a copy of the posted notice and note the dates when and the locations where the notice was posted.

These records must be made available for public examination and to the ETA on request. The records must be retained at the employer's principal place of business in the U.S. or at the place of employment for a period of 1 year beyond the end of the employment stated on the LCA or 1 year from the date the LCA is withdrawn, unless an enforcement action is commenced.

H1B dependent employers and employers who, on or after the date of enactment, commit a willful violation within the five years preceding the filing of the LCA, are subject to the displacement and recruitment attestations, unless the employer is petitioning for an H1B foreign professional with a master's or higher degree or who receives compensation of at least $60,000 per year.

These employers must attest they have not "displaced" and will not displace any US worker employed by them within the period 90 days before and 90 days after the filing of an H1B petition based on that LCA. For this purpose, permissible termination (inadequate performance, etc) is not displacement. However, care must be taken during work force reductions and layoffs that result in the termination of similarly employed US workers.

Note that displacement can sometimes occur when the H1B professional is placed at another employer's site where there have been layoffs. This attestation includes that the employer will not place the H1B foreign professional with another employer, unless the H1B employer has inquired and has no knowledge of the fact that the other employer has displaced or will displace a US worker within the 90 days before and 90 days after the H1B foreign professional is placed with the other employer.

Recordkeeping: All records regarding the termination by the employer of similarly employed US workers, including name, address, job title/description, qualifications, offers of alternative employment, termination notice, any employee responses , etc. These are not required for the public access files, but must be available for DOL audit.

H1B dependent employers and employers who, on or after the date of enactment, commit a willful violation within the five years preceding the filing of the LCA, are subject to the displacement and recruitment attestations, unless the employer is petitioning for an H1B foreign professional with a master's or higher degree or receives compensation of at least $60,000 per year.

These employers must attest that they have taken good-faith steps to recruit in the US using industry-wide standards and offering prevailing wages and that they have offered the position to any US worker who applies and is equally or better qualified than the H1B foreign professional. Employers may use selection standards normal or customary to the profession involved, but cannot apply the standards in a discriminatory manner. The recruitment attestation is not required if the H1B foreign professional qualifies for the priority worker immigrant visa classification.

Recordkeeping: For the public access file, the employer should retain copies of the recruiting efforts, such as newspaper advertisements, internet postings, job fairs, on-campus recruiting or contracts with recruiters seems best, although DOL regulations suggest that an employer's memorandum may suffice. Documentation of industry-wide recruitment standards, such as organization surveys, consulting group reports, letters from trade groups, etc.

After much delay, the DOL issued on December 20, 2000, regulations to implement the H1B dependent employer law.

H1B dependent employers (and employers who, on or after the date of enactment, commit a willful violation within the five years preceding the filing of the LCA) are subject to the displacement and recruitment attestations. Such attestations are not required, however, for exempt H1B professionals. A professional is exempt if holding a Master's or higher degree (the DOL will not consider experience as equivalent to a degree for this purpose) in a relevant field or who earns wages equal to or greater than $60,000 annually (regardless of whether employed full- or part-time, however the amount can be pro rated for employees who work less than a full year), including bonuses and similar compensation.

Whether an employer is H1B dependent is determined by the ratio of full-time employees in the US to H1B foreign professionals as follows:

• If 1-25: 7+ H1Bs
• If 26-50: 12+ H1Bs
• If 50+: 15% or more H1Bs

Recordkeeping. A list of the names of all H1B professionals whose petitions are based on an LCA indicating it was used only for exempt H1B professionals. A record of the calculation is generally required. This is not required for the public access file, but must be available in the event of a DOL audit.

(C) Copyright 1995-2001 C. Matthew Schulz
(All Rights Reserved).