H1B public access files

Return to Main Employer Issues page

Compliance with the H1b regulations is a new area of emphasis for the government. In the past, the DOL has brought fines and back pay actions in response to complaints filed by disgruntled employees. Today, both the DOL and ICE are proactively investigating companies based on profile information provided in H1b filings.

For example, In January, 2009 Vision Systems Group, an IT consulting company in Iowa, was the target of a ten count criminal indictment. This included one count of conspiracy, eight counts of mail fraud, and a notice of forfeiture amounting to $7,400,000. The government’s charging document alleged that company personnel submitted false statements and documents via wire and mail to federal agencies. Specific allegations included false representations as to work locations, submission of applications which omitted notice that the employee would be working for a third party at a different job site, showing the job site as Iowa for purposes of obtaining a lower prevailing wage, and falsely representing the numbers of workers employed by the company. Eleven management employees were arrested.

H1b compliance is particularly important because of the potential for massive monetary sanctions. Beyond monetary sanctions and possible criminal complaints for fraud, there is also the very real possibility of temporary or even permanent debarment from the H1b program for violations.

Employers of H1b personnel must be particularly mindful of violations of the regulations concerning H1b workers. Presently, the government is following a “zero tolerance” policy, meaning that all violations will result in civil fines, at the very least.

In late 2008, the CIS received a report on the subject of alleged H1b and L visa fraud and abuse. The most common problem cited was failure to regularly pay the promised wage to H1b employees. The report alleged a 20% non-compliance rate for this issue. Other problems cited including failure to obtain LCAs for actual work sites, failure to obtain accurate prevailing wage figures, and misclassification of jobs.

In the wake of that report, the CIS developed a fraud profile for suspect petitioners. This profile includes the following criteria:

· Gross annual income less than $10 million;

· Company claims fewer than 25 employees;

· Company established less than 10 years;

· Not paying the claimed wage;

· Location of the LCA is different from the actual place of employment;

· LCA codes do not match the claimed duties in the petition;

· Company identified in the Fraud Information Database;

· Records show significant discrepancies between the number of petitions filed in the last three years and the current number of employees;

The CIS recently revealed that they are creating on-line employer profiles. These profiles will include such things as company size, financial information, number and types of nonimmigrant and immigrant petitions filed, among other items of information. The CIS will refer to this information when adjudicating nonimmigrant and immigrant petitions prospectively. They will also share this information with Immigration and Customs Enforcement (ICE) to develop enforcement profiles.

The Department of Justice uses the factors articulated in their “McNulty memorandum, to determine whether a company or an individual should be the target of a criminal investigation. These include .:

1. How widespread was the activity?

2. To what degree was corporate management in the wrongdoing?

3. How high up and how extensive was the complicity of management?

4. Was there timely and voluntary disclosure of wrongdoing and cooperation in the investigation?

5. To what extent was there the existence of a preexisting compliance program?

6. What, if any, remedial actions – including an effective compliance program, replacing responsible management, and termination of wrongdoers – did management undertake?

In the event criminal charges are brought, and a conviction is obtained, federal judges use sentencing guidelines that employ a “culpability score.” To the extent that companies are able to show investigators that they meet most or all of the criteria found in the mitigation guidelines, they will likely avoid a criminal inquiry. The guidelines include the following factors:

· Establishment of standards and procedures to detect/prevent criminal conduct

· Board (or committee) and senior management oversight

· Screening of management personnel for past illegal conduct

· Training/dissemination of information regarding compliance and ethics for directors and employees

· Monitoring compliance with and auditing effectiveness of program

· Promotion and enforcement of program

· Appropriate response to violations of program

What are the key elements to include in a corporate immigration compliance policy?

· The policy language should be clear and understandable, and should plainly state that all employees are to comply with relevant federal, state, and local immigration laws, and behave at all times in an ethical manner.

· The policy should require that a compliance officer be selected. This should be an employee who is ultimately responsible for ensuring that the company and its employees and agents understand the laws and comply with the policy.

· The policy should require regular training programs for all levels of employees—from senior management down to the receptionists.

· A monitoring system should be established to measure compliance with the policy and its effectiveness.

· Ramifications for violation of the policy should be spelled out clearly and applied uniformly.

· In consultation with litigation counsel, a procedure should be established for dealing with government visits, audits, investigations, and raids. This procedure should be communicated to “front-line” employees, including security guards, receptionists, etc.

· Ensure that the company provides post-audit and post-raid training for all involved individuals to further protect the company from follow-up actions by the government.

While ICE has recently stepped up enforcement of H1b compliance, the DOL has been active in this area for many years. The new Labor Secretary announced that her department intends to increase the number of field investigators by 50% in the immediate future. The DOL also intends to develop fraud profiles and use them to develop audit programs.

Employers should understand that when a government agency develops and uses a fraud profile, it is important for them to include companies that are obviously not engaging in fraudulent practices. This is done to validate the fraud profile. Thus, many companies with spotless records can expect to be audited as part of the government’s anti-fraud efforts.

Apart from random and anti-fraud profile driven audits, there are also complaint driven H1b audits. These occur when an employee files a complaint with the DOL. In most cases, such complaints are filed by foreign national employees who feel that they were not treated properly while employed, or perhaps improperly terminated. Other complaints are filed by U.S. workers who feel that the company has unfairly favored foreign nationals over U.S. employees. Still others are filed by persons outside the company who object to the company’s H1b program. It really doesn’t matter what triggers an audit, if a company is audited, the government will look for every possible violation and impose fines for every violation found.

With all of this in mind, let’s turn to the regulatory requirements involved in H1b compliance.

The Labor Condition Attestation (LCA)

The cornerstone of H1b compliance is the labor condition attestation, or LCA. It is not possible to file an H1b petition without a valid LCA. In applying for an LCA, the employer must make certain representations under oath to the DOL. These include the actual job the employee will do, the actual job site where the employee will work, and the actual salary the employee will receive. Let’s examine these requirements individually.

The DOL regulations require that in the LCA, the employer must state that it will:

· Pay the nonimmigrant workers at least the local prevailing wage or the employer's actual wage, whichever is higher; pay for non-productive time in certain circumstances; and offer benefits on the same basis as for U.S. workers;

· Provide working conditions for H1b workers that will not adversely affect the working conditions of workers similarly employed;

· Not employ an H1b worker at a location where a strike or lockout in the occupational classification is occurring, and notify the Employment and Training Administration (ETA) of any future strike or lockout; and

· On or within 30 days before the date the LCA is filed with the ETA, provide notice of the employer's intent to hire H1b. The employer must provide this notice to the bargaining representative of workers in the occupation in which the H1b will be employed. If there is no bargaining representative, the employer must post such notices in conspicuous locations at the intended place(s) of employment, or provide them electronically.

The job described in the LCA must be the same job that is described in the H1b petition and must be the actual job the employee will perform. If there is any significant difference between the LCA, the petition, or the actual job, then the LCA becomes invalid. If the nature of the job changes after the LCA is certified, then the employer must file an amended LCA immediately. Failure to describe the job accurately, if discovered in the course of an audit, will result in a fine or worse.

It is essential that the employer disclose the actual job site in the LCA. Once issued, an LCA remains valid if the employee work site changes within the same metropolitan statistical area (MSA). If the new job site is outside the same MSA, however, then a new LCA is needed. MSA is important in that the DOL related prevailing wage findings to limited geographic areas. The most finite of these is the MSA. Thus, if an employee changes job locations, and the new job location is in a different MSA, the wage finding is no longer valid and a new LCA is required.

Prevailing wage.

The DOL is very strict on the issue of prevailing wage. An employer can obtain a “safe harbor” with respect to the issue of prevailing wage by asking the state employment agency for a formal prevailing wage finding. This involves submitting a prevailing wage request (PWR) to the state workforce agency (SWA) where the work will be done. The SWA will then make a formal finding as to what they consider the “prevailing wage” in the area of intending employment for the specific job described. An employer may rely on this prevailing wage determination (PWD) as long as the employee works at the job site shown in the PWR and performs the duties described in the PWR. The DOL may not challenge this finding later. If the employer has not obtained a PWD for the work, then the DOL reserves the right to make a de novo determination as to the prevailing wage in the context of a subsequent audit of the employer’s records.

Note that the DOL requires the employer to pay at least the local prevailing wage or the employer's actual wage – whichever is higher. This means that an employer may not pay H1b workers less than other workers in the company with similar qualifications, doing the same or similar work.

New/Amended LCA

If a material change in the terms of employment occurs, an amended petition or withdrawal is required.

What is material change?

A "material change" is one that may affect the foreign national’s eligibility for the classification. INS policy memoranda have said the following are material changes:

· Transfer from one entity to another entity within the same organization;

· Change in job location that invalidates the supporting LCA;

· Change in duties from one specialty occupation to another.

· INS memoranda state the following are not material changes:

· Change of the company’s name;

· Change in ownership structure of the petitioning entity, provided the new entity assumes the previous owner’s immigration duties and liabilities;

· Promotion or change in job title that does not result in a significant change in job duties;

· Change in job location for which a new LCA is not required.

Penalties/Sanctions

When violations of the regulations are found, the DOL may assess civil money penalties with maximums ranging from $1,000 to $35,000 per violation, depending on the type and severity of the violation. The DOL may also impose other remedies, including payment of back wages.

Within 15 days of the date of the DOL’s determination that a violation has occurred, any interested party may request a hearing on the DOL's determination before an administrative law judge. Within 30 days of the decision by an Administrative Law Judge, an interested party may request a review of the ALJ's decision by the Department's Administrative Review Board.

Employers found to have committed certain violations may also be precluded from future access to the H1b program and other immigrant programs for a period of at least one year. This is known as “debarment”. An employer that has been debarred may not employ H1b workers nor file permanent labor certification applications on behalf of employees for a period of at least one year.

Since March 8, 2005, an H1b employer will be considered in compliance notwithstanding a technical or procedural failure if the employer:

· Makes a good faith attempt to comply;

· Voluntarily corrects violations within 10 business days of being advised by an enforcement authority; and

· Has not engaged in a pattern or practice of willful violations; and

· For prevailing wage violations, can establish that the wage was calculated consistent with recognized industry standards and practices.

Public access files

Employers of H1b nonimmigrants must create and maintain public access files for each employee. Such files must be created within one working day after the day the LCA is filed with the DOL. The file must be maintained at the employer’s principal place of business or the place of employment.

The public access file must contain:

· A copy of the certified labor condition application;

· Documentation which provides the wage rate to be paid the H-1B nonimmigrant;

· A full, clear explanation of the system that the employer used to set the "actual wage" the employer has paid or will pay workers in the occupation for which the H-1B nonimmigrant is sought, including any periodic increases which the system may provide--e.g., memorandum summarizing the system or a copy of the employer's pay system or scale;

· A copy of the documentation the employer used to establish the "prevailing wage" for the occupation for which the H-1B nonimmigrant is sought (a general description of the source and methodology is all that is required to be made available for public examination; the underlying individual wage data relied upon to determine the prevailing wage is not a public record, although it shall be made available to the Department in an enforcement action);

· A copy of the document(s) with which the employer has satisfied the union/employee notification requirements of 20 CFR §655.734;

· A summary of the benefits offered to U.S. workers in the same occupational classifications as H-1B nonimmigrants, a statement as to how any differentiation in benefits is made where not all employees are offered or receive the same benefits (such summary need not include proprietary information such as the costs of the benefits to the employer, or the details of stock options or incentive distributions), and/or, where applicable, a statement that some/all H-1B nonimmigrants are receiving "home country" benefits;

· Where the employer utilizes the definition of "single employer" in the IRC, a list of any entities included as part of the single employer in making the determination as to its H-1B-dependency status;

· Where the employer is H-1B-dependent and/or a willful violator, and indicates on the LCA(s) that only "exempt" H-1B nonimmigrants will be employed, a list of such "exempt" H-1B nonimmigrants;

· Where the employer is H-1B-dependent or a willful violator, a summary of the recruitment methods used and the time frames of recruitment of U.S. workers (or copies of pertinent documents showing this information).

Retention of records

The employer must retain these records, either at the employer's principal place of business in the U.S. or at the place of employment, for a period of one year beyond the last date on which any H-1B nonimmigrant is employed under the labor condition application or, if no nonimmigrants were employed under the labor condition application, one year from the date the labor condition application expired or was withdrawn.

Required payroll records for the H-1B employees and other employees in the occupational classification shall be retained at the employer's principal place of business in the U.S. or at the place of employment for a period of three years from the date(s) of the creation of the record(s), except that if an enforcement action is commenced, all payroll records shall be retained until the enforcement proceeding is completed through the procedures set forth in subpart I of this part.

Public access

For the duration of the LCA’s validity, and as long thereafter as the employer has H1b workers, the employer must make the public access file available to interested parties within 72 hours of receiving a written or oral request.

H1b employee copy

Employers are required to provide H1b employees with a complete copy of the certified LCA no later than the first day the employee reports for work.

No “benching”

Employers must pay H1b workers the wage shown on the LCA, or the actual wage –whichever is higher, at all times while the LCA is effective. Employers who fail to pay the promised wage are subject to fines and payment of back wages, with penalties. If an employer cannot pay an H1b worker, the employer must terminate the H1b and withdraw both the LCA and the H1b petition. Unless and until an employer withdraws both, the employer remains liable for the promised wage.

Employees may request time off without pay. For example, if an employer is large enough to be subject to the Family Leave Act, employee may demand time off without pay as a matter of right. In such cases, it is incumbent upon the employer to document the fact that the employee requested the time off and that it was not due to the employer’s lack or work or inability to pay the promised wage. The DOL presumes that all unpaid time is the result of the employer’s inability to pay, unless the employer offers persuasive proof to the contrary.

H1b petitions

Apart from the DOL enforcement regime, the USCIS also monitors H1b petitions closely. When they find instances of suspected fraud or noncompliance, they refer such cases to Immigration and Customs Enforcement (ICE) for investigation and possible prosecution.

The CIS fraud report (discussed previously) articulated many areas of concern now emphasized by the CIS in their adjudications. Of late, the CIS has followed a “zero tolerance” policy with respect to petitioner failures to comply with USCIS H1b regulations.

The CIS expects H1b petitioners (employers) to amend or withdraw petitions as material conditions change. For example, if an employee changes job locations, the petitioner must review the facts to determine whether an amended H1b petition is required. Generally speaking, when an employer must amend an LCA, then an H1b petition amendment is almost always required as well.

As with LCAs, when an H1b worker terminates before the end of the petition validity period, the CIS expects the petitioner to notify them and withdraw the petition. Failure to do this subjects the petitioner to continuing enforcement liability.