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LCA Compliance Issues for Employees of H-1B Workers

LCA Compliance Issues for Employees of H-1B Workers. Panelists: Kamlesh Tewary, Esq. Akshat Tewary, Esq. This presentation is being made available for informational purposes only, and its presentation herein neither creates an attorney-client privilege nor constitutes legal advice.

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LCA Compliance Issues for Employees of H-1B Workers

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  1. LCA Compliance Issues for Employees of H-1B Workers Panelists: Kamlesh Tewary, Esq. Akshat Tewary, Esq. This presentation is being made available for informational purposes only, and its presentation herein neither creates an attorney-client privilege nor constitutes legal advice.

  2. Recent News on H-1B Enforcement • Increased documentary requirements by various agencies (USCIS, DOS, DOL) for routine filings. • October 2008 – Survey of H-1B employers by the Office of Fraud Detection and National Security (FDNS), a division of the USCIS. • February 2009 – Passage of Economic Stimulus Plan • February 2009 – Nationwide prosecutions and raids under “Operation Pacific Vision” • More information: http://www.tewary.com/h1b021309.htm LCA Compliance Issues for Employers of H-1B Workers

  3. Labor Condition Applications (LCAs) • When an employer files a petition for an H-1B worker, it files an LCA. • In the LCA the employer specifies certain details, such as the wage offered, prevailing wage, work location, and prevailing wage source. • In filing the LCA, the employer takes on certain obligations. LCA Compliance Issues for Employers of H-1B Workers

  4. Basic LCA Requirements • Basic Attestations LCA Compliance Issues for Employers of H-1B Workers

  5. Basic LCA Attestations • Payment of the “required wage” • Required wage - higher of the “actual wage” and the “prevailing wage” covering the H-1B employee’s occupation and work location. • DOL’s OES wage data is the most reliable source of prevailing wage information in most cases. • www.flcdatacenter.com • The actual wage is the wage rate paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question. Public access file’s Actual Wage Memorandum must define “actual wage” properly to avoid penalties. LCA Compliance Issues for Employers of H-1B Workers

  6. Basic LCA Attestations • Working Conditions • Should not discriminate against U.S. workers in working conditions or benefits • No Strike or Lockout at worksite • Notice of LCA Filing • Must be posted at worksite (or given to bargaining representative for unionized worksites). • A copy of the LCA must be given to the H-1B worker. LCA Compliance Issues for Employers of H-1B Workers

  7. Notice of LCA Filing – (No Bargaining Rep.) • Must state the basic information listed on the LCA • “that H-1B nonimmigrants are sought; the number of such nonimmigrants the employer is seeking; the occupational classification; the wages offered; 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.” • Must include the following language (for all companies): • “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.” • Must also include the following language for H-1B dependent employers: • “Complaints alleging failure to offer employment to an equally or better qualified U.S. applicant or an employer's misrepresentation regarding such offers of employment may be filed with the Department of Justice. . .” • More information: http://edocket.access.gpo.gov/cfr_2008/aprqtr/pdf/20cfr655.734.pdf LCA Compliance Issues for Employers of H-1B Workers

  8. Notice of LCA Filing – (No Bargaining Rep.) • Hard Copy or Electronic Copy • Hard copy: posted in two conspicuous locations at each place of employment (even if that means the client site for contractors) • Electronic copy: Via email, bulletin board, Internet site, etc. In contractor situations, the affected employees at the client-site need to be provided notice. • Notice must be posted on or within 30 days before the date the LCA is filed, and kept for 10 days. • New posting is required for each new work location, even if that location is within the same commuting area and no new LCA is filed. • More information: http://edocket.access.gpo.gov/cfr_2008/aprqtr/pdf/20cfr655.734.pdf LCA Compliance Issues for Employers of H-1B Workers

  9. H-1B Dependent Employers • Employers that are deemed “H-1B dependent” under the following definition undertake certain additional obligations (with some exceptions). • An H-1B employer is “H-1B dependent” if, as per its current payroll, it has: • 25 or fewer full-time equivalent employees and at least eight H-1B nonimmigrant workers; or • 26 - 50 full-time equivalent employees and at least 13 H-1B nonimmigrant workers; or • 51 or more full-time equivalent employees of whom 15 percent or more are H-1B nonimmigrant workers. • A part-time employee counts as ½ an employee for “full-time equivalent” purposes, but as a full employee for “H-1B nonimmigrant worker” purposes. • More information: http://www.dol.gov/esa/whd/regs/compliance/FactSheet62/whdfs62C.pdf LCA Compliance Issues for Employers of H-1B Workers

  10. H-1B Dependent Employers When an H-1B dependent employer files an LCA for an H-1B worker, it takes on certain additional obligations with respect to that hiring: • UNLESS, that H-1B worker will earn $60,000 per year or has a relevant Master’s degree. • In that case, the employer is still H-1B dependent, but is “exempt” from the additional attestations listed above for that particular H-1B worker. LCA Compliance Issues for Employers of H-1B Workers

  11. H-1B Dependent Employers • Displacement • The H-1B dependent employer attests that there is no “lay off ” a U.S. worker (GC/USC) performing the same job as the new H-1B worker 90 days before or after the filing of the H-1B petition. • Secondary Displacement • If the H-1B worker will work at a client site, the H-1B dependent employer makes the same attestation regarding the client’s workforce (no layoffs of U.S. workers 90 days before or after H-1B petition filing). • Employment Relationship Exemption • Recruitment and Hiring • How does an employer document compliance? • More information: http://edocket.access.gpo.gov/cfr_2008/aprqtr/pdf/20cfr655.738.pdf LCA Compliance Issues for Employers of H-1B Workers

  12. Public Access File • All H-1B employers must maintain a public access file. • Retention: • Payroll records of H-1B employees and other employees in similar positions must be kept posted for 3 years from the date of creation of that record. • LCAs in the public access file must be kept for 1 year after the end of the H-1B employee’s employment or 1 year after the LCA expires or is withdrawn. • This public access file should be kept separate from normal employee records, and must be made available to anyone from the public who asks to see it. • The public access file can be a file folder with 10 sub-folders covering of the 10 requirements of the public access file regulation (20 CFR 655.760). • More information: http://edocket.access.gpo.gov/cfr_2008/aprqtr/20cfr655.760.htm LCA Compliance Issues for Employers of H-1B Workers

  13. Public Access File • First section: • 20 CFR 655.760 (1): A copy of the certified labor condition application (Form ETA 9035 or Form ETA 9035E) and cover pages (Form ETA 9035CP). If the Form ETA 9035 is submitted by facsimile transmission, the application containing the original signature shall be maintained by the employer in its files. If the Form ETA 9035E is submitted electronically, a printout of the certified application shall be signed by the employer and maintained in its files. LCA Compliance Issues for Employers of H-1B Workers

  14. Public Access File • Second section: • 20 CFR 655.760(2): Documentation which provides the wage rate to be paid the H-1B nonimmigrant. LCA Compliance Issues for Employers of H-1B Workers

  15. Public Access File • Third section: • 20 CFR 655.760(3) 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 (payroll records are not required, although they shall be made available to the Department in an enforcement action). LCA Compliance Issues for Employers of H-1B Workers

  16. Public Access File • Fourth section: • 20 CFR 655.760(4) 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); LCA Compliance Issues for Employers of H-1B Workers

  17. Public Access File • Fifth section: • 20 CFR 655.760(5) A copy of the document(s) with which the employer has satisfied the union/employee notification requirements of Sec. 655.734 of this part. • This refers to all the LCA posting notices for LCAs that are kept in Section 1. LCA Compliance Issues for Employers of H-1B Workers

  18. Public Access File • Sixth section: • 20 CFR 655.760(6) 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 (see Sec. 655.731(c)(3)); LCA Compliance Issues for Employers of H-1B Workers

  19. Public Access File • Seventh section: • 20 CFR 655.760(7) Where the employer undergoes a change in corporate structure, a sworn statement by a responsible official of the new employing entity that it accepts all obligations, liabilities and undertakings under the LCAs filed by the predecessor employing entity, together with a list of each affected LCA and its date of certification, and a description of the actual wage system and EIN of the new employing entity (see Sec. 655.730(e)(1)). LCA Compliance Issues for Employers of H-1B Workers

  20. Public Access File • Eighth section: • 20 CFR 655.760(8) 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 (see Sec. 655.736(d)(7)); LCA Compliance Issues for Employers of H-1B Workers

  21. Public Access File • Ninth section: • 20 CFR 655.760(9) 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 (see Sec. 655.737(e)(1)) • If the employer is H-1B dependent: • The employer can go through all the LCAs listed in section 1. If Option c is checked as shown above (Page 3, Section F-1 of the LCA), that means that the H-1B employee is “Exempt.” Create a list of all “exempt” individuals and keep it here. • If the employer is not H-1B dependent, this is N/A LCA Compliance Issues for Employers of H-1B Workers

  22. Public Access File • Tenth section: • 20 CFR 655.760(10) 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) (see Sec. 655.739(i)(4). • If the employer is H-1B dependent: • The employer must describe its efforts to recruit U.S. workers. • If the employer is not H-1B dependent, this is N/A LCA Compliance Issues for Employers of H-1B Workers

  23. Payment Obligations • At least the required wage must be guaranteed to H-1B employees every paycheck. • Timing of paychecks LCA Compliance Issues for Employers of H-1B Workers

  24. Deductions • Deductions from the H-1B employee’s paycheck are permissible if: • Required by law • (e.g. payroll, income taxes) • Reasonable and customary • Insurance premiums, retirement plans (not recouping business expenses) • Certain voluntary deductions. • Consult with an attorney before making any deductions other than those required by law. • Generally, voluntary deductions are permissible only if they are specifically requested by H-1B worker in writing and for the H-1B worker’s benefit, and not used to recoup employer’s business expense • Also deductions must not violate the Consumer Credit Protection Act • garnishment(s) may not exceed 25 percent of an employee's disposable earnings for a workweek. • Disposable earnings – Earnings after deductions required by law LCA Compliance Issues for Employers of H-1B Workers

  25. Leave Letters • Nonpayment by the employer is acceptable due to:“conditions unrelated to employment which take the nonimmigrant away from his/her duties at his/her voluntary request and convenience (e.g., touring the U.S., caring for ill relative) or render the nonimmigrant unable to work (e.g., maternity leave, automobile accident which temporarily incapacitates the nonimmigrant).” 20 C.F.R. § 655.731(c)(7)(ii) • Written request • by employee • for own benefit • USCIS makes its own determination for H-1B status purposes: Has the employment relationship been maintained • Leave letters cannot be used to substitute for bench periods. • DOL looks at this closely LCA Compliance Issues for Employers of H-1B Workers

  26. Payment Obligations • Employee Payment of Fees • $750/$1500 H-1B filing fee (user fee) explicitly must not be paid by employee • PERM related fees explicitly must not be paid by the employee • Any remaining H-1B related fees paid by employee could be considered recoupment of business expenses • Best practice: Employer pays all H-1B related fees. • How can an employer protect itself from H-1B workers who hop from employer to employer? • Travel or relocation expenses for a new work location • Avoid using “per diems” as a substitute for wages. • Initial transportation to US can be paid by employee. LCA Compliance Issues for Employers of H-1B Workers

  27. Payment Obligations • When does the payment obligation begin for H-1B employees? • Consular cases: Earlier of (30 days) and (when the employee makes himself/herself available for employment) • Extension cases: Earlier of (60 days) and (when the employee makes himself/herself available for employment) LCA Compliance Issues for Employers of H-1B Workers

  28. Changes in Terms of Employment • Changes in work location: • Require a new LCA if new location is outside the commuting area of the prior LCA’s work location • A new area in the same MSA means it is commutable • A new LCA notice posting is still required at the new site even if no new LCA is required • Complicated exceptions apply for Casual or Short-term placements • Details: SeeShort-term placement and peripatetic worker regulations. LCA Compliance Issues for Employers of H-1B Workers

  29. Changes in Terms of Employment • “Material” changes in terms of employment require amended I-129 petition with USCIS • Material: • LCA filed after change in work location • Significant change in salary or job duties • Not Material: • LCA filed before change in work location • Change in company name due to merger or simple name change LCA Compliance Issues for Employers of H-1B Workers

  30. Key Issues in Recent Audits • Payment of Required Wage • Justification of Actual Wage • Justification of Wage Levels • No Benching! • Proper Revocation (3 steps) • 1. Inform USCIS • 2. Inform Beneficiary • 3. Offer return airfare unless the Beneficiary resigned LCA Compliance Issues for Employers of H-1B Workers

  31. Key Issues in Recent Audits • Generally avoiding legal wage requirements: • Filing LCAs in remote areas • Abuse of per diems and other non-taxed compensation • Fabricating paystubs / experience letters • Performing functions not listed on petition • Filing payroll taxes in improper state • Displacement of US workers LCA Compliance Issues for Employers of H-1B Workers

  32. Key Issues in Recent Audits • Government Agencies are “Ganging up” on Violators • Vision Systems case involved investigation or assistance from: • U.S. Attorney’s Office, Southern District of Iowa; • U.S. Immigration and Customs Enforcement; • U.S. Citizenship and Immigration Services – Fraud Detection and National Security Division; • U.S. Department of Labor - Office of Inspector General; • U.S. Postal Inspection Service; • U.S. Department of State, Kentucky Consular Center • U.S. Marshals Service; • Social Security Administration - Office of Inspector General; • Internal Revenue Service - Criminal Investigations; • Des Moines Police Department; • West Des Moines Police Department; • Iowa Department of Transportation - Motor Vehicle Enforcement Office. LCA Compliance Issues for Employers of H-1B Workers

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