A staffing and recruiting company based in El Segundo, California recently paid $58,815 in fines to two H-1B workers after an investigation by the Department of Labor (DOL)’s Wage and Hour Division (WHD) found that the company had not complied with applicable H-1B Labor Condition Application (LCA) requirements. Specifically, the WHD found that the company, Login Consulting Services, Inc.:

• Improperly required an H-1B worker to pay H-1B visa petition fees;
• Impermissibly “benched” an H-1B worker (“benching” refers to the practice where H-1B workers are not paid as they wait for projects or work); and
• Wrongly paid an H-1B worker less than the hourly rate guaranteed in the LCA that the company submitted in connection with its H-1B petition.

As a general matter, prior to filing an H-1B petition with the U.S. Citizenship and Immigration Service, an employer must submit an LCA to the DOL attesting to its compliance with the requirements of the H-1B program. By completing and signing the LCA, the employer makes several attestations regarding wages, working conditions, and related terms of employment. The employer’s failure to comply with these attestations may lead to civil and/or criminal liability and/or fines.

The Login investigation serves as a cautionary tale for employers of H-1B workers and highlights the importance of being familiar and complying with all LCA requirements. Of particular note are the following general rules:

• Expenses incurred in connection with the preparation and filing of an H-1B petition are considered by the WHD to be an “employer business expense.”  H-1B employers generally should pay all attorney fees and filing fees associated with the preparation and filing of an H-1B petition. Importantly, this is the rule even if the H-1B worker offers or agrees to pay H-1B expenses. It is generally permissible, however, for an H-1B worker to pay the costs associated with the preparation and filing of an H-4 petition (for the H-1B worker’s spouse or child).
• Benching of H-1B workers is generally prohibited. H-1B workers must be paid for all nonproductive time caused by conditions related to employment, such as lack of assigned work. Payment is not required, however, for nonproductive time due to reasons not related to employment, such as a worker’s voluntary absence from work for pleasure, or due to illness. Before placing an H-1B worker in an inactive or nonproductive status, seek legal advice to ensure compliance with H-1B program requirements.
• H-1B workers must be paid the wage promised on the certified LCA. There should not be any discrepancy between the wage paid to the H-1B worker and the offered wage listed on the certified LCA. Before an employer makes any downward adjustment to an H-1B worker’s wage, seek legal advice to ensure compliance with H-1B program requirements. 

The current enforcement environment makes it more important than ever for employers of H-1B workers to understand and comply with all of the requirements of the H-1B program, including the requirements associated with the attestations made on the LCA.  As the Login case illustrates, failure to comply can be a costly mistake!

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.