Beware of H-1B Wage Law Violations: Company to be Debarred, Ordered to Pay Over $120,000 in Penalties and Back Pay for H-1B/LCA Violations

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
Contact

A recent case before the Office of Administrative Law Judges (ALJ) is a compelling reminder that violations of H-1B wage requirements can result in significant financial penalties and fines. Moreover, violations of H-1B program rules also can lead to program debarment and even criminal investigations. Noting that the “rules governing the employment of nonimmigrant workers in specialty occupations are specific and must be followed completely,” Thomas Gauza, District Director for the U.S. Department of Labor’s (DOL) Wage and Hour Division cautioned that the case demonstrates that the DOL “will not hesitate to bring legal action against employers that continue to short their employees and violate the law.”

H-1B Wage Requirements

In the case at hand, the employer, an Indianapolis-based healthcare recruiting and staffing company, violated several H-1B wage obligations. An investigation by the DOL’s Wage and Hour Division revealed that the employer had misrepresented facts on its H-1B nonimmigrant applications and failed to pay wages at the prevailing wage rate for productive work time or pre-assignment and post-assignment time, as required by law, entitling the affected employees to back wages. The company also failed to withhold applicable employment taxes, such as payments to Medicare, FICA, and federal and state income tax, and was required to pay such taxes, plus interest and penalties, to the appropriate taxing authorities.

H-1B visas are issued for “specialty occupations” and allow an employee to work temporarily for a U.S. employer in a qualifying position. Employers of H-1B workers must adhere to stringent wage requirements. The regulations require an employer to pay H-1B employees as much as it pays other employees with similar experience and qualifications (the “actual wage”) or the prevailing local wage level for the H-1B worker’s occupational classification, whichever is greater. Prior to submitting an H-1B petition to the U.S. Citizenship and Immigration Services (USCIS), the company must determine the prevailing wage rate for the occupational classification in the H-1B employee’s area of intended employment and file a Labor Condition Application (LCA) with the DOL. The LCA defines the employer's obligations to ensure that employing a foreign worker under the H-1B program will not adversely impact the wages or working conditions of similarly-situated U.S. workers. A civil money penalty of up to $5,000 per violation may be assessed for willful failure to pay the required wages.

H-1B employees must be paid the required wage listed on the original H-1B petition when they report for work, and these wages must continue even if they are not performing work and are in a nonproductive status based on factors such as lack of work. The practice of an employer placing an H-1B nonimmigrant in nonproductive status without pay is colloquially referred to as “benching.” If an employee is benched, the employer remains liable for all salary due and owing to the employee. By contrast, wages need not be paid if an H-1B employee is nonproductive due to non-work-related factors, such as the H-1B employee’s voluntary request for leave, or circumstances that render the H-1B worker unable to work, such as leave for family/medical reasons or temporary incapacity for health reasons. In his statement, Gauza emphasized that non-compliance with H-1B wage requirements “denies qualified workers an opportunity for meaningful employment in the American economy.”

Debarment, Back Pay Awarded, and Severe Penalties Assessed for Violations

Under the terms of the court order, the company has been ordered to pay $81,454 in civil money penalties and $39,946 in back wages to six employees for violations of the H-1B wage regulations. The company has also been debarred from participation in the H-1B program for a one-year period. In addition to paying the back wages and penalties, the employer has agreed to enhance its compliance procedures, including records review by the DOL for a two-year period, and to comply with the Immigration and Nationality Act going forward.

Note: This article was published in the June/July 2014 issue of the Immigration eAuthority.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ogletree, Deakins, Nash, Smoak & Stewart, P.C. | Attorney Advertising

Written by:

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
Contact
more
less

Ogletree, Deakins, Nash, Smoak & Stewart, P.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.