More H-1B Third-Party Placement Changes: DOL Proposes Significant Changes to H-1B LCA Form

U.S. employers that hire and place foreign workers with H-1B visas at third-party worksites may be faced with additional burdens in the H-1B petition process. The U.S. Department of Labor (DOL) has released proposed changes to ETA Form-9035, Labor Condition Application for Nonimmigrant Workers (LCA) that would require more details about the end-user clients and potential worksites specific to the placement of H-1B workers. 

The most notable change to the LCA is the requirement that employers provide the legal business name of the end-user client at whose worksite the H-1B intends to work. At present, employers are only required to list the addresses for all intended worksites. It has never been mandatory to list the name of the entity associated with those worksites. The proposal further increases employers’ reporting requirements by requiring identification of not only known worksites but those at which there is a “reasonable expectation” of placement. The DOL explained that “employers must identify those worksites at which the employer knows or reasonably expects to place H-1B workers based on existing contracts, business plans, or its own expertise.” To facilitate increased worksite listings, the proposed form has been amended to include entry space for 10 additional worksites, as compared to the 3 entry lines currently available. The DOL estimates that the number of hours needed to process the additional information required will increase almost threefold; this appears to be accurate given the vast increase in information potentially being provided.

During the initial comment period, commenters raised concerns about the DOL’s use of the term “secondary employer” to describe the end-user clients because the term could imply the existence of an employer-employee relationship. The DOL amended the language in response to the comments and adopted the term “secondary entity” instead. Some commenters also raised privacy concerns regarding the disclosure of client names, specifically in relation to staffing firms that have confidentiality agreements with some of their end-user clients. Commenters also noted that the information being requested could tip competitors off to the work being done by U.S. companies and jeopardize the competitiveness of those companies. The DOL did not respond to those comments.

The proposed changes are just the latest in a series of changes specifically targeting third-party worksites. The DOL asserts that the additional information is necessary to safeguard both U.S. workers and H-1B employees. In its supporting statement, the DOL said the revisions are being “made to improve transparency about the number of H-1B workers being sent to worksites . . . and the entities with which the workers will be placed.” Earlier this year, U.S. Citizenship and Immigration Services (USCIS) updated its policies to essentially prohibit foreign students from working at third-party worksites during their Option Practical Training (OPT). Additionally, in April, USCIS issued a policy memorandum requiring employers to provide detailed itineraries for the entire duration of H-1B petitions involving off-site employment.

Given the privacy and competitiveness concerns raised during the comment period, employers may want to consider their own confidentiality issues to determine if they will need to amend contract terms or to obtain consent from end-user clients before disclosing identifying information on the LCA if these changes are adopted. Employers may also want to consider alternative solutions so that they can continue to comply with H-1B regulations while also honoring contract provisions.

The DOL intends to finalize the new form in 2018.

Ogletree Deakins’ Immigration Practice Group will continue to monitor developments related to third-party placement and ETA Form 9035, and will post updates on the Immigration blog as additional information becomes available.