Increased Wage and Hour Investigations Serve as a Warning to Employers on the Importance of H-1B Wage Attestations

Several recent decisions by the U.S. Department of Labor’s (DOL) Office of Administrative Law Judges (OALJ) serve as a compelling reminder to employers that violations of H-1B wage requirements can result in significant consequences, including monetary penalties, debarment from the H-1B program, and even criminal investigations. For example, in a recent case before the OALJ, a New York-based engineering consulting company was ordered to pay nearly $300,000 in back wages to 50 H-1B foreign workers for H-1B wage violations. Specifically, the employer was found to have failed to pay the employees all of their wages in violation of the H-1B provisions of the Immigration and Nationality Act. The employer in the case at hand is currently on the DOL’s list of employers that have willfully violated H-1B program rules and has been debarred from the H-1B program for a two-year period.

In another recent case, a physical therapy services provider was ordered to pay more than $380,000 in back wages to more than 40 H-1B workers for numerous H-1B wage violations. A comprehensive investigation of the employer’s H-1B practices by the DOL was triggered by a complaint filed against the employer by one employee. Following a thorough investigation by the DOL’s Wage and Hour Division (WHD), the employer was ordered to pay back wages, not only to the complainant, but also to more than 40 other H-1B employees, for numerous H-1B wage violations (including failing to pay required wages during non-productive periods of employment, illegally deducting fees from the wages of H-1B employees, illegally collecting or attempting to collect penalties for early termination of employment, and failing to maintain documentation as required by the regulations). This case highlights that the scope of a DOL wage and hour investigation is not limited to the allegations of a single aggrieved party complaint alone, but may extend to alleged H-1B violations pertaining to other H-1B employees of a company, even if they did not file a complaint.

These recent cases serve as a compelling reminder to employers of the importance of compliance with wage and hour attestations made in relation to H-1B petitions filed on behalf of foreign workers.

Employer Attestations as Part of the H-1B Petition

The H-1B visa program permits employers to temporarily employ foreign workers in the United States in a “specialty occupation,” which is defined as one that requires the application of a body of highly specialized knowledge and the attainment of at least a bachelor’s degree, or its equivalent. To protect U.S. workers, employers must complete and sign a certified Labor Condition Application (LCA) as part of the H-1B petition. It is in the LCA that the employer makes certain attestations regarding its responsibilities, including the wages, working conditions, and benefits it will provide to the H-1B foreign worker. By completing and signing the LCA, an employer attests to the DOL that it will pay the higher of the actual or prevailing wage rate, compensate these employees for non-productive time, and offer benefits on the same basis as offered to U.S. workers. Employers also attest that they will provide working conditions that will not adversely affect similarly situated U.S. workers; there is no strike, lockout, or other work stoppage in the occupational classification at the place of employment; they will notify the bargaining representative, if any, or post a notice that the LCA is being filed; and they will provide the H-1B worker with a copy of the certified LCA.

Enforcement of Attestations Made by Employers on the LCA

The WHD is tasked with enforcing the attestations made by employers on the LCA. The WHD may investigate and make determinations against an H-1B employer regarding a wide range of allegations, such as an failing to pay wages or provide working conditions as required by the LCA regulations, filing an LCA that misrepresents a material fact, failing to provide notice of the filing of an LCA, or otherwise failing to comply in any other manner with the provisions governing LCAs. Any employer filing an H-1B petition should strictly adhere to the wages and other conditions to which it attested in the LCA to protect itself from the risk of a WHD investigation in which a violation is found. When authorized to investigate, the WHD is responsible for ensuring that workers are receiving their wages and working under the terms of employment as specified in the LCA.

Pursuant to the applicable regulations, the WHD may only initiate H-1B related investigations of an H-1B employer in one of the following four situations:

• A complaint is filed with the WHD by an aggrieved person or organization, such as an H-1B worker, a U.S. worker, or the employee bargaining representative.
• The Secretary of Labor receives specific credible information from a reliable source that provides reasonable cause to believe that the employer has failed to meet certain conditions of the LCA, has engaged in a pattern or practice of failures to meet such conditions, or has committed a substantial failure to meet such conditions that affects multiple employees.
• The Secretary of Labor may, on a case-by-case basis, subject an employer to random investigations for a period of up to five years in cases where the employer has been found by the Secretary to have committed a willful failure to meet a condition specified in the LCA or willfully misrepresented a material fact in the LCA.
• The Secretary of Labor has reasonable cause to believe that an employer is not in compliance with the employer’s LCA requirements. In such circumstances, the Secretary will personally certify that reasonable cause exists and will approve commencement of the investigation.

An investigation by the WHD commences with a notice issued to the employer by an investigating officer of the WHD. The investigating officer may choose to meet with the employer to obtain an initial statement. Following the initial notice and statement, the investigating officer commences the investigation, which could take several months to complete. Once the investigation is complete, the investigating officer makes a final determination regarding compliance. The employer is then issued a determination letter and given the opportunity for a hearing.

Penalties for LCA Violations

Penalties imposed on employers for failing to comply with the requirements of the LCA may include civil fines ranging from $1,000 to $35,000 per violation, depending on the type and severity of the violation, as well as criminal fines or even incarceration. The WHD may also impose other types of remedies, including but not limited to, return of any money paid by the employee in violation of H-1B regulations, reinstatement of workers who were discriminated against in violation of protections against employer retaliation, reinstatement of displaced U.S. workers, back wages to workers who have been displaced, or other appropriate legal or equitable remedies. Employers that have committed certain violations may also be barred from future use of the H-1B program for a period of up to three years.

Ensuring Compliance With H-1B Regulations

In light of the steady increase in H-1B wage and hour compliance investigations and the potential risk of significant monetary fines and other penalties for violation of an employer’s attestation obligations, including payment of back wages, disbarment from the H-1B program, and even criminal investigations, employers should take care to fully comply with all their obligations attested to on the LCA. To that end, it is critical that employers take the time to fully understand their obligations under the H-1B provisions of the Immigration and Nationality Act and develop and maintain appropriate policies and procedures to ensure compliance with these obligations.