Department of Labor Wage & Hour Investigations

Overview of the US Department of Labor Wage and Hour LCA Investigations

Investigations of Labor Condition Application ("LCA") violations:

Investigations pertaining to LCA complaints are handled by the Department of Labor (DOL) District offices. Part of the funding for the investigations comes from the $500 Fraud Detection and Prevention Fee paid when filing H-1B petitions. Employees, if they were not properly compensated by their employers pursuant to the approved LCA and the prevailing wages, can file complaints with the DOL. During the past several years, there has been a steady increase in the DOL Wage and Hour investigations of alleged LCA violations.

I. DOL Processing of the Complaint:

The Wage and Hour Division of the USDOL is commissioned with enforcing all elements of the LCA. Based upon a complaint from an aggrieved party affected by the alleged violation, the Wage and Hour ("WH") investigator will request a copy of the company's Public Access files, the company's payroll, and their H1-B records. The investigator will contact past and present H1-B workers to discuss the various details of their employment with the company. A final determination will be issued at the end of the investigation process. If violations are found, the investigator may assess back wages, civil monetary penalties between $1,000 and $35,000 per violation, depending upon the type of violation, and determine whether it is viewed as "willful." In addition, the company could be barred from participating in the H-1B visa program.

If your company has been the subject of a WH investigation, it is critical that you contact competent counsel as soon as possible. Our experienced lawyers will immediately conduct a thorough review of your files and determine the areas that could present a problem. In some situations, the company could engage in a good faith attempt to remedy any violations, such as filing an LCA if an employee changed location. Such early survey allows the attorney to try to resolve the matter much quicker with the investigator. The competent attorneys at The Law Firm of Shihab & Associates, Co., LPA, are experienced in negotiating LCA violations. Contact us for a consultation.

Below is a list of the most common allegations that are normally levied against employers in the LCA enforcement area:

1. Failure to Pay the Required Wage:

LCA-based claims frequently allege that the employer failed to pay the attested wage, to properly compute the prevailing wage or actual wage, or failed to document the minimum wage. Companies mostly get in trouble when they chose an OES wage level for all of their H-1B visa candidates. Level I wage submissions are generally a difficult proposition for USDOL because Level I wages are reserved for employees working under tight supervision with little discretion or independent judgment. Some USDOL investigators do not consider Level I wages as appropriate for professional employees in the wage and hour context. Since H1-B employees need to be professionals, Level I is incompatible with H1-B status. The wage level should be computed in a manner that is consistent with the employee's actual job duties and responsibilities. In determining the correct wage level, the employer avoids the imposition of back wages and penalties.

2. The Date of Employment Commencement and Termination:

The employer is obligated to pay the required wage to an H-1B worker from the date of employment until the date of the bona fide termination. The date on which an H-1B visa employee is deemed to have entered into employment is when the employee makes himself available for employment or 30 days after the date he is admitted into the US in H-1B visa status. In case the non-immigrant is present in the US on the date of approval of the petition, 60 days after the approval. Notwithstanding these rules, the employer is not required to pay the employee's wages and the employment is not deemed to have begun if the employee failed to make himself available for employment by taking medical leave or by failing to show up to work. In such situations, the employer is advised to retain documentation of the circumstances.

3. Bonafide Termination of H-1B Employees:

Employers could be found liable for the payment of employee back wages for failing to follow procedural rules when it comes to the termination of H-1B visa employees. Unless all of the following measures are documented, the employer may be found liable for the employee's wages even long after terminating the H-1B visa employee:

Notice given to the H-1B visa employee clearly indicating the effective date of termination;
Notice of the termination is communicated to the USCIS; and
An offer to pay return transportation home is given to the H-1B visa employee.

4. Improper Deductions:

An employer may only deduct permissible amounts from the H-1B visa employee's salary. A deduction is deemed to have existed even when the H-1B visa employee pays for the expenditure herself. For instance, if the employee pays for her transportation cost to meet with an offsite client, the cost of transportation may be considered as a deduction according to USDOL regulations. It is worthy to note that the deduction in this example is improper under the regulations.

Any permissible deduction to the wages of an H1-B employee should not cause the employee's wages to fall below the required wage. A voluntary deduction may be made with the written authorization of the H1-B employee; however, it should not include recouping employer's business expense, attorney's fee, and costs in preparation of the LCA and H1-B petition. The amount of deduction from each pay period is limited to 25 percent of the employee's disposable earnings for the period. If the deduction is more, the investigator may direct payment of back wages to the H1-B employee.

a. Can an Employer Legally Recoup H-1B Visa Preparation Costs?

Employers invest several thousands of dollars in petitioning for the employee's H-1B visa. Hence, they often would like to retain the employee for a period of time consistent with such investment. Some employers enter into an agreement with the employee which calls for the recoupment of such costs if the H-1B visa employee resigns before a certain period. Such recoupments are considered improper deductions. The best tool employers could utilize in order to recoup its cost is an employment contract which calls for the imposition of "liquidated damages" against the H-1B employee in case of early termination. Such contractual provisions are subject to state employment law which determines what constitutes proper liquidated damages. The imposition of early termination penalties is considered improper deductions.

It should be noted that the provisions of such a contract should be carefully drafted as a WH investigator may determine that such deduction for liquidated damages is valid or whether it is tantamount to a penalty.

5. Failure to Provide Notice of Filing:

The employer is required to provide notice of the filing of the LCA to the bargaining representative of the employees. If there is no such bargaining representative, a hard copy of the notice or electronic notice of the filing of the LCA shall be posted in two conspicuous places for 10 days at each place where the H1-B nonimmigrant will be employed. The electronic notice shall be provided to all affected employees at each place of employment.

The employer must maintain documentation of such notice (i.e. what was posted, when it was posted and where it was posted in the LCA Public Access file). If the employer moves the H1-B nonimmigrant to a worksite not contained in the approved LCA, the employer must provide notice of filing at the new place on or before the H1-B worker commences his work.

6. Failure to Provide Copy of LCA to Employee:

The employer must provide the H1-B nonimmigrant with a copy of the LCA before the H1-B employee reports to work at the place of employment. If the employer fails to comply with the notice of filing requirement and the WH investigator determines the violation was substantial, she may assess a penalty of up to $1,000 for each violation. The investigator may also recommend debarment from the non-immigrant and immigrant programs for one year.

Our law firm prepares a complete public access file for each H-1B visa we file on behalf of our clients. Each public access file contains a procedure to provide the employee with a copy of the approved LCA and a receipt documenting the transmittal of such LCA to the employee to avoid any violations.

7. Failure to Comply with H-1B Dependency Requirements

An employer is considered H1-B dependent if it has:

25 or fewer full-time equivalent employees and at least eight H1-B non-immigrants; or
26-50 full-time equivalent employees and at least 13 H1-B non-immigrants; or
51 or more full-time equivalent employees and 15 percent or more are H1-B nonimmigrants.

As part of the LCA process, an employer must determine if it is an H1-B dependent employer or willful violator and indicate so on the LCA and Form I-129.

a. Non-displacement of U.S. Workers:

If the employer has deemed an H-1B visa dependent employer or a willful violator, it is required to offer the position to a US worker as long as the US worker has equal or better qualifications than the H1-B nonimmigrant. An employer is also prohibited from displacing or "laying off" any US worker directly at its worksite within the period beginning 90 days before and 90 days after the filing of an H-1B petition supported by the LCA.

If the employer displaces a US worker in its workforce due to a willful violation, the WH investigator may apply an enhanced penalty of up to $35,000 per violation plus debarment from nonimmigrant and immigrant programs for at least three years. The displacement of a US worker in the course of a willful violation must occur within the period beginning 90 days before and ending 90 days after the date of the employer filing the Form I-129.

b. Exemption: Annual wages of $60,000 and/or Master's or higher degree

An H1-B nonimmigrant is considered exempt from the H-1B visa dependency rules if he/she receives annualized wages of at least $60,000 or if he/she has attained a Master's or higher degree in a specialty related to the intended employment.

II. Conclusion

The rules governing what is permissible and what is not, and what is a required procedural step and what is not in the H-1B visa program are numerous. As one of the administrative law judges once put it, these rules are burdensome and in many instances may expose employers to great liabilities and artificial obstacles placed on employers to discourage them from using the H-1B visa program. These rules are placed in order to protect the US worker. Employers are strongly urged to employ the services of a qualified immigration lawyer who is versed in this particular area in order to navigate through these murky waters. The immigration attorneys at The Law Firm of Shihab & Associates, Co., LPA have processed thousands of H-1B visas and have represented employers in the WH investigations. The USDOL is effectively investigating complaints and enforcing actions against employers for violations of H1B and LCA requirements. Hence it pays off to retain the services of experienced immigration lawyers. Contact us for a consultation.

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