Updates - January 2001

H-1B Visa and Immigration
	LAW OFFICE OF AJAY K. ARORA Empire State Building 350 Fifth Avenue, Suite 1415A New York, NY 10118 Phone: (212)268-3580 Fax: (212)268-3582 Email: info@h1b1.com

Disclaimer: This article is not intended to establish an attorney-client relationship. All information contained herein is generalized. Any reliance on information contained herein is taken at your own risk

UPDATES - Year 2001

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January, 2001

SUMMARY OF DEPARTMENT OF LABOR’S 12/20/00 INTERIM FINAL H-1B REGULATION

We reproduce below a summary prepared by the American Immigration Lawyers Association. The summary is divided into two parts. The first summarizes the provisions of general applicability and the second part summarizes the provisions specific to dependent employers. These regulations implement the provisions of the American Competitiveness and Workforce Improvement Act of 1998, which introduced the concept of a "dependent" H-1B employer. As of January 19, 2001, employers dependent on H-1B workers will have to make additional attestations on the Labor Certification Application (LCA). A new LCA form will have to be filed from January 19 onwards with any H-1B petition.

PART 1- PROVISIONS OF GENERAL APPLICABILITY

Filing the LCA. A new, 3-page form is included in the regulation. The form can be filed via faxback system using an "800" telephone number, or can be submitted by mail to the Philadelphia DOL Regional Office post office box (no private carriers). Individual regions will no longer process LCAs. If the form is mailed in, it will be scanned into the faxback system. There will be a transitional period, from January 19, 2001 until February 5, 2001, during which the faxback system will not be useable, and LCAs can be submitted only by mailing the new form to the Philadelphia address. However, after January 19, 2001, only the new three-page form published with the regulation will be accepted. The new form removes the actual text of the attestation elements to a new "cover page" which does not need to be submitted to DOL, but must be included in the public access file, be part of any posting of the form (electronic or hard copy) and be provided to the H-1B employee. The form will be available for download (along with a form filler program) from DOL’s website at http://ows.doleta.gov.

H-1B portability. The regulation indicates that AC21’s H-1B portability provision cannot be used until a petition is filed with INS that is supported by a certified LCA.

Corporate reorganizations. As long as the conditions specified by the DOL are met, no new LCA will need to be filed to continue employment of existing H-1B employees when there is a corporate reorganization. However, the new entity will be required to maintain a list of the H-1B employees transferred to it, and to maintain in the public access file a list of the affected LCA numbers and their dates of certification, a description of the new entity’s actual wage system, the EIN of the new entity, and a sworn statement from an authorized representative of the new entity expressly assuming the liabilities and obligations of the existing LCAs and containing certain specified language (including, according to the preamble, assumption of liability for any violations by the previous entity under the LCA). According to the regulation, the new entity "shall not" employ any of the predecessor’s H-1B employees unless either this statement is executed and placed in the public access file or new LCAs and petitions are filed. Successors will not be able to use existing LCAs of the predecessor company to file new petitions or extend existing petitions. If the restructuring results in a change in the company’s dependency status, there will be no effect on the employer’s obligations with respect to existing H-1B employees, but any new H-1B hire or extensions of status for existing H-1Bs s would be subject to whatever rules would now apply to the company (dependent or non-dependent.)

Traveling employees. A multi-tiered inquiry is involved in determining what, under the regulations, needs to be done when H-1B employees travel. The first tier involves the question of whether the travel needs to be of concern at all. Essentially, if the employee’s travel does NOT involve going to a new "place of employment" or "worksite," one need not be concerned with any special traveling employee rules. The regulation includes a new, detailed definition of "place of employment." It is not a "place of employment" if the "nature and duration" of the employee’s job functions necessitate frequent changes of location with little time at any one place. To meet this criterion, the job (as opposed to the employer’s business) must be peripatetic in nature, the duties must require that most work time be spent at one location but occasional travel for short periods is needed to other locations, AND the travel must be on "a casual, short-term basis, which can be recurring but not excessive (i.e., not exceeding five consecutive workdays for any one visit by a peripatetic worker, or 10 consecutive workdays for any one visit by a worker who spends most work time at one location and travels occasionally to other locations)."
Examples cited that could meet these criteria for not being a new place of employment include computer engineers who troubleshoot at customer sites; physical therapists making home visits "within an area of employment;" or sales representatives making customer calls. Examples of those not meeting these criteria, and therefore going to "places of employment," include computer engineers who work on projects for weeks or months at a time; physical therapists who "fill in" for other therapists for extended periods or who are placed by contractor companies; or a sales representative who is assigned on a continuing basis to a location away from the home office. It is also not a "place of employment" if the H-1B employee is temporarily at a different location for developmental activity (seminars, etc.), unless he or she is an instructor or a member of support staff who "continuously or regularly" performs duties at such locations. There is no time limit for attendance at a different location for developmental activity according to the preamble.

Where the person travels to a location that does not constitute a new "place of employment," under these rules, then the LCA obligations are tied to the regular work location. Employers are required to reimburse for travel expenses during such travel.

If, however, the travel constitutes going to a new "place of employment," a second tier of inquiry is necessary. If the travel is within the same area of intended employment, Section 655.734 requires that notices be posted at new worksites within that area on or before the date that the H-1B employee reports to that site. If the travel is outside the area of intended employment shown on the LCA, the new Section 655.735 is invoked. In essence that section requires that either a new LCA must be filed before the travel can take place, or detailed "short-term placement" rules must be followed. Those rules limit short-term placements to 30 workdays at any worksite not listed on the LCA in any given fiscal or calendar year. However, a short-term placement can be for up to 60 workdays in a one-year period if the H-1B employee continues to maintain a work station at the "permanent" worksite and spends a substantial amount of there during the year, and if the employee’s place of abode is in the area of the permanent worksite. The regulation prohibits employers from making the employee’s initial assignment at a short-term placement location. It also prohibits use of the short-term placement rules in any area of employment where the employer has a certified LCA for that occupational classification. In that case, the employer must apply the conditions of that LCA (wage rate, strike or lockout) to the new H-1B employee. The preamble states that if the employer’s LCA has open "slots", nothing more must be done. However, if the employer moves more H-1B employees into the area than it has available "slots," DOL states in the preamble that it expects the employer will take steps to correct the situation by filing new LCAs. In an enforcement context, DOL may, "in its discretion, overlook ‘overcrowding’ of the LCA, if it is not substantial."

Employers choosing to use the short-term placement rule (rather than filing a new LCA) for areas where they do not already have an LCA must continue to pay the required wage based on the permanent worksite, and must pay the employee’s actual cost of travel, lodging, meals and incidentals for workdays and non-workdays at the short-term site. The employer is not required to meet GSA per diem schedules, but, according to the preamble, in an enforcement proceeding if the employer cannot document the actual expenses, DOL will use the GSA schedules to determine appropriate reimbursement.

Once the workday limit is reached at a location, the employer must either file an LCA for that site (the language of the regulation is vague as to whether the LCA must be certified at the time the limit is reached) or remove the employee. If any employee exceeds the time limit, or the employer in any other way "violates the terms of" the LCA, and the short-term placement option cannot thereafter be used by that employer for any H-1B employees in that occupational classification in that area of employment. Employers also are "cautioned" against continuously rotating H-1B nonimmigrants to an area of employment "in a manner that would defeat the purpose of the short-term placement option."

Prevailing wage-Service Contract Act wages. For purposes of SCA wage determinations, it is irrelevant whether the worker is employed on an SCA-subject contract, and whether the worker would be exempt from the SCA under the "professional employee" exemption test. Also, if an SCA wage determination for a computer professional states a rate of $27.63 per hour, that rate may not be used (due, according to the regulation, to a quirk in the SCA system). This provision appears to be effective immediately (the regulation indicates that Section 655.731(a)(2) is effective immediately, but there are two subparagraphs with that same number. The other subparagraph (a)(2)-relating to prevailing wages for institutions of higher education and others-most likely is the one intended to be effective immediately, but DOL may have meant to also make this subparagraph effective immediately).

Prevailing and actual wage when a new prevailing wage is obtained. The regulation indicates that the prevailing wage as to any particular H-1B employee is governed by the LCA that supports that individual’s petition, and that prevailing wage determinations on later LCAs for the same occupation do not operate as an "update" of the prevailing wage of earlier LCAs. However, the regulation seems to indicate that, because the DOL views actual wage as a "dynamic" matter, an increase in pay for new employees because of an increase in the prevailing wage could cause the actual wage to also rise and create an obligation to increase the wages of the H-1B employees under old LCAs.

Actual Wage Documentation. The Interim Final Rule also drops the entire Appendix A from the Notice of Proposed Rulemaking ("NPRM"), which contained DOL’s "guidance" regarding documentation of the actual wage. The requirement from the NPRM that employers must have an objective wage system "sufficiently detailed to enable a third party to apply the system to arrive at the actual wage rate computed by the employer for any H-1B nonimmigrant" has been deleted. In the preamble to this Interim Final Rule, DOL states that the system does not have to be "objective" but must only use "legitimate business factors." DOL is "persuaded that some subjective factors, such as an evaluation of performance levels," may be legitimate. Also, the documentation must only be detailed enough that a third party can "understand how the employer applied its pay system to arrive at the actual wage for its H-1B nonimmigrant(s)." The preamble also states that the description in the public access file should, at a minimum, contain the business-related factors that are used in setting wages and the manner in which they are implemented (e.g., the wage/salary range for the position and the pay differentials for various factors such as education and job experience).

Prevailing wage for employees in higher education or Governmental or nonprofit research organizations. In this notice, the DOL amends the regulations on this subject for both LCAs and the permanent labor certification process. To qualify to use the separate prevailing wage categories for this grouping, institutions of higher education must be accredited or pre-accredited. Governmental research organizations, which must be U.S. government entities, and nonprofit research entities must have a primary mission of performance or promotion of basic or applied research, which can include sciences, social sciences or humanities. This provision is effective immediately, and is retroactive as to prevailing wage determinations "that were not final as of October 21, 1998."

Benefits. ACWIA requires that benefits be offered to H-1B nonimmigrants on the same basis, and in accordance with the same criteria, as they are offered to the employer’s U.S. workers. The regulation defines this to mean that H-1Bs must be offered the same benefit package as U.S. workers, cannot be subjected to stricter eligibility criteria, and cannot be treated as "temporary employees" for benefits purposes by virtue of their nonimmigrant status. The benefits received by the H-1B employee do not have to be identical to those received by U.S. workers, as long as the same benefits package was offered and the H-1B voluntarily chose different benefits (and the employee actually receives the benefits elected). Multinational companies can keep transferred employees on the foreign payroll and offer "home country" benefits under certain circumstances.
The regulations require that employers retain, as documentation of the benefits attestation, a copy of benefit plan descriptions provided to employees, a copy of the benefit plans themselves and any rules used for differentiating benefits among groups of employees, evidence as to what benefits are actually provided to U.S. workers and H-1B nonimmigrants, and the benefit elections made by those employees. If the employer is a multinational employer providing "home country" benefits, evidence of the benefits provided to the H-1B nonimmigrant before and after the move to the U.S. also must be maintained.

For violations of this provision, the DOL gives itself authority in Section 655.810 to assess payment of "back…fringe benefits." The preamble discusses the DOL view that certain benefits "are in the nature of compensation for services rendered" and have a monetary value (such as paid vacations and holidays, bonuses and termination pay, which are taxable to the employee when earned, and health, life and disability insurance, deferred compensation such as retirement plans and stock options funded by employers). The preamble also states DOL’s view that these items are more "in the nature of wages than working conditions" and the department will enforce violations of these under the wage.

Benching. If an H-1B employee is in a nonproductive status due to a "decision by the employer," which includes lack of work assignments and lack of a permit or license, the employee must nevertheless be paid the full pro-rata amount due. Part time employees in nonproductive status must be paid at least the number of hours indicated on the petition. If a range of hours is indicated on the petition, then the employee must be paid for the average number of hours he or she ordinarily works. The preamble indicates that if an employee regularly works more than the designated number of part-time hours stated on the petition, DOL might charge the employer with misrepresentation.
If the nonproductive period is due to "conditions unrelated to employment" at the employee’s "voluntary request and convenience" (such as caring for a sick relative or touring the U.S.) or due to circumstances like maternity leave that render the employee unable to work, the employer is not obligated to pay the employee, provided the period is not subject to pay under the employer’s benefit plan or under other statutes. The preamble makes clear that DOL cannot "forgive" employers from compliance with this rule due to annual plant shutdowns or holidays or other events that affect both U.S. workers and H-1B nonimmigrants. However, DOL indicates its view that laying off U.S. workers in such situations while retaining H-1B nonimmigrants may violate other nondiscrimination laws. Such an action would also be a violation of the ACWIA layoff attestation for H-1B dependent employers, in the DOL’s view.

These obligations begin once the H-1B employee "enters into employment," which is deemed to occur when the individual first makes him or herself available. The regulation indicates that "even if the nonimmigrant has not yet ‘entered into employment’," once the petition is approved, the required wage must start to be paid 30 days after the nonimmigrant is first admitted to the U.S., or if he or she is already here, 60 days after the nonimmigrant first becomes eligible to work for the employer. The latter is deemed to be the later of the start date set forth on the petition or the date INS renders a status decision. Payment obligation ends if there has been a "bona fide" termination of the employment relationship. While the language of the regulation itself is less than clear on this point, the preamble indicates that a "bona fide" termination will be deemed to have occurred only when the employer notifies the INS of the termination, the H-1B petition is canceled, and the return fare obligation is fulfilled.

Attorney’s fees. The effect of this regulation is to make it a violation of the required wage provisions if the H-1B employee pays "attorney fees and other costs connected to the performance of H-1B program functions which are required to be performed by the employer (e.g., preparation and filing of LCA and H-1B petition)" such that, when deducted from the employee’s wage, the wage would be below the higher of the actual or the prevailing wage. (If such payments would not reduce the employee’s wage beneath the required wage, such payments are permissible.) The regulation at Section 655.731(c)(9)(iii)(C) terms the deduction of such fees and costs from the employee’s wages as a "recoupment of the employer’s business expense," and then at Section 655.731(c)(12) deems the act of "imposing on the employee" such an expense to be an unauthorized deduction from wages. These provisions were included in the NPRM’s Appendix B, which has now been eliminated, and are now incorporated in the actual regulatory text.

The "no penalty" penalty. ACWIA prohibits the requirement of payment of a penalty for the H-1B employee ceasing employment prior to an agreed date, except that the employer may receive liquidated damages in such a case. The interim regulation does not contain the requirement that was in the proposed regulation that a court order would be necessary for a repayment to constitute liquidated damages, instead defining liquidated damages by reference to state law. However, the regulation indicates that liquidated damages cannot be collected by deduction from the employee’s paycheck. The preamble states that recoupment of attorneys fees may be included in liquidated damages. In any event, the regulation indicates that the $1,000 "training" fee could never be a part of liquidated damages and cannot be recouped in any form.

Notice requirement. The regulation reinstates the requirement, struck down by the NAM lawsuit, that notices must be posted at new worksites within the area of intended employment on or before the date that the H-1B employee reports to that site. It also explicitly requires postings not only in the employer’s own facility, but at third party worksites. Electronic notice is allowed, either by a one-time direct notice (such as email) to employees in the occupational classification at the place of employment or by making the notice available for 10 days by electronic means such as a company intranet or bulletin board.

Complaints by non-aggrieved parties. For the first time, ACWIA authorized the DOL to conduct investigations, under certain specified circumstances, based on information received from persons who would not be considered aggrieved parties. The regulation sets forth a process for receiving such information, which the DOL will then review to determine whether the source is likely to possess relevant knowledge, whether the information provided is specific and credible and provides reasonable cause to believe that the employer has committed a violation, and whether the alleged violation is willful, involves a pattern or practice, or involves substantial violations affecting multiple employees. The regulation specifies that "information" does not include information from DOL employees unless obtained in the course of a lawful investigation. In the preamble, DOL provides a lengthy discussion of its belief that this new authority does not in any way diminish its ability to conduct "directed" investigations without a complaint. However, the preamble also states that during the period when this new "other source" investigative authority is in place, it intends to investigate only under a complaint from an aggrieved party (including information obtained during an investigation under the INA or any other law) and random investigations of willful violators (as authorized by ACWIA).

New violations and penalties; investigations. The regulation creates a new rule by which a violation of other rules that "impedes" the ability of the DOL to investigate or the ability of members of the public to obtain information needed to file a complaint can make an employer subject to a $1,000 civil penalty. The preamble indicates this penalty will apply for violations preventing public access or record-keeping violations. The preamble also contains a lengthy discussion of DOL’s interpretation that it has the authority to order "make whole relief" including reinstatement of dismissed employees, as part of its "administrative remedies." DOL also gives itself the authority to interview complainants and extend the 30-day period for investigations if due to reasons "outside of the control" of DOL and additional time is necessary to obtain information from the employer or other sources.

Key dates. Unless otherwise noted, the provisions of this regulation are effective January 19, 2000. Comments are due February 20, 2001, except for comments on a new proposed form for collecting information to determine if a violation has been committed. Comments on that form are due January 19, 2001.

PART 2- PROVISIONS APPLICABLE TO DEPENDENT EMPLOYERS

DEFINING H-1B DEPENDENT EMPLOYERS

What are the proportions of H-1B employees to overall workforce that constitute H-1B dependency? Under ACWIA, an employer is H-1B dependent if it has in the U.S.: (a) 25 or fewer full-time equivalent ("FTE") employees and more than 7 H-1B employees; (b) between 26 and 50 FTE employees and more than 12 H-1B employees; or (c) at least 51 FTE employees and a number of H-1B employees equal to at least 15% of the employer’s FTE employees. In counting the number of FTE employees for this purpose, H-1B employees are included.

What is the formula for determining if an employer is H-1B dependent? The DOL views the formula as requiring a comparison of two dissimilar numbers: an actual head count of H-1B employees, without regard to full or part-time status, and a computation of the employer’s FTE employees. If the ratio of H-1B employees to the total workforce is "obvious and can easily be compared to the definition of ‘H-1B dependency’," the employer’s status as dependent or non-dependent need not be calculated. If the employer’s dependency status is "borderline"—i.e., not readily apparent—the employer can use a "snap shot test" to determine if calculation of the status is necessary. Employers of 51 or more persons would divide the number of H-1B employees by the number of full-time employees. (It would not be necessary to perform the FTE calculation for part-time workers described below.) If this "snap shot" results in a ratio of less than 15%, the employer is not dependent and no further calculations are necessary. If the "snap shot" gives a result of 15% or more, and the employer believes it is actually non-dependent, then it must calculate the FTEs of its part-time workforce as described below. Smaller employers (50 or fewer full and part time employees) may compare a head count of their workforces to the definition of H-1B employer for this "snap shot" test.

What is a full-time equivalent employee? Under the IFR, an FTE employee is either one who actually works full time, i.e., at least 40 hours per week unless the employer can show that a lesser number of hours are considered full-time in its regular course of business. Under the DOL regulation, full-time can never be less than 35 hours per week. The IFR offers two options for calculating how many part-time employees equal an FTE: 1) count each part-time worker as ½ of an FTE for the calculation, thus requiring no records of actual hours worked and no complex calculations; or 2) total the hours worked by all part-time workers in the pay period and divide that total by the employer’s standard hours for full-time employment (at least 35 hours per week), based on the last payroll or, where records of hours of work are not maintained, a reasonable approximation of the hours worked, such as a standard work schedule.

Who is the employer? The Interim Final Rule (IFR) provides that entities considered a "single employer" under the Internal Revenue Code Sections 414(b), (c), (m), or (o) must combine their employees for determining their dependency calculation. In general, those sections include: 1) "controlled groups of corporations," such as a parent-subsidiary controlled group, a brother-sister-controlled group, or a combined group; 2) "trades or businesses under common control" which can include sole proprietorships, partnerships, estates, trusts, and corporations; or 3) "affiliated service groups," such as a service organization (health care organization, law firm, accounting firm) and other organizations that regularly perform services for the first organization and either are shareholders or partners in the first organization or the interest in the second organization is held by highly-paid employees of the first organization. At present, the Treasury Department has no regulations governing employee-leasing situations and thus such situations are not covered in this regulation. If, however, the Treasury Department issues regulations on the subject in the future, members of employee leasing groups might be treated as a single employer. This "single employer" definition is only to be used in dependency calculation, and not in any other element of H-1B LCA filing or enforcement.

When must the calculation of H-1B dependency be made? Employers must determine their dependency status each time an LCA (existing or new) is used to support an H-1B petition (for new employment or an extension of employment). The LCA filed in support of that petition must accurately state the employer’s dependent or non-dependent status. Stating that DOL "disagrees" with the argument that invalidating existing, valid LCAs for H-1B dependent employers is retroactive rule-making, the IFR requires that employers wishing to file petitions for new H-1B employees or to extend the status of existing H-1B employees must determine their dependency status. If they are H-1B dependent, they must file a new LCA indicating that status to support those petitions, and may not use existing, certified LCAs, even if they are still valid and have open "slots" on them. Those LCAs are still valid for existing H-1B employees, and the employer need not comply with the new attestation requirements for those employees, until they wish to file for extensions of status for those employees. An employer undergoing a corporate reorganization must also recheck its dependency status before filing new LCAs for future petitions (see the summary of provisions of general applicability for the regulations regarding the need for documentation in a corporate restructuring situation).

What records need to be kept of the dependency determination? The IFR does not require any documentation of the employer’s determination if its "snap shot" makes its dependency status readily apparent, either dependent or non-dependent. However, if the employer’s snapshot is over 15% and it makes a further calculation that it is non-dependent, the employer must retain a copy of the full computation. If an employer’s status changes from dependent to non-dependent, the employer must keep a copy of the full calculation used to make this determination. If an employer uses the IRS "single employer" test to determine dependency, it must keep records of which entities are included in the definition of single employer as well as the computation performed (either the snapshot or full calculation). Also, if any employees are included in the calculation that are not on the employer’s normal payroll, the employer must have documentation to substantiate that the workers are indeed employees. None of this documentation must be kept in the public access file, but must be made available to DOL in an investigation.

What indication of the employer’s status is included on the LCA? The new LCA form will have three options for the employer to check: 1) the employer is non-dependent; 2) the employer is dependent but the only H-1Bs to be sponsored under this LCA are "exempt" H-1Bs (see below); or 3) the employer is dependent, the employees are non-exempt, and the employer will comply with the additional attestations. According to the regulation, the LCA cannot be used for new H-1B nonimmigrants or extensions of H-1B status if an employer’s dependency status changes from that indicated on the form (either to dependent or non-dependent). Likewise, if the LCA indicates it will be used only for exempt H-1B nonimmigrants, it may not be used to support petitions for non-exempt H-1Bs. Dependent employers must file separate LCAs for exempt and nonexempt H-1Bs even in the same occupation.

WILLFUL VIOLATORS

What constitutes a "Willful violator" for purposes of the additional attestations and random investigations authorized under ACWIA?

Under the regulation, any employer who is found to have committed a willful failure to meet a condition of the LCA or a misrepresentation of a material fact on the LCA, is required to make additional attestations for H-1B dependent employers and be subject to random DOL investigations during the five year period following the date of the final determination of such violation (on or after October 21, 1998) either in a DOL proceeding (relating to LCA compliance) or in a Department of Justice proceeding (relating to failing to offer employment to U.S. workers under the recruitment attestation). The section of the preamble discussing the random audits states that the date of the "finding" of willful violation or misrepresentation occurs when the administrative review process is completed, as described in Section 655.855(b) of the regulations (which would be the date on which the final administrative appeal is exhausted and a finding is issued).

EXEMPT H-1B NONIMMIGRANTS

What are "Exempt H-1B Nonimmigrants" generally? Under the statute, "exempt H-1B nonimmigrants" (for whom an H-1B dependent employer is not obliged to meet the additional attestation elements) are those holding a master’s or higher degree or its equivalent in a specialty related to the intended employment, or who earn wages (including cash bonuses and similar compensation) at an annual rate of at least $60,000.

Who will make the determination whether a nonimmigrant is "exempt"? The IFR states DOL’s "understanding" that INS will examine the exempt status of any nonimmigrant whose petition is supported by an LCA that indicates it is to be used only for exempt nonimmigrants. This examination will be based on the wage level indicated for the individual on the LCA and the petition, or, if this wage level is not adequate to support an exempt status, whether the individual’s educational level qualifies for exempt status. If the INS’ initial determination is that the individual is not exempt, then INS will, according to the preamble to the DOL regulation, issue a Request for Evidence seeking a new LCA or documentation of the individual’s exempt status. DOL will, in an investigation, determine whether an individual actually received the required wage rate. If the wage rate is not adequate, then DOL will examine the educational level of the individual (including whether the field of study is relevant). However, under the terms of the IFR, the DOL will treat as conclusive INS’ determinations of exempt status based on educational attainments, unless the INS determination was based on false information.

What documentation of the "exempt" status must be kept? DOL will not require that individual petitions be kept in the public access file, but the employer must keep them in case of a DOL investigation. However, the public access file must include a list of the names of H-1B employees whose petitions are supported by any LCA indicating that it will be used only for exempt nonimmigrants, unless the employer does not employ any non-exempt H-1B employees, in which case a simple statement to that effect must be included in the public access file.

How is the $60,000 annual rate determined? The regulation indicates that the "cash in hand, free and clear" standard applicable to satisfaction of the prevailing and actual wage requirement also applies to the question of whether the full $60,000 annual rate was actually paid. Under the regulation, part-time workers may not meet this requirement unless they actually receive $60,000 for their part-time work (i.e., the $60,000 cannot be prorated for part-time employees). Employees who have worked less than a full year will retain their exempt status if they received at least the pro rata share of the $60,000 annual requirement for the period.

How is the "equivalent" of a degree determined? DOL rejects the use of work experience equivalency for this standard, and instead requires the individual to have the actual degree or its foreign equivalent. With regard to determining equivalence of foreign degrees, the IFR requires that the degree be from an institution recognized or accredited by the law of the country, and specifies that where an employer attests that an H-1B nonimmigrant is exempt based on education, rather than wages, the employer must provide, at the request of either INS or DOL, copies of the degree and transcripts of courses taken and grades earned. DOL also is proposing (for comment, but not as part of the IFR) to include the guidelines published by the American Association of Collegiate Registrars and Admissions Officers (AACRAO) regarding equivalency of foreign degrees as part of the Final Rule for use in determining whether a foreign degree is equivalent to a U.S. master’s degree. As an alternative, DOL proposes that employers would be able to present evidence from a credential evaluation service if there were no foreign degree listed as equivalent or where a degree was awarded in the past and circumstances have changed. The DOL regulation does not address how INS might evaluate degree equivalency for these purposes.

What is "a specialty related to the intended employment"? The IFR adopts a standard that in order to be considered "relevant" the degree must be "generally accepted in the industry or occupation as an appropriate or necessary skill or credential." In order to determine whether a credential meets this standard, the DOL, in the preamble, indicates its intention to use the Occupational Outlook Handbook and O*NET as guides. The preamble also suggests that DOL may examine other evidence of industry standards in an investigation. DOL also seeks comment on whether or not to specifically cite the OOH and O*NET as primary sources for determining whether a degree is in a specialty related to the occupation in the Final Rule and proposes that where neither of the two primary sources recognizes the credential, then the employer may submit a report from a credentialing organization that the degree is recognized in the industry as an appropriate and necessary skill.
DISPLACEMENT ATTESTATION
Which employees are protected from displacement? The statute provides that "employees of the employer" and "employees of the other employer" in contractor situations ("secondary displacement") are protected from displacement by H-1B nonimmigrants. The IFR uses a "common law" test to determine whether an individual is an "employee" of either the principal employer or the other employer. However, the IFR does not include a detailed list of factors that determine common law employment, as was proposed in the NPRM. The preamble reiterates that the common law test requires an assessment of all of the factors of the employment, but also states that the right to control the means and manner of work will be a key determinant, with no single factor controlling. The preamble does not suggest any particular test, but does state that an employer’s designation of a worker’s status for tax purposes is not controlling as to the matter of that worker’s status for purposes of the H-1B program. The preamble also emphasizes that the common law test is not only for use in the displacement context, but for any area in the H-1B program in which the question of an employment relationship may arise. However, the IFR does state that the employer of any H-1B nonimmigrant is, by definition, the petitioning entity.

The employee must also be in an "essentially equivalent job" to that held by the H-1B nonimmigrant. The IFR indicates that the comparison will be one-to-one where appropriate between the displaced worker and the H-1B nonimmigrant, but may be broader "where appropriate," such as in cases where a department is eliminated and then the function staffed with H-1B nonimmigrants. The comparison will be based on the job responsibilities, focusing on the core elements of and competencies for the job, the qualifications and experience of the workers in question, which must be substantially equivalent (the IFR indicates that 10 years of experience would be "substantially equivalent" to 15 years of experience and that degrees from any accredited university would be "substantially equivalent" regardless of the stature of the institution). The comparison also must be for positions that are in the same area of employment, i.e. the area within normal commuting distance of the worksite.

What circumstances does the "secondary displacement" prohibition cover? The secondary displacement prohibition controls when an H-1B employer places the nonimmigrant at a worksite operated or owned by another employer where there are "indicia of employment" between the H-1B professional and the other employer. DOL notes that such "indicia" do not have to meet the definition of "employed by the employer" (based on the common law test), but the IFR includes a list of relevant indicia to include:

The other employer has the right to control when, where and how the nonimmigrant performs the job (the presence of this indicator would suggest that the relationship "approaches" the relationship that triggers the secondary displacement provision); The other employer provides tools, materials and equipment; The work is performed on the premises of the other employer (this alone would not trigger the secondary displacement provision); There is a continuing relationship between the nonimmigrant and the other employer; The other employer has the right to assign additional projects to the nonimmigrant; The other employer sets the hours of work and the duration of the job; The work performed by the nonimmigrant is part of the regular business of the other employer; The other employer is itself in business; and The other employer can discharge the nonimmigrant from providing services.
What is considered an impermissible layoff vs. a permissible termination for determining "displacement"? The IFR clarifies that an employer may terminate an employee for inadequate performance, violation of workplace rules, or other cause related to the worker’s performance or behavior on the job. The worker may also voluntarily depart or retire (although DOL will assess whether "constructive discharge" may have taken place in this circumstance). In cases where the U.S. worker is discharged because of the expiration of a grant or contract, where such expiration essentially ends the need or funding for the job, DOL will not consider it to be a lay off, but will examine closely to determine whether or not the employer usually moves employees to a new contract or project when such expirations occur. The preamble states that in situations where an employer normally lays off U.S. workers when alternative work is not available and then rehires them when it is, DOL will expect the employer to first contact the laid off U.S. worker before hiring an H-1B nonimmigrant. An employer may also offer a U.S. worker who loses employment an alternative job offer that is a "similar employment opportunity" at equivalent or higher compensation. The alternative offer does not need to be in the same area of employment, but in a case where the job location is different, DOL will assess cost of living differentials and payment of moving expenses in determining whether the offer is at "equivalent or higher compensation." The comparison of the job opportunities will also include comparison of compensation and benefits, levels of authority, discretion and responsibility, opportunity for advancement and tenure and work scheduling.
What inquiry/documentation is needed for a secondary placement situation? The placing employer is required to exercise "due diligence" in enquiring of the other employer as to displacement of U.S. workers during the relevant period (90 days before and after placement of the H-1B nonimmigrant at the worksite). The LCA and the IFR make clear that making this inquiry will not protect a placing employer from sanctions if the secondary employer does, in fact, displace a U.S. worker within the relevant period. However, unless the employer knew or had reason to know of the displacement, the employer would be subject only to monetary penalties, and not to debarment. The other employer has no liability in such situations. The IFR suggests that the placing employer may accomplish this inquiry in several ways, including securing written assurance from the other employer regarding displacements, preparing a written memorandum of an oral statement of the other employer, or including a secondary displacement clause in the contract with the other employer. The IFR also states that the employer may be required, in the exercise of due diligence, to make further inquiries when it has other information which indicates that U.S. workers might have been or will be displaced (examples include where the employer is taking over a function of the other employer that was formerly conducted by its own employees, or following news reports of layoffs by the other employer) if the information is available before the placement of the H-1B nonimmigrant.

What documentation is required to support the direct displacement attestation? The employer is required to retain (not create) all records that it makes or receives concerning the circumstances under which each U.S. worker in the same locality and occupation as the H-1B nonimmigrant left the employer’s employ during the relevant period (90 days before and after the petition filing) and any such U.S. worker was terminated by the employer’s action. The documentation should contain the following: name, last-known mailing address, occupational title and job description, any documentation concerning the employee’s experience and qualifications and principal assignments. All documentation prepared by the employer relating to the departure of such employees, including any offers of alternative employment, notification of termination and any responses thereto, must be retained as well. These records are not required to be in the public access file, just available to DOL upon request.

RECRUITMENT ATTESTATION

What are the standards for recruitment? The employer is required to engage in "good faith recruitment" using "industry-wide standards." The IFR states that the employer is not required to utilize any particular number or type of recruitment, but must use strategies that have been successfully used by other employers in the industry to recruit U.S. workers. An employer may not use the "least common denominator" of methods that are unsuccessful at recruiting U.S. workers, even if such methods are common. An employer must, at a minimum, recruit both internally and externally and use both active and passive methods. Examples of active methods include attending job fairs, using college placement services or headhunters, and internal employee training. Examples of passive methods include print or Internet advertisement and internal job postings. The language of the regulation appears to require that at least some recruiting must target former employees.

The employer has the burden of proving, in an enforcement action, that its recruitment met "industry-wide standards," such as trade organization surveys, studies by consultative groups or reports/statements from trade organizations. Staffing firms must meet the standards of the industry in which they are placing employees, i.e. health care staffing firms must meet the standards of the health care industry, and technology-staffing firms must meet the standards of the information technology industry generally. The preamble also makes clear that an employer may advertise for multiple similar positions, and such recruitment may be acceptable if it accords with "relevant industry standards" applicable to that employer. The preamble also cautions employers that disproportionate use of certain recruitment methods, such as college campus recruiting, may have the unintended consequence of discriminating against older workers.

The employer’s recruitment must also be in "good faith." DOL determines that this means that U.S. workers must be given an equal and fair opportunity to obtain the position. An employer must not skew the recruitment process against U.S. workers or in favor of H-1B nonimmigrants. Specifically, the IFR states that an employer may not give preference to its current nonimmigrant workers who do not yet have H-1B status (such as students on practical training). DOL also states that it would look with disfavor upon any practice that screens the applications of H-1B nonimmigrants or prospective H-1B nonimmigrants differently than U.S. workers.

The preamble notes that DOL has rejected its presumption that successful recruitment of U.S. workers would necessarily meet its good faith recruitment standard, since the perception that a negative presumption would attach to unsuccessful recruitment was evidenced from the comments. However, the preamble also notes that in its enforcement, DOL will look closely at the recruitment efforts of employers who have not been successful in hiring U.S. workers. Employers may not apply otherwise-legitimate selection criteria in a way that skews the recruitment process in favor of H-1B nonimmigrants, nor may they apply their screening criteria in a discriminatory manner. Such violations would evidence the employer has failed to recruit in "good faith."

What are the standards for selection? The employer must offer the job to any equally or better qualified U.S. worker who applies. The employer may use any "legitimate selection criteria relevant to the job that are normal and customary to the type of job. While the Department of Justice has jurisdiction over claims from U.S. workers who allege they were not offered the job but were equally or better qualified, DOL asserts its authority to determine whether or not legitimate selection criteria were used. The IFR indicates that each criterion must meet three standards: 1) legitimate, meaning legally cognizable and not violating any applicable laws, 2) relevant to the job, meaning having a nexus to the job and its duties and responsibilities, and 3) normal and customary to the type of job, meaning necessary and appropriate based on the practice or expectations of the industry, rather than the preferences of the particular employer. The preamble indicates that DOL will look to the Occupational Outlook Handbook and O*NET as guidelines for what constitute acceptable criteria that are normal and customary for the job, and that those resources will be used as a tool in DOL enforcement. However, DOL acknowledges that these sources would not be definitive. DOL also cautions against recruitment practices and selection criteria that have the effect of discriminating against U.S. workers generally or against groups of workers, such as older workers and minorities.

What documentation is the employer required to maintain with regard to its recruitment? The employer must make and maintain documentation of the recruiting methods used, including the places and dates of any advertisements, postings or other methods used, the content of the advertisements or postings, and the compensation terms, if such are not included in the advertisements or postings. The documentation may be in any form, including a summary memorandum to the file. The employer must keep any documentation it has received or prepared concerning the treatment of applicants for the position, such as copies of applications and related documents, test papers, rating forms, records of interviews, and records of job offers and responses. The preamble emphasizes that DOL is not requiring that the employer create any documents relating to the treatment of applicants, but it must keep any documents it does create or receive. A summary of the recruitment methods used and periods for recruitment must be in the public access file. All other documentation must be made available to DOL upon investigation and request.

KEY DATES
Key Dates. Unless otherwise noted, the provisions of this regulation are effective January 19, 2000. Comments are due February 20, 2001, except for comments on a new proposed form for collecting information to determine if a violation has been committed. Comments on that form are due January 19, 2001.

[Note: Please consult with an attorney specializing in Immigration & Nationality law for professional advice in specific situations.]

Ajay K. Arora, Esq., is a prominent member of the Immigration & Nationality bar in New York City and a member of the American Immigration Lawyers Association. He may be contacted at (212)268-3580.