Labor Condition Applications and Requirements for Employers Using
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion
Models; Labor Certification Process for Permanent Employment of Aliens
in the United States; Proposed Rule
[Proposed Rules] [01/05/1999]
Labor Condition Applications and Requirements for Employers Using
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion
Models; Labor Certification Process for Permanent Employment of Aliens
in the United States; Proposed Rule
[01/05/1999]
Volume 64, Number 2, Page 627-678[[Page 627]]
_______________________________________________________________________
Part IV
Department of Labor
_______________________________________________________________________
Employment and Training Administration
_______________________________________________________________________
20 CFR Parts 655 and 656
Labor Condition Applications and Requirements for Employers Using
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion
Models; Labor Certification Process for Permanent Employment of Aliens
in the United States; Proposed Rule
[[Page 628]]
DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Parts 655 and 656
RIN 1215-AB09
Labor Condition Applications and Requirements for Employers Using
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion
Models; Labor Certification Process for Permanent Employment of Aliens
in the United States
AGENCY: Employment and Training Administration, Labor, in concurrence
with the Wage and Hour Division, Employment Standards Administration,
Labor.
ACTION: Notice of Proposed Rulemaking; request for comments.
-----------------------------------------------------------------------
SUMMARY: The Department of Labor is proposing regulations to implement
recent legislation and clarify existing Departmental rules relating to
the temporary employment in the United States of nonimmigrants under H-
1B visas. Specifically, the Department publishes this notice of
proposed rulemaking to obtain public comment on issues to be addressed
in regulations to implement changes made to the Immigration and
Nationality Act (INA) by the American Competitiveness and Workforce
Improvement Act of 1998 (ACWIA). For certain of these ACWIA issues, the
Department is proposing regulatory language for comment; for other
issues, the Department is identifying concerns and its proposed
approach to addressing them or alternative approaches, on all of which
comments are requested. In addition, the Department is providing an
opportunity for additional comments on certain provisions which were
previously published for comment as a Proposed Rule in 1995 (60 FR
55339).
The Department is also proposing to modify regulations to implement
an ACWIA provision which modifies the methodology for the determination
of the prevailing wage under the Permanent Labor Certification program
(20 CFR Part 656), but is not proposing specific regulatory text at
this time. This methodology is also applicable to prevailing wages for
the H-1B program. The Department is working in close cooperation with
the Immigration and Naturalization Service (INS) in developing these
regulations, since certain definitions and terms must be consistently
applied by the two agencies in their respective regulations.
After receiving public comments on this notice of proposed
rulemaking, the Department plans to publish an Interim Final Rule
(inviting further comment) and a Final Rule (after reviewing all the
comments received).
DATES: Submit written comments by February 4, 1999. The Department
encourages submission of comments as soon as possible before that date.
Any comments received by the Department after that date will be part of
the rulemaking record and will be considered, fully, in subsequent
rulemaking, but they may not receive full consideration in the interim
implementing regulations. Congress expressed its intent that the
Department act swiftly to issue regulations by waiving the customary
60-day comment period.
ADDRESSES: Submit written comments concerning Part 655 to Deputy
Administrator, Wage and Hour Division, ATTN: Immigration Team, U.S.
Department of Labor, Room S-3502, 200 Constitution Avenue, NW,
Washington, DC 20210. If you want to receive notification that we
received your comments, you should include a self-addressed stamped
post card. You may submit your comments by facsimile (``FAX'') machine
to (202) 219-5122. This is not a toll free number.
Submit written comments concerning Part 656 to the Assistant
Secretary for Employment and Training, ATTN: Division of Foreign Labor
Certifications, U.S. Employment Service, Employment and Training
Administration, Department of Labor, Room N-4456, 200 Constitution
Avenue, NW, Washington, DC 20210. If you want to receive notification
that we received your comments, you should include a self-addressed
stamped post card. You may submit your comments by facsimile (``FAX'')
machine to (202) 208-5844. This is not a toll-free number.
FOR FURTHER INFORMATION CONTACT: On Part 655, contact either of the
following:
Michael Ginley, Director, Office of Enforcement Policy, Wage and
Hour Division, Employment Standards Administration, Department of
Labor, Room S-3510, 200 Constitution Avenue, NW, Washington, DC 20210.
Telephone: (202) 693-0745 (this is not a toll-free number).
James Norris, Chief, Division of Foreign Labor Certifications, U.S.
Employment Service, Employment and Training Administration, Department
of Labor, Room N-4456, 200 Constitution Avenue, NW, Washington, DC
20210. Telephone: (202) 219-5263 (this is not a toll-free number).
On Part 656, contact James Norris, Chief, Division of Foreign Labor
Certifications, U.S. Employment Service, Employment and Training
Administration, Department of Labor, Room N-4456, 200 Constitution
Avenue, NW, Washington, DC 20210. Telephone: (202) 219-5263 (this is
not a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Paperwork Reduction Act
The H-1B visa program is a voluntary program that allows employers
to temporarily secure and employ nonimmigrants admitted under H-1B
visas to fill specialized jobs in the United States. (Immigration and
Nationality Act (INA), 8 U.S.C. 1101 et seq.). The statute, among other
things, requires that an employer pay an H-1B worker the higher of its
actual wage or the locally prevailing wage, to protect U.S. workers'
wages and moderate any economic incentive or advantage in hiring
temporary foreign workers. Under the Immigration and Nationality Act
(INA), as amended by the Immigration Act of 1990 and the Miscellaneous
and Technical Immigration and Naturalization Amendments of 1991, an
employer seeking to employ an alien in a specialty occupation or as a
fashion model of distinguished merit and ability on an H-1B visa is
required to file a labor condition application with and receive
certification from the Department of Labor before the Immigration and
Naturalization Service (INS) may approve an H-1B visa petition. The
labor condition application (LCA) process is administered by the
Employment and Training Administration (ETA); complaints and
investigations regarding labor condition applications are the
responsibility of the Wage and Hour Division, Employment Standards
Administration (ESA).
This proposed rule would implement statutory changes in the H-1B
visa program made to the INA by the American Competitiveness and
Workforce Improvement Act of 1998 (ACWIA) (Title IV of Pub. L. 105-277,
Oct. 21, 1998; 112 Stat. 2681). The ACWIA, among other things,
temporarily increases the maximum number of H-1B visas permitted each
year; temporarily requires new non-displacement (layoff) and
recruitment attestations by ``H-1B dependent'' employers (as defined by
ACWIA) and by employers found to have committed willful violations or
misrepresentations; and requires all employers of H-1B workers to offer
the same fringe benefits
[[Page 629]]
to H-1B workers as it offers to U.S. workers.
A. Labor Condition Application (LCA)
Summary: The process of protecting U.S. workers begins with a
requirement that employers file a labor condition application (Form ETA
9035) with the Department. In this application the employer is required
to attest: (1) that it will pay H-1B aliens prevailing wages or actual
wages, whichever are greater; (2) that it will provide working
conditions that will not adversely affect the working conditions of
U.S. workers similarly employed; (3) that there is no strike or lockout
at the place of employment; and (4) that it has publicly notified its
employees of its intent to employ H-1B workers. In addition, the
employer must provide the information required in the application about
the number of aliens sought, occupational classification, wage rate,
the prevailing wage rate and the source of such wage data, the date of
need and period of employment.
Need: Pursuant to ACWIA, new attestation requirements become
applicable to H-1B dependent employers or willful violators after
promulgation of implementing regulations. The LCA, currently approved
by OMB under OMB No. 1205-0310, is being revised to identify H-1B
dependent employers and willful violators and provide for their
attestation to the new requirements, and to accommodate electronic
processing.
Respondents and frequency of response: ACWIA increased the number
of available H-1B nonimmigrant visas from 65,000 to 115,000 in fiscal
years 1999 and 2000 and to 107,500 in fiscal year 2002. Besides the
increase in LCAs filed for these additional workers, the proposed
regulation provides that H-1B dependent employers could be required to
file new LCAs. It is estimated that 249,500 LCA's will be filed
annually by 50,000 H-1B employers (dependent and nondependent). This
estimate is based on the assumption that the alternative LCA format
preferred by the Department is selected.
Estimated total annual burden: The only added LCA burden is for
employers to determine if they are dependent. In most cases employers
will be able to immediately answer this question, without review of
their payroll records. Where dependent or non-dependent status is not
readily apparent, employers would be required to make a mathematical
calculation to determine if they must make the additional attestations
required of an H-1B employer. (See C. below for further explanation.)
The time required to review records and make the determination is
estimated to take an average of 30 minutes per employer. Since it is
estimated that only 50 H-1B employers will find it necessary to make
this calculation, out of a total of 50,000 H-1B employers, the estimate
of the average time necessary to complete the form remains at 1 hour.
Total annual burden is 249,500 hours.
B. Documentation of Corporate Identity
Summary: Currently, the regulatory requirement is that a new labor
condition application (LCA) must be filed when an employer's corporate
identity changes and a new Employer Identification Number (EIN) is
obtained. Under the proposed rule, an employer who merely changes
corporate identity through acquisition or spin-off need merely document
the change in the public file (including an express acknowledgement of
all LCA obligations on the part of the successor entity), provided it
satisfies the Internal Revenue Code definition of a single employer,
found at 26 U.S.C. 414 (see 8 U.S.C. 1182(n)(3)(C)(ii)).
Need: The regulation is designed to eliminate a burden on
businesses to file a new LCA, while at the same time ensuring that the
public is aware of the changes and that the employer will continue to
follow its LCA obligations.
Respondents and Proposed Frequency of Response: It is estimated
that 500 H-1B employers will be required to file the subject
documentation annually.
Estimated total annual burden: It is estimated that the recording
and filing of each such document will take 15 minutes for a total
annual burden of 125 hours.
C. Determination of H-1B Dependency
Summary: An H-1B employer must calculate the ratio between the
number of H-1B workers it employs and the number of full-time
equivalent employees (FTEs) to determine whether it meets the statutory
definition of an H-1B dependent employer . (8 U.S.C. 1182 (n)(3)(A)).
When it is a close question, this determination would ordinarily be
made by examination of an employer's quarterly tax statement and last
payroll or other evidence as to average hours worked by part-time
employees to aggregate their hours into FTEs, together with a count of
the number of workers employed under H-1B petitions. Documentation of
this determination must be made where non-dependent status is not
readily apparent and a mathematical determination must be made. A copy
of this determination must be placed in the public disclosure file. In
addition, if an employer changes from dependent to non-dependent
status, or vice versa, a simple statement of the change in status must
be placed in the public disclosure file. An employer must retain hours
worked records or other evidence of the average work schedules of part-
time employees only, and copies of H-1B petitions for its H-1B workers.
Need: Documentation of a determination of an H-1B dependency where
it is a close question is necessary to determine employer compliance
with H-1B requirements, and to advise the public of an employer's
status. The underlying documentation must be retained to allow the
Department to check this determination.
Respondents and proposed frequency of response: All employers will
be required to keep the underlying documentation. It is estimated that
approximately 50 H-B employers will be required to review their records
in order to make the determination, with 25 employers who are found not
to be dependent employers required to document this determination
annually.
Estimated annual burden: The making and documentation of each such
determination will take approximately 15 minutes, and occur at least
twice annually, for a total annual burden of 12.5 hours.
D. Filing of Copy of INS Documentation for Exempt H-1B Employees in
Public Access File
Summary: The ACWIA provisions regarding non-displacement and
recruitment of U.S. workers do not apply where the LCA is used only for
petitions for exempt H-1B workers. (8 U.S.C. 1182(n)(1)(E)(ii)) Where
the Immigration and Naturalization Service (INS) determines a worker is
exempt, employers are required to maintain a copy of such documentation
in the public access file.
Need: Determinations as to whether or not H-1B workers meet the
requirements to be classified as exempt H-1B nonimmigrants will be made
initially by the INS in the course of adjudicating the petitions filed
on behalf of H-1B nonimmigrants by dependent employers. In the event of
an investigation, it is anticipated that considerable weight will be
given to the INS determination that H-1B nonimmigrants were exempt
based on the educational attainments of the workers, since INS has
considerable experience in evaluating the educational qualifications of
aliens. Retention of copies of such determinations will aid DOL in
determining compliance with the H-1B requirements.
[[Page 630]]
Respondents and frequency of response: It is estimated that 28,125
such documents will need to be filed annually.
Estimated total annual burden: Each such filing will take
approximately one minute for an annual burden of approximately 468.8
hours.
E. Record of Assurance of Non-displacement of U.S. Workers at Second
Employer's Worksite
Summary: 8 U.S.C. 1182(n)(1)(F)(ii) generally requires an H-1B
dependent employer not to place H-1B nonimmigrant with another employer
unless it has first inquired as to whether the other employer will
displace a U.S. worker. The proposed regulation would require an
employer seeking to place an H-1B nonimmigrant with another employer to
secure and retain either a written assurance from the second employer,
a contemporaneous written record of the second employer's oral
statements regarding non-displacement, or a prohibition in the contract
between the H-1B employer and the second employer.
Need: Pursuant to ACWIA, 8 U.S.C. 1182(n)(2)(E), an H-1B employer
may be debarred for a secondary displacement ``only if the Secretary of
Labor found that such placing employer * * * knew or had reason to know
of such displacement at the time of the placement of the nonimmigrant
with the other employer.'' Congress clearly intended that the employer
make a reasonable inquiry and give due regard to available information.
In order to assure that the purposes of the statute are achieved, the
Department is developing a regulatory provision to require that the H-
1B employer make a reasonable effort to inquire about potential
secondary displacement and to document those inquiries.
Respondents and proposed frequency of response: It is estimated
that approximately 150 employers will place H-1B nonimmigrants with
secondary employers where assurances are required.
Estimated total annual burden: It is estimated each such assurance
will take approximately 5 minutes and each such employer will obtain
such assurances 5 times annually for an annual burden of 62.5 hours.
F. Documentation of Non-Displacement of U.S. Workers
Summary: ACWIA (8 U.S.C. 1182(n)(1)(E) prohibits H-1B dependent
employers and willful violators from hiring an H-1B nonimmigrant if
their doing so would displace a U.S. worker from an essentially
equivalent job in the same area of employment. The regulations will
require H-1B dependent employers to keep certain documentation with
respect to each former worker in the same locality and same occupation
as any H-1B worker, who left its employ 90 days before or after an
employer's petition for an H-1B worker. For all such employees, the
Department proposes that covered H-1B employers maintain the name,
last-known mailing address, occupational title and job description, and
any documentation concerning the employee's experience and
qualifications, and principal assignments. Further, the employer is
required to keep all documents concerning the departure of such
employees and the terms of any offers of similar employment to such
U.S. workers and responses to those offers.
Need: These records are necessary for the Department to determine
whether the H-1B employer has displaced similar U.S. workers with H-1B
nonimmigrants.
Respondents and proposed frequency of response: It is estimated
that 200 H-1B-dependent and willfully violating employers will need to
maintain documentation for any workers who leave their employment
during the prescribed period.
Estimated total annual burden: No records need be created to comply
with these requirements, since the Equal Employment Opportunity
Commission (EEOC) already requires under its regulations that the
records described above be maintained.
G. Documentation of U.S. Worker Recruitment
Summary: Pursuant to ACWIA (8 U.S.C. 1182(n)(1)(G)), H-1B dependent
employers are required to make good faith efforts to recruit U.S.
workers before hiring H-1B workers. Under the regulations, H-1B
employers will be required to retain documentation of the recruiting
methods used, including the places and dates of the advertisements and
postings or other recruitment method used, the content of the
advertisements or postings, and the compensation terms. In addition,
the employer must retain any documentation concerning consideration of
applications of U.S. workers, such as copies of applications and
related documents, rating forms, job offers, etc. The Department has
also requested comments regarding how employers should determine
industry-wide standards, and how to make this determination available
for public disclosure to U.S. workers and others.
Need: The documentation noted above is necessary for the Department
of Labor to determine whether the employer has made a good faith effort
to recruit U.S. workers and for the public to be aware of the
recruiting methods used and the industry standard. Retention of the
records regarding consideration of applications is required to ensure
employers have given good faith consideration of applications from U.S.
workers.
Respondents and proposed frequency of response: It is estimated
that annually 200 H-1B dependent employers will need to document their
good faith efforts to recruit U.S. workers.
Estimated total annual burden: The filing of such records will take
approximately twenty minutes per employer for an annual burden of
approximately 66.7 hours. The retention of documents relating to
applications by U.S. workers is already required by EEOC regulations,
and therefore no additional burden is created.
H. Documentation of Fringe Benefits
Summary: Pursuant to ACWIA (8 U.S.C. 1182(n)(2)(C)(viii)), all
employers of H-1B employees are required to offer benefits to H-1B
workers on the same basis and under the same terms as offered to
similarly employed U.S. workers. The regulations require employers to
retain copies of all fringe benefit plans and any summary plan
descriptions, including all rules regarding eligibility and benefits,
evidence of what benefits are actually provided to individual workers
and how costs are shared between employers and employees.
Need: These records are necessary for the Department to determine
whether the H-1B nonimmigrants are offered the same fringe benefits as
similarly employed U.S. workers.
Respondents and proposed frequency of response: Records are
required to be retained for all H-1B employers, estimated to total
50,000. Because copies of fringe benefit plans and records are
generally required to be maintained by the Pension and Welfare Benefits
Administration (PWBA) and Internal Revenue Service (IRS) regulations,
there should be no additional recordkeeping burden from these
requirements. It is also believed that a prudent businessman would keep
these records, in the order course of business, in any event. However,
because some plans such as unfunded vacation plans and cash bonuses may
not be documented, it is estimated that approximately 5%, or 2,500
employers, will need to record and retain some
[[Page 631]]
documentation which would not otherwise be kept.
Estimated annual burden: It is estimated that 2,500 employers will
spend approximately 15 minutes each documenting unwritten plans for an
annual burden of 625 hours.
I. Wage Recordkeeping Requirements Applicable to Employers of H-1B
Nonimmigrants
Summary: The Department has also republished and asked for comment
on several provisions of the December 20, 1994 Final Rule (59 FR
65646), which were published for notice and comment on October 31, 1995
(60 FR 55339). All H-1B employers are required to document their
objective actual wage system to be applied to H-1B nonimmigrants and
U.S. workers. They are also required to keep payroll records for non-
FLSA exempt H-1B workers and other employees for the specific
employment in question. This proposal would decrease the burden on
employers of keeping hourly pay records for U.S. workers, requiring
such records only if the worker is either not paid on a salary basis,
or if the actual wage is stated as an hourly wage. For H-1B workers,
such records must also be kept if the prevailing wage is expressed as
an hourly rate.
Need: The statute requires that the employer pay H-1B nonimmigrants
the higher of the actual or prevailing wage. In order to determine
whether the employer is paying the required wage, the Department must
be able to ascertain the system an employer uses to determine the wages
of non-H-1B workers. The Department also believes that it is essential
to require the employer to maintain payroll records for the employer's
employees in the specific employment in question at the place of
employment to ensure that H-1B nonimmigrants are being paid at least
the actual wage being paid to non-H-1B workers or the prevailing wage,
whichever is higher.
Respondents and proposed frequency of response: The Department
estimates that approximately 50,000 employers employ H-1B
nonimmigrants. The documentation of the actual wage system must be done
only one time for each employer. Hourly pay records would have to be
prepared with respect to all affected employees each pay period.
Estimated annual burden: The Department estimates that the public
burden is approximately 1 hour per employer per year to document the
actual wage system for a total burden to the regulated community of
50,000 hours in a year. The payroll recordkeeping requirements are
virtually the same as those required by the Fair Labor Standards Act
(FLSA) and any burden required is subsumed in OMB Approval No. 1215-
0017 for those regulations at 29 CFR Parts 516, except with respect to
records of hours worked for exempt employees. There will be no burden
for U.S. workers since as a practical matter, hours worked records will
be required for U.S. workers only if they are not exempt from FLSA, or
if they are exempt but paid on an hourly basis (certain computer
professionals). The Department estimates that 55,000 H-1B workers will
be paid on a salary basis. Hours worked records would be required for
these workers only if the prevailing wage is expressed as an hourly
rate--estimated to be 17 percent of all cases. The Department estimates
a burden of 2.5 hours per worker per year, for 9350 workers, and a
total of 23,375 hours.
Retention of Records: Pursuant to section 655.760(c) of
Regulations, 20 CFR Part 655, copies of the LCAs, and its documentation
are to be kept for a period of one year beyond the end of the period of
employment specified on the LCA or one year from the date the LCA was
withdrawn, except that if an enforcement action is commenced, these
records must be kept until the enforcement procedure is completed as
set forth in Part 655, Subpart I. The recordkeeping requirements in
this proposed rule would be subject to the same retention period,
except, as required by 20 CFR 655.760(c), the payroll records for the
H-1B employees and other employees in the same occupational
classification, which must be retained for a period of three years from
the date(s) of the creation of the record(s); if an enforcement
proceeding is commenced, all payroll records are to be retained until
the enforcement proceeding is completed as set forth in Part 655,
Subpart I. The existing record retention requirements in 20 CFR
655.760(c) have been approved by OMB under OMB No. 1205-0310.
Total public burden: H-1B employers and employees of H-1B employers
may be from a wide variety of industries. Salaries for employers and/or
their employees who perform the reporting and recordkeeping functions
required by this regulation may range from several hundred dollars to
several hundred thousand dollars where the Corporate Executive Office
of a large company performs some or all of these functions themselves.
Absent specific wage data regarding such employers and employees,
respondent costs are estimated at $25 an hour. Total annual respondent
hour costs for all information collections are estimated at
$8,105,887.50 ($25.00 x 324,235.5 hours).
Request for comments: The public is invited to provide comments on
this information collection requirement so that the Department of Labor
may:
(1) Evaluate whether the proposed collections of information are
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimates of the burdens
of the collections of information, including the validity of the
methodology and assumptions used;
(3) Enhance the quality, utility and clarity of the information to
be collected; and
(4) Minimize the burden of the collections of information on those
who are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses.
Written comments should be sent to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Attention: Desk
Officer for Employment Standards Administration, U.S. Department of
Labor, Washington, D.C. 20503. Office of Management and Budget,
Attention: Desk Officer for Employment Standards Administration, U.S.
Department of Labor, Washington, DC 20503.
II. Background
On November 29, 1990, the Immigration and Nationality Act was
amended by the Immigration Act of 1990 (IMMACT) (Pub. L. 101-649, 104
Stat. 4978) to create the ``H-1B visa program'' for the temporary
employment in the United States (U.S.) of nonimmigrants in ``specialty
occupations'' and as ``fashion models of distinguished merit and
ability.'' The H-1B provisions of the INA were amended on December 12,
1991, by the Miscellaneous and Technical Immigration and Naturalization
Amendments of 1991 (MTINA) (Pub. L. 102-232, 105 Stat. 1733). Further
amendments were made to the H-1B provisions of the INA on October 21,
1998, by enactment of ACWIA.
These cumulative amendments of the INA assign responsibility to the
Department of Labor (Department or DOL) for implementing several
provisions of the Act relating to the temporary employment of certain
categories of nonimmigrants who have
[[Page 632]]
been granted entry into the United States by INS. The H-1B provisions
of the Act govern the temporary entry of foreign ``professionals'' to
work in ``specialty occupations'' in the U.S. under H-1B visas. 8
U.S.C. 1101(a)(15)(H)(i)(b), 1182(n), and 1184(c). The H-1B category of
specialty occupations consists of occupations requiring the theoretical
and practical application of a body of highly specialized knowledge and
the attainment of a Bachelor's or higher degree in the specific
specialty as a minimum for entry into the occupation in the U.S. 8
U.S.C. 1184(i)(1). In addition, an H-1B nonimmigrant in a specialty
occupation must possess full State licensure to practice in the
occupation (if required), completion of the required degree, or
experience equivalent to the degree and recognition of expertise in the
specialty. 8 U.S.C. 1184(i)(2). The category of ``fashion model''
requires that the nonimmigrant be of distinguished merit and ability. 8
U.S.C. 1101(a)(15)(H)(i)(b).
The ACWIA made numerous significant changes in the H-1B provisions.
One such change is the temporary increase in the maximum number of H-1B
visas over the next three fiscal years: for fiscal years 1999 and 2000,
the cap is 115,000; for fiscal year 2001, the cap is 107,500; and for
fiscal year 2002 (and thereafter), the cap returns to the original
65,000. Another significant change is the imposition of additional
attestation requirements for certain employers to provide better
protections to some U.S. workers. The additional attestation
requirements apply to an ``H-1B dependent employer'' and an employer
who has been found to have committed a willful failure or
misrepresentation with respect to the H-1B requirements (for ease of
reference, referred to as a ``willful violator''). H-1B-dependent and
willful violating employers must attest that they have not displaced
and will not displace a U.S. worker from a job that is essentially like
the job for which an H-1B worker(s) is being sought, that they will not
place an H-1B worker with another employer without making an inquiry to
assure such displacement will not take place, that they have taken good
faith steps to recruit U.S. workers for the job for which the H-1B
workers are sought, and that they will offer the job to any equally or
better qualified U.S. worker. A labor condition application (LCA) for
an H-1B worker who is ``exceptional,'' an ``outstanding professor or
researcher,'' or a ``multinational manager or executive'' within the
meaning of Section 203(b)(1) of the INA, is not subject to the
recruitment provision. Both the displacement protection and the
recruitment/hiring protection become effective upon the date of the
Department's final regulation and expire with respect to LCAs filed
before October 1, 2001. An H-1B dependent employer or willful violator
filing an LCA which will be used only for ``exempt'' H-1B workers is
not required to comply with the new attestation requirements.
Also enacted via the ACWIA is a new fee of $500, to be collected by
INS, for initial petitions and first extensions filed on or after
December 1, 1998 and before October 1, 2001. Institutions of higher
education, or related or affiliated nonprofit entities, nonprofit
research organizations, or Governmental research organizations are
exempt from the new fee. The fees are to be used for job training, low-
income scholarships, and program administration/enforcement. The ACWIA
includes other generally applicable worker protections, specifically
whistleblower protection, prohibitions against fee reimbursement and
penalizing an H-1B worker who terminates employment prior to a date
agreed with the employer, and a requirement that the employer pay wages
during nonproductive time if such time is not due to reasons occasioned
by the worker. The ACWIA also requires employers to offer H-1B workers
fringe benefits on the same basis and in accordance with the same
criteria as U.S. workers. The ACWIA specifies new civil money penalties
ranging from $1,000 to $35,000 per violation, along with debarment. New
investigative procedures are created, authorizing the Department to
conduct ``random'' investigations of willful violators during the five-
year period after the finding of such violation, and establishing an
alternative investigation protocol based on information indicating
potential violations obtained from sources other than aggrieved
parties.
The ACWIA mandates a particular method of computation of the local
prevailing wage for employees of certain types of employers:
institutions of higher education (as defined in section 101(a) of the
Higher Education Act); nonprofit entities related or affiliated with
such institutions; nonprofit research organizations; and Governmental
research organizations. Under the ACWIA provision, the prevailing wage
level is to take into account only employees at such institutions and
organizations.
The rulemaking history, as published in the Federal Register, is as
follows:
March 20, 1991, Advance Notice of Proposed Rulemaking, 56 FR 11705.
August 5, 1991, Proposed Rule, 56 FR 37175.
October 22, 1991, Interim Final Rule, 56 FR 54720.
January 13, 1992, Interim Final Rule, 57 FR 1316.
October 6, 1993, Proposed Rule, 58 FR 52152.
December 30, 1993, Interim Final Rule, 58 FR 69226.
December 20, 1994, Final Rule, 59 FR 65646.
January 19, 1995, Final Rule, 60 FR 4028.
September 26, 1995, Notice, 60 FR 49505.
October 31, 1995, Proposed Rule, 60 FR 55339.
April 22, 1996, Proposed Rule, 61 FR 17610 (Part 656).
May 3, 1996, Final Rule, 61 FR 19982.
September 30, 1996, Final Rule, 61 FR 51013.
November 30, 1998, Final Rule, 63 FR 65657 (Part 656).
III. The Process of Developing Proposed Regulations
In developing proposed regulations, the Department has identified a
number of issues arising from the provisions of the ACWIA. On some of
these issues, the Department is proposing regulatory language and is
seeking comments on those proposals. But on other issues, the
Department has not yet developed regulatory language and, in this
notice, is seeking public comments on the issues and possible
regulatory approaches or alternatives which are set forth.
In addition, the Department is continuing to examine several
provisions that were previously addressed in a Notice of Proposed
Rulemaking published in the Federal Register on October 31, 1995 (60 FR
55339-55348). The Department considers it appropriate to provide, via
this notice, an additional opportunity for public comment on those
provisions. Some of these existing Final Rule provisions are affected
by the enactment of ACWIA, and for some affected provisions the
Department has not yet developed new or modified regulatory language.
Other Final Rule provisions are being republished for comment, with
limited proposed changes as discussed below.
After review of the comments received, the Department intends to
publish an Interim Final Rule, inviting comments on that rule, which
will contain the full regulatory text. The Department will then review
the comments and issue a Final Rule.
[[Page 633]]
The Department requests comments on each of the following issues
and proposals, and on any other related matters concerning the
temporary employment in the U.S. of nonimmigrants under the H-1B visa
program.
A. What Constitutes an ``Employer'' for Purposes of the ACWIA
Provisions?
In enacting certain new LCA attestations for ``H-1B-dependent''
(and certain other) employers in the ACWIA, Congress directed (in the
definition of H-1B-dependent employer) that ``any group treated as a
single employer under subsection (b), (c), (m), or (o) of section 414
of the Internal Revenue Code of 1986 shall be treated as a single
employer.'' These provisions, found at 26 U.S.C. 414(b), (c), (m) and
(o), concern the circumstances in which separate businesses are treated
as a single employer for purposes of the Internal Revenue Code (IRC).
Specifically, the IRC provisions concern treatment of a controlled
group of corporations (Sec. 414(b)); partnerships, proprietorships,
etc., under common control (Sec. 414(c)); an affiliated service group
(Sec. 414(m)); as well as separate organizations, employee leasing, and
other arrangements (Sec. 414(o)). See Internal Revenue Service (IRS)
regulations at 26 CFR 1.414(b)-1, 1.414(c)-1. See also 26 CFR 1.414(q)-
1T.
Further, the Department is considering the effect and implications
of adopting this single definition of ``employer'' for all purposes
under this program, to the extent it may serve to accommodate common
business activities and facilitate administration and enforcement of
the program. The Department is interested in learning from commenters
the consequences of a regulation which would provide that where an
``employer'' files an LCA and thereafter undergoes some change of
structure (e.g., buy-out by a successor corporation; corporate
restructuring of subsidiaries), the ``employer'' for LCA purposes would
be the entity which satisfies the Internal Revenue Code definition of a
single employer. The Department is considering whether and how, under
this approach, it may be able to modify its position that a new LCA
must be filed when the corporate identity changes and a new Employer
Identification Number (EIN) is obtained. Thus an employer which merely
changes its corporate identity through acquisition or spin-off would be
allowed to document this change in its public disclosure file
(including an express acknowledgment of all LCA obligations on the part
of the successor entity), provided that it satisfies the Internal
Revenue Code definition of a single employer.
The Department seeks comments on this proposed regulation and on
other related matters, such as whether and how the Internal Revenue
Code interpretation of ``single employer'' should be used for other
purposes in the H-1B program, such as corporate restructuring, and
whether another approach should be utilized to address corporate
restructuring.
B. Which Employers are ``H-1B-dependent'' for Purposes of the ACWIA
Provisions?
The ACWIA requires new non-displacement and recruitment
attestations by ``H-1B-dependent employers'' and by employers found
after the date of enactment to have committed a willful violation or
misrepresentation during the 5-year period preceding the filing of the
LCA (see item M.2 below, regarding the ``finding'' of such violations).
The ACWIA definition of ``H-1B-dependent employer'' provides a formula
for comparing the number of H-1B nonimmigrants to the total number of
full-time equivalent employees (including H-1B nonimmigrants) in the
employer's workforce. ``Exempt H-1B nonimmigrants'' are not included in
the H-1B-dependency computation during a certain period after enactment
of the ACWIA (i.e., the longer of the period of six months from the
date of enactment (until April 21, 1999), or the date of the
Department's interim final rule on this provision).
The Department is developing regulations on the following issues,
and seeks comments on these and any other related matters.
1. What Is a ``Full Time Equivalent Employee''?
The ACWIA definition of ``H-1B-dependent employer'' includes a term
that is not defined: ``full-time equivalent employees'' (FTEs), as part
of the calculation to determine an employer's H-1B dependency status
based on the ratio between the number of H-1B workers (a ``head
count'') and FTEs (the employer's workforce of employees, expressed as
FTEs). Thus ACWIA defines an ``H-1B-dependent employer'' as an employer
that has--
<bullet> 25 or fewer full-time equivalent employees who are
employed in the United States, and employs more than 7 H-1B
nonimmigrants;
<bullet> At least 26 but not more than 50 full-time equivalent
employees who are employed in the United States, and employs more than
12 H-1B nonimmigrants; or
<bullet> At least 51 full-time equivalent employees who are
employed in the United States; and employs H-1B nonimmigrants in a
number that is equal to at least 15 percent of the number of such full-
time equivalent employees.
For larger employers (at least 51 full-time equivalent employees),
the number of H-1B workers is the numerator and the number of FTEs is
the denominator in this computation; if 15 percent or more of the
employer's workforce are H-1B workers, as computed in this ratio, then
the employer is ``H-1B-dependent.''
The term ``full-time equivalent'' lends itself to various
interpretations, some of which could significantly increase an
employer's possible paperwork burden. One interpretation would require
maintaining a record and computing the hours worked in a period of time
(a year, a workweek, or some intermediate period of time) for each
worker in the entire workforce. For example, the total of all hours
worked by all employees would be divided by the full-time ``standard''
in order to arrive at the FTE figure. Such an approach would
necessitate collection and maintenance of hourly records for all
workers, not just hourly wage earners. Moreover, the complexity of such
an approach and the related computations could make it difficult for
employers to recognize if and when they become H-1B-dependent. A less
onerous approach would allow an employer to simply count the number of
workers it employs on a full-time basis, using some standard threshold
(e.g., 35 hours per week or more) for identifying a ``full-time''
schedule. This approach would only additionally require a showing of
the average weekly hours worked by part-time employees, through hours
worked records or by evidence regarding their standard working
schedules. (It has been the Department's experience that hours worked
records are ordinarily kept for part-time workers since they are
ordinarily paid on an hourly basis and typically are not exempt from
the Fair Labor Standards Act.) The number of FTEs in the workforce
would then be determined by aggregating the average hours of the part-
time workers, dividing that total by the standard for a full-time
schedule, and adding the resulting number to the number of full-time
workers in the workforce.
The Department proposes a procedure by which the determination
would be made by an examination of the employer's quarterly tax
statement (or
[[Page 634]]
similar document) to determine the number of workers on the payroll
(assuming there is no issue as to whether all employees are listed on
the tax statement), and a further examination of the last payroll (or
the payrolls over the previous quarter if the last payroll is not
representative) or other evidence as to average hours worked by part-
time employees, to aggregate the average hours of the part-time workers
into FTEs based on the employer's definition of full-time employment.
The Department would accept an employer's definition of full-time
employment, provided that it is at least 35 hours or more per week; in
the absence of such an employer definition, the Department would use 40
hours per week as a full-time schedule. However, in no case would a
single employee count as more than one FTE, even if the employee
commonly worked more hours per week than the ``full-time'' schedule.
Finally, it should be noted that the count would be made only of
employees of the employer, including both H-1B nonimmigrants and U.S.
workers, but would not include bona fide consultants and independent
contractors who do not meet the employment relationship test described
below (see item D.1). It is important to note that the number of H-1B
nonimmigrants (the numerator in the H-1B-dependency ratio) would be
determined by the number of H-1B nonimmigrants employed by the employer
in the period reviewed--a simple ``head count''--without regard to
their full-time or part-time status.
The Department seeks comments on its proposed approach to
determining full-time equivalency, and any other approaches which might
be used to accurately make the determination without undue paperwork
burden.
2. When Must an Employer Determine H-1B Dependency?
The ACWIA definition of ``H-1B-dependent employer'' and the new LCA
attestation elements that are required of such an employer do not
clearly define the timing of the dependency determination. Certainly
such a determination must be made when a new LCA is filed. The two
issues to be resolved are when a new LCA must be filed, and what
obligations, if any, an employer has if its dependency status changes.
The Department is particularly concerned about the obligations of
employers who already hold or may soon obtain certified LCAs. The
Department's current regulations provide that an LCA is valid for three
years from its date of certification, during which time the employer
may file petitions for H-1B workers based on that LCA (not to exceed
the number of positions shown on the LCA). The new recruitment and
displacement attestation provisions of the ACWIA are expressly
applicable to LCAs filed by a certain subset of H-1B employers after
the date of issuance of the Department's interim final regulations. We
expect that most H-1B-dependent employers have LCAs in effect and that
many such employers may file additional LCAs during the period prior to
the effective date of the regulations. Therefore--if this issue is not
directly addressed by these regulations--these H-1B-dependent employers
could avoid any application of the law's new dependency provisions,
which are applicable only to applications filed before October 1, 2001,
by continuing to use current or newly certified LCAs. Since this would,
as a practical matter, potentially nullify these ACWIA requirements for
all or many H-1B-dependent employers, the Department proposes that any
current (or non-dependent) LCA will become invalid for H-1B-dependent
employers by operation of these regulations with respect to any future
H-1B petitions (including extensions), although an employer's
obligations under the LCA would continue with respect to all H-1B
nonimmigrant petitions under that LCA. The regulations would,
therefore, require that all H-1B-dependent employers with existing LCAs
file new LCAs if they wish to petition for any new H-1B nonimmigrants
(or if they wish to seek the extension of any existing H-1B visas) on
or after the effective date of the interim final regulations.
Similarly, an employer with an existing LCA which is not H-1B-dependent
on the effective date of the regulations but which later becomes H-1B-
dependent, would be required to file a new LCA if it wishes to petition
for new H-1B nonimmigrants (or seek extensions of existing H-1B visas)
at any time after the date it becomes dependent. An employer who fails
to take such action but instead uses an existing LCA contrary to these
regulations would be subject to sanctions, including debarment and
civil money penalties. The Department seeks comments on this proposed
approach and on any other approaches which might be used to ensure that
U.S. workers are provided with the protections which the Act intended
with regard to H-1B-dependent employers.
As suggested above, the Department also recognizes that the makeup
of an employer's workforce, and the ratio of H-1B nonimmigrants to
total FTEs, could change significantly over the three-year validity
period of an LCA. Thus an employer which is not H-1B-dependent at the
time it files an LCA under these regulations might later become
dependent, or an employer which is initially H-1B-dependent might later
become non-dependent. The Department, after careful consideration, has
concluded that, in order for the Congressional intent for the new
provisions to be appropriately implemented, an employer's H-1B
dependency may need to be redetermined as the composition of the
workforce changes after the filing of the LCA, where the employer plans
to take actions which require recruitment and non-displacement
commitments by H-1B-dependent employers (or their clients).
Thus, the Department proposes that an employer would be required to
make a determination of dependency not just prior to or on the
effective date of these regulations, but when it files any new LCA or
H-1B petition (including extensions) after that date. If an employer is
not H-1B-dependent at the time an LCA is filed, it would have a
continuing obligation to ensure that if it later becomes H-1B-dependent
and wishes to file new H-1B petitions (including extensions), it takes
the steps necessary to comply with the requirements of the law and the
Department's regulations applicable to dependent employers during the
period it is H-1B-dependent, with respect to all H-1B nonimmigrant
petitions filed under that LCA. Similarly, if an employer which is
initially dependent and files an LCA so indicating its dependency later
determines that it has become not dependent, it would not be required
to comply with the attestation elements applicable to dependent
employers with respect to any H-1B workers during any period in which
it is not dependent.
The Department believes that this approach is necessary to properly
effectuate the law's new requirements and does not believe that this
continuing obligation places any undue burden on employers. As a
practical matter, the Department's experience in the H-1B program is
that the large majority of employers which use the program clearly will
not meet the test for H-1B-dependency and that most program users
would, therefore, be entirely unaffected by this ACWIA provision and
the Department's regulations. With regard to the small minority of
employers who would meet the H-1B-dependency test, the
[[Page 635]]
Department's experience is that most such employers employ H-1B workers
in such a large proportion that they would almost certainly be subject
to the non-displacement and recruitment requirements during the entire
LCA validity period. As a practical matter, therefore, any continuing
obligation for an employer to monitor its workforce ratio would apply
only in the very rare instance where the H-1B-dependency determination
is a close question for a ``borderline'' employer on the effective date
of these regulations, or upon the date of a subsequent LCA filing or
petition and thereafter.
The Department also considered whether the same issues would arise
with respect to employers found after the effective date of ACWIA to
have committed willful violations or misrepresentations. However, a
finding of a willful violation or misrepresentation would commonly
result in debarment and consequently, invalidation of all the
employer's LCA's. The employer would then be required to file a new
LCA(s) to petition for additional H-1B nonimmigrants (or to extend
petitions) after the debarment period ends, attesting to the new
attestation elements for H-1B dependent employers and willful
violators.
The Department seeks comments on its proposal, and specifically
whether there are other ways to effectively accomplish the statutory
intent that H-1B-dependent employers comply with the new attestation
elements. For example, another possible regulatory approach could be to
have the dependency up-date determined on a set, regular basis, such as
for each calendar quarter. Alternatively, the Department could limit
the use of an attestation to a shorter period, such as 90 or 180 days,
instead of the current three years.
3. What Kind of Records Are Required Concerning the H-1B-Dependency
Determination?
The Department is considering several matters relating to
documentation. First, the Department is examining the issue of the kind
of record which might need to be made by an employer concerning its
determination of whether it is or is not H-1B-dependent at the time
that an LCA is completed and filed. It is the Department's view that no
record needs to be created or maintained to show how an employer made
that determination when its H-1B-dependency or non-dependency status is
apparent, and it files an LCA reflecting that obvious status. As
discussed above, the Department believes that for the vast majority of
employers there is either such a small or large proportion of H-1B
nonimmigrants employed that an employer's dependency status will not be
a close question. With regard to an employer for which the H-1B-
dependency or non-dependency status is not readily apparent, the
question of appropriate records is more difficult. The Department
believes that it is important that the employer make this determination
with proper care and consideration. Further, the Department believes
that, in the event of an inquiry by an affected U.S. worker (concerning
possible rights regarding displacement or recruitment) or an
investigation by the Department, documentation of an employer's
determination that it is not H-1B-dependent needs to be available to
ascertain and evaluate the method by which the determination was made.
Therefore the Department proposes that such documentation be required
wherever the determination that an employer is not dependent is not
readily apparent and a mathematical calculation must be made (i.e.,
where the ratio of H-1B workers to U.S. workers is close to that set
forth in the statute for dependency). The Department solicits comments
on whether the regulations need to define an explicit standard (for
example, all circumstances where H-1B workers are 10 percent or more of
the workforce) to determine the subset of employers which must make and
retain such documentation when an attestation is made.
The Department also is considering whether a record must be kept of
an employer's H-1B-dependency status determinations (if any) which are
made after the filing of an LCA which is used in support of a petition
for an H-1B nonimmigrant worker. The Department believes that--in order
that U.S. workers are aware of their rights concerning nondisplacement
and recruitment, and that the Administrator is able to conduct fair and
effective investigations on those matters--a record needs to be
maintained of an employer's determination if at any time an employer
which was non-dependent determines that it is dependent, or if an
employer which was dependent determines that it is non-dependent. The
Department is therefore proposing that a copy of the determination and,
where an employer determines that it is not dependent, the underlying
computation, be placed in the public disclosure file.
The Department also requests comments on whether it would be
feasible and appropriate to specify that no record of an employer's
computations would be necessary, if the determination could be made
from publicly available documents. This approach presents some
difficulties, in that, for example, a publicly available list of an
employer's employees may not show the workers' full-time or part-time
status, or may not accurately reflect the number of workers who meet
the ``employment relationship'' test, and these documents may not be
readily available to U.S. workers. The Department therefore solicits
comments as to the feasibility of this approach and whether there are
any generally available public documents which would normally contain
the required information.
It is also necessary that an employer have the underlying records
necessary to make the dependency determination. The records required to
determine the number of workers on the payroll are required by
Sec. 655.731(b) of the existing regulations. An employer would also be
required to have a record of the hours worked by part-time workers, or
a document showing their normal work schedule if no records of their
hours of work are maintained. As discussed above (see item B.1), it has
been the Department's experience that most part-time workers are paid
on an hourly basis and, therefore, that employers maintain hours-worked
records for such workers. Finally, the employer would need to maintain
copies of its H-1B petitions, in order to determine the number of H-1B
nonimmigrants on its payroll.
The Department seeks comments on all of these issues and possible
approaches.
4. What Information Will Be Required on the LCA Regarding an Employer's
Status as H-1B-Dependent?
The Department expects that every employer will need to read the
instructions for determining H-1B dependency and make a determination
that it is or is not dependent, in order to determine whether to attest
to dependency. In most cases, the Department expects that the
determination will be so clear that the employer will not need to make
any mathematical calculation. The Department also believes that it is
important that those employers constituting the vast majority of those
filing LCAs not be subject to any unnecessary burden because of the
relatively small number of employers who are dependent.
The Department believes that the revised attestation form (LCA), at
a minimum, should require that every
[[Page 636]]
employer which is H-1B-dependent affirmatively acknowledge its status
and obligations by checking a box attesting to its dependency and its
compliance with the additional attestation requirements concerning non-
displacement and recruitment of U.S. workers. Further, as discussed
above, the Department proposes that H-1B-dependent employers which
filed an LCA before these regulations become effective, may not use
such an LCA in support of an H-1B petition filed after the effective
date, or, if they do not become dependent until sometime after the
effective date of the regulations, may not use such an LCA in support
of an H-1B petition filed after they become dependent.
The question arises as to what information should be required of
employers who are not H-1B dependent when they file an LCA after the
effective date of these regulations. The Department is considering
three alternative revisions to the LCA form for such employers:
1. The employer would expressly attest that it is not dependent and
that if it later becomes dependent, it will comply with the additional
attestation requirements; or
2. The employer would not have to attest that it is not dependent,
but the LCA would clearly state--and by signing the form the employer
would agree--that the employer is required to comply with the
additional attestation requirements if it does become dependent; or
3. The employer would not have to attest that it is not dependent,
but the LCA would clearly state that it could not be used in support of
any H-1B petition filed after the employer became dependent.
Under all of the alternatives an employer will be expected to make
an initial determination as to whether it is or is not dependent; to
remain cognizant as to its status if it later files a new H-1B
petition; and would commit misrepresentation if it falsely fails to
attest that it is dependent. The first two alternatives do not require
the filing of a new LCA should a formerly non-dependent employer become
dependent, but such employer will be obliged to comply with the
substantive obligations of the additional attestation elements
applicable to dependent employers. The third alternative would parallel
the approach proposed for H-1B dependent employers with LCAs filed
before the effective date of the regulations in that an employer which
initially was not dependent would be required to file a new LCA if it
later became dependent and would be subject to sanctions, including
debarment and civil money penalties, if it failed to do so.
The Department is concerned about the burden of requiring the
filing of a new LCA as well as the burden of requiring the overwhelming
majority of employers who are not dependent to check a box so
attesting. The Department therefore proposes to utilize the second
alternative, where the non-dependent employer would not be required to
check any additional box(es). The Department is aware that under this
alternative the lack of such identification will make it particularly
important that the form clearly lay out the obligations of employers.
The Department therefore seeks comments on the above alternatives, and
the layout and clarity of the proposed attestation form, attached as
Appendix I as well as any other comments on these and related matters.
5. What Changes Are Proposed for the Labor Condition Application Form
and the Department's Processing Procedures?
Based on the preceding discussion, the Department is publishing for
public comment a proposed revised Labor Condition Application form (ETA
9035), and providing advance public notice of a planned change in the
existing system for processing LCAs. At present, such applications are
submitted by mail, fax or private carrier to one of ten ETA regional
offices with jurisdiction, as set forth in Sec. 655.720. The Department
has been developing the capacity to automatically receive and, in many
cases, automatically process LCAs submitted. The Department intends to
implement an automatic system whereby all faxed LCAs will be processed
in Philadelphia and San Francisco beginning in January 1999. This new
capacity requires changes in the LCA form as well as in the filing
instructions.
The Department has redesigned the LCA form (attached as Appendix I)
to both reflect the statutory changes in the ACWIA and facilitate the
automated receipt and processing of applications. With the exception of
the changes occasioned by the provisions of the ACWIA, as discussed in
this proposed rulemaking, the proposed revisions to the LCA form are
merely aesthetic. The Department's revised processing procedures will
not require any substantive changes with respect to the information
required of employers in preparing the LCA. When the Department
publishes the Interim Final Rule pursuant to this proposal, contingent
upon approval by the Office of Management and Budget, the revised form
will become the sole form for public use; thereafter, prior versions of
the ETA 9035 will not be accepted for processing.
The Department proposes that, after the effective date of the
Interim Final Rule, all LCAs--whether submitted by fax or not--will be
filed with one of two ETA regional offices. Employers within the
jurisdiction of ETA's current Boston, New York, Philadelphia, and
Atlanta regions will submit LCAs only to the Philadelphia regional
office; employers within the jurisdiction of ETA's current Chicago,
Kansas City, Dallas, Denver, Seattle and San Francisco regions will
submit LCAs only to the San Francisco regional office. There will be an
automated back-up capacity in the Washington, D.C. headquarters for
automated processing of LCAs, in the event of a system failure in one
of the regional offices.
The proposed revised LCA form can be completed in several ways--in
handwriting, in typewriting, or through use of a new ``form filler''
electronic program that will be generally available to program users.
The new LCA form will be posted and thereafter can be down-loaded and
printed from the Department's World Wide Web site at http://
www.doleta.gov. The ``form filler'' electronic program will also be
available to be down-loaded from this web site, or can be obtained from
ETA headquarters, on request, via e-mail or on diskette. This ``form
filler'' electronic program will enable the user to easily complete the
LCA form with a font that can be reliably read by the Department's
automated LCA processing system.
The Department proposes that, under the Interim Final Rule, the LCA
form--whether completed using the ``form filler'' program, in
typewriting, or in handwriting--will be submitted by employer
applicants to one of the two ETA regional offices either by facsimile
transmission (fax), which is preferred, or by mail or private carrier.
The Interim Final Rule and the LCA form itself will so indicate and
will provide the appropriate fax numbers. The Department anticipates
that LCAs submitted by fax can be readily received and processed by the
automated system, and that a response--approval or rejection--can be
returned to the employer's sending FAX number (i.e., the telephone
number designated in the ``Return Fax Number'' block on the LCA form),
usually within 48 hours of submission/receipt by ETA. For employer-
applicants without the capacity to send the LCA by FAX and receive
ETA's response to the employer-applicants' sending FAX machine, the
[[Page 637]]
LCA may still be submitted by mail or other delivery in hard-copy paper
form (either typewritten or handwritten) to the two ETA regional
offices with jurisdiction Such non-FAX submissions will be processed by
the ETA office by being faxed internally or scanned electronically into
the automated system, and the ETA decision will be mailed to the
submitter.
The automated processing system will electronically scan the
incoming facsimile, extract the information contained in the LCA,
record the information to a database, and--in most cases--make the
appropriate determination to approve/certify or reject the application,
with little intervention by system administrators. As under the current
manually-operated system, the LCA will be approved/certified and faxed
(or mailed) back to the submitter if the appropriate boxes are checked
and the required information is provided on the form. If the LCA is
incomplete or contains obvious inaccuracies, it will be rejected under
the automated system as it is under the manually-operated system.
Comments are requested on the proposed electronic transmission
system described and on the proposed form to be utilized.
C. What H-1B Worker Would be an ``Exempt H-1B Nonimmigrant''?
The ACWIA provisions concerning non-displacement and recruitment of
U.S. workers do not apply where the only H-1B workers sought in the LCA
at issue are ``exempt H-1B nonimmigrants.'' In addition, for a limited
time after the ACWIA's enactment, determining whether the employer is
H-1B-dependent does not include ``exempt'' H-1B workers. The ACWIA
contains alternative definitions of ``exempt H-1B nonimmigrant'' as one
``who * * * receives wages (including cash bonuses and similar
compensation) at an annual rate equal to at least $60,000; or * * *
[who] has attained a master's or higher degree (or its equivalent) in a
specialty related to the intended employment.''
The Department notes that the statutory language seems clear--an H-
1B-dependent employer, or an employer found to have committed willful
violations, is required to comply with the new attestation elements
unless the only workers employed pursuant to the LCA are exempt
workers. The non-displacement obligation, for example, applies for the
period beginning 90 days before and ending 90 days after the filing of
any H-1B petition supported by the LCA. The Department therefore reads
the statute as requiring that an employer which uses an LCA in support
of a petition for any non-exempt worker must comply with the new
attestations with respect to all of its H-1B nonimmigrants employed
pursuant to the LCA, even the exempt H-1B nonimmigrants.
The Department recognizes that employers commonly apply for
multiple positions, and often for multiple locations, on the same LCA.
Further, the Department recognizes that when an employer recruits U.S.
workers, it often cannot know whether in fact the H-1B worker for whom
it eventually petitions will qualify as exempt or non-exempt, since it
is not uncommon for both exempt and non-exempt workers to be qualified
for the same job. In any event, the Department points out that an H-1B-
dependent (or willful violating) employer is free to file separate LCAs
for its exempt and non-exempt workers, thereby obviating the
requirement of complying with the new attestation elements for its
exempt workers.
Determinations as to whether or not H-1B workers meet the
requirements necessary to be classified as exempt H-1B nonimmigrants
will be made initially by the Immigration and Naturalization Service
(INS) in the course of adjudicating the petitions filed on behalf of H-
1B nonimmigrants by employers. Employers should maintain, in the public
access file, a copy of the INS determinations with the petitions
approved for exempt H-1B workers. In the event of an investigation, it
is anticipated that considerable weight will be given to INS'
determinations that H-1B nonimmigrants, based on the educational
attainments of the workers, were ``exempt'' since INS has considerable
experience in evaluating the educational qualifications of aliens.
However, with respect to H-1B workers claimed to be exempt on the basis
of annual wages, employers will be expected in the event of an
investigation to be able to document that such H-1B nonimmigrants
received sufficient pay to satisfy the statutory wage ``floor'' of
$60,000.
The Department seeks comments on this proposed regulation, and on
any other related matter including but not limited to the following
questions.
1. How Would the $60,000 Annual Rate be Determined?
The ACWIA sets the wage ``floor'' for an ``exempt'' H-1B
nonimmigrant at $60,000 annually, which is to include ``cash bonuses
and similar compensation.'' In order to ensure that this statutory
standard is in fact met, the Department is of the view that this
standard should be interpreted consistent with the existing DOL
regulations for determining if an employer has satisfied its other wage
obligations under the H-1B program (20 CFR 655.731(c)(3)). Future
(i.e., unpaid but to-be-paid) cash bonuses and similar compensation
would be ``counted'' toward the required wage if their payment is
assured, but not if they are conditional or contingent on some event
such as the employer's annual profits (unless the employer guarantees
that the worker will receive payment of at least $60,000 per year, in
the event the bonus contingency is not met). In addition, such bonuses
and compensation are to be paid ``cash in hand, free and clear, when
due * * *,'' meaning that they must have readily determinable market
value, be readily convertible to cash tender, and be received by the
worker when due (which must be within the year for which the employer
wants to ``count'' the compensation).
Similarly, in assessing payment to an H-1B nonimmigrant claimed to
be ``exempt,'' the Department interprets the statutory language ``* * *
receives wages (including cash bonuses and similar compensation) at an
annual rate equal to at least $60,000; * * *'' to mean that the worker
actually receives the $60,000 compensation in the year. Therefore, an
H-1B nonimmigrant working part-time, whose actual annual compensation
is less than $60,000, would not qualify as exempt on this basis, even
if the worker's earnings, if projected to a full-time work schedule,
would theoretically exceed $60,000 in a year.
The Department seeks comments on this proposal and any alternative
approaches that would ensure the $60,000 wage standard for ``exempt''
workers would be met.
2. How Would the ``Equivalent'' of a Master's or Higher Degree be
Determined?
The second definition of ``exempt H-1B nonimmigrant'' requires that
the nonimmigrant ``has attained a master's or higher degree (or its
equivalent) in a specialty related to the intended employment.'' Based
on the language of this provision, the Department and the INS are of
the view that work experience cannot be converted to the ``equivalent''
of an academic degree at the master's level or higher. The ACWIA's
language differs from INA section 214(i) (8 U.S.C. 1184(i)), which
explicitly authorizes a ``time equivalency'' approach. Section 214(i)
provides that one of the ways to meet the requirements of a bachelor's
or higher degree (or its equivalent) is by experience in the specialty
equivalent to
[[Page 638]]
the completion of such a degree and ``recognition of expertise in the
specialty through progressively responsible positions relating to the
specialty.'' The contrast between these INA provisions demonstrates
that when Congress intended to authorize a ``time equivalency,'' such
authorization was expressly stated. Further, the statement of one of
the sponsors of the legislation shows the intent of Congress: ``the
term `or its equivalent' refers only to an equivalent foreign degree.
Any amount of on-the-job experience does not qualify as the equivalent
of an advanced degree.'' (144 Cong. Rec. H8571-05, H8584, Sept. 24,
1998, remarks of Rep. Smith). The Department's proposed regulation,
therefore, does not allow a work experience equivalency and recognizes
only those foreign academic degrees as would be equivalent to a
master's or higher degree in the U.S.
The Department is consulting with the INS on this matter, and will
work in close cooperation with that agency in developing regulations.
As indicated above, the Department will give considerable weight to INS
determinations concerning the academic credentials of H-1B
nonimmigrants who are claimed to be ``exempt.'' Employers should note
that INS' review of academic credentials for its determination on
``exempt H-1B nonimmigrants'' is distinct from its review of academic
credentials for its determination on ``specialty occupations'' under
Section 214(i) of the INA and 8 CFR 214.2(h)(4).
The Department seeks comments on this regulatory proposal, and on
any other or alternative interpretations of the ``equivalency''
provision.
3. How is ``a Specialty Related to the Intended Employment'' Defined?
The H-1B nonimmigrant who holds an advanced academic degree would
be ``exempt'' only if that degree is in ``a specialty related to the
intended employment.'' The Department proposes to make it clear that,
in order for the degree specialty to be sufficiently ``related'' to the
employment, the specialty must be generally accepted in the industry or
occupation as an appropriate or necessary credential or skill for the
person who undertakes the employment in question. Any ``specialty''
which is not generally accepted as appropriate or necessary to the
employment would not be sufficiently ``related'' to afford the H-1B
worker status as an ``exempt H-1B nonimmigrant.''
The Department is consulting with the INS on this matter, and will
work in close cooperation with that agency in developing regulations.
As indicated above, the Department will give considerable weight to INS
determinations concerning the academic credentials of H-1B
nonimmigrants who are claimed to be ``exempt.'' Again, employers should
note that INS' review of academic credentials for its determination on
``exempt H-1B nonimmigrants'' is distinct from its review of academic
credentials for its determination on ``specialty occupations'' under
Section 214(i) of the INA and 8 CFR 214.2(h)(4).
The Department seeks comments on this regulatory proposal, and on
any other or alternative interpretations of the ``related'' provision.
4. Should the LCA be Modified to Identify Whether it Will be Used in
Support of Exempt and/or Non-Exempt H-1B Nonimmigrants?
The ACWIA provides that ``[a]n application is not described in this
clause [i.e., is not subject to the new attestation requirements] if
the only H-1B nonimmigrants sought in the application are exempt
nonimmigrants.'' The Department is considering whether an employer's
intention to use the attestation for exempt and/or non-exempt H-1B
nonimmigrants should be indicated on the LCA, or whether this issue
should be addressed in some other way. The Department recognizes that
employers may wish to use separate LCAs for exempt and non-exempt H-1B
workers, so they would not be required to comply with the attestations
with respect to any exempt H-1B workers. As explained in the
introductory discussion, the statutory language seems to require that
an employer which initially believed its LCA would be used only for
exempt H-1B nonimmigrants would have been obliged to comply with the
attestations with respect to all of its H-1B workers under the LCA--
exempt and non-exempt--if it later used that LCA in support of a
petition for any non-exempt worker.
The Department therefore considered whether there would be any
advantage to requiring such separate attestations. The Department is
aware, however, that for many occupations, such as in information
technology, two different workers might both be qualified for the same
job, but because of education, for example, one might be exempt and
another non-exempt. Therefore an employer might not know in advance
whether the worker will be exempt.
At the same time, the Department believes it is important than an
H-1B-dependent employer which intends to use the LCA only for exempt H-
1B workers attest that the LCA will only be used to petition for such
workers. The INS has made this request so as to allow both INS and the
Department to know for which H-1B workers the ``exempt'' status must be
ascertained. The Department therefore proposes to require such an
attestation on the LCA. Of course, this requirement would not prevent
an H-1B-dependent employer from either using separate LCAs for its
exempt and non-exempt workers, or using one LCA for all H-1B workers
(both exempt and non-exempt) and complying with the new attestation
elements for all such workers.
Comments are sought on this proposed approach and on any other
alternatives.
D. What Requirements Apply Regarding no ``Displacement'' of U.S.
Workers Under the ACWIA?
The ACWIA imposes new obligations on an H-1B-dependent employer
(see discussion in items A and B, above) and an employer found to have
committed willful violations within the 5 years preceding the filing of
an LCA (beginning on or after the date of the ACWIA's enactment). Such
an employer is prohibited from ``displacing'' a U.S. worker who is
``employed by the employer'' or is employed by some other employer at
whose worksite the sponsoring employer places an H-1B nonimmigrant
where there are ``indicia of employment'' between the H-1B worker and
that other employer. The prohibition on displacement within the
employer's own workforce applies for 90 days before and 90 days after
the date of filing of any H-1B petition based on the LCA. The
prohibition on ``secondary'' displacement, at another employer's
worksite, applies for 90 days before and 90 days after the placement of
H-1B worker(s) at the worksite. These prohibitions do not apply to the
placement of ``exempt'' H-1B workers, if the employer's LCA involves
only ``exempt'' nonimmigrants. (See discussion in item C, above).
The Department recognizes that the non-displacement provisions in
the ACWIA raise several issues, and proposes regulatory provisions on
each of the following matters. The Department seeks comments on all of
these proposed provisions, and on any other related matters.
1. What Constitutes ``Employed by the Employer,'' for Purposes of
Prohibiting a Covered Employer From Displacing U.S. Workers in its Own
Workforce?
The ACWIA provides that a U.S. worker ``employed by the employer''
is protected from displacement by that employer's H-1B workers.
However, the
[[Page 639]]
ACWIA contains no definition of the phrase ``employed by the
employer.'' In this circumstance, where Congress has not specified a
legal standard for identifying the existence of an employment
relationship, the Department is of the view that Supreme Court
precedent requires the application of ``common law'' standards in
analyzing a particular situation to determine whether an employment
relationship exists. Nationwide Mutual Insurance Co. v. Darden, 503
U.S. 318 (1992). See Community for Creative Non-Violence v. Reid, 490
U.S. 730 (1989). Mindful of the Supreme Court's teaching that since the
common-law test contains ``no shorthand formula or magic phrase that
can be applied to find the answer, * * * all of the incidents of the
relationship must be assessed and weighed with no one factor being
decisive'' (NLRB v. United Ins. Co. of America, 390 U.S. 254, 258
(1968)), the Department proposes regulatory language setting out
factors that would indicate the existence of an employment relationship
under the common law test. These factors would include:
<bullet> The firm or the client has the right to control when,
where, and how the worker performs the job;
<bullet> The work does not require a high level of skill or
expertise;
<bullet> The firm or the client rather than the worker furnishes
the tools, materials, and equipment;
<bullet> The work is performed on the premises of the firm or the
client;
<bullet> There is a continuing relationship between the worker and
the firm or the client;
<bullet> The firm or the client has the right to assign additional
projects to the worker;
<bullet> The firm or the client sets the hours of work and the
duration of the job;
<bullet> The worker is paid by the hour, week, month or an annual
salary, rather than for the agreed cost of performing a particular job;
<bullet> The worker does not hire or pay assistants;
<bullet> The work performed by the worker is part of the regular
business (including governmental, educational, and non-profit
operations) of the firm or the client;
<bullet> The firm or the client is itself in business;
<bullet> The worker is not engaged in his or her own distinct
occupation or business;
<bullet> The firm or the client provides the worker with benefits
such as insurance, leave, or workers' compensation;
<bullet> The worker is considered an employee of the firm or the
client for tax purposes (i.e., the entity withholds federal, state, and
Social Security taxes);
<bullet> The firm or the client can discharge the worker; and
<bullet> The worker and the firm or client believe that they are
creating an employer-employee relationship.
(Factors adapted from EEOC Policy Guidance on Contingent Workers,
Notice No. 915.002, Dec. 3, 1997). The Department is aware that these
analytical factors--all of which are drawn from the Supreme Court's
decision in Darden--may be expressed somewhat differently. See, e.g.,
Restatement (Second) of Agency Sec. 220(2) (1958) (listing
nonexhaustive criteria for identifying master-servant relationship);
Rev. Run. 87-41, 1987-1 Cum. Bull. 296, 298-299 (providing 20 factors
as guides in determining whether an individual qualifies as a common-
law ``employee'' in various tax law contexts). The Department is also
aware that some factors, such as the level of the worker's skill or
expertise, have little relevance in the context of this program where,
by the terms of the Act, all of the H-1B workers and similarly employed
U.S. workers are skilled.
The Department recognizes that there are a number of legal
standards--other than the common law test--for determining the
existence of an employment relationship. For example, it would appear
that the standard most analogous to the H-1B worker protection
provisions would be that found in the Fair Labor Standards Act, which
provides minimum wage and overtime wage protections to ``employees.''
In addition, there is some suggestion of a preference on the part of
some Members of Congress for the use of the Internal Revenue Service
standards for the identification of an employment relationship under
the ACWIA provisions (see Cong. Rec. S12751, Oct. 21, 1998; remarks of
Sen. Abraham). While the Department considers both the FLSA and tax
standards (which contain some special exemptions from the common law
test) to be inappropriate under this statute, in light of the Supreme
Court precedents discussed above, the Department would carefully
consider any comments which suggest and support these or other
alternate tests for determining whether an employment relationship
exists.
The Department seeks comments on the proposed regulation applying
the common law standards, and on any other, related matters regarding
the appropriate factors.
2. What Constitute ``Indicia of an Employment Relationship,'' for
Purposes of the Prohibition on Secondary Displacement of U.S. Workers
at Worksites Where the Sponsoring Employer Places H-1B Workers?
In a provision described herein as the ``secondary displacement
prohibition,'' the ACWIA prohibits the displacement of U.S. workers
employed by another (``secondary'') employer, if an H-1B-dependent
employer (or willful violator) intends or seeks to place its own H-1B
workers with that other employer in a situation where, among other
things, there are ``indicia of an employment relationship between the
nonimmigrant and such other employer.'' The Department, after careful
consideration, has concluded that this term--``indicia of an employment
relationship''--identifies a relationship which is less than an
employment relationship but more than the H-1B worker's mere
performance of duties at the secondary employer's worksite (such as
being dispatched for a brief part of a work day to diagnose or repair
equipment at that other employer's location). Further, the Department
has concluded that, for purposes of clarity and consistency, the
standards indicative of ``indicia of an employment relationship'' with
the secondary employer should be consistent with and a sub-set of the
criteria which are used in determining an employment relationship
between the covered (or ``primary'') employer and its own U.S. workers
for purposes of the displacement prohibition concerning such workers
(i.e., U.S. workers ``employed by the employer''). The Department
considered proposing that indicia of employment would be found to exist
wherever a certain number of these criteria are met, but does not
believe such a quantitative standard to be appropriate since the
determination requires consideration of all of the relevant facts of
the relationship, with no single factor or set of factors decisive.
The Department reviewed the factors considered in determining
employment relationship, as discussed above, and proposes a sub-set of
those factors which it believes are most useful in determining whether
indicia of employment are present in evaluating a placement at another
company's worksite (here referred to as ``the client''). The sub-set
does not include those factors which are relevant to determining
whether a worker is an employee of any company (e.g. worker's skill
level). Such factors do not seem relevant where the H-1B worker is an
[[Page 640]]
acknowledged employee of some entity (i.e., the company filing the
LCA), and would virtually never arise in a secondary placement of the
H-1B worker (e.g., client's payment of wages and benefits to worker).
The sub-set of factors the Department believes are relevant ``indicia
of an employment relationship'' include:
<bullet> The client has the right to control when, where, and how
the worker performs the job;
<bullet> The client furnishes the tools, materials, and equipment;
<bullet> The work is performed on the premises of the client;
<bullet> There is a continuing relationship between the worker and
the client;
<bullet> The client has the right to assign additional projects to
the worker;
<bullet> The client sets the hours of work and the duration of the
job;
<bullet> The work performed by the worker is part of the regular
business (including governmental, educational, and non-profit
operations) of the client;
<bullet> The client is itself in business; and
<bullet> The client can discharge the worker from providing
services to the client.
(See discussion in item D.1 above). The Department seeks comments
on this regulatory standard, including the factors to be considered and
the manner in which the factors might be applied or weighed.
The Department recognizes that alternative approaches may be
available, such as some standard other than the common law factors, or
having no regulatory standard. The Department seeks comments on any
such alternative approaches, and on any other, related matters
including, but not limited to, the possible contents and consequences
of a regulation which would apply different standards.
3. What Constitutes an ``Essentially Equivalent Job,'' for Purposes of
the Non-Displacement Provisions of ACWIA?
The ACWIA definition of the prohibited displacement of a U.S.
worker states, in part, that such displacement is ``lay[ing] off the
[U.S.] worker from a job that is essentially the equivalent of the job
for which the nonimmigrant or nonimmigrants is or are sought. A job
shall not be considered to be essentially equivalent of another job
unless it involves essentially the same responsibilities, was held by a
United States worker with substantially equivalent qualifications and
experience, and is located in the same area of employment as the other
job.'' This definition, thus, requires three comparisons to determine
whether displacement occurs: job responsibilities; workers; and
locations.
The Department is of the view that the job responsibility
comparison must focus on the core elements of and competencies for the
job, such as supervisory duties, or design and engineering functions,
or budget and financial accountability. Peripheral, non-essential
duties that could be tailored to the particular abilities of the
individual workers would not be determinative in the comparison of the
jobs. In other words, the job responsibilities must be similar and both
workers capable of performing those duties. In this connection, the
Department believes it may be useful to utilize standards under the
Equal Pay Act (29 U.S.C. 206(d)(1)) for determining the essential
equivalence of jobs. These standards focus on actual job duties and
responsibilities, rather than a comparison of sometimes artificial job
titles and position descriptions, and recognizes that precise overlap
between jobs is not necessary to achieve essential equivalence (see the
regulations at 29 CFR 1620.13 et seq.). Like the Equal Pay Act, ACWIA's
remedial purpose could be thwarted by requiring a match of
insubstantial aspects of jobs as a condition for determining their
equivalence. The Department therefore seeks comments on the
appropriateness of adapting these standards to ACWIA.
As to the qualifications and experience of the workers, the
Department considers the comparison to be confined to matters which are
normal and customary for the job, and which are necessary for
successful performance of the job. Thus, while it would be appropriate
to compare whether the workers in question are qualified by virtue of
education, skills and experience to perform the job, it would not be
appropriate to compare their relative ages or their ethnic identities,
nor whether they are exactly alike--which would virtually never be the
case--in their educational background and work experience. For example,
an H-1B worker who is ``over-qualified'' for a particular job could
still ``displace'' a U.S. worker.
The area of employment is defined in ACWIA as ``the area within
normal commuting distance of the worksite or physical location where
the work of the H-1B nonimmigrant is or will be performed. If such
worksite or location is within a Metropolitan Statistical Area, any
place within such area is deemed to be within the area of employment.''
This statutory definition is much the same as the Department's current
regulatory definition of ``area of intended employment'' for prevailing
wage purposes (20 CFR 655.715). (See item P.5, below.)
The Department proposes regulatory language to implement these
provisions and seeks comments on these and any other related matters.
4. How Does the ACWIA Distinguish Between a Prohibited ``Lay Off'' and
a Permissible Termination of an Employment Relationship?
The ACWIA distinguishes a ``lay off'' of a U.S. worker from certain
other circumstances in which a worker's employment relationship may
end. The ACWIA's non-displacement prohibition applies only to a ``lay
off.''
The ACWIA specifies that, even though an H-1B worker may be placed
in a job similar to one formerly held by a U.S. worker, no
``displacement'' or ``lay off'' is considered to have occurred if the
U.S. worker left the job through ``voluntary departure or voluntary
retirement.'' As a logical and obvious matter, the requirement of
``voluntariness'' is crucial to the effectiveness of this provision in
assuring appropriate protections of U.S. workers' jobs in situations
where nonimmigrants are being hired. The Department takes the view that
the totality of the circumstances must be considered in assessing
whether a U.S. worker's departure was ``voluntary.'' Therefore, the
Department will look to well-established principles concerning
``constructive discharge'' of workers who are pressured to leave
employment (e.g., a resignation letter would not be conclusive proof of
``voluntariness'' where other information indicates coercion). The
Department proposes a regulation that reflects this fair, common sense
view of ``voluntary departure or voluntary retirement.''
The ACWIA also specifies that no ``lay off'' is considered to have
occurred where the U.S. worker's loss of employment is caused by the
expiration of a grant or contract, other than a temporary employment
contract entered into in order to evade the employer's obligations
under the attestation. The Department believes that this language was
designed to address the common situation where scientists and other
academic personnel at universities are expressly hired to work under a
contract or grant from another institution. Where such funding is lost,
and the worker is not replaced because the project funded by the
contract or grant ends, there would be no lay off within the meaning of
the ACWIA. Similarly, a staffing firm or other commercial firm may hire
an employee expressly to work on a specific project under a contract it
has
[[Page 641]]
obtained from another entity. If the contract project ends and is not
renewed, and the employer does not have a practice of then moving its
employees to work under other contracts, or placing its employees on a
call-back list or its equivalent, but rather terminates the employment
relationship for lack of work, there would be no lay off. The
Department does not believe, however, that this ACWIA provision applies
to the common situation where a staffing firm, which places employees
at other businesses, does not hire employees for a specific client
contract, and (upon the expiration, termination, or loss of a client
contract) ordinarily would move its employees to perform work under a
different contract or on a different project. In such a situation, the
Department may find a displacement has occurred if an employer
terminates employment of its U.S. workers and hires H-1B workers to
perform essentially the same job under a different contract at a
different worksite in the same area of employment. The Department notes
that the ACWIA provision expressly excludes temporary employment
contracts entered into to evade the employer's obligations. The
Department intends to closely scrutinize situations under commercial
contracts and grants, as well as employment contracts, where it appears
that such evasion may be occurring. The Department recognizes, however,
that there are situations where employment contracts, like the
commercial contracts described above, are excluded from the Act's
definition of ``lays off.'' Such situations might include, for example,
visiting professors who are hired for a semester or a year because of
their special expertise. The expiration of such a contract would not
constitute a ``lay off'' of the U.S. worker, unless the circumstances
showed some subterfuge or contrivance by the employer to avoid the
ACWIA prohibition.
The Department seeks comments on this proposed approach, and on any
related matters.
5. What Constitutes ``a Similar Employment Opportunity'' for a U.S.
Worker, Which--if Offered--Would Not Constitute a Prohibited ``Lay
Off'' or Displacement of That Worker?
The ACWIA further provides that, even though an H-1B worker is
placed in a job formerly held by a U.S. worker, no ``displacement'' or
``lay off'' is considered to have occurred if the U.S. worker was first
offered but refused ``a similar employment opportunity with the same
employer.'' This provision thus allows an employer an affirmative
defense to its displacement of a U.S. worker if the employer can
establish that it offered a bona fide transfer opportunity to the
worker. The Department interprets the ACWIA language to require not
just that the U.S. worker be offered another job with a similar title,
but that the offer must involve a similar opportunity in terms such as
a similar level of authority and responsibility, a similar opportunity
for advancement within the organization, similar tenure and work
scheduling.
The Department proposes a regulation to reflect this statutory
requirement of ``opportunity'' for the U.S. worker who has lost a job.
At a minimum the Department believes that an offer of a ``similar
employment opportunity'' must be a bona fide offer, rather than an
offer designed so as to induce the employee to refuse, or with the
expectation that the employee will refuse the offer.
The Department seeks comments on this proposed regulatory
provision, and on any other related matters.
6. What Constitutes ``Equivalent or Higher Compensation and Benefits''
for a U.S. Worker, for Purposes of the Other Job Offer to That Worker
so as to Not Constitute a Prohibited ``Lay Off'' or Displacement?
The ACWIA provides that no prohibited ``lay off'' of a discharged
U.S. worker has occurred, if the U.S. worker is offered another
employment opportunity with the same employer ``at equivalent or higher
compensation and benefits than the position from which the employee was
discharged.'' It would appear obvious that an ``opportunity'' could not
be considered to provide ``equivalent or higher compensation and
benefits'' if that ``opportunity'' would provide the worker a lower
disposable income or would require the worker to incur expenses that
drive down his/her financial standing. By specifying ``equivalent or
higher'' pay and benefits, Congress must have intended that the U.S.
worker be offered a positive, rather than negative, ``employment
opportunity.'' In this regard, one of the sponsors of the ACWIA
compromise legislation stated that ``[t]he intent of Congress is that
the `similar employment opportunity with the same employer at
equivalent or higher compensation and benefits' would be a meaningful
offer. It is Congress' intent that an employer should not be able to
evade liability for a violation of the displacement attestation because
an offer of an alternative employment opportunity was made without
considerations such as relocation expenses and cost of living
differentials if the alternative position was in a different
geographical location.'' (See Cong. Rec. E2324, Nov. 12, 1998, remarks
of Rep. Smith). Assuming the regulations provide that a ``similar
employment opportunity'' may include a transfer to another commuting
area, the Department takes the position that an alternative
``opportunity'' offered to the U.S. worker must take into consideration
matters such as cost of living differentials and relocation expenses
(e.g., a New York City ``opportunity'' offered to a worker ``laid off''
in Kansas City would provide a wage adjustment from the Kansas City pay
scale and would include relocation costs). The Department is also
considering adapting relevant provisions of regulations defining
equivalent compensation and benefits under the Equal Pay Act
regulations (see item D.3, above) and of the Family and Medical Leave
Act regulations, 29 CFR 825.215(c)-(d). The Department seeks comments
on this proposal and on any related matters that encompass this
concept.
7. What is Required of an H-1B-dependent (or Willful Violator) Employer
Which Seeks Information About Displacement or Potential Displacement of
U.S. Workers at a Second Employer's Worksite?
The ACWIA's secondary displacement prohibition requires that
certain H-1B employers (H-1B-dependent; willful violator) not place any
H-1B worker at another employer's worksite (to work under ``indicia of
employment'' with such secondary employer), ``unless the [H-1B]
employer has inquired of the other employer as to whether, and has no
knowledge that ... the other employer has not displaced or intends to
displace a United States worker employed by the other employer'' within
the period of 90 days before and 90 days after the H-1B worker's
placement at that worksite. The ACWIA further specifies (in the
enforcement and penalties provisions) that the H-1B employer may be
debarred for a secondary displacement ``only if the Secretary of Labor
found that such placing employer ... knew or had reason to know of such
displacement at the time of the placement of the nonimmigrant with the
other employer.'' The language and structure of these provisions
demonstrates that Congress intended for the H-1B employer to take
proactive steps to ascertain whether placement of H-1B workers would
correspond with the lay off of similarly-employed U.S. workers. In
enacting this provision, Congress clearly intended that the employer
make a reasonable inquiry and
[[Page 642]]
give due regard to available information. Simply making a pro forma
inquiry would not insulate a covered employer from liability should the
secondary employer displace a U.S. worker from a similar job which
would be performed by an H-1B worker.
The Department recognizes that the ACWIA obligation concerning
``secondary displacement'' could easily be subverted if a placing H-1B
employer were merely to make a pro forma inquiry and rely on a pro
forma reply. Thus, in order to assure that the purposes of the statute
are achieved, the Department proposes to develop a regulatory provision
to require that the H-1B employer make a reasonable minimal effort to
inquire about potential secondary displacement. The Department believes
that a covered H-1B employer may demonstrate such effort through a
variety of methods that include, but are not limited to, the following:
<bullet> Securing and retaining a written assurance from the
secondary employer that it has not and does not intend to displace a
similarly-employed U.S. worker within the period 90 days before and 90
days after the placement of an H-1B worker at the work site; or
<bullet> Preparing and retaining a note to the file, prepared at
the same time or promptly after receiving the secondary employer's oral
statement (including the substance of the conversation, the date of the
communication, and the names of the individuals involved) that the
secondary employer has not and does not intend to displace a similarly-
employed U.S. worker within the period 90 days before and 90 days after
the placement of an H-1B worker at the work site; or
<bullet> Including a secondary displacement clause in the contract
between the H-1B employer and the secondary employer, whereby the
secondary employer would agree that it has not and will not displace
similarly-employed U.S. workers at the work site at any time within the
period 90 days before and 90 days after the placement of an H-1B
worker.
Further, even with such assurance, a placing H-1B employer should
not be able to ignore other information that comes to its attention--
such as newspaper reports of relevant lay-offs by the secondary
employer--if such information becomes available before its placement of
H-1B workers with that other employer. Under such circumstances, the
employer would be expected to recontact the secondary employer and
receive credible assurances that no lay offs are planned or have
occurred in the applicable time frame.
The Department seeks comments on the methods described above, and
any other methods for demonstrating that a placing employer has made a
reasonable inquiry concerning potential secondary displacement of U.S.
workers.
8. What Documentation Will be Required of Employers About ACWIA's Non-
Displacement Provisions?
The ACWIA prohibits the small affected class of H-1B employers--H-
1B-dependent or willful violators--from hiring H-1B workers if their
doing so would displace similar U.S. workers from an essentially
equivalent job in the same area of employment. The employer will not be
considered to have displaced the U.S. worker if that worker left
voluntarily, was dismissed for a valid reason, or turned down the
employer's offer of a similar employment opportunity with equivalent or
higher compensation and benefits (as previously discussed).
The Department proposes to require that covered H-1B employers
retain certain documentation with respect to each U.S. worker in the
same locality and same occupation as any H-1B nonimmigrants hired, and
who left its employ in the period 90 days before or after the
employer's petition for the H-1B worker(s). In addition, because an
employer generally takes action to effectuate a layoff at a point
before a worker's employment terminates, such documentation would be
required for any such employee for whom the employer has taken any
action during the period 90 days before or after the petition to cause
the employee's termination (e.g., a notice of future termination of the
employee's job). For all such employees, the Department proposes that
covered H-1B employers maintain the name, last-known mailing address,
occupational title and job description, as well as any documentation
concerning the employee's experience and qualifications, and principal
assignments. In addition, the Department proposes that the employer
maintain copies of all documents concerning the departure of such
employees, such as notification by the employer of termination of
employment prepared by the employer or the employee and any responses
thereto, evaluations of the employee's job performance, etc. Finally,
the employer would be required to retain copies of the terms of any
offers of similar employment to such U.S. workers and the employee's
response thereto. Because EEOC regulations (29 CFR 1602.14) currently
require retention of all personnel or employment records, the
Department does not believe that this requirement in the H-1B
regulation would impose any new burden on employers.
The Department seeks comments on this proposed regulation, and on
any related matters.
E. What Requirements Does the ACWIA Impose Regarding Recruitment of
U.S. Workers, and Which Employers are Subject to Those Requirements?
The ACWIA requires that an H-1B-dependent employer (or employer
found by DOL to have committed willful H-1B violations within a 5-year
period) take ``good faith steps to recruit, in the United States using
procedures that meet industry-wide standards and offering compensation
that is at least as great as that required to be offered to H-1B
nonimmigrants . . ., United States workers for the job for which the
nonimmigrant or nonimmigrants is or are sought.'' The Department is
charged with enforcing this obligation, while the Attorney General
administers a special arbitration process to address complaints
regarding an H-1B employer's companion obligation to ``offer the job to
any United States worker who applies and is equally or better qualified
for the job for which the nonimmigrant or nonimmigrants is or are
sought.'' The ACWIA further provides that ``[n]othing in subparagraph
(G) [this new attestation element on recruitment] shall be construed to
prohibit an employer from using legitimate selection criteria relevant
to the job that are normal or customary to the type of job involved, so
long as such criteria are not applied in a discriminatory manner.'' An
H-1B employer is not subject to these recruitment requirements if its
labor condition application involves only ``exempt'' H-1B workers, or
if the H-1B worker has ``extraordinary ability,'' or is an
``outstanding professor or researcher'' or a ``multinational manager or
executive,'' as defined in section 203(b)(1)of the INA.
It should be noted that the statutory attestation language requires
the employer to affirm the statement that, ``prior to filing the
application--[the employer] has taken good faith steps to recruit. .
.'' This language appears to be based on the presumption that employers
file LCAs for individual workers at the time the need for that worker
arises. In fact, however, employers may and often do file one LCA for
many workers and use that LCA into the future in support of H-1B
petitions filed when the actual
[[Page 643]]
employment need does arise. For example, an LCA filed for 100 computer
programmers may be used up to 100 times over a period of months or even
years (through the three year validity period) in support of separate
petitions for individual workers.
Given this common practice by employers, it is not reasonable to
assume Congressional intent to require a separate LCA for each worker,
particularly in light of the existing regulatory provision allowing the
listing of multiple positions and work locations on a single
application, which was not altered by ACWIA. At the same time, it is
not reasonable to assume that Congress expects employers using the H-1B
program (in this case, only H-1B-dependent employers and willful
violators) to be able to attest--on the LCA filing date--that they have
already recruited in good faith in the U.S. for every job for which
they may wish to petition for H-1B workers over the three-year life of
the LCA, and further, that they already have offered that job to every
equally or better qualified U.S. worker who applies. As a practical
matter, it would be virtually impossible for employers to be able to
conduct such recruitment, since they have not yet identified every job
opportunity which might arise at some point in the LCA's three-year
validity period, for which the employer might wish to file an H-1B
petition for an H-1B worker. In this context, the Department believes
that the ``good faith recruitment'' attestation must be read,
interpreted and applied to mean that the employer promises--and agrees
to be held accountable--that it has or will recruit with respect to any
job opportunity for which the application is used, whether that
recruitment occurs before or after the application is filed (if the
application is to be used in support of multiple petitions for future
workers). The Department invites comments on this approach and any
alternative suggestions for how to appropriately balance employers'
practices under the program with their good faith recruitment
obligations in the context of the statutory language on this labor
condition statement.
The Department recognizes that the ACWIA requirements for a small
sub-set of H-1B employers to recruit U.S. workers present several
points on which views might differ. Therefore, the Department proposes
a regulation addressing the following matters and seeks comments on all
of these points, as well as on any other related matters.
1. How are ``Industry-wide Standards'' for Recruitment to be
Identified?
The benchmark for minimal U.S. worker recruitment under the ACWIA
is ``industry-wide'' procedures. This provision allows employers to use
normal recruiting practices which are common among similar employers in
their industry in the United States (even though, in some cases at
least, these have been demonstrably unsuccessful by virtue of the
employer seeking access to foreign labor markets). The statute does not
require employers to comply with any specific recruitment regimen or
practice, nor does the Department believe it is authorized to prescribe
any explicit regimen. In this regard, the Department is of the view
that the H-1B-dependent employer should look, in particular, to those
recruitment strategies by which employers in an industry have
successfully recruited U.S. workers; through this rulemaking proposal,
the Department solicits and will consider the views of major industry
associations, employee organizations, and other interest groups
concerning successful recruitment practices and strategies.
The Department is considering a number of options regarding the
type or level of recruitment necessary, ranging from prescribing
specific required recruitment efforts to simply allowing employers to
pursue what they perceive to be industry standard procedures.
There are a number of recognized methods for successfully
soliciting U.S. worker applicants, including: advertising in general
distribution publications, trade or professional journals, or special
interest (e.g., ethnic-oriented) publications; America's Job Bank or
other Internet sites advertising job vacancies; outreach to trade or
professional associations; use of public and/or private employment
agencies, referral agencies, or ``headhunters;'' outreach to colleges,
universities, community/junior colleges and business/trade schools; job
fairs; contact with labor unions; and recruitment, development or
promotion from within an employer's organization (or its competitors),
including workers who may have been displaced from similar jobs. The
Department's expectation is that good faith recruitment will ordinarily
involve several of these methods of solicitation, both passive (where
potential applicants find their way to an employer's job announcements,
such as to advertisements in publications and the Internet) and active
(where the employer takes proactive steps to identify and get
information about it's job openings into the hands of potential
applicants, such as through job fairs, outreach at universities, use of
``headhunters,'' and providing training to incumbent employees in the
employer's organization).
The Department is considering whether the regulation should
recognize that if an employer uses at least three of these recognized
solicitation tools (at least one or two of which are active), it will
be presumed to meet the ``good faith'' standard in this regard. This
approach would, in effect, create a presumption for employers which do
not wish to demonstrate industry practice for recruitment. An employer
which did not use at least three of these approaches could still
demonstrate its ``good faith'' by showing that its recruitment methods
comport with the industry norm, as discussed below. However, the
Department believes that good faith recruitment must, at a minimum,
involve solicitation efforts which include advertising in relevant and
appropriate print media or the Internet (where common in the industry),
in publications and at facilities commonly used by the industry (e.g.,
higher education institutions), as well as solicitation of U.S. workers
within the employer's organization. Of course, an employer would have
to use good faith in the recruitment conducted. For example, an
employer would be expected to advertise for a reasonable period of
time, and would be expected to do so in those publications and to
attend those job fairs which would ordinarily be read or attended by
the types of workers being recruited. The Department seeks comments as
to whether this approach offers an effective means of implementing the
Act's objectives, including specifically whether such a presumption
should be established and, if so, whether it should involve at least
three recognized solicitation tools or some other number.
The Department considers it important that there be a general
recognition that good faith recruitment must involve some active
methods of solicitation, rather than just passive methods such as
posting job announcements at the employer's work site(s) or on its
Internet web page. The Department's view is that ``industry-wide
standards'' do not mean the lowest common denominator--i.e., the
minimum recruitment or least effective methods in attracting U.S.
workers used by companies in an industry. Rather, solicitation must be
at a level and through methods and media which are normal, common or
prevailing in an industry--the ``standard''--including at
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least the medium most prevalently used in the industry and employing
those strategies that have been shown to be successfully used by
employers in an industry to recruit U.S. workers.
The Department believes that, as a general matter, the statutory
intent of the recruitment attestation is best effectuated if employers
are required to utilize the recruitment methods of the set of employers
which primarily compete for the same types of workers as those who are
the subjects of the H-1B petitions to be filed pursuant to the LCA. For
example, a hospital, university, or computer software development firm
would be required to use the standards utilized by the health care,
academic, or information technology industries, respectively, in hiring
workers in the occupations in question. Similarly, a staffing firm,
which places its workers at job sites of other employers, would be
required to utilize the standards of the industry which primarily
employs such workers--e.g., the health care industry, if the staffing
firm is placing physical therapists (whether in hospitals, nursing
homes, or private homes); or the information technology industry, if
the staffing firm is placing computer programmers, software engineers,
or other such workers. These firms are competing for the same kind of
workers and the ``industry standard'' should recognize that fact and
not reward lack of success in attracting U.S. workers by some sectors
of an industry.
The Department seeks comments on this proposed regulation and on
any other related matters, including any possible alternative
regulatory standards and their contents and consequences.
2. What Constitute ``Good Faith Steps'' in Recruitment?
The essential requirement for good faith recruitment, as mandated
by the ACWIA, is that employers maintain a fair and level playing field
for all applicants and be able to show that they have not skewed their
recruitment process against U.S. workers. The Department believes that
``good faith'' recruitment does not involve only the steps taken to
communicate/advertise job openings and solicit applications (ending
upon the employer's receipt of the applications), but also encompasses
pre-selection treatment of the applicants. The level playing field for
U.S. applicants mandated by the ACWIA cannot be guaranteed if only
those steps taken to find potential applicants and solicit applications
are considered; the pre-selection treatment of applicants must also be
considered if good faith is to be assured. For example, an application
screening process tailored to favor H-1B workers and bypass U.S.
applicants would represent as much a violation of the good faith
recruitment requirement as a failure to seek U.S. applicants in the
first place.
The Department does not propose any specific regimen or practice
for pre-selection treatment of applications and applicants. However, in
circumstances where H-1B employers are demonstrably unsuccessful (or
less successful than their competitors) in hiring U.S. workers, the
Department intends to scrutinize the recruitment process, including
pre-selection treatment, to insure that U.S. workers are given a fair
chance for consideration for a job, rather than being ignored or
rejected through some tailored screening process based on an employer's
preferences or prejudices with respect to the make up of its workforce.
Examples of such processes could include a practice of interviewing H-
1B applicants but not U.S. applicants with equivalent qualifications,
or assigning different staff to the screening or interviewing of H-1B
and U.S. applicants.
The Department solicits comments on this issue and the relevance of
these examples in identifying less than ``good faith'' recruitment, and
the existence of any other practices with a similar design or impact.
The Department is of the view that--as a practical matter--there
may be little reason to examine the particulars of an employer's
recruitment efforts if the results of those efforts amply demonstrate
the employer's good faith in employing U.S. workers. Thus, the
Department is con |
