[Federal Register: December 20, 2000 (Volume 65, Number 245)]
[Rules and Regulations]
[Page 80159-80208]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de00-21]
[[pp. 80159-80208]] 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
[[Continued from page 80158]]
[[Page 80159]]
lists of all the criteria which the Department would find meet the
statutory test in the event of an investigation.
The Department also wishes to specifically caution against
recruitment practices and selection criteria or practices which have
the effect of discriminating against U.S. workers or other groups of
workers, as the comment by Miano recognizes. In this connection,
workers are advised that the three federal agencies ordinarily
recognized as responsible for enforcement of anti-discrimination laws
are the Equal Employment Opportunity Commission (EEOC), the Department
of Justice's Office of Special Counsel (OSC), and the Department of
Labor's Office of Federal Contract Compliance Programs (OFCCP). The
EEOC administers several statutes prohibiting discrimination in
employment based on factors such as age, race, color, religion, sex, or
national origin. OFCCP administers several statutes and an executive
order prohibiting discrimination by Federal government contractors and
subcontractors based on factors such as race, color, religion, sex,
national origin, disability, and veteran status. EEOC and OFCCP offices
are located throughout the United States and can be located in the blue
pages of the telephone directory. Complaints can be made to the EEOC by
telephone at: (202) 275-7377; see also their website at www.eeoc.gov.
Complaints can be made to OFCCP by telephone at: (202) 693-0102, -0106,
or by contacting the local offices, which can be located at its
website, www.dol.gov/dol/esa/public/contacts/ofccp/ofcpkeyp.htm.
OSC administers several statutes concerning employment
discrimination based on national origin, citizenship status, and
immigration document abuse. OSC can be contacted at P.O. Box 27728,
Washington, DC 20038-7728; telephone: 1-800-255-7688 (workers) or 1-
800-255-8155 (employers); and e-mail address: osc.crt@usdoj.gov; see
also OSC's website at www.USDOJ.gov/crt/osc.
TCS described its own hiring practices, which it contended should
be allowed as legitimate under the Department's regulations.
Specifically, TCS recruits its employees from university campuses
(apparently in India) and places them in a 12-to 18-month training
program in India. At the same time requiring a three-year commitment
from its employees, whom it sends on assignments in India and
throughout the world. TCS suggested that the Department's proposal
could be read to require TCS instead to recruit U.S. workers for
assignments in the United States without regard to the employment terms
and conditions it applies to its other employees--a requirement which
it suggested could potentially subject it to anti-discrimination
claims. TCS argued that the Department's proposal incorrectly focused
on the recruitment/employment for the particular job listed on an LCA
rather than the dependent employer's hiring criteria for a position
with the dependent employer--a position that encompasses duties and
responsibilities beyond those required for the performance of the
particular job covered by an LCA. TCS explained that its employees,
including those it places in H-1B positions, serve as team members of
consulting groups that will move from job to job in the United States
and elsewhere. It stated that it hires employees with this enduring
employment relationship in mind, not for the employee's particular
assignment to a job in the United States.
Similar practices are described by Simmons, which asked whether a
foreign-based employer may give preference to its own (foreign)
workers, who are familiar with the specific technologies and protocols
of an ongoing project, and whether it would be required to offer
permanent as distinguished from temporary positions to employees in the
U.S., since it otherwise would only temporarily transfer its permanent,
foreign workers to perform the job in the U.S. Simmons also commented
that it provides extensive training to its employees in India, and
asked if it could require that U.S. workers have such skills, or would
it be required to use the hiring criteria it utilized to hire the
workers in India. Finally, Simmons asked if it could require U.S.
workers to have the precise, specialized skills to meet a specific
customer need.
In the Department's view, an employer's recruitment obligation
attaches to the position for which an H-1B worker is sought in the
United States (the employer is obliged to take, in the words of the
statute, "good faith steps to recruit . . . United States workers for
the job for which the [H-1B worker(s)] is or are sought").
Additionally, the employer is required to offer the job to the U.S.
worker if the worker is at least as qualified as the H-1B worker.
Accordingly, the focus must be on the particular job(s) in the United
States which is/are covered by the LCA, not the position an H-1B
applicant already occupies or will occupy with the dependent employer.
An employer will fail to meet its recruitment obligation if it utilizes
recruitment/selection criteria that have the effect of precluding an
equally or better qualified U.S. worker from being hired for the
position. The Department also notes that L visas, where the criteria
are met, may be available as an alternative method to accommodate
intra-company transfers.
5. What Documentation Would Be Required of Employers? (Sec. 655.739(i))
Concerning documentation to show that good faith recruitment was
conducted in accordance with industry-wide standards, the NPRM stated
that an employer would not need to retain actual copies of
advertisements, provided it kept a record of the pertinent details. The
Department proposed that an employer's public access file need only
contain information summarizing the principal recruitment methods used
in soliciting potential applicants and the time frame in which such
recruitment was conducted. The NPRM also requested comments on how
employers can and should determine industry-wide standards and how to
make the employer's determination available for public disclosure.
With regard to documentation concerning pre-selection treatment of
applicants for employment, the Department proposed in the NPRM that
employers should retain any documentation they receive or prepare
concerning the consideration of applications by U.S. workers, such as
copies of applications and/or related documents, test papers, rating
forms, records regarding interview and job offers. The Department
stated its view that the EEOC already requires employers to retain such
records and therefore this requirement imposes no new obligations on
employers.
With regard to the proposed documentation requirement, Senator
Abraham stated: "The intent is not to require employers to retain
extensive documentation in order to be able retroactively to justify
recruitment and hiring decisions, provided that the employer can give
an articulable reason for the decisions that it actually made." 144
Cong. Rec. S12751 (Oct. 21, 1998).
AILA and ACIP cited Senator Abraham's statement in the
Congressional Record for the principle that the ACWIA did not impose
any extensive documentation requirements. ACIP, however, stated its
belief that prudent employers of their own volition may want to retain
documentation and that it is appropriate for the Department to provide
guidance on how long employers should retain such documentation.
The Department disagrees with the view that the ACWIA denies the
[[Page 80160]]
Department the usual regulatory authority to require recordkeeping as a
means of ensuring compliance with an employer's statutory obligations--
either generally or with specific reference to the recruitment
obligation. The fact that the H-1B program is primarily complaint-
driven with only attestations of compliance filed initially with the
Department makes it all the more important that documentation be
retained so that the Department can determine compliance in the event
of an investigation. In response to AILA's comment about the length of
time which documents must be retained, the Department notes that its
standard record retention requirements are set forth in Sec. 655.760(c)
of the regulation, which has been clarified as discussed in IV.B.3,
above.
With regard to documents concerning recruitment practices, the AFL-
CIO and Miano urged that employers be required to retain copies of all
job advertisements or other recruiting efforts. AILA asserted that the
Department's statement that an employer need not keep copies of
advertisements is an illusory saving because as a practical matter
saving these documents is the only way to document the information the
Department proposed to require. AILA recommended that employers only be
required to keep a summary of their recruitment for the past six
months, similar to the requirements of the RIR procedures in the
permanent labor certification program--especially when an employer is
still recruiting for open positions and it is its practice to hire U.S.
as well as H-1B workers. However, AILA stated that employers should not
be required to keep recruitment information in public access files
because it invites competitor intrusion into an employer's recruitment
practices.
The Interim Final Rule, like the proposal, requires employers to
retain documentation of the recruiting methods used, including the
places and dates of the recruitment, advertisements, or postings; the
content of the advertisements and postings; and the compensation terms
(if not included in the content). The Department continues to believe
that copies of print advertisements are not necessary since publication
can be verified if necessary. Rather, the documentation may be in any
form, such as a copy of an order or response from the publisher, an
electronic or print record of an Internet notice, or a memorandum to
the file. Similarly, the documentation of recruitment of positions
filled by H-1B nonimmigrants need not be segregated from other records
provided it is available to the Department upon request in the event of
an investigation.
In addition, as proposed, the employer will be required to maintain
a summary of the recruitment methods used and time frames of
recruitment in its public access file. The Department does not believe
that information in this summary nature will unduly disclose
proprietary information since advertisements and attendance at job
fairs are public in any event.
ACIP was the only commenter responding to the Department's request
for comments on how employers should determine industry-wide
recruitment standards, stating only that it is unaware of any source
that catalogues standard recruiting practices within an industry. The
Department repeats its request for further information on this point.
The Department has determined that employers will not be required to
maintain evidence of industry practice. However, in the event of an
investigation, the employer will be required to substantiate its
assertion as to industry practice through credible evidence, such as
through trade organization surveys, studies by consultative groups, or
a statement from a trade organization regarding the industry norm(s).
The Department will look behind such evidence as it deems appropriate
in the context of the particular recruitment performed by an employer.
With regard to documentation concerning pre-selection treatment of
applicants, AILA disagreed with the Department's characterization of
EEOC guidelines, stating that EEOC only requires that if documentation
is created or retained, it must be done consistently. It also stated
that it is impractical to expect an employer to retain what may be
thousands of resumes submitted to it at a job fair, especially since
many resumes do not even relate to positions offered.
As discussed in detail in IV.D.8, above, in connection with the
retention of records relating to displacement of U.S. workers, the
Department disagrees with AILA's characterization of the EEOC
requirements. The Department continues to believe that most employers
are already required to preserve copies of the records listed and that
retention of the documents is necessary to demonstrate fair treatment
of U.S. applicants. ADEA regulations, for example, require an employer
to preserve all records it makes, obtains or uses relating to "[j]ob
applications, resumes, or any other form of employment inquiry whenever
submitted to the employer in response to his advertisement or other
notice of existing or anticipated job openings, including records
pertaining to the failure or refusal to hire any individual, * * *
[j]ob orders submitted by the employer to an employment agency or labor
organization for recruitment of personnel for job openings, * * * [a]ny
advertisements or notices to the public or to employees relating to job
openings, promotions, training programs, or opportunities for overtime
work." 29 CFR 1627.3(b)(i).
The Department emphasizes that it is not requiring employers to
create any documents regarding treatment of applicants for employment,
but rather to preserve those documents which are created or received.
With regard to the comment regarding job fairs, this rule would not
require employers to retain any resumes which do not relate to the
positions to be filled by H-1B nonimmigrants. Nor does the Interim
Final Rule require that any information relating to treatment of
applications be maintained in the public access file.
F. What Are the Requirements for Posting of Notice? (Combined With
Section O.5 of the Preamble to the NPRM) (Sec. 655.734(a)(1)(ii)(A) and
(B))
Section 212(n)(1)(C) of the INA, 8 U.S.C. 1182(n)(1)(C), requires
that, at the time of filing the LCA, an employer seeking to hire an H-
1B nonimmigrant shall notify the bargaining representative of its
employees of the filing or, if there is no bargaining representative,
post notice of filing in conspicuous locations at the place of
employment. As amended by the ACWIA, Section 212(n)(1)(C) further
provides (where there is no bargaining representative) that the notice
may be accomplished "by electronic notification to employees in the
occupational classification for which the H-1B nonimmigrants are
sought."
1. What Are the Requirements for Posting of "Hard Copy" Notices at
Worksite(s) Where H-1B Workers Are Placed? (NPRM Section O.5)
(Sec. 655.734(a)(1)(ii)(A))
Regulations with respect to this notification requirement were
published by the Department as a Final Rule on December 20, 1994 (59 FR
65646, 65647). That Final Rule (set forth in the current Code of
Federal Regulations) required, among other things, that an employer,
who sends an H-1B worker to a worksite within the area of intended
employment listed on the LCA which was not contemplated at the time of
filing the LCA, post a notice at the worksite on or before the date the
H-1B nonimmigrant begins work. 20 CFR 655.734(a)(1)(ii)(D). The purpose
of the
[[Page 80161]]
provision was to enable employers to place H-1B workers at worksites
where posting had not occurred without filing a new LCA. This provision
was among those enjoined for lack of notice and comment by the court in
National Association of Manufacturers v. Reich (NAM), 1996 WL 420868
(D.D.C. 1996). On October 31, 1995, during the pendency of the NAM
litigation, the Department republished the regulation for comment (60
FR 55339).
In the 1999 NPRM, the Department proposed for comment
Sec. 655.734(a)(1)(ii)(A) (previously published for notice and comment
in the October 31, 1995 proposed rule as Sec. 655.734(a)(1)(ii)(C) and
(D)). The provisions regarding "hard copy" notice requirements
remained essentially unchanged from the 1995 proposed rule. Subclause
(A)(3) requires employers to post notice at worksites on or within 30
days before the date the LCA is filed. Subclause (A)(4) requires that
where the employer places an H-1B nonimmigrant at a worksite which is
not contemplated at the time of filing the LCA, but is within the area
of intended employment listed on the LCA, the employer is to post
notice at the worksite (either by hard copy or electronically) on or
before the date any H-1B nonimmigrant begins work there. The preamble
explained that posting is not required if the location is not a
"worksite," as discussed in proposed Appendix B of the NPRM.
Fourteen commenters responded to the 1995 proposed rule on
notification. Eight of those commenters (AILA, ACIP, Intel, Microsoft,
otorola, NAM, Complete Business Solutions, Inc. (CBSI), and Moon,
oss, McGill & Bachelder (Moon)) objected to posting at worksites not
controlled by the LCA-filing employer. These commenters asserted that
many employers' customers would not allow posting at their worksites.
In addition, because the regulations define "place of employment" as
the worksite or physical location at which the H-1B nonimmigrant's work
is actually performed, some commenters expressed a concern that strict
application of this definition of place of employment could lead to
absurd and/or unduly burdensome notice requirements such as posting
notice at a restaurant when an H-1B nonimmigrant has a business lunch,
at a courthouse when the nonimmigrant makes a court appearance, or at
an out-of-town hotel when the nonimmigrant attends a training seminar.
One commenter (Microsoft), expressed concern about the burden of
notification and suggested that the notice provision should not apply
to employers who do not make great use of the H-1B nonimmigrant worker
visa program.
The Department received six comments on these provisions in
response to the 1999 NPRM.
The AFL-CIO emphasized the importance of giving notice to all
affected employees, including employees of the secondary employer and
employees of other staffing firms. The AFL-CIO stated that the purpose
of the notice is to provide information to affected workers that they
may have certain rights and that the employer has certain duties
regarding placement of the H-1B worker which are not diminished because
the worksite is "short-term" or "transitory."
Four employer organizations (ACIP, AILA, ITAA, NACCB) commented on
the issue of notification (whether hard-copy or electronic) to affected
workers at third-party worksites. These groups contended that the
statute requires an employer to notify only its own employees and that
it is unreasonable to hold a primary employer responsible for notifying
employees at worksites over which it lacks control. AILA gave as an
example, workers such as service engineers who travel to a number of
worksites during the course of a day or a week. AILA stated that if a
client refuses to post notice, an H-1B worker cannot be sent to the
site, resulting in a potential loss of business.
One commenter (Latour) requested that the regulation specify that
worksite posting requirements do not apply to rehabilitation
professionals providing home health care.
The Department has carefully considered the comments submitted in
response to the 1995 proposed rule and the 1999 NPRM. The Department
notes first that the statute requires that notice be posted at the
place of employment. See Section 212(n)(1)(C)(ii). The Department's
regulations have consistently defined "place of employment" as "the
worksite or physical location where the work is performed." 20 CFR
655.715 (1992).
This definition was modified slightly in the 1994 Final Rule
(currently in effect) to provide "where the work actually is
performed."
Furthermore, the purposes of notification can only be satisfied by
notice to all of the affected workers--i.e., all of the workers in the
occupation in which the H-1B worker is employed at the place of
employment, including employees of a third-party employer. This is
critical because of the real possibility of displacement by the H-1B
employees. Although this would only be a violation if the employer is
an H-1B-dependent employer or willful violator, there remains a real
possibility that U.S. workers of other employers could be harmed by the
placement of the H-1B worker. Thus the notice alerts affected employees
to the fact that an LCA has been filed and that H-1B workers will be
placed at the worksite. Without such notice affected workers would not
be able to file complaints regarding H-1B violations either with regard
to themselves (if they are displaced because of a placement by an H-1B-
dependent employer or willful violator), or with regard to the H-1B
workers (which might indirectly affect themselves).
The Department observes that a number of employers' concerns with
respect to notification of affected employees, either by hard copy
posting or electronically, at third-party work sites, have been
addressed by the interpretation of "place of employment"/"worksite"
discussed in detail in IV.P.1 and .2 of the preamble and Sec. 655.715
of the Interim Final Rule (see Appendix B of the NPRM). As stated in
Sec. 655.715, the Department interprets "place of employment" as
excluding locations where the H-1B worker's presence either is due to
the developmental nature of his/her activity (e.g., management seminar;
formal training seminar), or is short-term (not exceeding five
consecutive workdays for any one visit) and transitory due to the
nature of his/her job (e.g., computer "troubleshooter," sales
representative, trial witness). Under this interpretation, employers
would not be required to give notice in many of the situations about
which concerns have been expressed, but would be required to give
notice in those instances where the Act and its purposes require. If a
location does not constitute a "worksite," the employer is not
required to post notice.
Although the Department recognizes that in some instances it may be
inconvenient for an employer to post notice at a worksite controlled by
another business (such as the customer of an employer), the Department
notes that its experience in enforcement is that no employer has been
unable to post notices at a customer's worksite when the operator,
owner, or controller of the worksite was informed that posting was
required by the statute and the regulations.
The Department agrees with the comment that notice need not be
provided where a rehabilitation professional is providing services in
the client's home. The Interim Final Rule provides in paragraph (2) of
the definition of "place of employment" in Sec. 655.715, that "a
physical therapist
[[Page 80162]]
providing services to patients in their homes within an area of
employment" is an example of a non-worksite location; in these
situations notice must be posted at the worker's home station or
regular work location.
2. What is Required for "Electronic Posting" of Notice to Employees
of the Employer's Intention to Employ H-1B Nonimmigrants?
(Sec. 655.734(a)(1)(ii)(B))
The Department also proposed a regulation,
Sec. 655.734(a)(1)(ii)(B), which would implement the ACWIA provision
allowing electronic notification of employees. The ACWIA modified the
statutory requirement for worksite posting of notices (where there is
no collective bargaining representative), to permit an H-1B employer to
use electronic communication as an alternative to posting "hard copy"
notices in conspicuous locations at the place of employment.
Senator Abraham explained: "An employer may either post a physical
notice in the traditional manner, or may post or transmit the identical
information electronically in the same manner as it posts or transmits
other company notices to employees. Therefore, use of electronic
posting by employers should not be restricted by regulation." 144
Cong. Rec. S12751 (Oct. 21, 1998).
Congressman Smith elaborated: "By providing this flexibility,
Congress intended to improve the effectiveness of posting in the
protection of American workers. Therefore, the electronic notification
must actually be transmitted to the employees, not merely be made
available through electronic means such as inclusion on an electronic
bulletin board." 144 Cong. Rec. E2325 (Nov. 12, 1998).
As the NPRM explained, in providing this alternative method for
notification to affected workers, Congress indicated no intention of
reducing the effectiveness of the notice requirement which has been an
element of the H-1B program from its inception. The proposed regulation
therefore provided that electronic notice may be accomplished by any
means the employer ordinarily uses to communicate with is workers about
job vacancies or promotion opportunities. Thus the NPRM stated that
notice would be permitted through the employer's "home page" or
"electronic bulletin board" where employees as a practical matter
have direct access; or through e-mail or other actively circulated
electronic message such as the employer's newsletter, provided the
employees have computer access readily available. Where such computer
access is not readily available, the NPRM explained that notice may be
accomplished by posting a "hard copy" at the worksite.
The preamble further explained at Section O.5 that where the H-1B
nonimmigrant(s) will be employed at the worksite of another employer,
the H-1B employer is required to provide notice to the affected workers
at that worksite. Thus, the H-1B employer may make arrangements with
the other employer to accomplish the notice (e.g., the other employer
may "post" the electronic notice on its Intranet or employee
newsletter, or may "post" hard copy notice in conspicuous locations
at the place of employment).
The Department received 30 comments, including 22 from individuals,
on the 1999 NPRM provisions regarding electronic notice.
The individuals generally objected to the statutory provision
allowing electronic posting as an alternative to hard copy posting,
asserting that Internet posting alone allows companies to hide
replacement of American workers with foreign workers. The AEA
essentially expressed a similar view on electronic posting, noting that
the Internet/Intranet method of notification is unworkable.
The AFL-CIO commented that electronic posting should only be
allowed if employers can show that all workers have access to e-mail or
the Internet site, and that all notices are flagged to them. Another
employee organization, IEEE, emphasized that to be an effective notice,
electronic communications must be readily available and accessible to
all affected U.S. and foreign workers.
ACE, ACIP and SHRM commended the Department for its flexibility on
methods of electronic posting. ACIP recommended that the Department
distinguish between "indirect" and "direct" electronic notices,
suggesting that where "indirect" notice is given, such as on a
bulletin board, the employer should have to make the notice available
for 10 days. If, however, the employer provides direct notice, such as
e-mail to each employee, ACIP suggested that notice should only have to
be sent to each affected employee once. SHRM urged the Department to
allow an employer to document that notice has been given by permitting
the employer to place a signed notice in the public access file
regarding how notice was provided. AILA recommended amending the
regulations to clarify that an employer may satisfy its electronic
posting obligation by providing the notification on its internal
network or website. AILA also recommended that with respect to
employers which send the notice by e-mail, the regulation should
specify that notification sent to a distribution group of "affected
workers" satisfies the electronic posting requirement. Another
commenter (Cooley Godward) sought clarification on the issue of how
electronic posting can comply with the requirement of
Sec. 655.734(a)(1)(ii)(A) that the LCA be posted in two or more
conspicuous places, and on whether or not all four pages of the LCA
must be posted.
With regard to posting at third-party worksites, AILA suggested
that a primary employer should be able to satisfy its obligation to
document that an electronic posting was made at the work site of a
third-party employer in any one of the following three ways: (1) A
statement in the contract between the parties requiring the
notification to be made; (2) a written statement by a responsible party
at the third-party location; or (3) a printout of the electronic
communication with a certification about when, how, and to whom it was
sent.
The statute does not give the Department the discretion to disallow
electronic posting, as suggested by the individual commenters. The
Department agrees with the AFL-CIO and the IEEE, however, that the
critical consideration is that the notice is readily available and
accessible to the affected workers. The Department believes that the
proposed regulation, as drafted, meets these concerns. Posting must be
by the means the employer ordinarily uses to communicate with its
workers about job vacancies or promotion opportunities. Posting on the
employer's "home page" or electronic bulletin board is allowed where
employees as a practical matter have direct access to these resources.
Where employees lack computer access, a hard copy must be posted or the
employer may provide employees individual copies of the notice.
The Interim Final Rule clarifies the operational requirements for
electronic posting. Like the physical posting, the electronic notice
need not incorporate a copy of the LCA, although it would be
permissible since a copy of the LCA would satisfy the substantive
requirements (see Sec. 655.734(a)(1)(ii)). (Employers are reminded that
all H-1B nonimmigrants must be given a copy of the LCA. See
Sec. 655.734(a)(2).) Like "hard copy" posting, electronic posting on
a "home page" or electronic bulletin board must be posted for 10
days. If direct notice is given to each affected employee, as through
e-mail or "hard copy" notices, the notice need only be given once
during the regulatory time
[[Page 80163]]
period. Notice by e-mail may be provided by notification to an e-mail
group consisting of all of the affected employees. Electronic posting,
unlike hard copy posting, need not be posted in two locations, provided
all the affected employees, as a practical matter, have access to the
website or bulletin board. Another method of posting would have to be
used to reach those employees who do not have such access. For example,
home care therapists may not have practical access to a computer at all
as a part of their job. Where there is no such access, physical posting
at two sites in the home office or individual copies of the notice
would be necessary. The Department believes the existing documentation
provision is broad enough to encompass electronic posting, both at the
employer's own worksite and at another employer's worksite.
The Interim Final Rule also clarifies that electronic notification,
like other physical posting, shall be provided in the period on or
before 30 days before the date the LCA is filed. Where H-1B
nonimmigrants are placed at a worksite not contemplated when the LCA
was filed, the notification shall be provided on or before the date the
H-1B nonimmigrant begins work at the site.
Finally, upon review of the provisions of the ACWIA, the Department
has concluded that some modification of the required notice is
appropriate. Specifically, the Department has concluded that the
content of the notice should be modified to require dependent employers
and willful violators to notify affected workers, through the methods
provided herein, that they are H-1B-dependent or a willful violator,
subject to the requirements for recruitment and non-displacement of
U.S. workers. Where the employer is dependent (or a willful violator)
but will employ only exempt workers, the notice must so provide, and
further state that it is not subject to the recruitment and non-
displacement requirements. In addition, the notice about filing
complaints with the Department of Justice for failure to offer
employment to an equally or better qualified U.S. worker will only be
required for H-1B-dependent employers and willful violators. Finally,
because the full attestations are set forth in the cover sheet, Form
ETA 9035CP, the provision in Sec. 655.734(a)(3) requiring employers to
give copies of the LCA to all H-1B nonimmigrants has been modified to
provide that copies of the cover sheet shall be given to the H-1B
nonimmigrant upon request.
G. What Does the ACWIA Require of Employers Regarding Benefits to H-1B
Nonimmigrants? (Sec. 655.731(c)(3), Sec. 655.732)
Section 212(n)(2)(C)(viii) of the INA as amended by the ACWIA
states that "[i]t is a failure to meet a condition of paragraph 1(A)
[the wage and working condition attestation requirements] * * * to fail
to offer an H-1B nonimmigrant, during the nonimmigrant's period of
authorized employment, benefits and eligibility for benefits (including
the opportunity to participate in health, life, disability, and other
insurance plans; the opportunity to participate in retirement and
savings plans; and cash bonuses and noncash compensation such as stock
options (whether or not based on performance) on the same basis, and in
accordance with the same criteria, as the employer offers to United
States workers."
Senator Abraham and Congressman Smith described the operation of
this provision in similar terms. Senator Abraham explained:
This obligation is only an obligation to make benefits available
to an H-1B worker if an employer would make those benefits available
to the H-1B worker if he or she were a U.S. worker. Thus, if an
employer offers benefits to U.S. workers who hold certain positions,
it must offer those same benefits to H-1B workers who hold those
positions. Conversely, if an employer does not offer a particular
benefit to U.S. workers who hold certain positions, it is not
obligated to offer that benefit to an H-1B worker. Similarly, if an
employer offers performance-based bonuses to certain categories of
U.S. workers, it must give H-1B workers in the same categories the
same opportunity to earn such a bonus, although it does not have to
give the H-1B worker the actual bonus if the H-1B worker does not
earn it.
144 Cong. Rec. S12753 (Oct. 21, 1998). See also the statement of
Congressman Smith, 144 Cong. Rec. E2326.
Senator Abraham continued:
While this clause is not intended to require that H-1B workers
be given access to more or better benefits than a U.S. worker who
would be hired for the same position, it does not forbid an employer
from doing so. For example, an employer might conclude that it will
pay foreign relocation expenses for an H-1B worker whereas it will
not pay such relocation expenses for a U.S. worker.
144 Cong. Rec. S12753 (Oct. 21, 1998).
Congressman Smith, on the other hand, stated that "[t]he statement
'on the same basis' is intended to mean equal or equivalent treatment,
not preferential treatment for any group of workers. Thus, if an
employer offers benefits to American workers, it must offer those same
benefits to H-1B workers." 144 Cong. Rec. E2326 (Nov. 12, 1998).
Senator Abraham also explained that "care must be taken to find
the right U.S. worker to whom to compare the H-1B worker in terms of
access to benefits. * * * If a particular benefit is available only
to an employer's professional staff, then it only need be made
available to an H-1B filling a professional staff position. If an
employer's practice is not to offer benefits to part-time or temporary
U.S. workers, then it is not required to offer benefits to part-time H-
1B workers or temporary H-1B workers employed for similar periods."
144 Cong. Rec. S12753 (Oct. 21, 1998).
Senator Abraham and Congressman Smith differed in their view as to
the application of the provision to multinational corporations. Thus
Senator Abraham stated:
If an employer's practice is to have its U.S. workers brought in
on temporary assignment from a foreign affiliate of the employer
remain on the foreign affiliate's benefits plan, then it must allow
its H-1B workers brought in on similar assignments to do the same.
Likewise, in that instance, it need not provide the H-1B workers
with the benefits package it offers to its U.S. workers based in the
U.S. Indeed, even if it does not have any U.S. workers stationed
abroad whom it has brought in this fashion, it should be allowed to
keep the H-1B worker on its foreign payroll and have that employee
continue to receive the benefits package that other workers
stationed at its foreign office receive in order to allow the H-1B
worker to maintain continuity of benefits. In that instance, the
basis on which the worker is being disqualified from receiving U.S.
benefits (that he or she is receiving a different benefits package
from a foreign affiliate) is one that, if there were any U.S.
workers who were similarly situated, would be applied in the same
way to those workers. Hence the H-1B worker is being treated as
eligible for benefits on the same basis and according to the same
criteria as U.S. workers. It is just that the criterion that
disqualifies him or her happens not to disqualify any U.S. workers.
Or to put the point a little differently: The H-1B worker is being
given different benefits from the U.S. workers not because of the
worker's status as an H-1B worker but because of his or her status
as a permanent employee of a foreign affiliate with a different
benefits package.
Ibid.
Congressman Smith had a different perspective:
There is particular concern regarding such erosion in instances
where a foreign affiliate of a petitioning employer is involved as
the agent for payment of wages and provision of benefits to the H-1B
workers. The statutory obligations must be fully met in such
instances. Congress intends that the ultimate and complete
responsibility for all employer obligations under this Act,
including the provision of benefits to the H-1B worker equal to
those offered the employer's
[[Page 80164]]
American workers based in the U.S., lies with the American (United
States) employer who brings nonimmigrant workers into the country.
Ultimately, it is the American employer, not the foreign subsidiary,
pledging a benefit package similar to that of its American workers.
Congress would expect the Secretary to look with particular care at
circumstances involving a foreign subsidiary where there is an
appearance of contrivance to avoid the obligation to provide equal
wages and benefits to H-1B and American workers.
144 Cong. Rec. E2326 (Nov. 12, 1998).
1. What Does "Same Basis and Same Criteria" Mean With Respect to an
Employer's Treatment of U.S. Workers and H-1B Workers With Regard to
Benefits? (Sec. 655.731(c)(3), Sec. 655.732)
In the NPRM, the Department proposed that: (a) An employer is
required to offer H-1B workers the same benefit package it offers to
U.S. workers; (b) the package must be offered on the same basis as it
is offered to U.S. workers, i.e., the employer may not impose more
stringent eligibility or participation requirements on the H-1B workers
than those applied to U.S. workers; (c) the comparison between the
benefits offered U.S. and H-1B workers should be between similarly
employed workers, i.e., those in the same employment categories, such
as full-time compared to full-time, professional to professional; and
(d) the benefits actually provided to the H-1B workers, as
distinguished from the benefits offered, might be different than those
provided to U.S. workers because of an individual's choice among
options. The Department also sought comments regarding whether the
ACWIA would allow an employer to provide a different, but "equivalent
package" to satisfy its benefits obligation, noting the difficulty of
making an evaluation of the benefits--particularly a qualitative
evaluation of the benefits, as distinguished from one based on the
relative costs to the employer of providing such benefits.
The Department further proposed that an employer, consistent with
its attestation to adhere to minimum standards for H-1B workers, may
provide greater benefits to H-1B workers than to U.S. workers. The
Department acknowledged, however, that the phrases "same basis" and
"same criteria," applied literally, could require that U.S. and H-1B
workers be offered the same (or possibly equivalent) benefits.
The Department noted the possible complications that might arise
with respect to benefits afforded employees of a multinational
corporate operation, particularly where the H-1B worker works in the
U.S. for only a short period of time. In this situation, the NPRM
noted, it might not be practical for the U.S. employer to provide the
H-1B worker with benefits identical to those provided its U.S. workers.
The Department proposed that while the U.S. employer may cooperate with
its corporate affiliate in the worker's home country with regard to the
payment of wages to the worker and the maintenance of his or her "home
country" benefits (such as that country's retirement system), the U.S.
employer remains ultimately responsible for ensuring that the H-1B
worker is provided benefits at least equal to those offered U.S.
workers. The Department stated that it would look closely into
situations involving a foreign affiliate where there was the appearance
of a contrived arrangement to avoid the U.S. employer's obligation to
provide to its H-1B workers wages and benefits at least equal to those
provided its U.S. workers. At the same time, the Department proposed
that it would carefully examine the circumstances to consider non-
equivalent but nonetheless equitable benefits, including the H-1B
worker's actual length of stay in the United States.
The Department also proposed to modify Sec. 655.732 of the current
regulations to clarify that an employer must provide the H-B worker
with fringe benefits and working conditions at least equal to those
provided U.S. workers. The NPRM noted that such a modification would
make it clear that the requirement that the H-1B employer provide
working conditions, including benefits, that will not adversely affect
those provided similarly employed U.S. workers, requires consideration
of similarly employed workers in the employer's own workforce and, in
some circumstances, the prevailing conditions in the area of
employment.
Finally, the Department sought comment on whether it would be
beneficial to develop a regulatory definition of "benefits" within
the meaning of the ACWIA or merely to provide a list of examples. The
NPRM noted that the ACWIA contemplates the inclusion of various forms
of cash and non-cash compensation, such as bonuses and stock options,
which ordinarily are considered wages.
Several commenters, including AOTA, APTA, IEEE, and an attorney
(Latour), generally endorsed the Department's NPRM approach in this
area. IEEE stated that the Department's proposal "will help implement
the letter and the spirit of the law that the wages and working
conditions of U.S. workers not be adversely affected" and, at the same
time, "help to reduce the likelihood that employers will discriminate
against H-1B workers by offering them less generous benefits."
Senators Abraham and Graham and AILA noted that the NPRM created
some confusion by failing to make it clear that an employer must offer
"benefits and eligibility for benefits" on the same basis as offered
to U.S. workers. Citing to Senator Abraham's statement in the
Congressional Record, these commenters stated that this phraseology was
important because workers must be or make themselves eligible to obtain
benefits--e.g., by selecting a plan, providing partial payment, working
for a period of time, or performing at a high level. Similarly, ACE
requested the Department to make clear that a comparison should be made
between the benefits offered to workers, not the benefits actually
selected by the workers. ACE mentioned, as one example, "cafeteria
plans" offered by many employers. Under these plans, it explained,
employees choose certain benefits and not others for a variety of
reasons.
The Department agrees that the ACWIA requires an employer to offer
H-1B workers benefits and eligibility for benefits on the same basis
and in accordance with the same criteria as U.S. workers. Because
employers often offer workers a choice of benefits, the ACWIA does not
require that U.S. workers and H-1B workers actually receive the same
benefits. Similarly, some employees may opt for "family" coverage of
certain benefits, while others opt for "individual" coverage.
Furthermore, as the commenters noted, workers may be required to meet
certain criteria or take certain action to avail themselves of the
benefits. However, an employer cannot satisfy its statutory requirement
by "offering" benefits which it never actually provides to selecting
workers. Thus, as discussed below, employers are required to retain
documentation showing that employees actually receive the benefits that
they have selected. While the Department believes that the NPRM
comported with the statutory language, the Interim Final Rule clarifies
these requirements in order to eliminate any ambiguity.
AILA and ACIP agreed with the Department's proposal that an
employer lawfully may offer and provide greater benefits to H-1B
workers than those offered to U.S. workers. The AFL-CIO asserted the
contrary position. In the AFL-CIO's view, an employer should be
required to provide identical benefits to H-1B and U.S. workers, a
result it argues is consistent with the ACWIA's "same basis"
requirement. Senators
[[Page 80165]]
Abraham and Graham suggested that the statute would allow employers to
offer benefit incentives above and beyond normal benefits to lure
foreign-based employees with critical skills to work in the United
States. The Senators suggested that so long as the packages are offered
on the same basis to U.S. and foreign nationals based abroad, the
practice should be permitted.
In the Department's view, the statute does not require that H-1B
workers and U.S. workers be offered the same benefits. While perhaps
Section 212(n)(2)(C)(viii), read in isolation, could be read to require
this result, this provision must be read in the context of the entire
statute. Section 212(n)(2)(C)(viii) provides that it is a failure to
meet paragraph (1)(A)--the wage requirements of the Act--to fail to
provide the required benefits. Section 212(n)(1)(A)(i) in turn provides
that the employer must offer wages that are "at least" those paid to
similar workers. The Department notes, however, that an H-1B-dependent
employer or willful violator, when it conducts good faith recruitment
pursuant to section 212(n)(1)(G)(i), must offer U.S. workers the same
compensation (including benefits) as it will offer the H-1B workers in
the recruited positions. Furthermore, providing greater benefits to H-
1B workers may violate requirements of the various discrimination laws.
The agencies that enforce discrimination requirements and their
telephone numbers and website addresses are set forth above in IV.E.4,
above.
Senators Abraham and Graham asserted that the Department should
look at the employer's entire benefits structure as it concerns
"benefits eligibility for its workforce generally" to make sure that
the comparison is made to the right employees. These Senators and AILA
suggested that comparisons could appropriately be made on such bases as
part-time vs. full-time workers, positions requiring extensive travel
vs. those that do not, relative seniority, the particular
organizational component to which the workers are assigned, and whether
the individual occupies a position for which special incentives should
apply. Similarly, ACIP suggested that the Department look beyond a
simple full-time/part-time distinction.
The Department agrees that it should look at an employer's benefits
structure. Employers commonly provide different benefits, for example,
based on part-time vs. full-time status, seniority, union vs. non-
union, organizational component, etc. The Department agrees that H-1B
workers should be provided benefits based on their position in the
organizational structure, provided the employer utilizes the same
distinctions on an organization-wide basis. However, the Department
will not accept artificial distinctions which are not generally
accepted in the industry and which have the result of denying benefits
to H-1B workers on the basis that there are no comparable workers in
the organization or which otherwise have the effect of discriminating
between workers on the basis of citizenship, nationality, or other
prohibited grounds.
The Interim Final Rule incorporates these principles. The Interim
Final Rule also prohibits employers from denying benefits based on the
H-1B worker's temporary status since all H-1B workers, by virtue of
their visa restrictions, are temporary workers. Thus, an employer by
utilizing "temporary" as a basis for comparison could evade offering
to these workers the benefits that typically would be paid to workers
hired on a "permanent basis," even though the tenure of workers in
each group might be of comparable duration, thereby effectively
nullifying the statutory provision. An employer would, however, be
allowed to require that an H-1B workers meet eligibility and vesting
requirements.
Sun Microsystems suggested that to the extent there was a perceived
need for greater scrutiny over fringe benefits, the Department's
efforts should be restricted to dependent employers. The Department
disagrees. Unlike some other provisions of the ACWIA, the "same
basis"/"same criteria" provision applies to all H-1B employers.
TCS asserted that the Department "should clarify that, where
length of service is applicable to the amount of the benefit, only the
H-1B non-immigrant's length of service in the United States, and not
the H-1B's entire length of service with the employer should be
included in the calculation."
It is the Department's view that an employer is required to offer
benefits on the same basis as it offers benefits to its U.S. employees.
If an employer offers benefits based on length of service for the
employer, it must offer benefits to its H-1B workers on that basis as
well. (See the discussion below regarding treatment of multinational
organizations.)
APTA suggested that the INS inform all H-1B workers of their right
to be offered the same benefits as U.S. workers, to better ensure that
they receive the benefits due them. The Department notes that every H-
1B worker is required to receive a copy of the LCA, which contains a
brief reference to this requirement. Section III.B of the Preamble,
above, discusses in greater detail the Department's plans to
disseminate information regarding the program's requirements.
In response to the Department's query, BRI and AILA contended
(without citing support for their position) that the ACWIA contemplates
that an employer may satisfy the benefits attestation by offering H-1B
workers different but "equivalent" benefit packages relative to the
benefits offered to U.S. workers. BRI further stated that such benefits
should be compared according to their monetary value.
The Department has concluded, as a general matter, that the
statute's "same basis" provision does not permit an employer to offer
its H-1B workers benefits "equivalent" to but different from those
offered its U.S. workers. The Department notes that these commenters,
like other commenters, appeared to be concerned with benefits provided
by multinational corporations, which are discussed separately below.
Intel and ACIP stated that a few countries prohibit their citizens
from owning stock in foreign corporations. Cooley Godward also raised
the question of benefits such as stock options whose accrual will
terminate after an H-1B employee's period of status ends.
Although there is nothing which requires an employee to take
advantage of a stock option, it is the Department's view that if an
employer is aware that its H-1B worker(s) is prohibited from taking
advantage of a stock option because of laws of the worker's home
country, the employer should offer such worker(s) an alternative
benefit of comparable value. With regard to the question of stock
options or benefits which will accrue after termination of an H-1B
worker's period of status, such benefits should be provided on the same
basis as they would otherwise be provided to workers who are no longer
in the firm's employ (or who have transferred back to the home office).
If other workers have a right to exercise the option or receive the
benefit even if they are no longer in the firm's employ, the same would
be true with regard to H-1B workers.
Turning to the question of treatment of employees of multinational
firms, Senators Abraham and Graham asserted that the Department's
proposal "appear[s to provide no] consideration of the question of who
the right similarly situated worker to compare [the transferee] is, and
whether there actually is one." They, instead, suggested that the
Department should focus on the transferee's status as a permanent
employee with the
[[Page 80166]]
employer's foreign affiliate, rather than his or her status as an H-1B
worker.
TCS stated that it appreciated the Department's sensitivity to the
issue of the application of the benefits requirement to employees who
receive a range of benefits from their foreign employer and are only in
the United States on short-term assignments in connection with their
long-term employment with the foreign employer. TCS contended, however,
that the requirement that H-1B workers be provided benefits equivalent
to those received by U.S. workers is contingent upon the existence of
"similarly employed" workers in the United States. TCS argued that
because it is an Indian company and its employees receive India-based
benefits, they are not similarly employed to any computer engineers it
might hire in the United States, and that TCS would therefore be
relieved from any obligation to offer new benefits to its workers
during the period of their temporary employment in the United States.
ACIP commented that a "length of status" test "wrongly assumes
that the practice of maintaining a foreign benefits program is a matter
of convenience, when, in fact, the practice is maintained because the
disruption often causes the employee to lose vested interest in a
benefit plan." Instead, they suggested, "[t]he Department should
adopt a rule that allows for a transferee to maintain his or her
foreign benefits as long as such benefits plan is administered abroad
continuously without interruption and as long as the company typically
offers this option to all international transferees." Similar comments
were made by AILA and Intel, which stated that it is in the employees'
best interest to stay on "home country" pay and benefits. SIA also
stated that if it is an employer's practice to have its workers
continue to receive "home country" benefits when they are on a short-
period assignment in the United States, it should be allowed to
continue to do so.
Some commenters (ACIP, Intel, Latour) indicated that multinational
corporations typically offer similar benefit packages to all their
employees. Thus, ACIP stated that "most employers already provide the
same benefits to all workers and do not distinguish between U.S. and
foreign nationals." At the same time, it noted that "in dealing with
a global workforce, it is sometimes necessary to provide different
benefit packages to workers from different countries, depending upon
the laws and social services of that country." Intel similarly stated
that the vast majority of its regular full-time H-1B workers are on
U.S. benefits; it noted that a small percentage of these workers are on
their "home country" pay and benefits. Intel further stated that all
its H-1B workers are put on U.S. medical benefits, because of "out of
country" coverage problems. ACIP explained that currently employers
may provide certain benefits to workers depending upon standards in the
workers' home countries and the employer's international relocation
policies. As stated by ACIP: "Benefits may include relocation
expenses, schooling for children, housing allowance, travel expenses,
additional vacation time and assistance with health care or other items
the worker is accustomed to receiving."
ACIP applauded the Department's effort to deal with this issue and
supported the Department's statement that "should the U.S. worker
remain on the foreign plan, the U.S. employer will be held responsible
for compliance with all H-1B regulations."
AILA's comment, that flexibility is needed to preserve the ability
of the H-1B workers to preserve their existing "home country"
benefits (which if interrupted could have significant and perhaps long-
term negative impact on the worker and the worker's family), was
representative of several comments on this point.
The Department has carefully considered the question of application
of the benefits requirements of the ACWIA to multinational firms. The
Department cannot agree with the construction of the statute that would
deprive foreign-based employees of the benefit protections enacted by
the ACWIA on the basis that they are not "similarly employed." On the
other hand, the Department believes it is appropriate to provide some
accommodation for multinational corporate operations where "home
country" benefits are equitably equivalent to the benefits provided to
employees.
The Department has crafted a two-part Interim Final Rule,
distinguishing between workers who are in the United States for a short
period of time (90 days or less) and workers who are in the United
States for a longer period. Where H-1B workers permanently employed in
their "home country" (or some other country) are not transferred to
the United States but remain on the payroll of their permanent employer
in their "home country" and continue to receive benefits from the
"home country" without interruption, the Department will require
nothing further, provided the worker is in the United States for no
more than 90 continuous days in any one visit to the United States.
oreover, the employer must also provide reciprocity to its U.S.
workers i.e., U.S. workers based abroad and U.S. workers based in the
United States must receive the benefits of their home work station (the
station abroad or in the United States, respectively) when traveling on
temporary business. It should be noted that this provision would allow
H-1B workers who are not in the United States more than 90 continuous
days in one trip to go back and forth between countries without any
consideration to cumulative days of employment in the United States,
provided there is no reason to believe the employer is trying to evade
the Act's benefit requirements, such as where a worker remains in the
United States most of the year but returns to the home country on brief
visits.
Once the H-1B worker has worked in the U.S. for more than 90
continuous days (or from the point where the worker is transferred or
it is anticipated that the worker will likely remain in the United
States for more than 90 continuous days), the H-1B employer is required
to offer that worker the same benefits on the same basis as provided to
its U.S. workers unless: (1) The worker continues to be employed on the
"home country" payroll; (2) the worker continues to receive "home-
country" benefits without interruption; (3) the "home-country"
benefits are equitable relative to the U.S. benefit package; and (4)
the employer provides reciprocity (i.e., similar treatment as discussed
above) to its U.S. workers (if any) on assignment away from their home
work station. In the Department's view, this strikes an appropriate
balance between meeting the statutory requirement (thereby protecting
the benefits of U.S. workers employed in the U.S. against erosion), and
protecting the H-1B worker's interest in preserving long-term "home
country" benefits which may be threatened by the disruption of these
benefits.
Furthermore, as Intel noted in its comments, many health care plans
fail to provide coverage, or fail to provide full coverage, outside
their country's boundaries. Therefore any employer that offers health
coverage to its U.S. workers must offer similar coverage (same plan and
same basis) to its H-1B workers in the United States for more than 90
continuous days unless the H-1B workers' home-country plan provides
full coverage (i.e., coverage comparable to what they would receive at
their home work station) for medical treatment in the United States.
In addition, employers will be required to provide H-1B workers who
are in the United States more than 90
[[Page 80167]]
continuous days those U.S. "benefits" which are paid directly to the
worker--namely paid vacation, paid holidays, and bonuses. H-1B workers
must also be provided working conditions and eligibility for working
conditions (hours, shifts, vacation periods, etc.) on the same basis
and criteria provided to U.S. workers.
TCS argued that if the Department requires the same or even
equivalent benefits for its workers, they will receive double
benefits--the U.S. benefits plus their "home country" benefits. In
the Department's view, TCS is mistaken. The Department's proposal
tracks the ACWIA. Neither the proposal nor the statute requires the
employer to continue to maintain "home country" benefits in such
situations. While an employer in such situations, either by contract or
otherwise, might be required to maintain such benefits (or it may
decide to do so as a matter of company policy), the ACWIA does not
impose such an obligation, nor does this rule.
The Department received a number of comments regarding whether a
multinational employer continuing "home country" benefits to H-1B
workers need establish that the benefits provided are equivalent or
equitable in relation to benefits provided U.S. workers. ACIP expressed
the view that "it [would be] extremely burdensome to put a dollar
value on benefits received." Similarly, AILA stated that multinational
employers should be able to provide equitable but non-equivalent
benefits to H-1B workers. BRI, on the other hand, took the position
that benefits should be equivalent, comparing their monetary value. The
AFL-CIO, as discussed above, contended that employers should be
required to provide identical benefits to H-1B and U.S. workers.
The Department agrees that a multinational firm, under the
circumstances described, should not be required to make a valuation of
the benefits it offers and provides to U.S. and H-1B workers, but
rather should be required, in the event of an investigation, to
establish only that it provides benefits which are equitable in
relation to U.S. workers' benefits. The Department finds very
persuasive the arguments that it is in the workers' interest to allow
employers to continue their permanent employees on "home country"
benefits when working temporarily in the United States. At the same
time, the Department believes that establishing benefits in terms of
cost is unduly burdensome, and would not further the objective of
establishing comparable benefits since there is no reason to believe
even identical benefits abroad would cost the same as benefits in the
United States.
Only ACIP provided comments on the meaning of the phrase
"equitable benefits." ACIP suggested that "[t]he emphasis should be
on whether the benefits package is equitable in light of basic human
needs, similarity in treatment of all workers, how U.S. workers
transferred abroad are treated, and the facts and circumstances of each
H-1B worker." ACIP further stated: "While we agree that the
Department should look closely at 'contrived cases,' we stress that the
Department should look closely at the facts of each case to determine
whether equitable benefits have been provided. * * * [T]he Department
should not place undue emphasis on any one factor such as the
employee's length of stay in the U.S."
The Department agrees that "equitability" between "home
country" and U.S. benefits does not reduce to a bright-line test. In
the event of an enforcement action, the Department will look into all
the circumstances bearing upon the benefits to ensure that the H-1B
worker's continued receipt of these benefits is not less advantageous
to him than the benefits offered U.S. workers. This examination entails
a qualitative rather than a quantitative review. In other words, an
employer in these circumstances must be able to demonstrate that the
worker's "home-country" benefits are equitable in relation to the
benefits provided its U.S. workers based in the United States,
similarity in treatment of all workers, how U.S. workers temporarily
stationed abroad are treated, and the facts and circumstances of each
H-1B worker. Where the employer makes this demonstration, and there is
no appearance of contrivance to avoid payment of U.S. benefits, the
Department will not second-guess the employer.
Several commenters responded to the Department's request for
comments on whether it should define "benefits" as that term is used
in Section 212(n)(2)(C)(viii), which provides that the requirement to
offer benefits and eligibility for benefits includes: "the opportunity
to participate in health, life, disability, and other insurance plans;
the opportunity to participate in retirement and savings plans; and
cash bonuses and noncash compensation such as stock options (whether or
not based on performance). * * *". Senators Abraham and Graham and
AILA stated that they did not see the need for further defining
"benefits," noting that the statute contains several examples of
benefits. ACIP also stated that a regulatory definition was
unnecessary, suggesting that instead the Department should examine the
facts and circumstances of each case. TCS contended that the statutory
list of benefits is exclusive; alternatively, it argued that the
Department should specify the benefits so that employers do not have to
guess about what is covered--e.g., is a separate office a benefit? ACIP
asserted that "[c]ertain cash and non-cash bonuses considered benefits
under ACWIA are considered wages under other laws. Adopting definitions
from other laws further confuses immigration law, does not address
practices abroad, and may have unintended tax consequences."
Similarly, ACIP, SHRM and Cowan & Miller commented that further
definition of benefits is unnecessary. Rapidigm asked for clarification
of the Department's statement.
The Department agrees with the position of most commenters that the
existing statutory definition is sufficient to administer effectively
this aspect of the statute. The language of section 212(n)(2)(C)(viii)
provides a fairly comprehensive list of the benefits that may be
offered to workers in the U.S. While the use of "including" evinces
an intention that the list is not exhaustive, the list, in the
Department's view, is representative of the types of benefits that must
be considered. Thus, an employer, by analogy, may determine whether
other particular benefits should be taken into account. In this regard,
the Department notes that the regulatory schemes under other
employment-related statutes such as FMLA, the Equal Pay Act, the ADEA,
and ERISA also provide guidance in this area. The Interim Final Rule
takes this approach in lieu of an attempt to more fully define
benefits. Under the Department's approach, it would appear clear that
office accouterments--the example used by TCS--ordinarily would not
constitute a benefit within the meaning of the statute. At the same
time, it bears noting that the ACWIA does not relieve employers from
any obligations they may have incurred through collective bargaining or
otherwise with regard to particular working conditions, or of its
obligation not to discriminate based on citizenship or national origin.
With regard to the Department's stated intention to modify the
current regulatory provision concerning the working condition
attestation, ACIP, AILA, and TCS expressed the concern that the
Department was seeking to impose a new requirement, i.e., that an
employer was required to offer benefits to H-1B workers at least
equivalent to the higher of those offered to their own U.S. employees
or those prevailing in
[[Page 80168]]
the area. ACIP asserted that the Department lacks authority to require
employers to consider conditions outside their own workforces. Rapidigm
requested clarification on the meaning of the provision.
After review of the ACWIA and the provisions of the H-1B program as
a whole, the Department concurs with commenters that Congress intended
that the requirement for offering benefits and eligibility for benefits
to H-1B workers on the same basis and same criteria as they are offered
to U.S. workers employed by the employer includes both benefits paid as
compensation for services rendered and working conditions. The
Department has therefore concluded that it is inappropriate to continue
the provision in Sec. 655.732 which provides for consideration under
some circumstances of prevailing conditions in the area of employment.
Section 655.732 therefore is revised in the Interim Final Rule to
clearly require that working conditions be provided to H-1B workers on
the same basis and same criteria as they are offered to U.S. workers.
The Department also believes that certain benefits appropriately
are in the nature of compensation for service rendered, and have a
monetary value to workers and monetary cost to employers. Such benefits
include cash bonuses, paid vacations and holidays, and termination pay,
which are paid directly to workers and are taxable when earned. Also
included are benefits such as health, life and disability insurance,
and deferred compensation such as retirement plans and stock options
which are funded by employers, either directly as costs are incurred or
through contributions to fringe benefit plans or insurance companies.
The Department has concluded that such benefits are more in the nature
of wages than working conditions, although the Department cautions that
only benefits which meet the criteria of Sec. 655.731(c)(2) count
toward satisfaction of the required wage since such benefits are not
included in surveys used to determine the prevailing wage. On the other
hand, benefits which do not have a direct monetary value to workers or
cost to employers, are in the nature of working conditions, including
matters such as seniority, hours, shifts, and vacation periods, and
preferences relating thereto. Sections 655.731 and 655.732 are amended
to reflect this distinction.
2. What Documentation Will Be Required? (Sec. 655.731(b))
The Department proposed to require H-1B employers to retain copies
of fringe benefit plans and summary plan descriptions provided to
workers, including all rules relative to eligibility and benefits, and
documents showing the benefits actually provided and how the costs are
shared between the workers and the employer. The Department sought
suggestions as to exactly what records would demonstrate the value of
benefits and satisfy the other retention requirements. The Department
expressed the view that such records already are required for IRS and
ERISA purposes (although noting in the paperwork analysis, at 64 FR
630, that a small percentage of employers might be required to keep
records that otherwise would not be kept). In connection with the
Department's query whether it might be possible to provide different
"home country" benefits to employees of a multinational corporate
operation in lieu of those provided to U.S. workers, the Department
sought comment on what records would be necessary to demonstrate the
relative value of the "home-country" benefits and the benefits
provided to U.S. workers.
Many of the commenters opposed the notion of maintaining particular
documentation in order to demonstrate compliance with the benefits
attestation. ACIP and AILA asserted that the statute does not authorize
the Department to require employers to retain documentation, suggesting
that it is up to an employer to decide what documentation, if any, it
should retain in order to demonstrate its compliance if it is
investigated. Similarly, Senators Abraham and Graham stated: "DOL is
not authorized to require employers to maintain any particular
documentation." The Department cannot, they asserted, include as part
of the proposed LCA a "new attestation" that "[the employer] will
develop and maintain documentation of working conditions and
benefits."
ACIP addressed particular burdens it perceived in retaining such
documentation, noting, for example, that they already maintain such
documentation in a location or in a format different than that
contemplated by the Department. While ACIP recognized that the
Department correctly stated that employers now keep documents related
to their fringe benefit plans, ACIP stated that these documents may be
housed in various departments and urged the Department to let the
employer decide where documentation must be kept. ACIP further
explained that much information is sensitive and confidential (e.g.,
stock option and incentive pay plans), requiring the Department, in its
view, to allow an employer flexibility in documenting these benefits.
Intel stated that summary plan descriptions are a U.S. requirement.
It noted that no other countries required the same depth and detail
regarding the documentation of benefits, though stating that about one-
half of its foreign subsidiaries have some benefits documentation.
Intel explained that all its employees at orientation receive
information regarding the company's benefits; in the U.S., it stated
that employees receive a book that describes benefits, and that each
year employees receive a particularized benefit portrait. Intel
asserted that further documentation should not be required; it contends
that a memorandum to the public access file that its employees are
advised of the company's benefits at time of their hire should suffice.
Satyam questioned whether current requirements under other statutes
and regulations relating to the retention of benefits documents would
suffice for H-1B purposes; it suggested that the Department should not
require putting specific information in the public access file. It also
inquired whether it would be necessary to retain information relevant
to the comparison group. ITAA said that the Interim Final Rule should
recite rather than refer to IRS and PWBA requirements. AILA expressed
the concern that the Department will make it a violation to fail to
keep copies of benefits documents in a public access file and that
requiring documentation to be kept up front would impose a huge burden.
AILA recommended instead that an employer, for example, be simply
required to bear the burden of proving the "equivalency" of foreign
benefits in the event of an investigation.
None of the commenters took issue with the Department's statement
that the documents sought are required already by IRS or ERISA.
Based on our review of the comments received on the proposal, it is
apparent that the documentation requirements proposed in the NPRM have
been misunderstood. With the exception of documentation specifically
required to be retained in the public access file, there is no
requirement that information be kept in any particular format or place,
or that information be segregated by LCA, by locality, by H-1B versus
U.S. workers, or in any other way from the employer's records for the
entire company.
[[Page 80169]]
Nothing in the ACWIA suggests that documentation requirements are
unauthorized or otherwise improper. To the contrary, section 212(n)(1)
specifically requires employers to make the LCA "and such accompanying
documents as are necessary" available for public examination. The
Department believes that this provision clearly permits the Department
to determine what documents must be created or retained by employers to
support the LCA. The documentation that is required by the Interim
Final Rule simply effectuates the more specific requirements imposed by
the ACWIA. Furthermore, as the NPRM stated, the documents sought for
the most part are already required by the IRS or ERISA, and would be
kept by an ordinary prudent businessman in any event. Thus, the
Department's ERISA regulations require at 29 CFR part 2520 that summary
plan descriptions be provided to participants, and require employers to
submit lengthy forms (Form 5500) to IRS with detailed information
regarding their fringe benefits plans, which must be substantiated by
records. In addition, EEOC rules under the ADEA, 29 CFR 1627.3(b)(2),
require that every employer retain copies of all employee benefit
plans, as well as copies of any seniority systems and merit systems
which are in writing. Where the plan is not in writing, a memorandum
fully outlining its terms and how it has been communicated to employees
is required.
The Department believes that it is essential that employers, in
order to establish that H-1B workers have in fact been offered the same
benefits as U.S. workers (or that the special benefit requirements for
certain employees of multinational firms are met), retain a copy of any
document provided to employees describing the benefits offered to
employees, the eligibility and participation rules, how costs are
shared, etc. (e.g., summary plan descriptions, employee handbooks, any
special or employee-specific notices that might be sent). It is also
important that employers keep a copy of all benefit plans or other
documentation describing benefit plans and any rules the employer may
have for differentiating among groups of workers. In addition, the
employer will be required to retain evidence as to what benefits are
actually provided to U.S. and H-1B workers. Where employees are given a
choice of benefits, employers will be required to retain evidence of
the benefits selected or declined by employees.
For multinational employers who choose to keep H-1B workers on
"home country" benefit plans, the employer will be required to
maintain evidence of the benefits provided to the worker before and
after the employee went to the United States. In the event of an
investigation, the employer will also be required to demonstrate that
the other requirements for multinational firms are met, as
appropriate--e.g., that the employer maintains reciprocity by treating
U.S. workers coming to the United States temporarily from abroad the
same as H-1B workers, and likewise continues U.S. workers temporarily
overseas on U.S. benefits, that the worker was not in the United States
for more than 90 continuous days, that "home country" benefits are
equitable in relation to U.S. benefits, etc.
With regard to the public access file, the employer need only
maintain a summary of the benefits offered to U.S. workers in the same
occupation as H-1B workers, including a statement explaining how
employees are differentiated where not all employees in the occupation
are offered the same benefits. If an employer has workers receiving
"home country" benefits, the employer may place a simple notation to
that effect in the file. The public access file need not show the
proprietary details of a plan (such as a stock option or incentive
distribution plan), the costs of providing the benefits, or the choices
made by individual workers.
Since the regulations do not allow an employer to provide
equivalent benefits as a general matter, and provide an "equitable"
rather than an "equivalent" test for multinational benefits, no
special documents regarding the cost of benefits are required.
H. What Does the ACWIA Require of Employers Regarding Payment of Wages
to H-1B Nonimmigrants for Nonproductive Time? (Sec. 655.731(c)(7))
On October 31, 1995, the Department republished for comment a
provision of the December 20, 1994 Final Rule which articulated the
Department's position regarding payment of the required wage for
nonproductive time. This provision, Sec. 655.731(c)(5), required
payment of the required wage beginning no later than the first day the
H-1B nonimmigrant is in the United States and continuing throughout the
nonimmigrant's period of employment, including periods when the
nonimmigrant is in nonproductive status due to employment-related
reasons such as training or lack of assigned work. The provision did
not require payment of such wages where the nonproductive status is due
to reasons unrelated to employment (e.g., caring for an ill relative),
provided the nonimmigrant's unpaid status is acceptable to the INS and
is not subject to a wage payment obligation under some other statute
(e.g., Family and Medical Leave Act). The provision distinguished
between full-time and part-time workers as provided on the I-129
petition filed with INS, but stated that in the event a part-time
employee regularly worked a greater number of hours than stated on the
I-129, the employer would be held to the actual hours disclosed in the
enforcement action. Section 655.731(c)(5) was among the provisions of
the December 20, 1994 Final Rule which had been enjoined from
enforcement, due to lack of notice and comment, by the court in
National Association of Manufacturers v. United States Department of
Labor.
Subsequently, the ACWIA, amending section 212(n)(2) of the INA,
enacted an explicit requirement, consistent with the Department's
regulation, providing that it is a violation of the wage attestation in
section 212(n)(1)(A) for an employer to fail to pay an H-1B worker the
required wage for certain nonproductive time. Like the Department's
regulation, an exception was created for nonproductive status which is
due to non-work-related factors such as the worker's own, fully
voluntary request, or circumstances rendering the worker unable to
work. Under this provision, workers designated as full-time on the
petition filed with INS must be paid full-time wages, and employees
designated as part-time on the petition must be paid the hours
designated in the petition. This obligation is effective "after the H-
1B worker has entered into employment with the employer," but in any
event, not later than 30 days after the worker's date of admission to
the United States (if entering the country pursuant to the petition) or
60 days after the date the worker "becomes eligible to work for the
employer" (if already in the country when the petition is approved).
The statute also contains a special provision regarding academic
salaries which is discussed in IV.I, below.
Congressman Smith and Senator Abraham, in their remarks after
enactment of the ACWIA, noted that the most extreme examples of
"benching" occur when workers are brought to the United States on the
promise of a certain wage, but only receive a fraction of that wage
because the employer does not have enough work for the H-1B worker. 144
Cong. Rec. E2326 (Nov. 12, 1998); 144 Cong. Rec. S12753-54 (Oct. 21,
1998). They also both agreed that employers must pay full wages and
benefits during an H-1B worker's non-productive status when that status
is due to the employer's decision--based
[[Page 80170]]
on factors such as lack of work for the worker--or due to the worker's
lack of a license or permit. Congressman Smith also remarked that
Congress anticipated the Secretary's close scrutiny of
"voluntariness" in circumstances that appear to be contrived to take
advantage of unpaid time. Senator Abraham listed the following examples
of H-1B employees taking unpaid leave which he stated would not be
considered "benching": leave under FMLA or other corporate policies,
annual plant shutdowns for holidays or retooling, summer recess or
semester breaks, or personal days or vacations. Senator Abraham also
stated that this provision does not prohibit an employer "from
terminating an H-1B worker's employment on account of lack of work or
for any other reason." Congressman Smith stated that an attempt by an
employer to avoid compliance with the "benching" provision by laying
off an American worker "would trigger the enforcement and penalty
provisions of the Act."
Congressman Smith and Senator Abraham agreed that the benching
provision is not intended to preclude part-time H-1B employment, agreed
to between the employer and the H-1B worker when the worker was hired.
144 Cong. Rec. E2326 (Nov. 12, 1998); 144 Cong. Rec. S12754 (Oct. 21,
1998). Congressman Smith stated that "the employer's misrepresentation
of this material fact should be scrutinized by the Secretary" in
determining whether a benching violation or misrepresentation has been
made, with particular attention to whether U.S. workers would receive
paid leave for nonproductive time. Senator Abraham stated that the Act
is not intended to give the Secretary the authority "to reclassify an
employee designated as part-time based on the worker's actual workload
after the employee begins employment."
In the NPRM, the Department proposed regulatory text which, except
for the different statutory language triggering the beginning of the
period in which the "benched" worker must be paid, is very similar to
its current regulation. In the preamble, the Department stated that it
was considering whether the H-1B worker "enters into employment" when
he first makes himself available for work, such as by reporting for
orientation or training, or when the worker actually begins receiving
orientation or training or "otherwise performs work or comes under the
control of his employer." In commenting on the purpose of the
"benching" provision, the Department observed that an H-1B
nonimmigrant is not permitted to be employed by another employer while
"benched" (unless another employer files a petition on behalf of the
worker or the worker adjusts his or her status under the INA), and is
without any legal means of support in the country. In contrast, a U.S.
worker can seek other employment and would be eligible for Federal
programs such as food stamps. The Department also observed that the
employer, at any time, may terminate the employment of the worker,
notify INS, and pay the worker's return transportation, thereby ceasing
its obligations to pay for non-productive time under the H-1B program.
The Department proposed that payment of wages would not be required
where the nonproductive status is due to reasons unrelated to
employment, unless such payment is required by INS as a condition of
the worker maintaining lawful status, or is required by some other Act
such as FMLA. On the other hand, the employer would not be relieved
from the wage obligation for any required leave of absence, even if it
includes U.S. workers.
The Department received three comments on the 1995 proposed rule on
this issue. Regarding the requirement in the 1995 NPRM that the
employer pay the required wage for nonproductive time beginning no
later than the first day the H-1B nonimmigrant is in the United States
and continuing throughout the nonimmigrant's period of employment, AILA
suggested that it would be more reasonable to require the employer to
begin paying on the day that the nonimmigrant actually reports to work,
provided that the date is no later than 30 days after the date the
nonimmigrant enters the U.S. or otherwise becomes eligible to work for
the employer. AILA also suggested that an exception be made where the
nonimmigrant is given an unpaid leave of absence pursuant to a
uniformly-enforced company policy. Similarly, another commenter, an
electronics manufacturer (Motorola), complained that in the case of a
temporary reduction in force, the employer would have to retain the H-
1B nonimmigrant at full salary, while U.S. workers are off the payroll.
The Department received 33 comments on the 1999 NPRM proposals
addressing the ACWIA's "benching" provisions. APTA stressed the
importance of the Department ensuring that H-1B nonimmigrants are aware
of their wage rights for nonproductive time. Miano commented that
companies should not be allowed to use the H-1B program to create
stables of available employees in anticipation of openings that do not
yet exist, but should be required to demonstrate that an unfilled
position actually exists.
The Department agrees that it is important that H-1B nonimmigrants
be aware of their rights. For this reason, Sec. 655.734(a)(3) requires
that all H-1B nonimmigrants be provided a copy of the LCA which
supports their petition. In addition, the Department is planning a
comprehensive educational program, as discussed in III.B, above.
AILA suggested that the Department add to its list of exceptions
situations where objective economic reasons are present, such as annual
retooling in the automobile industry for production model changes. ACIP
and SIA urged the Department to adopt Senator Abraham's October 21,
1998 comments as examples of what is not benching, i.e. leave under the
Family and Medical Leave Act; or other corporate policies for no
payment such as annual plant shutdowns for holidays or retooling,
summer recess or semester breaks, or personal days or vacations. ACIP
also urged that similar situations be included in the list of examples
which do not constitute benching, such as disciplinary action,
mandatory unpaid pre-employment training or orientation, mandatory
vacation leave, and periods of downturn where all workers are treated
the same. ACIP suggested that the facts and circumstances of each case
be considered, including whether similarly-situated U.S. workers are
placed on leave and whether H-1B workers knew before accepting
employment of the possibility of such leave. ACIP and SIA encouraged
the Department to exercise flexibility to avoid the potential effect of
companies laying off U.S. workers to avoid the benching of H-1B workers
by allowing for periods attributable to regular, objective business
occurrences such as cyclical business downturns, holiday plant
shutdowns, and plant retooling. They observed that when these events
occur all workers are treated equally, according to the same standards.
The AFL-CIO and other commenters observed that the provision's
prohibition against "benching" may lead employers to treat H-1B
employees better than U.S. workers, and may create the situation where
an employer retains an H-1B worker over an American worker during a
lay-off to avoid paying full wages to the H-1B worker. The AFL-CIO
stated its belief that U.S. workers who are laid off to avoid the
benching provision may have grounds for a discrimination complaint
based on nationality and immigration status and that the regulation
should so indicate.
The Department believes that the statutory language is clear. The
statute
[[Page 80171]]
requires payment, after a nonimmigrant has entered into employment with
an employer, whenever nonproductive status is due to a decision by the
employer or to the nonimmigrant's lack of a permit or license. In
contrast, payment is not due when the nonproductive time is due to non-
work-related factors, such as the voluntary request of the nonimmigrant
for an absence or circumstances rendering the nonimmigrant unable to
work. Therefore the Department cannot interpret the Act to allow
employers to be relieved from payment for periods where the employer's
business is shutdown, regardless of whether it affects U.S. workers as
well, whether for economic downturn, annual retooling, or holiday
shutdown; nor can the employer be relieved from liability for mandatory
vacation, pre-employment training, or disciplinary action. All of these
situations are caused by the employer, rather than at the voluntary
request of the nonimmigrant. The Department notes that training or
orientation required of an employee before productive work starts has
always been considered compensable time under the Fair Labor Standards
Act, and that the Department has required payment for such time in its
enforcement of the H-1B attestation requirements since the injunction
entered in the NAM litigation. If an employer finds need to discipline
an H-1B nonimmigrant, it must find a method other than loss of pay, or
it may terminate the employment relationship.
The Department understands the concern expressed regarding the
possibility of an employer laying off U.S. workers while continuing to
pay H-1B workers because of its obligation to continue paying H-1B
workers during periods of nonproductive status. Congressman Smith
suggested that an employer's action in laying off U.S. workers to avoid
placing H-1B workers in nonproductive status for which they must be
paid would be a violation of the ACWIA. We agree, with respect to H-1B-
dependent employers and willful violators, where the required showing
for a prohibited displacement under section 212(n)(1)(E) or (F) is
made. In addition, we note that a displacement in connection with a
willful violation of the attestation requirements or a willful
misrepresentation can bring enhanced penalties pursuant to section
212(n)(2)(C)(iii). Additionally, other laws provide U.S. workers with
rights and remedies for an employer's discriminatory practices. The
names, telephone numbers, and websites of the three federal agencies
responsible for enforcement of anti-discrimination laws are set forth
in IV.E.4, above.
The Department notes that--in determining whether the statutory
criteria have been met, including the exception for nonpayment based on
"the voluntary request of the nonimmigrant for an absence"--it will
look closely at any situation where there is any question about whether
the period of nonproductive time is truly voluntary. The Department
will not under any circumstances consider the employer to be relieved
of wage liability where there is a plant shutdown. Nor will the
Department relieve an employer from liability simply because the
employee agreed to periods without pay in the employment contract.
ACIP and AILA questioned the basis for the Department's proposed
requirement that workers be paid where required by other statutes such
as FMLA or the ADA, and that the worker's period of unpaid leave be
consistent with maintenance of status under INS regulations.
The Department intended to say nothing more than that an employer
must comply with other laws. The Department notes that FMLA only
requires paid leave where the employer has a paid leave plan and either
the employer or the employee wishes to substitute the paid leave for
unpaid FMLA leave. Since the employer is required to offer H-1B workers
the same benefits as U.S. workers, an employer would be required to
provide H-1B workers with paid leave under any circumstances in which
it is provided to U.S. workers. Enforcement of this requirement during
periods where the employee voluntarily takes leave or is unable to
work, is in accordance with the benefit obligations at section
212(n)(2)(C)(viii). The Department also wishes to point out, as stated
by both Senator Abraham and Congressman Smith, that during periods of
nonproductive time, employers are required to provide fringe benefits
as well as wages.
ACIP and AILA agree with the proposal that an employer may choose
to terminate an H-1B worker without violating the benching provision.
ACIP also suggests that employers should not be held liable for the
nonimmigrant's failure to leave the country.
The Department agrees that an employer is no longer liable for
payments for nonproductive status if there has been a bona fide
termination of the employment relationship. The Department would not
likely consider it to be a bona fide termination for purposes of this
provision unless INS has been notified that the employment relationship
has been terminated pursuant to 8 CFR 241.2(h)(11)(i)(A) and the
petition canceled, and the employee has been provided with payment for
transportation home where required by section 214(E)(5)(A) of the INA
and INS regulations at 8 CFR 214.2(h)(4)(iii)(E). In accordance with
current INS policy (see 76 Interpreter Releases 378), once an employer
terminates the employment relationship with the H-1B nonimmigrant,
regardless of any arrangements for severance pay or benefits, that H-1B
employee must either depart the United States upon termination of his
or her services, or seek a change of immigration status for which he or
she may be eligible. Therefore, under no circumstances would the
Department consider it to be a bona fide termination if the employer
rehires the worker if or when work later becomes available unless the
H-1B worker has been working under an H-1B petition with another
employer, the H-1B petition has been canceled and the worker has
returned to the home country and been rehired by the employer, or the
nonimmigrant is validly in the United States pursuant to a change of
status.
Commenters also offered their views on the phrase "entered into
employment," one of the alternative triggers for an employer's
obligation to pay the H-1B worker wages during periods of nonproductive
status. The Department proposed that this term means the date when the
H-1B worker makes himself/herself available for work, e.g., reports for
orientation or training, performs work for the employer, or is under
the control of the employer. One attorney-commenter (Hammond) expressed
appreciation for this "bright line test" and described the 30-day
allowance as reasonable.
The Department received twenty essentially identical comments on
this issue from individuals who urged payment of wages to nonimmigrants
immediately on their arrival to the United States. The AEA suggested
that the H-1B visa holder be given a firm starting date from his/her
employer and that wages start from that date. AOTA commented that
"entered into employment" should mean when the nonimmigrant makes
himself or herself available for work. ACIP urged the Department to
look at the facts of the case, but urged as a general matter that an H-
1B worker has entered into employment when he or she has reported to
the worksite, has been placed on the payroll, and has completed an I-9
form; ACIP stated that H-1B workers should not be required to be paid
for short periods of unpaid
[[Page 80172]]
training or orientation or medical examinations, since U.S. workers are
not. AILA suggested that "entered into employment" occurs when the
employee actually commences the orientation, training or work because
ACWIA, in mandating payments by the 30-day and 60-day deadlines,
appears to provide the employer with discretion regarding the starting
date prior to those deadlines.
The statutory language does not permit the Department to define the
term "entered into employment" as the date the H-1B worker arrives in
the United States. Likewise, payment of wages by the employer cannot be
required before the H-1B petition is approved. On the other hand, the
Department notes that the Fair Labor Standards Act itself requires that
where there is an employment relationship (including where the worker
has been promised employment, even if the employee is not yet on the
payroll), both H-1B and U.S. workers be paid for orientation or
training time required by the employer.
The Department has concluded that the term "entered into
employment" means the date on or after the date of need on the H-1B
petition when the worker makes himself or herself available for work or
otherwise comes under the control of the employer and includes all
activities thereafter, such as waiting for an assignment, going to an
interview or meeting with a customer, attending orientation, studying
for a licensing examination.
Several employers, attorneys and organizations also commented on
the meaning of the phrase "eligible to work for the employer." (Sixty
days thereafter an H-1B nonimmigrant already in the United States
legally under another visa (e.g., F-1 student visa) or on another H-1B
visa with another employer must be paid for nonproductive time, even if
the H-1B nonimmigrant has not yet entered into employment.) One law
firm (Hammond) encouraged flexibility on the 60-day test. An employer
(BRI) urged that "eligible to work for the employer" should be based
on the agreement of employment terms between the employer and employee
and determined by the date an employment agreement is entered into
between the employer and employee or the completion of the visa
process, whichever comes last.
ACIP and Intel requested a specific exception from the benching
regulations for export control licenses. ACIP explained that an
employee who awaits a license to practice his or her profession in the
United States, and is subject to the ACWIA benching provisions, is
distinguishable from an export control license which must be procured
by an employer in a process which can take three to six months.
Therefore, ACIP suggested that the rule provide that where an export
license and H-1B petition were filed concurrently but the export
license is not approved within the 60-day window, the employer has an
additional 90 days to obtain the license before being required to
rescind the H-1B petition or pay the worker.
The Department continues to believe that an employee is eligible to
work on the date of need stated in the petition, provided that the
petition has been processed and the employee has either received a visa
or had his/her status adjusted (where the employee is in the United
States). The Department sees no basis for any exception based on the
export control license. Clearly the employee is legally eligible to
work, but work is simply not available (even if due to circumstances
beyond the employer's control). The Department agrees that a worker
need not be compensated if the H-1B nonimmigrant voluntarily chooses
not to make himself or herself available for work, such as where the
nonimmigrant has not yet finished school or chooses to remain with
another employer in order to finish a project. In each case, although
the H-1B nonimmigrant is eligible to work for the employer, he or she
need not be paid because of the nonimmigrant's voluntary action. The
Department notes, however, that the nonimmigrant may be out of status
if he or she does not report to work on the date of need.
In response to the NPRM's proposals on nonproductive pay for part-
time workers, Senators Abraham and Graham and AILA objected to the
regulatory language requiring workers be paid for hours that exceed the
part-time number of hours on the INS petition where in practice the
worker regularly works a longer schedule. AILA seeks to allow an
employer which has less work than anticipated after filing an I-129
petition for full-time work, to secure approval of a new I-129 petition
for part-time work, after which the employer is obliged to pay only for
the part-time work.
In addition, Latour commented that the traditional 40-hour week is
rapidly changing. It stated that some firms engage workers to perform a
project which is completed in less than a year, and then the worker has
several months off and may "moonlight" at a second job (presumably
under a second petition). Latour assumed this practice would be
considered "part-time," and suggest that DOL focus on three issues in
determining if there is a violation of the "benching" provision: (1)
Whether the prevailing wage is being paid; (2) whether the worker is
making a plausible living; (3) whether the nature of the employment
schedule is usual and reasonable for the type of work.
The Department agrees that nonproductive pay is based on the number
of hours per week on the H-1B petition. The LCA has therefore been
amended to alert employers that their H-1B employees should not
regularly work more than the number of hours shown on the petition,
which may be expressed as a range of hours. If the H-1B worker normally
works full-time or a greater number of hours than shown on the
petition, the Department will examine the facts and circumstances and
charge the employer with misrepresentation where appropriate. In light
of the importance of the distinction between part-time and full-time
employment for purposes of the employer's wage obligations, the
Department has modified the proposed LCA form to specify that the
employer is to designate that the position(s) covered will be either
part-time or full-time; a combination of part-time and full-time
positions cannot be entered on a single LCA form.
The Department cautions employers that time spent in training or
studying to get a license is ordinarily compensable hours worked under
the Fair Labor Standards Act without regard to any rules on payment for
nonproductive time under the H-1B program.
The Department agrees with AILA's comment that an employer may
secure approval of a new H-1B petition for part-time work, after which
the employer is obliged to pay only for the part-time work. The
nonproductive pay computation is based on the petition that is in
effect at the time the H-1B worker is in nonproductive status.
Correspondingly, before INS approves a new petition that changes the
work time (part-time to full-time or vice versa), the employer will
need to file a new LCA that reflects the change.
Finally, the Department disagrees that the scenario described by
Latour is part-time work. Rather, it is full-time work with periods
where no work is available due to actions of the employer, rather than
the employee. This period of non-productive work must be paid unless
the worker is temporarily unable to return to work because of alternate
commitments or other factors within the control of the employee.
[[Page 80173]]
I. What Special Rule Does the ACWIA Provide for Academic Salaries?
(Sec. 655.731(c)(4))
The ACWIA provision on non-productive time ("benching")
(discussed in IV.H, above) has a special rule permitting "a school or
other education institution" to apply an established salary practice
which might result in an H-1B worker appearing to be "unpaid" for
some part of a calendar year. See Section 212(n)(2(C)(vii)((V) of the
INA as amended by the ACWIA. Specifically, that provision allows an
education institution to disburse an annual salary to its H-1B workers
and U.S. workers in the same occupational classification over fewer
than 12 months if: (1) The H-1B worker agrees to the compressed annual
salary payments prior to commencing payment, and (2) the salary
practice does not otherwise cause any violation of the H-1B worker's
authorization to remain in the United States.
Congressman Smith and Senator Abraham both explained that this
provision "is intended to make clear that a school or other
educational institution that customarily pays employees an annual
salary in disbursements over fewer than 12 months may pay an H-1B
worker in the same manner without violating clause (vii), provided that
the H-1B worker agrees to this payment schedule in advance." 144 Cong.
Rec. E2326 (Nov. 12, 1998); 144 Cong. Rec. S1275 (Oct. 21, 1998).
Congressman Smith explained that Congress "specifically limited this
exemption to schools and educational institutions in recognition of
their unique salary patterns." 144 Cong. Rec. E2326. Senator Abraham,
on the other hand, stated:
Because Congress is not aware of all the possible kinds of
legitimate salary arrangements that employers may establish, the
situation covered by subclause (V) may be merely illustrative of
other kinds of legitimate salary arrangements under which an
employee's rate of pay may vary. Accordingly, so long as an H-1B
worker is not being singled out by such a salary arrangement, it is
not Congress's intent that such a salary arrangement be treated as
suspect under or violative of clause (vii) merely because there is
no special provision like subclause (V) addressing it. To the
contrary, if it is an arrangement that the employer routinely uses
with U.S. employees as well as H-1B workers, it should be treated as
presumptively not a violation of that clause."
144 Cong. Rec.S1275 9 (Oct. 21, 1998).
The one commenter on this provision, ACE, urged the Department to
follow the law as written with no further regulation.
As the Department explained in the NPRM, the Department believes
that this provision is directed to the common practice by which
colleges, universities, and other educational institutions disburse
faculty salaries over a nine-or ten-month period, with no salary
payments during the summer, between academic quarters, or over some
other period during which the faculty member may be away from the
institution. As the statute provides, this special rule applies only to
schools and other educational institutions. Any attempts to apply the
more general definition of organizations to which the special
prevailing wage requirements apply (see section 212(p)(1) of the INA as
amended by the ACWIA) would change the statutory mandate. The
Department has concluded that the NPRM properly implements the
statutory mandate and will adopt the provision as proposed.
J. What Actions or Circumstances Would be Prohibited as a "Penalty"
on an H-1B Nonimmigrant Leaving an Employer's Employment?
(Sec. 655.731(c)(10)(i))
Section 212(n)(2)(C)(vi)(I) of the INA as amended by the ACWIA
prohibits an employer from "requir[ing] an H-1B nonimmigrant to pay a
penalty for ceasing employment with the employer prior to a date agreed
to by the nonimmigrant and the employer." This section requires the
Department to "determine whether a required payment is a penalty (and
not liquidated damages) pursuant to relevant State law." As discussed
in Sections L and M of the NPRM, section 212(n)(2)(C)(vi)(III) provides
that the Department, after notice and opportunity for a hearing, "may
impose a civil money penalty for each such violation and issue an
administrative order requiring the return to the [H-1B worker] of any
amount paid in violation * * *, or if [the H-1B worker] cannot be
located, requiring payment of any such amount to the general fund of
the Treasury."
Senator Abraham explained:
New clause (vi)(I) * * * directs that the Secretary is to decide
the question whether a required payment is a prohibited penalty as
opposed to a permissible liquidated damages clause under relevant
State law (i.e. the State law whose application choice of law
principles would dictate). Thus, this section does not itself create
a new federal definition of "penalty", and it creates no authority
for the Secretary to devise any kind of federal law on this issue,
whether through regulations or enforcement actions."
144 Cong. Rec. S12752 (Oct. 21, 1998). Congressman Smith further
explained that "[t]his provision was added because of numerous cases
that have come to light where visa holders or their families were
required to make large payments to employers because the worker secured
other employment." 144 Cong. Rec. E2325 (Nov. 12, 1998).
In the NPRM, the Department proposed to prohibit employers from
attempting to enforce any such liquidated damages provisions without
first obtaining a State court judgment ordering the H-1B worker to make
such a payment. The Department explained its view that State courts
were better versed than the Department to resolve State law questions
posed by such matters. The Department also stated its intention to make
it clear that employers cannot collect the additional $500 petition fee
in the guise of liquidated damages, and noted its concern that some
employers might attempt to collect liquidated damages in situations
where the employers' unlawful conduct may have caused the H-1B worker
to prematurely leave the employment.
A number of commenters responded to the Department's proposals on
this issue. Two commenters (Latour, Padayachee) endorsed the approach
taken in the NPRM. Padayachee also expressed the view that only
quantifiable liquidated damages should be claimable. A third commenter
(TCS), generally agreed with the Department's approach, although noting
some specific objections as identified below.
The view most frequently expressed by other commenters was that the
Department's approach was contrary to the intent of the ACWIA. These
commenters (Senators Abraham and Graham and other Congressional
commenters, ACIP, AILA, and other employers and employer
representatives) viewed the proposal as inconsistent with the role
intended for the Department under the ACWIA, i.e., to determine whether
or not a specific liquidated damages provision is legal under State
law. Nallaseth and SBSC asserted that it would be discriminatory to
require employers to first secure a State court judgment in enforcing
an agreed damages provision against an H-1B worker when none is
required to enforce a similar provision involving a U.S. worker. While
some commenters recognized that the Department's concern about the
difficulty of identifying and applying State law to a particular
dispute was well-founded, it was their view that Congress intended the
Department, not the State courts, to shoulder this burden. Senators
Abraham and Graham asserted that the proposal that an employer obtain a
State court judgment as a precondition to enforcing its contractual
agreement--a practice,
[[Page 80174]]
they stated, they were not aware of under any State's law--constituted
an attempt by the Department to create federal law on this question in
contravention of the statute's direction that State law was to be
applied in resolving such matters. They stated that it was the
intention of Congress not to require litigation over each such
agreement, but instead to allow the Department to bring an enforcement
action if it believes an agreement is punitive as a matter of State
law.
Congressional commenters and Network Appliance objected to any
requirement that employers obtain a state court judgment where there is
no disagreement between the parties. ACIP asserted: "Requiring a state
court judgment to enforce any part of a contract is an unreasonable
intrusion upon the ability of parties to contract and limits their
ability to settle disputes through mediation, arbitration or other
forms of alternative dispute resolution. * * * [A]lthough we agree that
individual state courts are much better versed in this area of their
law for their state than the Secretary, it clearly was not Congress'
intent to impose such a high burden on employers." TCS, on the other
hand, asserted that a State court judgment should be a prerequisite to
any finding of a violation by the Department, limiting its objection
primarily to the Department's proposal that a State court judgment must
be obtained, even where there is no dispute by the parties or they
choose to resolve the dispute by settlement or otherwise.
As an alternative to the Department's proposal, ACIP, AILA, and SIA
suggested that the regulation set forth examples of acceptable
reimbursements and examples of prohibited penalties. AILA and TCS
requested that the Department prohibit any class-based complaint or
relief in the administrative proceeding, i.e., to limit the relief to
the particular H-1B worker who initiated the complaint. In a similar
vein, AILA and ACIP argued that whether a provision is a penalty or
liquidated damages should be inferred from the facts and circumstances
of the case; thus the fact that a penalty is found in one case does not
automatically mean all similar provisions are void. TCS asserted that
the Department should adopt a rule that an employer cannot be held in
violation of the ACWIA unless a State court first holds that an agreed
damage provision is a penalty, and, that even where a State court so
holds, the Department should not find an employer in violation unless
it fails to cure the violation within a reasonable amount of time.
TCS also objected to any required notice to employees that would
suggest that an employer's ability to enforce a damages provision
contained in the employment contract is limited, expressing concern
that such notification would encourage H-1B workers to disregard their
contractual obligations. AILA encouraged the Department to avoid a
presumption that any "agreed damage" is an unenforceable penalty.
ACIP objected to the Department's statement that it would examine
"attempts by employers to collect damages where their violations of
the INA [the H-1B program], or other employment law may have caused the
H-1B worker to cease employment"--apparently viewing this statement as
suggesting that employers might contrive to get workers to quit their
employment in order to collect contract damages.
Notwithstanding the Department's continued reluctance to identify
and interpret State law, the Department now concurs with the view that
Congress intended the Department to determine whether a provision is
liquidated damages or a penalty. For the same reason, it believes there
is no merit to the suggestion by TCS that the Department cannot find
that an employer has violated the ACWIA's bar against punitive damages,
unless a State court first rules that a violation has occurred.
Furthermore, the Department agrees that it is unnecessary to obtain a
court judgment or a ruling from the Department of Labor if an employee
pays voluntarily or the matter is settled. The Interim Final Rule
reflects the Department's revised position on this question.
Under the Interim Final Rule, a complaint regarding an alleged
attempt to enforce a penalty provision will be processed and
investigated in the same way as other complaints by aggrieved parties
under Subparts H and I. Thus, an individual who believes that an
employer has sought to enforce a penalty provision should file a
complaint with the Wage and Hour Administrator. After investigation,
Wage and Hour will issue a determination in accordance with its
analysis of the relevant State law, and, where violations are found,
may assess a civil money penalty of $1,000 for each violation and order
the return of any money paid by the worker(s) to the employer (or, if
the worker(s) cannot be located, to the U.S. Treasury). A party
aggrieved by Wage and Hour's determination may request a hearing before
an ALJ; a party may obtain review of the ALJ's determination by the
Department's Administrative Review Board.
The Department agrees with the suggestion that the regulations
contain some of the general principles applied in resolving whether a
provision is a permissible liquidated damages provision or an
impermissible penalty. It is drawn primarily from two legal reference
publications (American Jurisprudence 2d; Restatement (Second)
Contracts) that provide a general discussion regarding the differences
between liquidated damage and penalty provisions. However, the
decisional and statutory law of a particular State, as applied to the
particular circumstances relating to the employment and contract at
issue--not these general principles--will control the resolution of
most disputes. Furthermore, we do not address other legal remedies that
may be available to the parties to recover damages for an alleged
breach of the employment agreement--matters outside the Department's
charge under the ACWIA. Individual State law also will determine the
particular state whose law will apply to the dispute, where significant
aspects of the contract and employment relationship involve different
States (or nations).
The Department has also incorporated into the Interim Final Rule
its proposal to examine attempts by employers to collect damages where
violations of employment law may have caused the H-1B worker's
premature termination of his or her employment. It is the Department's
expectation that where there is a constructive discharge, or the
employer has committed substantive violations of the H-1B provisions
directly impacting on the employee (such as wage and benefit
violations), State law would not permit the employer to collect the
payment.
The Department reiterates the point it made in the NPRM that,
although State law will govern the enforceability of liquidated damage
provisions in agreements, an H-1B employer nevertheless must comply
with the requirements of Federal statute and regulation bearing upon
the H-1B employment relationship. For example, irrespective of any
contractual agreement to the contrary, an employer is prohibited from
directly or indirectly allocating any of the $500 LCA fee (recently
increased to $1,000) or other employer expenses to the H-1B worker (see
Section 212(n)(2)(C)(vi)(II)). Thus an employer is barred from directly
withholding the $500 or $1,000 fee from the H-1B worker's pay or from
indirectly collecting the fee through a liquidated damages provision in
the contract. The Department agrees that
[[Page 80175]]
liquidated damages may encompass other costs the employer has borne on
behalf of the employee, such as transportation and visa processing
assistance. Employers should be aware that liquidated damages may be
withheld from the required wage only if permitted under the criteria
for allowable deductions at 20 CFR 655.731(c)(7).
With regard to the suggestion that the Department issue a rule
limiting the relief available to the particular worker rather than
allowing a particular determination to affect other cases or other
workers, the Department will apply principles of administrative
collateral estoppel (the legal principle limiting consideration of a
dispute to only one court action), where appropriate, just as it would
for any other employment law violation.
The Department sees no merit to the proposal by TCS that an
employer may be held in violation of the ACWIA' s punitive damages bar
only where it fails to cure the violation within a reasonable time
after a determination that an agreed damages provision is an
unenforceable penalty. There is nothing in the language of the statute
to suggest that penalties under this provision should be assessed
differently than penalties under other provisions.
K. What Standards Apply To Determine If an Employer Received a
Prohibited Kickback of the Additional $500/$1,000 Petition Filing Fee
From an H-1B Worker? (Sec. 655.731(c)(10)(ii))
The ACWIA prohibits an employer from "requir[ing] an alien who is
the subject of a [visa] petition * * * for which a fee is imposed under
section 214(c)(9), to reimburse, or otherwise compensate, the employer
for part or all of the cost of such fee. It is a violation for such an
employer otherwise to accept such reimbursement or compensation from
such an alien." The referenced filing fee is the ACWIA-enacted filing
fee applicable to H-1B petitions, which is in addition to any other
fees imposed by INS for filing H-1B petitions. The fee was created by
the ACWIA, in the amount of $500; the October 2000 Amendments increased
the fee to $1,000. The H-1B worker is not, in any manner, to pay or
absorb the cost of any of the additional fee.
Senator Abraham explained that new clause (vi)(II) "prohibits
employers from requiring H-1B workers to reimburse or otherwise
compensate employers for the new fee imposed under new section
214(c)(9), or to accept such reimbursement or compensation." 144 Cong.
Rec. S12752 (Oct. 21, 1998); see also, 144 Cong. Rec. E2325 (Nov. 12,
1998). Congressman Smith explained that "Congress included this
provision to make it very clear that these fees are to be borne by the
employer, not passed on to the workers." Id.
The proposed rule stated that the employee is not to be forced,
encouraged, or permitted to rebate any part of the filing fee to the
employer, directly or indirectly, e.g., through an intermediary such as
an attorney, relative, or co-worker.
The Department received three comments on this issue. All the
commenters agreed that the statute prohibits employers from accepting
reimbursement from the H-1B worker for the filing fee.
AILA asserted that not all third-party reimbursements are
prohibited (e.g., joint employment arrangements, cooperative or joint
ventures). The Department agrees that the statute does not prohibit
payment of the filing fee by a third party, nor does it require payment
only from the employer. However, the Interim Final Rule does prohibit
third-party payment if the third party receives or asks for
reimbursement from the alien. The employer is held accountable even if
it is a third party which violates the statute.
The AFL-CIO asserted that the Department should state specifically
that deductions from the alien's wages will be scrutinized to prevent
subterfuge for repayment of the filing fee. The Department intends to
be alert to abuse or subterfuge. The Interim Final Rule makes it clear
that deductions to cover the fee are not allowed, even if the H-1B
worker's pay is higher than the required wage.
A third commenter (ITAA) contended that the Department does not
have the authority to prohibit the alien from paying the expenses other
than the filing fee. This issue regarding other expenses is discussed
at Sec. 655.731(c)(7) and Section P.3 of the NPRM, concerning allowable
deductions from the required wage.
The Department has determined that the NPRM properly implements the
statutory mandate that the employer not force, encourage, or permit an
employee to rebate any part of the fee back to the employer or a third
party, directly or indirectly, including payments through an
intermediary such as an attorney, relative or co-worker. The Interim
Final Rule, therefore, embodies the proposed rule. In addition, the
Interim Final Rule takes into account the increased petition filing
fee, enacted by the October 2000 Amendments. The Rule prescribes that
for H-1B nonimmigrants admitted on petitions filed prior to December
18, 2000, the fee "kickback" prohibited by this statutory provision
is $500 (the amount of the filing fee as created by ACWIA), and that
for nonimmigrants admitted on petitions filed on or subsequent to
December 18, 2000, the prohibited fee "kickback" is $1,000 (the
increased fee enacted by the October 2000 Amendments). In the event of
an investigation, the Administrator will determine the amount of the
statutorily-prohibited "kickback," based on the filing date of the
petition.
L. What Penalties and Remedies Apply If the Employer Imposes an
Impermissible Penalty or Receives an Impermissible Rebate?
(Sec. 655.810)
The ACWIA enforcement provision on early termination penalties and
filing fee kickbacks is self-contained and provides its own sanctions
authority. The Department may impose a civil monetary penalty of $1,000
for each violation, whether willful or non-willful, and may order the
employer to reimburse the worker (or the Treasury, if the worker cannot
be located) for any such payment. The ACWIA provision does not
authorize debarment for the penalty and kickback violations.
The Department proposed to adopt the ACWIA language verbatim. Three
commenters (ACIP, AILA, TCS) encouraged an express provision
prohibiting any class-based relief or res judicata effect and limiting
an administrative finding of penalty and corresponding remedy to the
particular H-1B worker for whom the violation was found. As discussed
in IV.J, above, the Department will follow traditional principles of
administrative collateral estoppel, if applicable, as it does under
other employment laws.
The Interim Final Rule adopts the statutory language without
further elaboration.
. How Did the ACWIA Change DOL's Enforcement of the H-1B Provisions?
(Subpart I)
Section 212(n)(2) of the INA as amended by the ACWIA provides
specific authority to undertake "random" investigations of employers
found to have previously violated their H-1B obligations and to
undertake investigations of employers, in limited circumstances, based
on information received from other sources that otherwise would be
unable to submit complaints as aggrieved parties. The ACWIA also
provides explicit employee whistleblower protections and enhanced
monetary and debarment sanctions against employers who willfully
violate H-1B requirements. The Department proposed to modify Subpart I
of the current regulations to
[[Page 80176]]
reflect these additional provisions, integrating them into the existing
regulatory scheme.
1. What Changes Has the ACWIA Made in the DOL's Enforcement Based on
Complaints From "Aggrieved Parties"? (Sec. 655.715)
Section 212(n)(2) of the INA as amended by the ACWIA, states that
"nothing in this subsection shall be construed as superseding or
preempting any other enforcement-related authority under this Act * *
*" Senator Abraham and Congressman Smith both explained that this
provision "clarifies that none of the enforcement authorities granted
in subsection 212(n)(2) as amended should be construed to supersede or
preempt other enforcement-related authorities the Secretary of Labor or
the Attorney General may have under the Immigration and Nationality Act
or any other law." 144 Cong. Rec. S12755 (Oct. 21, 1998); 144 Cong.
Rec. E2329 (Nov. 12, 1998). For this reason, and because the ACWIA did
not by its terms purport to amend the Secretary's authority to
investigate based upon complaints from an "aggrieved party" or the
Secretary's regulations defining "aggrieved party," the Department
proposed no changes to the existing regulation defining "aggrieved
party" at Sec. 655.715. Accordingly, any changes to those regulations
would be outside of the scope of this rulemaking.
Two comments were received regarding the issue of "aggrieved
party."
AILA asserted that a fair reading of ACWIA suggests that
governmental entities other than DOL should be removed from the current
regulatory definition of aggrieved party and should instead present
"other source" claims. The U.S. Department of State stated that
requiring the Department of State to submit information only as an
"outside source," with the compelling standard required by section
212(n)(2)(G), discussed below, would be a mistake, as it could limit
the effect of what could be an excellent source of information, and
would therefore be detrimental to the effectiveness of the H-1B
category.
The Department has consistently defined "aggrieved party" to
include "a government agency which has a program that is impacted by
the employer's alleged non-compliance with the [LCA]." 20 CFR 655.715.
The State Department is an aggrieved party, for example, because its
mission is adversely affected if H-1B petitions are erroneously
granted. Because of the responsibility of consular officers to reject
visa applications of anyone the officer "knows or has reason to
believe * * * is ineligible to receive a visa" (8 U.S.C. 1201(g); 22
CFR 41.121(a)), the State Department would be required to expend its
own investigative resources to ferret out illegal practices visa by
visa if it did not provide information to the Administrator. Similarly,
the State Department is required to withhold the granting of a visa and
exclude the alien from the U.S. if it determines that the alien will
become a public charge (8 U.S.C. 1182(a)(4); 22 CFR 40.41)--a
possibility that increases significantly if an employer fails to pay
its H-1B worker the required wage. Many of these violations would
otherwise go undetected because of the inclination of H-1B workers and
their employers to hide such matters from INS and the Labor Department.
Therefore the Department has made no change in the definition of
"aggrieved party." However, the Department will not consider
information contained on the LCA or associated petition(s), including
the documentation supporting the petition, to be the sole basis of a
complaint under section 212(n)(2)(A) while section 212(n)(2)(G) remains
in effect.
2. What Procedures Does the ACWIA Provide for Random Investigations?
(Sec. 655.808)
Section 212(n)(2)(F) of the INA as amended by the ACWIA authorizes
random investigations of employers found by the Secretary, after the
ACWIA's enactment on October 21, 1998, to have committed a willful
failure to meet an LCA condition or a willful misrepresentation of
material fact on an LCA. The statute authorizes such random
investigations over a period of five years, beginning on the date of
the willful violation finding. The same special scrutiny exists where
an H-1B-dependent employer or willful violator is found by the Attorney
General to have willfully failed to meet its obligation under section
212(n)(1)(G)(i)(II) to offer a job to an "equally or better
qualified" U.S. worker. The requirements of section 212(n)(2)(A)
regarding investigation of complaints are not applicable to these
random investigations.
Senator Abraham observed that this provision adds a new section
212(n)(2)(F) granting the Secretary authority to conduct random
investigations of employers found after enactment of this act to have
committed a willful violation or willful misrepresentation for five
years following the finding. 144 Cong. Rec. S12754 (Oct. 21, 1998).
Congressman Smith explained that this authority is "in addition to the
existing investigative authority in section 212(n)(2)(A), as heretofore
exercised by the Secretary." 144 Cong. Rec. E2327 (Nov. 12, 1998).
The Department proposed that the date of the willful violation
"finding" (which invokes the "random investigation" authority)
would be the date of the agency's final determination of a violation
for debarment purposes. 20 CFR 655.855(a); 59 FR 656757 (Preamble to
the Final Rule). Although the NPRM proposed this interpretation, the
Department sought comment on whether an earlier date, such as that of
the Administrator's investigation finding or an ALJ's finding would be
appropriate.
Three comments were received relating to the proposed regulation on
random investigation authority.
IEEE expressed strong support for the new random enforcement
provision in ACWIA and recommended that the regulations not be written
or interpreted so strictly as to effectively prevent the Department
from exercising this authority. Malyankar suggested directly surveying
H-1B workers themselves at short intervals to determine how the program
is being used and to detect possible abuses.
AILA responded that only final action finding a willful violation
or willful misrepresentation should trigger its authority to conduct
random investigations.
The Interim Final Rule, consistent with the AILA suggestion and the
manner in which the current regulations address other Secretarial
"findings," states that a willful violation "finding" within the
meaning of the statutory provision occurs when the administrative
review process is completed, as described in Sec. 655.855(b) of the
regulations.
3. What Procedure Does the ACWIA Provide for Investigation Arising From
Sources Other Than Aggrieved Parties? (Sec. 655.807)
Section 212(n)(2)(G) of the INA as amended by the ACWIA authorizes
the Secretary to investigate possible violations based on information
provided to the Department by sources other than aggrieved parties. The
Department may, upon personal certification by the Secretary, undertake
an investigation under this authority when it receives specific
credible information that provides reasonable cause to believe that a
particular type of violation has occurred. The types of violations
covered are: A willful failure to meet statutory conditions relating to
wages, working conditions, a strike/lockout, and the displacement and
recruitment provisions applicable to dependent employers and willful
[[Page 80177]]
violators. In addition, such an investigation may be undertaken where
the information provides reasonable cause to believe that the employer
has engaged in a pattern or practice of failures to meet any of these
conditions; or a substantial failure to meet such a condition that
affects multiple employees. The Department is also charged with
developing a form for receiving information on these potential
violations. The ACWIA specified that this provision would be effective
until September 30, 2001; the October 2000 Amendments extended the
effective period to September 30, 2003.
The ACWIA limits the source who may provide information under this
provision to a known source who is likely to have knowledge of the
employer's practices, and specifically excludes information provided to
the Secretary or to the Attorney General for purposes of securing
employment of a nonimmigrant. However, the Secretary is authorized to
commence an investigation under this provision if the information was
obtained by the Secretary in the course of an investigation under the
INA or any other Act.
To allow employers to respond to the allegations before an
investigation is commenced, the ACWIA provides that the Secretary shall
ordinarily provide notice to the employer concerning the allegations.
However, the Secretary is authorized to withhold the source's identity
and is not required to provide this notice if the Secretary determines
it would interfere with efforts to secure compliance with the
requirements of the H-1B program.
In explaining the purpose and effect of this provision, Senator
Abraham stated:
Subsection 413(e) grants the Secretary limited additional
authority with respect to other employers to investigate certain
kinds of allegations of failures to comply with labor condition
attestations. The Secretary's authority under current law is limited
to investigating complaints concerning such violations that come
from aggrieved parties. * * * The rationale for this grant of
authority is to make sure that if DOL receives specific, credible
information from someone outside the DOL that an employer is doing
something seriously wrong but that information comes from someone
who is not an aggrieved party, DOL can nevertheless pursue the lead.
* * *. Thus, this provision does not authorize 'self-directed' or
'self-initiated' investigations by the Secretary.
144 Cong. Rec. S12754 (Oct. 21, 1998). In contrast, Congressman Smith
stated:
Subsection 413(e) specifies a particular investigative process,
to be used by the Secretary during the three-year period following
enactment of this legislation. This process does not supplant or
curtail the Secretary's existing authority in paragraph (2)(A) and
does not affect the Secretary's newly-created authority under
paragraph (2)(F) ('random investigations')* * *. This provision does
not address the matter of "self-directed" or "self-initiated"
investigations by the Secretary. * * * Congress' intent in enacting
this special enforcement process was to endorse the Secretary's
efforts to be more vigilant and effective in the enforcement of this
Act, especially given the authorization of a substantial increase in
temporary foreign workers.
144 Cong. Rec. E2327 (Nov. 12, 1998).
The Department proposed regulatory language to integrate this
"other source" protocol with the Department's other enforcement
procedures in a new Sec. 655.806. The Department additionally noted in
the NPRM that it was developing a form to be used in receiving
information from "other sources" that would be published for public
comment.
Eight comments were received regarding this provision.
Three organizations representing employees (AFL-CIO, AOTA, IEEE)
supported these provisions as essential to careful monitoring of the
program. IEEE stated its view that it is important that the regulations
not be written or interpreted so restrictively as to effectively
prevent the Department from exercising this authority. The AFL-CIO
commented that the "integrated procedures" for handling complaints
from other sources will make it easier for workers and job applicants
to follow the status of the complaint and ensure that the Department
examines complaints against an employer in full.
AILA commented that Congress, in providing DOL with the new other
source enforcement authority, "repudiated and eliminated the so-called
'self directed' authority to initiate investigations."
The Department has long believed that directed (no complaint)
investigations are appropriate where the Department becomes aware of a
possible H-1B violation, whether in the course of an investigation of
another employer, an investigation under another statute, or as the
result of the receipt of information from some other source. To do
otherwise would place Department staff in the untenable position of
being forced to ignore knowledge of potentially serious H-1B violations
secured in performance of their official duties, and would be a
departure from the Department's practice under the H-1A nonimmigrant
nurses program. The Department is also of the view that directed
investigation authority is not precluded by the Act.
However, the Department also believes that the explicit provisions
of the ACWIA concerning random investigations of willful violators and
investigations based on credible information from sources other than
aggrieved parties allow it to conduct "directed" investigations in
virtually all situations in which it might have done in the past.
Consequently, at least through September 30, 2003 (the date the "other
source" investigation authority sunsets), it is the Department's
intention to conduct only investigations pursuant to complaints from
aggrieved parties, investigations based on information from sources
other than aggrieved parties (including information obtained by the
Secretary during an investigation under the INA or any other Act), and
random investigations of willful violators.
AILA also requested that the Department define the terms
"substantial" and "pattern and practice."
In the Department's view, it is unnecessary to define these terms
in the regulations. The concept of a "substantial" violation, like
"willful" violation, has been in the statute since enactment of MTINA
in 1991. Furthermore, "pattern and practice" is a recognized concept
in employment law which requires no definition. Finally, the
determination of whether there is reason to believe there is a pattern
or practice of failures or a substantial failure to meet a condition
that affects multiple employees are determinations that are necessarily
fact-specific, based upon the facts and circumstances of a particular
case.
ACIP suggested that employers should be notified of receipt of
complaints within 48 hours of receipt, and that a decision not to
notify the employer should be a rare occurrence, happening only if the
Department possesses clear evidence that the employer is likely to
impede the investigation.
The Department anticipates that a decision not to notify an
employer of the substance of allegations against it is likely to be a
rare occurrence. It is also the Department's experience that many
employers quickly remedy violations when brought to their attention.
However, the Department does not believe it is appropriate to specify
the time period in which notification will occur, or to delineate a
standard in the regulations.
Kirkpatrick & Lockhart and Latour expressed their views that
investigations should be initiated only on information from injured
parties, while acknowledging that the scope of the provision goes
beyond
[[Page 80178]]
"whistleblowers." The firms expressed particular concern about
competitor complaints.
Contrary to the views expressed by Kirkpatrick & Lockhart and
Latour, the Department is of the view that the "other source"
provision of the ACWIA was intended to extend to any source likely to
have knowledge of the employer's practices or employment conditions, or
of an employer's compliance with its attestation obligations.
Furthermore, the Department has long considered a competitor to be an
"aggrieved party," as defined in its current regulations at
Sec. 655.715.
ITAA noted that the proposed regulations correctly state that the
"other source" provisions expire on September 30, 2001, unless
continued by future legislation, and suggested that the regulations
should also identify other provisions that will "sunset" absent
further action by Congress. The point is well taken. The Department
notes that Congress in the October 2000 Amendments has, in fact,
extended the effective periods for this and other provisions until
2003. The Interim Final Rule identifies the provisions that will expire
on particular dates, absent their extension by future legislation.
AILA requested the opportunity to review and comment on the form
that is being developed to receive "other source" information. One
commenter (BRI) asserts that Department employees should not be allowed
to complete forms on behalf of a "source," suggesting that the
Department's involvement might have a coercive effect.
The Department has attached its proposed form to this rule in order
to obtain the views of the public, as required by the Paperwork
Reduction Act. The Department notes that for the convenience of the
public and of the Department, it has designed one form for use both by
aggrieved parties and by other sources. This will allow the Department
to make a determination as to whether the source is aggrieved, and if
not, whether the statutory standard is met, after review of the
information submitted. The Department disagrees with the comment by
BRI, noting that the "other source" procedure is initiated by the
individual who has submitted information to the Department--not vice-
versa--and that the ACWIA expressly authorizes the Department to
complete the form on behalf of the individual.
The Department has made other procedural changes. Sections
655.800(b), 655.806(a), and 655.807(b) of the Interim Final Rule
provide that the Administrator may interview the complainant or other
person supplying information to determine whether the statutory
standards are met. (As a courtesy, the Administrator will notify the
person providing the information if the standards have not been met, or
if, after the determination by the Secretary, an investigation will be
conducted.)
The section has been restructured, in accordance with the
Department's reading of the statute, to provide that the employer will
ordinarily be provided information regarding the allegations and given
an opportunity to respond after the Administrator has made an initial
determination that the statutory standards are met, rather than prior
to this determination. The Administrator will then review this
information in order to determine if the allegations should be referred
to the Secretary for a determination as to whether an investigation
should be commenced. Where the Administrator has determined that
notification to the employer should be dispensed with, the Secretary
will be advised in the referral; there will be no review of this
determination other than by the Secretary.
Section 655.806(a)(3) (and the corresponding provision in
Sec. 655.807(i)) is clarified based on the Department's enforcement
experience to provide that the time to conduct an investigation may be
increased where, for reasons outside of the control of the
Administrator, additional time is necessary to obtain information from
the employer or other sources to determine if a violation has occurred.
It has been the Department's experience that employers do not always
timely provide requested information; in other circumstances Wage-Hour
must obtain documentation from other agencies, such as information from
INS regarding petitions filed (especially where employers have not
provided requested information or where needed to verify information
supplied by employers).
4. What Protections Are Provided to Whistleblowers by the ACWIA?
(Sec. 655.801)
Section 212(n)(2)(C)(iv) of the INA as amended by the ACWIA
provides explicit protection for H-1B employees who exercise their H-1B
rights by complaining about a violation of the Act or cooperating with
an investigation. An employer may not "intimidate, threaten, restrain,
coerce, blacklist, discharge, or in any other manner discriminate
against [such] employee." "Employee" is defined to include former
employees and applicants for employment. Like other whistleblower
statutes, the ACWIA provision protects an employee's "internal"
complaint to the employer or to any other person, as well as an
employee who cooperates in an investigation or proceeding concerning an
employer's compliance with the Act and these regulations. As Senator
Abraham stated, this provision "essentially codifies current
Department of Labor regulations concerning whistleblowers." 144 Cong.
Rec. S12752 (Oct. 21, 1998).
Section 212(n)(2)(C)(vi) directs the Department and the Attorney
General to establish a process to enable an H-1B worker who files a
whistleblower complaint to remain in the United States and seek other
appropriate employment for a period not to exceed the maximum period
provided for the H-1B classification. As noted in the NPRM, the
Department and the INS are working in close cooperation to develop this
process. This mechanism, however, is not within the scope of this
rulemaking.
The whistleblower enforcement provision elicited five comments.
APTA, AOTA, and IEEE expressed strong support for the statute's
whistleblower provisions.
AILA suggested that the ACWIA's anti-retaliation language
protecting an employee from retaliation where the employee has
disclosed information that the employee "reasonably believes evidences
a violation" of the H-1B provisions covers only "genuine infractions
of law." It therefore suggested that the Department should amend its
rule to make clear that the disclosure "must be other than a de
minimis violation."
The Department rejects this interpretation. The Department is of
the view that Congress intended that the Department, in interpreting
and applying this provision, should be guided by the well-developed
principles that have arisen under the various whistleblower protection
statutes that have been administered by this Department (see 29 CFR
part 24). The Department also believes that, as in those programs, the
parameters of the provision are best developed through adjudication
rather than through rulemaking. The Department points out that the
statutory test is whether the employer has discriminated against an
employee because the employee disclosed information the employee
reasonably believed evidenced a violation, or because the employee
cooperated or sought to cooperate in an investigation or other
proceeding. The Department believes that there is no basis for
inferring an intention to protect only complaints of actual infractions
of
[[Page 80179]]
law, or to exclude potential de minimis violations.
BRI commented that the employer should not be liable for wrongful
termination until found guilty by the appropriate authority. The
Department agrees that an employer is not liable for wrongful
termination until a final decision is issued in a Department of Labor
proceeding.
5. What Changes Does the ACWIA Make in Enforcement Remedies and
Penalties? (Sec. 655.810)
Prior to the ACWIA's enactment, the INA authorized the assessment
of a civil money penalty (up to $1,000 per violation) and debarment
from the sponsorship of nonimmigrant aliens for employment (at least
one year), among other unspecified remedies, for H-1B violations. In
place of this "unitary" scheme, section 212(n)(2)(C)(i)-(iii) of the
INA as amended by the ACWIA established a three-tier scheme for
sanctions and remedies, depending upon the nature and severity of the
violations. The first tier provides for up to $1,000 per violation and
debarment for at least one year (for violations of the attestation
provisions regarding a strike or lockout, or the dependent employer/
willful violator provisions regarding displacement; or for substantial
violation of the attestation provisions regarding notice, the details
of the attestation, or the dependent employer/willful violator
provisions regarding recruitment). The second tier provides for up to
$5,000 per violation and debarment for at least two years (for willful
violations of any of the attestation provisions, willful
misrepresentation, or violation of the whistleblower provisions). The
third tier provides for up to $35,000 and debarment for at least three
years (for willful violations of any of the attestation provisions or
willful misrepresentation, in the course of which violation or
misrepresentation the employer displaced a U.S. worker within the
period beginning 90 days before and ending 90 days after the filing of
an H-1B petition supported by the LCA). In each of the three penalty
tiers, as in the previous statutory provision, the ACWIA authorizes the
imposition of "such other administrative remedies as the Secretary
determines to be appropriate."
In explaining new clause (iii), Senator Abraham explained:
The rationale for this new penalty is that there have been
expressions of concern that employers are bringing in H-1B workers
to replace more expensive U.S. workers whom they are laying off.
Current law, however, requires employers to pay the higher of the
prevailing or the actual wage to an H-1B worker. Thus, the only way
an employer could profitably be systematically doing what has been
suggested is by willfully violating this obligation. Otherwise, the
employer would have no economic reason for preferring an H-1B worker
to a U.S. worker as a potential replacement. Thus, the new penalty
set out in new clause (iii) is designed to assure that there are
adequate sanctions for (and hence adequate deterrence against)
[willful violations of the wage provisions] by imposing a severe
penalty on a willful violation of the existing wage-payment
requirements in the course of which an employer 'displaces' a U.S.
worker with an H-1B worker.
At the same time, Congress chose not to make the layoff itself a
violation. The reason for this is that there are many reasons
completely unconnected to the hiring of H-1B workers why an employer
may decide to lay off U.S. workers. * * * Accordingly, it is
important to understand that unlike the new attestation requirements
imposed by the amendments to section 212(n)(1), clause (iii) of
section 212(n)(2)(C) provides no new independent basis for DOL to
investigate an employer's layoff decisions. The only point at which
DOL can do so pursuant to clause (iii) is after it has already found
that the employer has committed a willful violation of one of the
pre-existing labor condition attestations.
* * * At that point, and not before, provided that there is
reasonable cause to believe that an employer had also displaced a
U.S. worker in the course of committing that violation, it would be
proper for DOL to investigate, but only in order to ascertain what
penalty should be imposed. The definitions concerning
"displacement" and the like, set out in new 212(n)(3) and
212(n)(4) of the Immigration and Nationality Act, and discussed in
the previous portion of this section-by-section analysis dealing
with the amendments to that Act made by section 412 of this
legislation, apply in this context as well.
144 Cong. Rec. S12752 (Oct. 21, 1998).
Congressman Smith explained that new clause (iii) "clarifies that
certain kinds of employer conduct constitute a violation of the
prevailing wage attestation, and that other kinds of employer conduct
are also prohibited in the H-1B program. * * * Congress intends that
this new penalty will assure that there are adequate sanctions for (and
hence adequate deterrence against) any willful violation of the
existing wage-payment requirements in the course of which an employer
'displaces' an American worker with an H-1B worker." 144 Cong. Rec.
E2325 (Nov. 12, 1998).
These penalty provisions do not apply to the ACWIA prohibitions on
penalizing an H-1B worker for his or her early cessation of employment,
or on requiring an H-1B worker to reimburse the filing fee. For these
violations, the Department, instead, may impose a civil money penalty
of $1,000 for each violation and reimbursement of the H-1B worker (or
the Treasury if the worker cannot be located). Debarment is not
available as a sanction for these violations.
In the NPRM, the Department proposed that "appropriate
administrative remedies" would include the imposition of curative
actions such as providing notice to workers and affording "make-
whole" relief for displaced workers, whistleblowers, or H-1B workers
who failed to receive proper benefits or eligibility for benefits.
Senator Abraham and Congressman Smith had divergent views regarding
the Secretary's authority to impose such remedies. Senator Abraham
stated that these remedies "do not include an order to an employer to
hire, reinstate, or give back pay to a U.S. worker as a result of any
violation an employer may commit." 144 Cong. Rec. S12752 (Oct. 21,
1998). Congressman Smith, on the other hand, stated that "Congress
intends that such remedies will include 'make-whole' relief for
affected American workers (such as, in appropriate circumstances,
monetary compensation to the American worker or reinstatement to the
job from which the American worker was dismissed or placement in the
job to which the American worker should have been hired)." 144 Cong.
Rec. E2325 (Nov. 12, 1998).
Several commenters (Senators Abraham and Graham, AILA, Network
Appliance, Rubin & Dornbaum, Satyam, and White Consolidated Industries)
stated that the authority to seek make-whole relief has never been
asserted by the Department and is beyond the authority granted to the
Department by the ACWIA. Other Congressional commenters commented that
the proposed regulations on the scope of administrative remedies go far
beyond what the statute contemplates, without specifically referring to
make-whole relief.
After careful consideration, the Secretary remains persuaded that
the plain language of the ACWIA ("the Secretary * * * may * * * impose
such other administrative remedies * * * as the Secretary determines to
be appropriate") provides the Secretary the authority to award
whatever relief is appropriate in the circumstances of a case,
including make-whole relief. Since the Act already contains explicit
authority for civil money penalties, back wages, and debarment, it
seems apparent that Congress intended to allow the Secretary to order
other appropriate remedies to cure the violations. In the case of
displacement
[[Page 80180]]
or whistleblower violations in particular, such relief must logically
include reinstatement and back pay. Nor does the Department believe
that the fact that explicit language concerning such relief was not
contained in the ACWIA, as Senator Abraham indicates was sought by the
Administration, equates to an express legislative denial of such
remedial authority to the Secretary.
ITAA, ACIP, and Intel requested that the Department define the
various terms used in the statute's three-tier scheme for violations.
The Department notes that "willful failure" is currently defined
in the regulations at Sec. 655.805(b). As discussed above, it is the
Department's view that it is unnecessary to define these terms further
in the regulations.
SBSC sought assurances that "punitive approaches" would not be
applied where there is an absence of negligence, fraud, or other
blameworthy action. Intel and ACIP suggest that the Department should
recognize, in effect, a good faith defense for an employer that is
found in violation of the statute. Intel suggests that the Department
should establish a practice akin to that provided for I-9 violations by
8 U.S.C. 1324a(b)(6). This provision stipulates that under certain
circumstances "a person is considered to have complied with a
requirement of this subsection notwithstanding a technical or
procedural failure to meet such requirement if there was a good faith
attempt to comply with this requirement."
In the Department's view, the ACWIA does not provide a general
defense in the nature of those suggested by SBSC and Intel. Entirely
missing from the statute is any provision comparable to 8 U.S.C.
1324a(b)(6). At the same time, however, it should be noted that the
Department is vested with some enforcement discretion and intends to
exercise this discretion in accordance with the purposes served by the
statute and the public interest. Where appropriate, the Department will
consider the totality of the circumstances, including an employer's
demonstrated good faith attempts at compliance, in fashioning remedies
appropriate to the violation. In this regard, the Department notes that
its regulations providing the factors to be considered in assessing the
amount of civil money penalties include an employer's good faith
efforts to comply, the gravity of the violations, and the violator's
explanation of the violations. See Sec. 655.810(c) of the current
regulations.
Several individuals urged the imposition of heavy penalties upon
violators. The AFL-CIO suggested in particular that the Department
should make greater use of the debarment penalty in cases that are
resolved through consent judgments or other means of settlement.
The Department, of course, will be guided by the penalty scheme
established by Congress and the Department's regulatory provisions
governing debarment and the assessment of penalties. The ACWIA
establishes a three-tier system for debarment and civil money
penalties; the remedy in a particular case will depend upon the
category of the violation involved and consideration of the regulatory
factors, which may enhance or reduce a civil money penalty under the
particular circumstances of the violation. The Department notes that
the ACWIA particularly recognizes the gravity of willful violations, as
demonstrated by the longer debarment period and authority to conduct
random investigations. Accordingly, the Secretary will insist on
debarment in appropriate cases.
The individual commenters urged the Department to issue a
regulation that informs American workers of their rights under the
statute. ITAA also suggested that the regulations should address the
Attorney General's role under the statute.
The Interim Final Rule lays out the obligations of H-1B-dependent
employers and willful violators, including the requirements--as laid
out in Sections D and E of the NPRM--that they not displace workers,
that they not place H-1B workers at worksites of other employers where
U.S. workers are being displaced, that they recruit U.S. workers using
industry-wide procedures, and that they offer the job to any U.S.
worker who applies who is equally or more qualified than the H-1B
workers. The rule also explains the provision for filing complaints
with the Attorney General for violations of the hiring requirement. In
addition, although there is no direct remedy for U.S. workers who are
not employed by dependent employers or willful violators, they may file
complaints with the Department.
ITAA requested that the Department clarify enforcement regulations
as they pertain to recruitment violations and specify that only H-1B-
dependent employers may be liable for such violations. The Interim
Final Rule has been clarified to make clear that only an H-1B-dependent
employer or willful violator may be held liable for a recruitment
violation. The recruitment obligations of dependent employers are
discussed in much greater detail in IV.E, above.
Finally, on review of the NPRM, the Department notes that it had
misconstrued the scope of the third tier of penalties. The highest
level of penalties (up to $35,000 per violation and a minimum of three
years of debarment) are applicable whenever any employer displaces a
U.S. worker in the course of committing a willful violation of any of
the attestation provisions or a willful misrepresentation--regardless
of whether the employer is a dependent employer or willful violator
subject to the new attestation provisions of the ACWIA. In the
Department's view this construction is clear from a careful reading of
the statutory language, as well as the statement describing this
provision by Senator Abraham, quoted above, at 144 Cong. Rec. S12752
(Oct. 21, 1998). Application of this higher penalty will arise only
where the Department determines that the employer has committed a
willful violation of an attestation requirement--e.g., the employer has
willfully failed to pay the required wage to H-1B workers. If the
Department determines that the employer has displaced a U.S. worker
within the period between 90 days before and 90 days after the LCA was
filed, and that the employer has replaced that worker with an H-1B
worker whom the employer has willfully failed to pay the required wage,
the employer will be subject to a CMP of up to $35,000 per violation of
the attestation requirements; in addition, the Department will advise
INS, which shall not approve any petitions for at least a three-year
period. The Interim Final Rule has been amended to correct this
provision.
In addition, the H-1B enforcement provisions contained in Subpart I
of Part 655 have been restructured to make them clearer and more user-
friendly. Changes have also been made to comport with the Department's
enforcement experience. Specifically, as discussed in IV.M.3, above,
Sec. 655.806(a)(3) (and the corresponding provision in Sec. 655.807(i))
clarifies that the time to conduct an investigation may be increased
where, for reasons outside of the control of the Administrator,
additional time is necessary to obtain information from the employer or
other sources to determine if a violation has occurred. Sections
655.800(b), 655.806(a), and 655.807(b) provide that the Administrator
may interview the complainant or other person supplying information to
determine whether the statutory standards are met.
[[Page 80181]]
Various clarifying changes have been made to proposed Sec. 655.810,
setting forth the remedies available to the Administrator upon a
finding of violations. As discussed in IV.G, above, the Department has
determined that certain benefits are in the nature of compensation for
services rendered, and have a monetary value to workers and monetary
cost to employers. Therefore such benefits are more in the nature of
wages than of working conditions. Paragraph (a) of Sec. 655.810 makes
it clear that payment of unpaid benefits can be ordered by the
Administrator pursuant to the Administrator's authority to order
payment of back wages under section 212(n)(2)(D).
In addition, the Interim Final Rule clarifies at
Secs. 655.810(a)(14) and 655.810(a)(16) that the Department will issue
CMP assessments for violations of the public access provisions of the
Act, or for regulatory violations, such as a failure to cooperate in
the investigation (see Sec. 655.800(c)). The Department will also
assess CMPs for violations of the recordkeeping requirements, where the
violation impedes either the ability of the Administrator to determine
whether a violation of the H-1B requirements has occurred, or the
ability of members of the public to have information needed to file a
complaint or information regarding alleged violations of the Act. Under
the existing regulations (Sec. 655.810(b)), CMP assessments may be
imposed for any violations of the regulations.
Finally, in conformance with the Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended (see 28 U.S.C. 2461 note), new
Sec. 655.810(f) provides for inflationary adjustments to be made, by
regulation, to civil money penalties in accordance with a specified
cost-of-living formula. Such adjustments will be published in the
Federal Register. The amount of the penalty in a particular case will
be based on the penalty in effect at the time of the violation.
N. What Modification to Part 656 Does the ACWIA Provide for the
Determination of the Prevailing Wage for Employees of "Institutions of
Higher Education," "Related or Affiliated Nonprofit Entities,"
"Nonprofit Research Organizations," or "Governmental Research
Organizations"? (Sec. 655.731(a)(2), Sec. 656.40)
The ACWIA amends the INA (Section 212(p)(1), 8 U.S.C. 1182(p)(1))
to require that the computation of the prevailing wage for employees of
institutions of higher education, nonprofit entities related to or
affiliated with such institutions, nonprofit research organizations,
and Governmental research organizations only take into account the
wages paid by such institutions and organizations in the area of
employment. In addition, section 212(p)(1) provides that with respect
to professional athletes as defined in section 212(a)(5)(A)(iii)(II),
where the job opportunity is covered by professional sports league
rules, the wage prescribed by those rules shall be considered the
prevailing wage. This ACWIA directive concerning academic and research
institutions affects both the H-1B program and the Permanent Labor
Certification program, since both programs use the prevailing wage
computation procedures set out in the Permanent program regulation at
20 CFR 656.40. The provision regarding professional athletes affects
only the Permanent program.
On March 20, 1998 (63 FR 13756), the Department published a Final
Rule amending its Permanent Labor Certification regulation to change
the effects of the en banc decision of the Board of Alien Labor
Certification Appeals in Hathaway Children's Services (91-INA-388,
February 4, 1994), which required prevailing wages to be calculated by
using wage data obtained by surveying across industries in the
occupation in the area of intended employment. The 1998 Final Rule, in
effect, allows prevailing wage determinations made for researchers
employed by colleges and universities, Federally Funded Research and
Development Centers (FFRDCs) operated by colleges and universities, and
certain Federal research agencies to be made by using wage data
collected only from those entities. The Department stated in the
Preamble to that Final Rule that the amendment to the regulation also
changed the way prevailing wages are determined for those entities
filing H-1B labor condition applications on behalf of researchers,
since the regulations governing the prevailing wage determinations for
the Permanent program are followed by State Employment Security
Agencies (SESAs) in determining prevailing wages for the H-1B program
as well.
The ACWIA provision goes considerably beyond the regulatory
amendments made by the Department. The ACWIA provisions extend to all
nonprofit research organizations and Governmental research
organizations. In addition, the ACWIA provisions extend not only to
researchers, but to all occupations in which institutions of higher
education, nonprofit entities related to or affiliated with such
institutions, and nonprofit research organizations or Governmental
research organizations may want to employ H-1B workers or aliens
immigrating for the purpose of employment.
In describing the application of this provision, Senator Abraham
stated in pertinent part:
Paragraph 212(p)(1) provides that the prevailing wage level at
institutions of higher education and nonprofit research institutes
shall take into account only employees at such institutions. The
provision separates the prevailing wage calculations between
academic and research institutions and other non-profit entities and
those for for-profit businesses. Higher education institutions and
nonprofit research institutes conduct scientific research projects,
for the benefit of the public and frequently with federal funds, and
recruit highly-trained researchers with strong academic
qualifications to carry out their important missions. The bill
establishes in statute that wages for employees at colleges,
universities, nonprofit research institutes must be calculated
separately from industry.
144 Cong. Rec. S12756 (Oct. 21, 1998).
The Department consulted with the INS on the definitional issues,
since that agency has addressed similar issues with regard to the
implementation of the additional fee required for petitions on behalf
of H-1B nonimmigrants. The employers excluded from that fee are the
same as the employers specified in the ACWIA provision concerning
prevailing wage determinations. The Department worked with the INS in
developing the following definitions contained in its Interim Final
Rule published on November 30, 1998 (63 FR 65657), 8 CFR
214.2(h)(19)(iii)(B):
"An institution of higher education, as defined in section
801(a) of the Higher Education Act of 1965;
"An affiliated or related nonprofit entity. A nonprofit entity
(including but not limited to hospitals and medical or research
institutions) that is connected or associated with an institution of
higher education, through shared ownership or control by the same
board or federation, operated by an institution of higher education,
or attached to an institution of higher education as a member,
branch, cooperative, or subsidiary;
"A nonprofit research organization or Governmental research
organization. A research organization that is either a nonprofit
organization or entity that is primarily engaged in basic research
and/or applied research, or a U.S. Government entity whose primary
mission is the performance or promotion of basic and/or applied
research. Basic research is research to gain more comprehensive
knowledge or understanding of the subject under study, without
specific applications in mind. Basic research is also research that
advances scientific knowledge, but does not have specific immediate
commercial objectives although it may be in fields of present or
potential commercial
[[Page 80182]]
interest. Applied research is research to gain knowledge or
understanding to determine the means by which a specific, recognized
need may be met. Applied research includes investigations oriented
to discovering new scientific knowledge that has specific commercial
objectives with respect to products, processes, or services."
The INS Interim Final Rule also provides, in relevant part, that a
nonprofit organization or entity is one that is qualified as a tax
exempt organization under Section 501(c) (3), (4) or (6) of the
Internal Revenue Code of 1986 (IRC) and has received approval as a tax
exempt organization from the Internal Revenue Service, as it relates to
research or educational purposes.
In the NPRM, the Department sought comments on the proper
definitions of the entities to which the ACWIA prevailing wage
provisions apply. The Department shared these comments with INS in the
development of definitions to apply to both the INS and Departmental
regulations. Comments received by INS concerning these definitions have
also been considered by the Department and are included in the record
of this rule.
In order to determine prevailing wages as required by the ACWIA,
the Department explained that it is also necessary to determine the
appropriate universe(s) to survey, and to determine the availability of
relevant, reliable data. The Act sets forth the four types of
organizations in two groups: educational institutions and related
research organizations; and other nonprofit research organizations and
Governmental research organizations. The Department stated, however,
that the Act does not seem to require that prevailing wages be
determined separately for those two groups, as distinguished from a
universe consisting of all four groups, or surveys of the four types of
organizations separately, or some other combination.
The Department explained in the NPRM that it has reason to believe
that it may not be feasible to identify the different kinds of entities
that might comprise educational institutions' related or affiliated
nonprofit entities, or nonprofit research organizations. If those
entities cannot be identified, it may not be possible to properly
define the universe that should be surveyed to determine the
appropriate prevailing wages. One possible alternative the Department
said it would explore is the use of the prevailing wage data it
currently collects in surveying institutions of higher education to
determine prevailing wages for one universe consisting of institutions
of higher education, affiliated or nonprofit research institutions, and
nonprofit research organizations. The Department also stated that data
currently being collected by the Office of Personnel Management (OPM)
may be able to be used to determine prevailing wages for Federal
Governmental research organizations.
The Department sought comments on the appropriate universes to use
in determining prevailing wages for the entities (employers) mentioned
in the ACWIA, methods to develop an appropriate universe, and the
feasibility and appropriateness of the Department's using data
collected from institutions of higher education and Federal
Governmental research organizations to determine prevailing wages.
In the period since the NPRM was published, INS has published its
Final Rule implementing the fee provisions of the ACWIA (65 FR 10678;
February 29, 2000). These regulations include provisions defining
organizations which are exempt from the H-1B petition filing fee. As
discussed above, the ACWIA defines exempt organizations as those
organizations described in section 212(p)(1). More recently, the
October 2000 Amendments (Pub. L. 106-311) amended section 214(c)(9) of
the INA to provide a modified definition of organizations exempt from
the fee. However, this recent provision has no effect on the
Department's prevailing wage obligation.
The Department received six comments on this section of the NPRM.
The American Council on Education (ACE) also attached a copy of its
comments on the INS Interim Final Rule. The Department also reviewed
the comments received by INS pertaining to this issue.
With respect to definitions of covered entities, ACE and the
Association of Independent Research Institutes (AIRI) commended the
efforts of federal agencies to jointly develop regulatory definitions,
and urged that all regulations that implement ACWIA sections include
identical definitions, regardless of the agency source of the
regulation.
AIRI stated that the proposed definitions adequately cover its
member institutions--independent, nonprofit research institutions
performing basic and clinical research in behavioral sciences.
Similarly, the Smithsonian Institution stated that it had no problem
with the definitions, stating that it believes that it qualifies as
both a nonprofit research organization and as a governmental research
organization.
ACE observed that the new section 212(p)(1) references only those
institutions included in section 101(a) of the Higher Education Act of
1965. (ACE pointed out a typographical error in the NPRM, which
referenced section 801 of the Higher Education Act rather than section
101(a).) The Higher Education Amendments of 1998 (Pub. L. No. 105-244,
112 Stat. 1581 (Oct. 7, 1998)), reauthorized the Higher Education Act
and made a number of amendments. Institutions contained in sections
101(a) and (b) of the Act as amended in 1998, 20 U.S.C. 1001(a) and
(b), were formerly contained in 20 U.S.C. 1201(a), which itself
incorporated 20 U.S.C. 1088. ACE stated its belief that Congress
inadvertently neglected to reference section 101(b) as well as section
101(a) of the Higher Education Act as amended in 1998 when it passed
the ACWIA. ACE requested that the definition of an "institution of
higher education" contained in the NPRM therefore be modified to
include both section 101(a) and section 101(b), pending clarification
by the Department of Education or a technical amendment. Unless this is
done, ACE contends, some categories of higher education, such as
independent medical colleges or graduate universities, might not
qualify for the academic prevailing wage determination.
ACE further stated, with respect to definitions, that the NPRM did
not define a "governmental research organization." Both AILA and ACE
stated that the definition should indicate that such organizations
include all federal, state, and local government laboratories
conducting scientific and/or scholarly research. ACE also noted that
FFRDCs are operated by contractors rather than the Federal Government
itself. ACE suggested that FFRDC contractors should be eligible for the
academic prevailing wage if they are institutions of higher education,
affiliated or related nonprofit entities, nonprofit research
organizations, or governmental research organizations. ACE also
recognized the problem inherent in applying the prevailing wage
methodology provided for by section 212(p)(1) to for-profit contractors
that operate FFRDCs. Nonetheless, ACE indicated it considered all
FFRDC's to be members of the academic research community, and expressed
hope that the Department will work with the ACE and the FFRDC
contractor community to develop an appropriate solution to allow all
academic researchers to be treated equally.
ACE also urged that the definition of "affiliated or related
nonprofit entity" include, in addition, those nonprofit research
hospitals which have an
[[Page 80183]]
historic affiliation with universities but do not meet the strict
definition of "affiliation" in the INS Interim Final Rule. ACE
proposed a specific modification of the definition to accommodate these
hospitals. Similarly, AILA maintained in the comments it submitted to
INS, that "[c]ertain non-profit or governmental (non-research)
institutions may have arrangements for the sharing of information,
training or research with educational institutions, yet would not by
this definition [of affiliated or related non-profit entity] be exempt
from the fee."
Finally, ACE urged that the definition of nonprofit organizations
or entities be modified so that a state or local organization exempt
from tax under IRC Section 115 or under an applicable state law
qualifies as a nonprofit organization or entity for purposes of the
ACWIA. By doing so, ACE contends, the Department's regulation would be
consistent with the INS Interim Final Rule.
The Research Corporation of the University of Hawaii (RCUH) sought
clarification regarding its status. RCUH explained that it was
established by the State of Hawaii as a "public instrumentality,"
part of the University of Hawaii "for administrative purposes only,"
and non-profit under state law but not under the IRC. It expressed the
view that both DOL and INS had failed to consider the special category
of public/private semi-autonomous, non-profit research organizations
created by other government agencies, and that they fit within the
intent of the ACWIA language regarding non-profit research
organizations.
In its comments on the definition provisions of the NPRM pertaining
to nonprofit research organizations and Governmental research
organizations, AILA maintained that the use of the word "scientific"
connotes a natural science like chemistry or physics, but not a social
science like history or sociology. In addition, AILA opined that the
distinction between basic research and applied research is often a
distinction drawn within the natural sciences, and that the NPRM
therefore implies that DOL believes that ACWIA amendments covers only
nonprofit organizations engaged in natural science research. The ACWIA
amendments, according to the AILA, broadly refer to research and
nowhere introduce the language limiting the amendment to natural
science research.
With respect to the definition of "nonprofit research
organization," AILA opined that nonprofit research organizations
engaged in substantial research should be covered by the ACWIA
amendments, whether or not research is the nonprofit's primary purpose.
AILA suggested that the Department's definition of nonprofit research
organizations include "organizations primarily engaged in research and
organizations engaged in research as an essential or significant
element of their operations."
A law firm representing Texas school districts and private schools
(Tindall and Foster) commented that elementary and secondary
educational institutions should be exempt from the filing fee because
they operate on tighter budgets than institutions of higher education
and because of the critical shortage of bilingual teachers. That
commenter also stated that ACWIA prevailing wage provisions should
include elementary and secondary education institutions.
With regard to the comments by ACE that the definition of "(a)n
institution of higher education" presented in the NPRM should be
modified to include those institutions contained in section 101(b), as
well as those contained in section 101(a) of the Higher Education Act,
as amended by the Higher Education Amendments of 1998, the Department
believes it is constrained by the unambiguous statutory language to
include only those institutions in section 101(a). Furthermore, there
is no indication in the legislative history as viewed in conjunction
with the history of the Higher Education Amendments to indicate
Congress intended to include section 101(b).
Concerning the view expressed by ACE and AILA that the definition
of a "Governmental research organization" should include state and
local government laboratories conducting scientific and/or scholarly
research, the Department has concluded that by Congress' use of the
initial capital "G" in the word "Governmental" in the statute,
Congress intended to limit the provision to the Federal research
organizations. In the INA, the words "Government" and "government"
appear numerous times. It appears that only when a small "g" is used,
does the term include state and local as well as Federal government
agencies. See the discussion in C. Stine, "Out of the Shadows:
Defining 'Known to the Government' in the Immigration Reform and
Control Act of 1986," 11 Fordham Int'l L.J. 641, 653 (Spring 1988);
see also Kalaw v. Ferro, 651 F. Supp. 1163 1169-70 (W.D.N.Y. 1987).
Furthermore, throughout the Omnibus Consolidated and Emergency
Supplemental Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681
(Oct. 21, 1998), of which the ACWIA is a part, it appears that a
capital "G" is used to mean the United States government or the
government of a foreign nation, while a small "g" is used to refer to
state, local, and tribal governments (unless the complete term
"Federal government" is used). See also, State Bank of Albany v.
United States, 530 F.2d 1379, 1382 (Ct. CL. 1976).
The Department agrees with the view expressed by ACE that the
status of entities contracting with FFRDCs determines the application
of the special provisions of Section 212(p)(1). An academic institution
operating an FFRDC, for example, would obtain the prevailing wage
determination applicable to academic institutions. The determination of
prevailing wages for for-profit employers that operate FFRDCs is
outside the scope of the proposed rule and is not addressed in this
document.
As noted above, ACE recommended that the definition of "[a]n
affiliated or nonprofit entity" be modified to include other
"nonprofit research hospitals" that do not meet the definition of
"affiliation" in the Department's NPRM and the INS Interim Final Rule
and, because their primary mission is patient care, do not meet the
definition of a "nonprofit research organization." Specifically, ACE
recommended that the phrase "or through a documented understanding or
affiliation" be added to the definition. The Department is of the
view, however, that the definition of "affiliated or related nonprofit
entity" in the NPRM and the INA Interim Final Rule is consistent with
the ordinary meaning of the phrase. The definition proposed by ACE is
inappropriately broad and would likely include many entities in
addition to the ones about which ACE and AILA are concerned.
Consequently, the Department has decided not to adopt the modification
to the definition of "affiliated or nonprofit entity."
In support of its view that the definition of a nonprofit
organization or entity should be modified to include organizations
exempt from tax under section 115 of the IRC (26 U.S.C. 115) or under
an applicable state law as a nonprofit organization or entity, ACE
stated that INS covers such organizations in its interim rule. To the
contrary, the INS Interim Final Rule at 8 CFR 214.2(h)(iv) does not
provide that organizations can qualify as nonprofit entities on the
basis of being exempt from tax under IRC Section 115 or under an
applicable state law, but instead provides at Sec. 214.2(h)(iv):
For purposes of paragraphs (h)(19)(B) and (C) of this section, a
nonprofit organization or entity is one that is qualified as a tax
exempt organization under section 501(c)(3),
[[Page 80184]]
(4) or (6) of the Internal Revenue Code of 1966 (26 U.S.C.
501(c)(3), (c)(4) or (c)(6)) and has received approval as a tax
exempt organization from the Internal Revenue Service, as it relates
to research or educational purposes.
The preamble to the INS Interim Final Rule (63 FR 65658) does
acknowledge that certain organizations (e.g., churches) qualify for
nonprofit status without a notice from the IRS confirming such status.
(It is unlikely that such organizations would be institutions of higher
education and related or affiliated institutions, or nonprofit and
Governmental research organizations.) The INS goes on to state that it
believes that most employers of specialty occupation workers claiming
an exemption will be able to meet the evidentiary requirement specified
in the rule, either with a notice from the IRS or other documents
demonstrating the United States employer's nonprofit status. The
Department agrees with these statements by INS. The preamble to the INS
rule does not indicate that nonprofit status will in any instance be
determined by the employer's tax exempt status pursuant to IRC Section
115 or state law. Moreover, we see no reason to include entities
encompassed by Section 115 within the definition of nonprofit entities.
Section 115 does not purport to be a list of tax-exempt organizations,
but rather is a reference to the kinds of state income which are
excluded from gross income in determining income tax. Furthermore, the
Department believes that it is generally accepted that nonprofit status
is determined by an entity's status under section 501(c). If Congress
wanted an entity's nonprofit status to be determined by state law,
Congress could have expressly so provided.
Based on the foregoing, this rule provides, as does INS' Interim
Final Rule, that a nonprofit organization or entity is one that is
qualified as a tax exempt organization under IRC section 501(c)(3),
(c)(4) or (c)(6), and has received approval from the Internal Revenue
Service as it relates to research or educational purposes.
As indicated above, AILA believed the Department was implying in
the NPRM that the ACWIA amendments and the definitions in the NPRM
pertaining to nonprofit research organizations and Governmental
research organizations only applied to organizations engaged in natural
science research. The definitions of basic research and applied
research used in the NPRM (and the INS interim rule) are based on the
definitions of "Basic Research" and "Applied Research" found on
pages 4-9 of Science & Engineering Indicators--1996, published by the
National Science Foundation (NSF). The materials contained in the NSF
publication indicate that these definitions apply to the social and
behavioral sciences (which include psychology, sociology and other
social sciences), as well as the natural sciences (which include all
physical, earth, atmospheric, biological and agricultural sciences).
NSF staff have confirmed that the NSF definitions of basic and applied
research apply to both the social and natural sciences. These
definitions are used in NSF's resource surveys and are well understood
by members of the research community. The Department has revised the
regulation to provide that "research" includes research in the
sciences, social sciences, and humanities.
The Department has also concluded that the definition of nonprofit
research organization should be limited to organizations primarily
engaged in research. We believe this is most consistent with the
statutory phrase "research organization." Furthermore, Senator
Abraham's statement, quoted above, indicates a specific Congressional
intent that the determination of the prevailing wage not include other
types of nonprofit entities. In addition, since workers in all
occupations for which nonprofit research entities file H-1B labor
condition applications or applications for alien employment
certification are potentially affected by the ACWIA prevailing wage
amendments, the proposed modification could affect large numbers of H-
1B workers not engaged in research or related activities, thereby
increasing the possibility of an adverse effect on U.S. workers who are
not engaged in research or related activities. The Department believes
such a construction would not be consistent with Congressional intent.
As indicated above, AILA indicated in its comments that the groups
included in prevailing wage determinations should only include
"similarly employed" individuals. This issue is outside the scope of
this rulemaking. However, it is the Department's position that all
occupations included within an OES occupational group for which
prevailing wage determinations are provided are "similarly employed."
The Department also notes that the OES does collect data for faculty
members by certain disciplines in accordance with an agreement reached
with the academic community.
With regard to the collection of prevailing wage data and
prevailing wage determinations, ACE and AIRI strongly supported the
Department's approach as the most feasible solution to meeting the
ACWIA requirements. These two organizations observed that institutions
of higher education, affiliated and related research institutions, and
nonprofit research organizations, are comparable for prevailing wage
purposes due to the similarity of their missions and employment of H-1B
nonimmigrants. ACE recommended a separate category for governmental
research organizations based on their understanding that pay scales and
wages for government research labs and other related activities are
established and predetermined by federal, state and local governments,
and do not necessarily correspond to the other three groups. The
Smithsonian Institution opposed this approach, and urged the Department
to treat all groups as a single universe for purposes of determining
prevailing wage levels. The Smithsonian also noted that the NPRM did
not address the issue of how organizations in the four groups are to
make their status known to the local SESA for prevailing wage
determinations. Moreover, the Smithsonian recommended that the
Department follow the example of the INS for I-129W, with no additional
evidentiary requirements.
ACE also expressed concern regarding the Department's treatment of
independent academic wage surveys, stating its view that much DOL and
state and local government academic wage information is inaccurate due
to inclusion of an insufficient number of academic institutions. It
therefore encouraged the Department to adopt independent surveys of
academic wages.
AILA argued that the division of employer groups into two distinct
subparagraphs in section 212(p)(1) is indicative of Congressional
intent to treat the two groups separately. AILA further commented that
the groups included in the prevailing wage determination should only
include similarly employed individuals, as distinguished from a group
of occupations. AILA also stated that similarly employed workers should
include reference to the skills and knowledge required by the position.
As noted in the NPRM, the Department does not believe that the
ACWIA requires that the four types of organizations be grouped in any
particular way in determining the universe for prevailing wage surveys.
The Department agrees with AIRI and ACE that there are substantial
similarities among employment found in colleges and universities,
affiliated or
[[Page 80185]]
related nonprofit entities, and nonprofit research organizations.
Therefore, the Department plans to use the data it currently collects
in surveying institutions of higher education to determine prevailing
wages for institutions of higher education, related or nonprofit
entities, and nonprofit research organizations.
The Department also agrees with ACE that pay scales for
Governmental research laboratories and other related activities are
established by the Federal government and do not necessarily correspond
with the three other groups mentioned above. For this reason, the
Department does not contemplate including Governmental research
organizations in the same universe as the other three types of
organizations unless the technical problems in determining prevailing
wages for the Government research organizations prove to be
insurmountable. The Department intends to use data currently being
collected by the Office of Personnel Management relating to Federal
Government employment to determine prevailing wages for Federal
Government research organizations if certain technical issues can be
satisfactorily resolved. One possible alternative approach would be to
use Government-wide prevailing wage data by occupation as a proxy for
prevailing wages in Government research organizations.
As an interim measure, since the prevailing wage provisions were
effective on enactment of the ACWIA, the Department has issued a
directive that provides that prevailing wages for institutions of
higher education, affiliated or nonprofit entities, nonprofit research
organizations and Government organizations should be based on the wages
now being collected by the Occupational Employment Statistics Program
for colleges and universities. General Administrative Letter No. 2-99,
(GAL 2-99) dated April 23, 1999, "Subject: Availability and Use of
Occupational Employment Statistics Survey Data for Alien Labor
Certification Purposes." With regard to ACE's comments on use of
independent academic wage surveys, the Department points out that its
guidance in GAL 2-98, dated October 31, 1997, "Subject: Prevailing
Wage Policy for Nonagricultural Immigration Programs," allows
employers to submit their own surveys, which will be used by the SESA
to determine prevailing wage if they meet the required standards.
With respect to the suggestion from the law firm that elementary
and secondary educational institutions should be made exempt from the
filing fee and should be included within the scope of the prevailing
wage provisions, the Department notes that the fee provision has been
modified by the October 2000 Amendments to exempt such organizations,
but no such modification was made to the prevailing wage provisions.
The Smithsonian Institution in its comments points out that one
issue not addressed in the NPRM is how the categories of employers are
to make their status known when they ask the local SESA for a
prevailing wage determination. These provisions have been in effect
since enactment of the ACWIA and the Department has not found that any
additional paperwork requirements are necessary. The Department
anticipates that employers which are entitled to this provision will
make themselves known. If additional guidance is necessary, the
Department will provide it.
The regulatory text consistent with the above discussion is
incorporated in the rules for the Permanent program, 20 CFR part 656,
Sec. 656.40(c). Conforming changes are made to cross-reference this
provision in Sec. 656.40(a) and in the H-1B regulations at
Sec. 655.731(a)(2) and (3). In addition, the related provisions
concerning prevailing wages for academic institutions and certain
Federal research agencies at Sec. 656.3 (definition of "Federal
research agency") and Subpart E, Sec. 656.50, are deleted.
Finally, Section 415(b) of the ACWIA provides that these special
prevailing wage provisions apply to computations made for applications
filed on or after the date of enactment of the ACWIA, and to
applications filed earlier "to the extent that the computation is
subject to an administrative or judicial determination that is not
final as of such date." Thus, as discussed above, the amendments made
to Secs. 655.731(a)(2) and 656.40 are effective immediately, and apply
to all cases in which the determination of the prevailing wage was not
yet finally determined administratively pursuant to the regulations at
Parts 655 and 656. Moreover, they are applicable to any cases pending
in Federal court which were not finally decided where the prevailing
wage determination was under review, as of the date of enactment.
O. What H-1B Regulatory Matters, in Addition to the ACWIA Provisions,
Are Addressed in This Interim Final Rule?
In the NPRM, the Department re-published for further notice and
comment some of the provisions of the Final Rule promulgated in
December 1994 which had been proposed for comment on October 31, 1995,
during the pendency of the NAM litigation. That litigation resulted in
an injunction against the Department's enforcement of some of these
provisions on Administrative Procedure Act procedural grounds (National
Association of Manufacturers v. Reich, No. 95-0715, D.D.C. July 22,
1996).
As explained in the NPRM, some of the provisions of the Final Rule
were modified in the NPRM in light of ACWIA requirements and others in
light of comments received in response to the October, 1995 proposal.
This Interim Final Rule is based on the Department's consideration
of all comments received, both on the 1995 proposal and the recent
NPRM.
1. What Are the Standards or Restrictions for Placement of H-1B Workers
at Locations Other Than Those Identified on the Original LCA?
(Sec. 655.735)
In the NPRM, the Department dealt separately with three related
matters concerning the work locations of H-1B workers and the movement
of such workers to new locations. These matters, which are of
significant concern to users of the H-1B program, were: the regulation
concerning short-term placement of H-1B workers at worksites not
covered by any LCA (NPRM Section O.1); the interpretation of the term
"place of employment"/"worksite," which affects many of the
employer's LCA obligations (NPRM Section P.1); and the interface among
the regulatory provisions affecting the "roving" or "floating" of
H-1B workers away from their home base worksite(s) (NPRM Section P.2).
Because the reactions of commenters indicated some confusion about the
interplay among these three matters, they are addressed in the
following combined discussion.
a. What Are the Opportunities and Guidelines for Short-Term Placement
of H-1B Workers at Worksite(s) Outside the Location(s) Listed on the
LCA? (NPRM Section O.1)
Regulations to authorize short-term placement of H-1B workers at
places of employment outside the areas of intended employment listed on
the employer's LCA(s) were first published by the Department in the
December 20, 1994 Final Rule. The structure and application of this
short-term placement option assumes that the new location to which an
H-1B worker is sent is, in fact, a "place of employment" or
"worksite" for that worker. However, as discussed below, not every
physical location at which an H-1B worker's duties are
[[Page 80186]]
performed will constitute a "worksite" for that worker (see
subsection b, below). It is important for employers to recognize that
if the location is not a "worksite" for that H-1B worker, then the
short-term placement provision will not be applicable to that worker at
that location and, consequently, the placement of the worker there will
not be subject to the requirements of this section of the regulation
(see IV.O.1.b and c, below). The following discussion of the short-term
placement option is, therefore, based on the assumption that the H-1B
worker(s) will be temporarily placed at worksites which are not covered
by an LCA.
Prior to promulgation of the short-term placement option, an
employer was not permitted to employ a worker at a worksite in any area
unless the employer had a certified LCA covering that area of
employment. Section 655.735(b)(4) of the 1994 Final Rule provided the
short-term placement option, whereby "the employer's placement(s) of
H-1B nonimmigrant(s) at any worksite(s) in an area of employment not
listed on the employer's labor condition application(s) shall be
limited to a cumulative total of ninety (90) workdays within a three-
year period, beginning on the first day on which the employer placed an
H-1B nonimmigrant at any worksite within such area of employment."
This provision was intended by the Department to allow employers
greater flexibility in deploying their H-1B workers in response to
business needs and opportunities in new areas. The Department
recognized that an employer could, in any such situation, choose to
file a new LCA covering the new worksite at which it intended to place
H-1B workers. However, the Department sought to provide a mechanism by
which an employer--desiring to move its H-1B worker(s) quickly, or
contemplating a temporary operation in a new location--could be
accommodated under the program without the delay or obligations
involved in filing a new LCA. With that goal in mind, the regulation
authorized an employer to use H-1B worker(s) at worksite(s) in an area
of employment not covered by an existing LCA for a total of 90 workdays
within a three-year period, without having to file a new LCA for that
new area. Essentially, the Department created a limited exception to
the rule that there must be an LCA covering every worksite at which an
H-1B worker is employed. By creating this exception, the Department
enabled employers wishing to use H-1B worker(s) to respond immediately
to an opportunity or a problem in a non-LCA location without waiting to
prepare and file an LCA for that location. If the situation requiring
quick response by H-1B worker(s) was resolved within the regulation's
"short-term" window, then a new LCA would never be required. If, on
the other hand, the H-1B worker(s) would be needed at worksite(s) in
the new area for a longer period of time, the employer would have ample
time to prepare and file a new LCA while already using the H-1B
worker(s) there. The "short-term" placement regulation set forth in
the 1994 Final Rule specified that the "short-term" 90-day period
would be calculated by totaling all days of work by all the employer's
H-1B workers in the area of employment (covering all worksites within
that area), beginning with the first workday of any H-1B worker at any
worksite in that area. The 90-day period was applied separately to each
new area of employment (i.e., a separate 90-day period was available
for each new city or commuting area).
This provision was enjoined because of lack of appropriate notice
and comment, in the NAM decision. In the meantime, the provision was
published for comment in the October 31, 1995, Proposed Rule. The
Department received eight comments in response to the 1995 proposed
rule. All eight commenters considered the proposed "short-term"
placement option to be unworkable. Several commenters (ACIP, Intel,
icrosoft, Motorola, NAM) described this option as particularly
burdensome to employers with many employees in positions where movement
is required as a normal incident of job duties.
ACIP, Intel, and Microsoft commented that large employers, with
many employees dispersed over a number of worksites, did not have the
practical ability to keep track of cumulative work days for H-1B
workers for every location to which the employees travel for business.
icrosoft added that the "short-term" placement option effectively
prevented H-1B employees from participating in joint development
projects with development partners. Microsoft recommended that the rule
be revised to increase the number of short-term placement days from 90
to 180 and that the regulation impose the time test on a per employee
basis, rather than on a location basis; apply it to a specific worksite
and not any worksite within the area of employment; and require a new
LCA only when the principal place of employment is changed. Intel and
ACIP recommended that the Department revise its approach to the roving
employee to one which differentiates between companies that are
dependent on foreign workers (employee base is comprised of more than
15 percent
H-1B workers) and those that are not dependent. Such a system, Intel
opined, would enable the Department to better focus its enforcement
activities, while not penalizing non-dependent employers with excessive
paperwork. ACIP further suggested that additional paperwork
requirements should apply only when travel to another location involves
"performance of services" and the H-1B worker does not remain under
the "sole control" of the H-1B employer. ACIP also suggested that
additional H-1B workers should be able to travel to any location for
which an LCA is already on file for that employer and occupation,
without any additional paperwork. AILA and NAM objected to the
cumulative nature of the proposed rule and its application to an entire
area, rather than to a given work site. ACIP, along with Coopers &
Lybrand and CBSI, recommended that the 90-day limit should apply to one
employee at one specific worksite, rather than for all of the
employer's H-1B workers.
Based on the comments received in response to that 1995
publication, the 1999 NPRM proposed and requested comments on a
modified version of the provision--allowing the employer to utilize the
"short-term" placement option in an area of employment without an LCA
until any individual
H-1B worker works for 90 days at any worksite or combination of
worksites in the area of employment. Under the proposal, the 90
workdays would be counted on a per-worker basis. The proposal specified
that as soon as one H-1B worker has worked more than 90 workdays within
that area of employment, no more work can be performed by any H-1B
worker at any worksite in that area unless, and until, the employer
files and ETA certifies an LCA for the area. In other words, the entire
workforce and all worksites in the area of employment would be subject
to a new LCA once any one H-1B worker has worked 90 days in a three-
year period in the area.
Twenty commenters addressed the NPRM revisions to the short-term
placement rule, including those who commented in both 1995 and 1999.
The AFL-CIO objected to the existence of a short-term placement
option. It expressed the view that the Department had given H-1B
employers an unnecessary and harmful "benefit of the doubt" in the
proposed regulation, and that employers may use short-term placement to
avoid prevailing wage and notice requirements.
[[Page 80187]]
Several commenters considered the rule to be complex and burdensome
for employers. Seven commenters (ACIP, AILA, Cowan & Miller, Rubin &
Dornbaum, White Consolidated Industries, Network Appliance, FHCRC)
stated that the Department's proposal unrealistically requires the
human resources staff at a large company to keep track of personnel
movement from multiple divisions or offices to various customer sites
around the country. Three commenters (Senators Abraham and Graham,
Congressional commenters, and Oracle) stated that the Department has no
authority, explicit or implicit, to impose what they believe is a
complex monitoring requirement under the rule.
AILA stated that the Department's proposed modification to the rule
was unresponsive to employers' fundamental concerns. AILA recommended
that the regulation should have no bright-line test for the amount of
time constituting temporary placement versus permanent re-assignment to
the new non-LCA worksite. AILA suggested that the distinction between
temporary and permanent placement should be based "on all of the facts
and circumstances of the situation," including such facts as whether
the H-1B worker's "place of abode" has changed, whether the worker's
business card shows the new work address, and whether the worker has a
phone line and work station at the new worksite. AILA also suggested
that, if a time test were to be used in the regulation, it should
operate as a presumption rather than a bright-line rule (i.e., once the
time limit had been reached, a presumption would arise that the
worker's place of employment had changed, but the employer could rebut
the presumption by showing that the placement was temporary in light of
the facts and circumstances). Further, AILA suggested that the
determination of temporary versus permanent placement should be
examined in an enforcement context, rather than be subject to a bright-
line rule.
Eight commenters expressed concerns regarding the proposed
regulation's time test of 90 cumulative workdays for any H-1B worker
over a three-year period. Four commenters (ACIP, AILA, Oracle and SBSC)
stated that limiting an individual worker to an average of 30 workdays
per year (90 days over a three-year period) in any one geographic area
would severely limit a company's ability to do business in the area.
Two commenters (ACIP, AILA) stated that 90 workdays over three years is
unreasonable; they suggested that the regulation allow 90 days per year
rather than 90 days over three years (i.e., three times the cumulative
workdays stated in the NPRM time test). Three commenters (ACIP, ITAA,
and Hammond) suggested that the time test be applied to each H-1B
worker for each worksite (i.e., the 90-day count would restart if the
worker moved to a different worksite within the same area of
employment, and one worker's accumulation of 90 workdays would have no
effect on the rest of the employer's H-1B workforce in that area). In
this regard, two commenters (Hammond, ACIP) commended the Department's
modification of the regulation to provide for a workday count on a
worker-by-worker basis (rather than a cumulative count of all workdays
of all of an employer's H-1B workers in the area of employment), but
ACIP nevertheless asserted that the modified regulation was unworkable
since large employers do not track workers in such a manner. Two
commenters (University of California, ACE) stated that the limitation
of 90 cumulative workdays in a three-year period may have an adverse
effect on academic researchers, whose research activities would not
likely exceed 90 consecutive days but may require more than 90
cumulative workdays in a three-year period. These commenters suggested
an exception to the time test, for researchers working for higher
education institutions, government labs and research affiliated units
for activities directly related to their research where the research
requires travel and work at sites that have one of a kind equipment.
The Department has carefully considered the views of the AFL-CIO,
which objected to the existence of the short-term placement option
because of the potential for employer avoidance of H-1B program
obligations applicable to the workers' new worksites. The Department
shares this concern that employers' obligations be met and that U.S.
workers be protected through the prevailing wage and notice
requirements. However, the Department believes that it is appropriate
and important to provide H-1B employers with a regulatory mechanism to
accommodate legitimate business needs while, at the same time,
preserving the program's protections. Without the regulation's short-
term placement option, an employer would, quite literally, be unable to
place any H-1B worker at any worksite that is not already covered by an
LCA; the employer would have to prepare and file an LCA and await ETA
certification prior to dispatching any H-1B worker(s) to such a
worksite. Considering the fast pace of business--especially in
industries such as information technology--the delay involved in the
LCA process could handicap an employer which needed to use its H-1B
workers to respond to a business need or opportunity at a non-LCA
worksite. The Department considers the short-term placement option to
be a reasonable means by which the employer may meet its obligations
both in its business and in the H-1B program. This option allows the
employer to move its H-1B worker(s) quickly, but also requires that the
employer continue to comply with
H-1B standards (e.g., paying "home base" wages plus travel expenses
to H-1B worker(s) in short-term placement). By setting a limitation on
short-term placements, the regulatory provision also assures that the
employer which needs to use its H-1B worker(s) at the new worksite
beyond such a time-frame will have to fully comply with all statutory
obligations for that location (e.g., provide notice, obtain local
prevailing wage rate and make any pay adjustments needed to meet that
rate).
The Department recognizes that some employers and interest groups
view the short-term placement option as impractical and burdensome.
These commenters view the regulation as requiring employers to keep
detailed records of placement of H-1B worker(s) to non-LCA worksite(s)
in order to ensure that the workday limit is not exceeded by any
worker. The Department considers it important to emphasize that the
short-term placement regulation creates an option for the employer, and
that no employer is required to use this provision. Further, the
regulation does not impose any recordkeeping requirements on an
employer that chooses to make short-term placements; the employer may
utilize any appropriate means to ensure that the workday limit is not
exceeded. Obviously, an employer may avoid all the perceived
"burdens" of the short-term placement regulation simply by
withholding its H-1B worker(s) from all non-LCA worksites until after
the LCA filing process is completed and the worker(s) can be sent to
the new worksites pursuant to new LCAs. Or, an employer may promptly
file a new LCA when the first H-1B worker is sent to a non-LCA
worksite, so that the LCA is certified well before the workday limit is
reached.
The Department also reminds employers that--regardless of whether
they are taking advantage of the short-term placement option--they are
obliged to be vigilant in maintaining their compliance with the H-1B
[[Page 80188]]
program's requirements, many of which are worksite-specific. The
Department presumes that employers are taking appropriate steps to
assure such compliance, which would logically include the employer's
being aware of the locations of its H-1B worker(s). An employer which
is unable to determine the whereabouts of its H-1B worker(s) would be
handicapped in assuring that the worker(s) are employed in full
compliance with an approved LCA (e.g., worksite notice, strike/lockout
prohibition, local prevailing wage rate) or in accordance with the
short-term placement option (e.g., workday limitation, travel costs).
The Department has carefully considered but is unable to
accommodate the suggestion that the short-term placement option have no
"time test" but, instead, allow a post hoc determination of temporary
versus permanent placement based on "all the facts and
circumstances." Such an approach would, in the Department's view, be
too vague to be effective from either the employer's or the worker's
perspective. A bright-line test, based on workdays, affords certainty
to the employer and to workers regarding applicable standards (e.g.,
clarity as to when a new prevailing wage or notice would be needed).
After fully considering the commenters' views, however, the
Department has concluded that the NPRM's time test--90 cumulative
workdays for any one H-1B worker at any worksite or combination of
worksites in one area of employment over a three-year period--should be
modified to provide a more reasonable accommodation for employers'
business needs. In the Interim Final Rule, the Department has
maintained the worker-by-worker count of workdays (which most
commenters endorsed) and has made an annual allocation, rather than a
three-year accumulation, of workdays (which several commenters
suggested). In addition, the Interim Final Rule incorporates the
concept of short-term placement being determined, in part, based on
facts such as the H-1B worker's maintenance of his/her workstation at
the "home office," as indicated by one of the commenters. Using these
concepts, the Interim Final Rule provides that an employer may make a
"short-term" placement or assignment of an individual H-1B worker at
any worksite or combination of worksites in a non-LCA area for a total
of 30 workdays in a one-year period (either the calendar year or the
employer's fiscal year, whichever the employer chooses). The Rule also
provides that the placement may be expanded by as much as an additional
30 workdays (thus, 60 workdays in a one-year period) if the employer is
prepared to show that the worker maintains a workstation at the home
office, spends a substantial amount of time at the home office, and
maintains his/her "place of abode" in the area of the home office.
Thus, under this regulation, the employer would be able to place an
individual H-1B worker at worksite(s) in a non-LCA area for as many as
60 workdays in a one-year period, and have that placement be considered
"short-term" so as not to trigger the requirements for filing and
complying with a new LCA for the area of employment. Once an H-1B
worker exceeds the workday limitation in a one-year period, the
employer would not be permitted to continue the placement of that
worker or any other H-1B worker in the same occupation in that area of
employment, until one year from the beginning of the next one-year
period (either the beginning of the next calendar year, or the
beginning of the employer's next fiscal year) or until an LCA is in
place.
The Department believes that any greater presence by an employer's
workforce in an area cannot be considered short-term and should require
the employer both to provide notice to the local workforce and to pay
local prevailing wages. Under the Interim Final Rule, the employer may
choose how to use the annual available workdays in placing an H-1B
worker "temporarily" at worksite(s) in the area of employment (i.e.,
use them all consecutively, or at different times within one year).
While some other measurement might have been preferred by some
commenters, the Department believes that, as a matter of common sense
and fairness, a worker's placement at a worksite for more than the
equivalent of 12 normal workweeks in a calendar year (60 workdays,
five-day work weeks) cannot reasonably be characterized as "short-
term," whether the workdays are taken in one block or spread over a
period of time.
The Department recognizes that some commenters have criticized the
regulation as being confusing and difficult to use. Therefore, the
Interim Final Rule contains clarifying changes which make the provision
more user-friendly. For example, the Rule includes a definition of the
"one-year period" for short-term placements (i.e., either the
calendar year or the employer's fiscal year, whichever the employer
chooses) and provides a clear description of the employer's choices of
actions when the time limit for short-term placement has been reached
(i.e., file an LCA to continue using H-1B workers, or discontinue use
of H-1B workers until the next one-year period begins). These
clarifications--made in response to commenters's concerns--do not
affect the substantive requirements of the regulation.
The Department has concluded that the same standards should apply
to all H-1B employers. A profusion of time tests and rules for
different industries or types of employers would increase the
complexity of the regulation without appreciable benefit in achieving
the purposes of the program. The employer's option of timely filing an
LCA for the location should alleviate any "burdens" which might
otherwise argue for special rules or exceptions for certain industries.
One commenter (ACIP) suggested that the regulation should authorize
employers to use a "national LCA" which would permit free movement of
H-1B workers to any and all worksites around the country without the
need to monitor the number of workdays at any particular worksites.
According to ACIP, some employers pay a wage which is greater than the
prevailing wage in any part of the country, as measured by the OES
survey, the source of prevailing wage determinations issued by the
Employment Service, or other published, nationwide data sources, so
that their placements of H-1B workers at any worksites (whether
temporarily or permanently) would have no adverse impact on local
wages. Since this concept of a "national LCA" was not set forth for
notice and comment in the NPRM, the Department cannot consider the
matter for purposes of the Interim Final Rule. However, the Department
is of the view that the concept warrants consideration. The Department,
therefore, proposes it here for comment and possible inclusion in the
Final Rule. In particular, the Department seeks comments as to whether
such an LCA would be feasible under the statutory scheme, and also
seeks information and suggestions as to how such an LCA would address
each of the statutorily-prescribed attestation elements (e.g.,
collective bargaining notice or worksite notice; local prevailing wage
rates; strike/lockout).
The Department wishes to emphasize that it considers the various
components of the short-term placement rule to be non-severable. After
the injunction was issued by the court in NAM, some confusion arose
concerning the effect of the injunction--i.e., whether short-term
placements were permitted without any time restriction, or whether
employers would be required to place H-1B workers only at worksites in
areas of
[[Page 80189]]
employment with certified LCAs. The Department has approached this
matter on a case-by-case basis, taking into account the confusion
created by the NAM decision. However, with the issuance of this Interim
Final Rule, the Department considers all such confusion to have been
dispelled. Therefore, the Department cautions employers that--except in
accordance with the strict requirements of the short-term placement
option--the H-1B provisions of the INA and the Department's regulations
require that an LCA be filed for any and all worksites where H-1B
workers are employed. Violations of any of the provisions of the short-
term placement option will result in its inapplicability in its
entirety.
i. When Is the Short-Term Placement Option Available? (Sec. 655.735)
As explained in the NPRM, the short-term placement option would be
available only when an employer wants to send its H-1B worker(s) who
are already in the United States under an H-1B petition supported by an
LCA filed by the employer to a new worksite which is in an area of
employment for which the employer does not have an LCA in effect for
the occupation. After the 90-workday limit is reached by any one H-1B
worker, the short-term placement option would no longer be available
for any H-1B worker(s) for any worksite in that area of employment; the
employer would be required to have an LCA in effect for the new area
and to be in full compliance with all the LCA requirements. The NPRM
explained that the short-term placement option would not be available
where the H-1B worker has just arrived in the United States (or has
adjusted status), in which case the worker must be placed at a place of
employment listed on the LCA supporting the H-1B petition for the
worker. In addition, the short-term placement option would not be
available where the employer is moving its H-1B worker(s) among
worksites in one or more areas covered by valid LCAs; the worker(s)
would be subject to the requirements of those LCAs (e.g., notice,
prevailing wage, non-displacement for dependent employers) that cover
those worksites. For example, as the NPRM explained, the short-term
placement option cannot be used where the employer has an LCA in effect
for an area of employment in order to avoid "overcrowding" the LCA
with H-1B workers. As a matter of enforcement discretion in determining
whether a violation exists in an "overcrowded" LCA situation, the
Department will look at all the facts and circumstances in order to
determine whether the employer is acting in good faith to assure
compliance with the program, including taking steps to file new LCA(s)
and rectify the overfilling of the numerical limitation specified by
the employer itself on the initial LCA(s).
The Department received three comments addressing the specifics of
the availability of the short-term placement option. ACIP commended the
Department for demonstrating flexibility and for clarifying that an
employer may file LCAs with multiple, open slots and use those slots
for roving employees. However, ACIP sought clarification that short-
term placements under the 90-workday rule do not "fill" an open LCA
slot. ACIP also sought clarification of the NPRM discussion of the
temporary placement of H-1B workers "overfilling" a valid LCA,
particularly concerning the Department's use of enforcement discretion
in such situations. ACIP suggested that, due to the lengthy processing
time of LCAs, the Department should permit the employer to "overfill"
an LCA. The second commenter, ITAA, stated that, in its view, the
Department's past practice was to ignore "LCA overcrowding" if the
employer met the notice and wage requirements for each worker at the
site. ITAA observed that, under the proposed regulation, the Department
stated an intention to use its enforcement authority and cite
violations for "LCA overcrowding" if the number of H-1Bs
"significantly exceeds" the number of openings listed on the LCA.
ITAA anticipated that DOL would assess penalties for "misrepresenting
a material fact" or a "substantial failure" to accurately list the
information on the LCA. Therefore, ITAA requested a definition of
"significant" overcrowding of the LCA. The third commenter, Latour,
suggested that the Department be flexible regarding "overfilled" LCAs
and consider employers' explanations in those situations where the
"overfill" is significant.
As for the concerns of the commenters regarding the potential use
of the short-term placement option to deal with situations of
"overcrowded" or "overfilled" LCAs, the Department points out that
the statute expressly requires that the employer's LCA "specif[y] the
number of workers sought," and further provides that a substantial
failure to comply with this requirement can result in the assessment of
a $1,000 civil money penalty and one-year debarment (8 U.S.C.
212(n)(1)(D) and 212(n)(2)(C)(i)). The number of H-1B workers taking
jobs in a local labor market is a matter which Congress obviously
considers to be significant, and the Department cannot set aside the
statutory requirement that the employer accurately attest to this
specific information. The Department is not aware of serious problems
concerning overcrowded LCAs since the H-1B program's inception. Thus,
the Department has used, and will continue to use, a rule of reason in
assessing such situations; violations will not be cited as long as the
employer is showing good faith and is taking steps to come into
compliance. The determination would necessarily be made on a case-by-
case basis, and it is not feasible to issue bright-line rules such as
some particular degree of overcrowding which would be tolerable.
With respect to the query as to whether the use of the short-term
placement option would affect the "overcrowding" determination, the
Department emphasizes that where an LCA is in effect, the short-term
placement option is simply not applicable. The LCA's terms--including
its specification of the number of H-1B workers to be employed in the
area-- are binding on the employer, except with respect to an H-1B
worker who moves into and out of the area without establishing a
"worksite" there (see IV.O.1.b, below).
ii. What Are the Standards for Payment of the H-1B Worker's Travel
Expenses Under the Short-Term Placement Option? (Sec. 655.735(b)(3),
Previously Set Forth in Appendix B, Section a)
A component of the proposed short-term placement option is the
requirement that employers who wish to avail themselves of this option
pay travel-related expenses at a level at least equal to the rate
prescribed for Federal Government employees on travel or temporary
assignment, as set out in the General Services Administration (GSA)
regulations. The NPRM explained that the GSA standards were used as a
benchmark because the Department believes that some basic, universally
available measures are needed, and because the GSA standards (based on
surveys of travel costs) are appropriate for this purpose. The NPRM
proposed to modify the provisions in the current Final Rule (enjoined
by NAM), so as to better explain the uses of the GSA standards (e.g.,
no payment to the worker for lodging would be required where the worker
actually incurs no lodging costs).
The nine commenters on this proposal (ACIP, AILA, Cowan & Miller,
Hammond & Associates, Intel, ITAA, Latour, Rubin & Dornbaum, White
Consolidated Industries) were
[[Page 80190]]
unanimous in their opposition to a regulation that would require
employers to have separate travel reimbursement standards for H-1B
workers than for other employees. These commenters suggested that the
standard for H-1B workers, like all other workers, should be
reimbursement for actual expenses incurred while on travel.
The Department has fully considered these comments, as well as its
own post-NAM enforcement experience. During the post-NAM period, when
the regulation has been enjoined, the Department has been enforcing
actual expense reimbursement for all H-1B business travelers. In these
enforcement proceedings, the Department has not encountered problems
pertaining to abusive practices or difficulties in proof of actual
expenses, since it has found that employers in fact keep a record of
expenses as a prudent business practice. Therefore, the Department is
adopting the commenters' recommendation. The regulation is modified in
this Interim Final Rule to specify that employers who use the short-
term placement option must reimburse H-1B workers for the actual
expenses incurred during their short-term placement. In those rare
instances where the employer, in an enforcement action by DOL, is
unable to demonstrate the actual expenses incurred, the Department will
use the GSA standards to determine whether the reimbursement was
sufficient and to assess back wages if appropriate.
b. What Constitutes an H-1B Worker's "Worksite" or "Place of
Employment" for Purposes of the Employer's Obligations Under the
Program? (NPRM Section P.1) (Sec. 655.715)
The H-1B program's requirements largely focus on the H-1B worker's
"place of employment" or "worksite." That location controls the
prevailing wage determination, identifies where the employer must
provide notice to workers, and specifies the scope of the strike/
lockout prohibition. A location which is not a worksite, on the other
hand, would not trigger those requirements, even if the H-1B worker
were at that location in the course of the performance of job duties.
The NPRM echoed the previous rules issued under this program at
Sec. 655.715, which define "place of employment" as "the worksite or
physical location where the work is actually performed." However, the
NPRM provided further interpretation of this term (as part of proposed
Appendix B to Subpart H of the regulations), in an effort to better
inform the users of the program and to alleviate some apparent
confusion on this matter.
The proposed guidance was in response to some employers' concern
that a strict or literal application of the "place of employment"/
"worksite" definition could lead to absurd and/or burdensome
compliance requirements with regard to the employer's obligation of
providing required notice and adjusting the H-1B worker's wages to
comply with different prevailing wages for work at various locations.
Employers raised questions regarding whether the "worksite"
definition would be applicable (thus either causing the worker's time
at that location to be counted towards the 90-workday ceiling, or
triggering compliance obligations under an LCA covering that location)
where an H-1B worker has a business lunch at a local restaurant, or
appears as a witness in a court, or attends a training seminar at an
out-of-town hotel.
The NPRM, in Appendix B, proposed that the term "place of
employment" or "worksite" does not include any location where either
of two criteria is satisfied:
1. An H-1B worker who is stationed and regularly works at one
location is temporarily at another location for a particular individual
or employer-required developmental activity such as a management
conference, a staff seminar, or a formal training course (other than
"on-the-job-training" at a location where the employee is stationed
and regularly works). For the H-1B worker participating in such
activities, the location of the function would not be considered a
"place of employment" or "worksite," and such location--whether
owned or controlled by the employer or by a third party--would not
invoke H-1B program requirements with regard to that worker at that
location. However, if the employer uses H-1B nonimmigrants as
instructors or resource or support staff who continuously or regularly
perform their duties at such locations, the locations would be "places
of employment" or "worksites" for any such workers and, thus, would
be subject to H-1B program requirements with regard to these workers.
2. The H-1B worker's presence at that location satisfies three
requirements regarding the nature and duration of the worker's job
functions there--
a. The nature and duration of the H-1B worker's presence at the
location is due to the fact that either the H-1B worker's job is by
nature peripatetic, in that the normal duties of the worker's
occupation (rather than the nature or the employer's business) require
frequent travel (local or non-local) from location to location, or the
H-1B worker spends most of the time working at one location but
occasionally travels for short periods to other locations; and
b. The H-1B worker's presence at the locations to which the worker
travels from the "home" worksite is on a casual, short-term basis,
which can be recurring but not excessive (i.e., not exceeding five
consecutive workdays for any one visit); and
c. The H-1B worker is not at the location to perform work in an
occupation in which workers are on strike or lockout.
The NPRM provided examples to illustrate these criteria, and
explained that for an H-1B worker who performs work at a location which
is a non-worksite (under either criterion 1 or criterion 2), the
"place of employment" or "worksite" for purposes of notice,
prevailing wage and working conditions is the worker's home base or
regular work location. Further, the NPRM stated that, in applying this
interpretation of "place of employment" or "worksite," the
Department will look carefully at any situations which appear to be
contrived or abusive, such as where the H-1B worker's purported "place
of employment" is a location other than where the worker spends most
of his/her time, or where the purported "area of employment" does not
include the location(s) where the worker spends most of his/her time.
The Department received nine comments on the NPRM "worksite"/
"place of employment" proposal.
Several commenters addressed the general matter of whether the
proposed Appendix B guidance was appropriate. Senators Abraham and
Graham and Oracle remarked that "place of employment" is a term with
a plain meaning (in their view, the location where the individual is
employed); they stated that, in modern commerce, workers employed in
one location frequently must travel to other locations to perform their
duties and that, when they do so, they are not employed there but are
merely visiting. Rapidigm, a staffing firm, requested a clearer
definition of "worksite," and asked whether the amount of time spent
at a location is the only factor, regardless of the nature of the work
or who has control or supervision of the worker. AILA urged that the
proposed Appendix B be dropped because, in its view, it creates an
absurd result and is "micromanagement" by the Department.
A number of commenters (ACIP, Intel, ITAA, Latour, Godward)
expressed their approval of the Department's recognition that not all
activities engaged in by a worker occur at a "worksite." However,
some commenters
[[Page 80191]]
were dissatisfied with the NPRM's proposal of five consecutive workdays
as the test for a "casual, short-term" stay for purposes of a non-
worksite visit by an H-1B worker. ACIP, Intel and ITAA stated that this
standard is overly restrictive and unrealistic. ACIP suggested that the
Department should not be concerned with the length of stay, as long as
the worker is engaged in non-worksite activities; ACIP recommended
that, if a duration-of-stay standard was adopted, it should be 10
workdays at least. ITAA expressed a similar view that "casual, short-
term basis" should be defined to include visits of up to10 consecutive
work days to accommodate training courses, business seminars, and other
events which may last between five and 10 days. Intel recommended that
the focus should be on the purpose of the trip, rather than on the
length of stay.
The Department seeks to achieve the purposes of the Act which
focuses its protections for workers on the "place of employment,"
while accommodating the legitimate needs of employers using the H-1B
program. The regulation, since the inception of the program, has
recognized that the identification of the "place of employment"
cannot be merely a matter of the employer's designation, since that
approach would not serve the purposes of protecting workers' prevailing
wages and other rights. Instead, the regulation identifies the "place
of employment" by looking to the activities of the H-1B worker,
defining "place of employment" as "the worksite or physical location
where the work is actually performed" (20 CFR 655.715). However, the
Department has determined that the regulation must afford reasonable
flexibility so as to take into account the common practices of
employers whose workers may have more than one "place of employment"
over a period of time or, who may perform duties at various locations
which should not, for practical reasons, be characterized as "places
of employment." In this regard, the Department shares the view of
those commenters who observed that workers may legitimately "visit"
locations to perform job duties without in all circumstances making
those locations into "places of employment" for purposes of the H-1B
program.
After consideration of all the comments, the Department has
concluded that the five cumulative workdays standard is a reasonable
and appropriate measure of a casual, short-term "visit" where a
worker's job is by its nature peripatetic. A full, ordinary workweek of
five days is, in the Department's view, a practical and reasonable
measurement of a business "visit" by a worker performing job duties.
Further, the worker may make recurring, short "visits" to the
location, in order to perform job duties. On the other hand, the
Department believes that more flexibility is appropriate for a worker
who spends most of his or her time at one location but occasionally
travels for short periods to other locations. Under these
circumstances, the Department believes that a duration of up to 10
workdays is appropriate. The Interim Final Rule is modified
accordingly.
With regard to the concern of some commenters that a five-workdays
time frame would be unrealistic for developmental activities such as
training and business seminars, the Department points out that there
is, in fact, no time frame for developmental activities. Such
activities are specifically addressed under criterion 1 rather than
under criterion 2, which contains the business "visit" concept.
Finally, based on considerations of clarity and ease of use of the
regulations, the Department has determined that the criteria for
distinguishing between a worksite and a non-worksite should be included
in the regulatory text which defines the statutory term "place of
employment." Thus, in this Interim Final Rule, this material appears
in the regulation at Sec. 655.715, rather than in Appendix B as
proposed.
c. Under What Circumstances May an H-1B Worker "Rove" or "Float"
From His/Her "Home Base" Worksite? (NPRM Section P.2 and Proposed
Appendix B, section b)
The statute and regulations do not permit the employment of H-1B
workers as "roving" or "floating" employees for whom no particular
LCA, and thus no specific set of LCA requirements, would be applicable.
However, as explained in the NPRM, the Department recognizes that some
employers need to move their H-1B workers from place to place in order
to meet the needs of clients or to respond to business problems and
opportunities. This practice of moving H-1B workers is sometimes
described as having the workers "rove" or "float" from a "home
base" worksite. To assist employers in understanding how this practice
can be accommodated under the program, Appendix B of the NPRM proposed
guidance concerning the three circumstances in which an H-1B worker
could legitimately "rove" or "float" from his/her home base
worksite to perform job duties at some other location. This guidance,
like the other provisions of proposed Appendix B, was initially
developed as interpretive guidance that the Department had planned to
issue independently of the regulations.
The Department received two comments on its proposed guidance.
AILA urged that the Appendix B guidance be dropped, because it
considered both the "rove"/"float" discussion and the
interpretation of "worksite" to be attempts by the Department "to
micromanage employers' commerce" through "peculiar workplace rules."
ITAA requested clarification concerning the interface between the
Department and INS policies concerning when an LCA for a "new" area
of employment may be substituted for the "original" LCA, and whether
such a substitution would require the filing of a new petition. The
Department recognizes that employers need clarity regarding this
matter, and will consult with the INS with the intention of providing
official, coordinated guidance.
The Department has concluded, upon further review, that
incorporation of the interpretive guidance in proposed Appendix B,
section b, into the regulation is not necessary or appropriate at this
time. The Department plans to issue separate interpretive guidance
explaining the inter-relationship between the various provisions
regarding employment of
H-1B nonimmigrant workers outside of their home work station.
2. What Are an Employer's Wage Obligations for an H-1B Worker's
"Nonproductive Time"? (See IV.H, Above)
3. What Are the Guidelines for Determining and Documenting the
Employer's "Actual Wage"? (Appendix A to Subpart H)
Section 212(n)(1)(A)(i)(I) of the INA as amended by the Immigration
Act of 1990 (IMMACT 90) and the Miscellaneous and Technical Immigration
and Naturalization Amendments of 1991 (MTINA) requires that an employer
seeking to employ H-1B nonimmigrants agree that it will pay the
nonimmigrants at least the higher of the prevailing wage or the
"actual wage level paid by the employer to all other individuals with
similar experience and qualifications for the specific employment in
question."
In explaining the amendments to the H-1B program made by MTINA,
Senator Reid explained Congress intended "specific employment to mean
the specific position held by the H-1B
[[Page 80192]]
worker at the place of employment." Furthermore, by "similar
experience and qualifications," Congress intended consideration of
"experience, qualifications, education, job responsibility and
function, specialized knowledge, and other such legitimate factors"
137 Cong. Rec. S18243 (Nov. 26, 1991).
The Department's regulations explaining the "actual wage"
requirement, as amended in 1992 and 1994, provide at Sec. 655.731(a)(1)
that in determining the actual wage, employers may take into
consideration experience, qualifications, education, job responsibility
and function, specialized knowledge, and other legitimate business
factors. Legitimate business factors are "those that it is reasonable
to conclude are necessary because they conform to recognized principles
or can be demonstrated by accepted rules and standards." The actual
wage is the amount paid to other employees with substantially similar
experience and qualifications with substantially the same duties and
responsibilities, or if there are no such employees, the wage paid the
H-1B nonimmigrant. In addition, the regulation requires that
adjustments such as cost of living increases or other periodic
adjustments, higher entry rate due to market conditions, or the
employee moving into a more advanced level of the occupation, be
provided to H-1B nonimmigrants where the employer's pay system or scale
provides for such adjustments during the LCA.
The regulations further provide at Sec. 655.731(b)(2) that the
employer shall retain documentation specifying the basis it used to
establish the actual wage, i.e., showing how the wage for the H-1B
worker relates to the wages paid other individuals with similar
experience and qualifications for the specific employment at the place
of employment. The documentation is also required to show that after
any adjustments in the employer's pay system or scale, the wage paid is
at least the greater of the adjusted actual wage or the prevailing
wage. In addition, the regulations provide at Sec. 655.760(a)(3) that
the public access file shall contain "[a] full, clear explanation of
the system that the employer used to set the 'actual wage' * * *,
including any periodic increases which the system may provide. * * *"
This explanation may be in the form of a memorandum summarizing the
system, or a copy of the pay system or scale. Payroll records do not
need to be in the public access file, but are required to be made
available to the Department in an enforcement action.
The Department initially offered guidance on factors to be
considered in making this determination, with examples, in the preamble
to the Interim Final Rule of January 13, 1992 (57 FR 1319). This
guidance, in modified form, was published as Appendix A to Subpart H in
the Final Rule of December 20, 1994 (59 FR 65671). In addition to the
examples set forth in the preamble to the 1992 Interim Final Rule,
Appendix A provided that the employer may take into consideration
"objective standards," and must "have and document an objective
system used to determine the wages of non-H-1B workers." The Appendix
further provided that the explanation of the wage system in the public
access file "must be sufficiently detailed to enable a third party to
apply the system to arrive at the actual wage rate computed by the
employer for any H-1B nonimmigrant." The portions of Appendix A
relating to an objective wage system were enjoined by the court in NAM,
for lack of prior notice and comment. In the meantime, the "Appendix
A" guidance was republished for public comment in the Proposed Rule
dated October 31, 1995 (60 FR 55339).
The Department republished Appendix A for further notice and
comment in the 1999 NPRM, as modified to include job performance among
the legitimate business factors which may be taken into consideration.
The underlying regulatory provisions at Secs. 655.731(a)(1),
655.731(b)(2), and 655.760(a)(3) were not open for notice and comment.
The preamble explained that under Appendix A as proposed, the employer
would not be required to create or to document an elaborate "step" or
"grid" type pay system, or any other complex, rigid system. Rather,
the employer's actual wage system could take into consideration any
objective, business-related factors relating to experience,
qualifications, education, specific job responsibilities and functions,
job performance, specialized knowledge and other business factors. The
use of any or all of the factors would be at the discretion of the
employer. All factors used in the employer's actual wage system would
need to be applied to H-1B nonimmigrant workers in the same,
nondiscriminatory manner as the factors would be applied to U.S.
workers in the occupational classification. Further, the preamble
explained that the explanation of the actual wage system in the public
access file must be sufficiently detailed to enable a third party to
understand how the wage system would apply to a particular worker and
"to derive a reasonably accurate understanding of that worker's
wage."
The Department received nine comments on proposed Appendix A in the
1995 Proposed Rule, and 15 (including two 1995 commenters) in response
to the 1999 NPRM. Most 1995 and 1999 commenters viewed the Appendix
guidance as inconsistent with the INA and demonstrating a lack of
understanding of corporate pay systems. The comments focused on an
employer's responsibilities in making the actual wage determination,
what factors should be considered in making the determination, how the
factors should be considered, when the factors should be considered,
and the documentation required to enable a third party to apply the
wage system to determine the actual wage rate.
Senators Abraham and Graham, the Congressional commenters, AILA (in
1995 and 1999 comments), FHCRC, Hammond, Network Appliance, Oracle,
Rubin & Dornbaum, Sun Microsystems, the Massachusetts Institute of
Technology (MIT) (1995 comment) and the National Association of
anufacturers (NAM) (1995 comment) contended that the INA does not
require, nor did Congress intend, that employers be required to create
and document an objective wage system for their U.S. workers to meet
the requirement to pay H-1B workers no less than the greater of the
actual or prevailing wage. AILA indicated further that the INA requires
the actual wage to be paid only to H-1B workers, and does not dictate
the wages of U.S. workers. NAM indicated that this requirement ignores
the realities of how businesses establish salaries and epitomizes
regulatory overreach.
Several commenters (AILA, ACIP, Kirkpatrick & Lockhart, Latour and
Sun Microsystems) disagreed with the Appendix A requirement that an
employer use only objective factors in determining the actual wage
while others offered suggestions on factors to be considered.
Kirkpatrick & Lockhart indicated that by limiting this determination to
objective factors, the Department was eliminating an employer's
discretion in hiring and ignoring the reality that subjective as well
as objective factors are evaluated in compensating employees in the
corporate world. Frost & Jacobs (1995 comment) suggested that the
Department include "performance level" as a legitimate business
factor in determining actual wage. ITAA agreed with the Department's
addition of "job performance" as an acceptable business factor in the
January 5, 1999 NPRM.
[[Page 80193]]
After carefully considering all the comments, the Department has
concluded that Appendix A--which was created in response to employers'
requests for technical guidance--has not served its intended purpose
and has, instead, caused some confusion. The Department has, therefore,
decided that Appendix A will not be included in the Interim Final Rule.
The controlling standards for determining and documenting an employee's
"actual wage" are contained in the current regulation, 20 CFR
655.731(a)(1), 655.731(b)(2), and 655.760(a)(3) (none of which were
opened for comment in the NPRM). If the need arises in the future, the
Department, as appropriate, will provide compliance advice or technical
assistance further explaining the current regulation.
The commenters' reactions to the proposed Appendix A are based, in
large part, on a lack of understanding of the fact that the
Department's regulations (20 CFR 655.731(a)(1), 655.731(b)(2), and
655.760(a)(3))--which the proposed Appendix A was intended to explain
and clarify--do not direct employers to develop a special corporate-
wide wage system specifically to support the employment of H-1B
nonimmigrants. The Department agrees with the commenters that section
212(n)(1)(A)((i)(I) of the INA does not require an employer seeking H-
1B nonimmigrants to create an objective wage system for its U.S. and H-
1B workers. The Department is imposing no obligation to create such a
system.
Section 655.760(a)(3) requires that the factors used be legitimate
business factors such as experience, qualifications, education,
specific job responsibilities and functions, specialized knowledge, and
job performance. The use of any or all of these factors is at the
discretion of the employer. Whatever factors are used in the employer's
actual wage system must be applied to H-1B nonimmigrant workers in the
same, nondiscriminatory manner that they are applied to U.S. workers.
Furthermore, the factors applied must relate to the statutory standard,
i.e., the workers' experience, qualifications, and job duties.
Accordingly, it is the Department's position that an employer may not
differentiate between the pay of H-1B and U.S. workers based on market
forces, such as the lowest wage a worker is willing to accept.
Similarly, it is inappropriate for an employer to consider factors
which are not relevant to the job and which are not uniformly applied
to H-1B and U.S. workers.
The Appendix A guidelines were drafted under the presumption that
all U.S. businesses use wage systems to determine professional salaries
that consider various legitimate business factors. The Department
drafted Appendix A to limit the actual wage determination to objective
legitimate business factors already being used by the employer because
such factors could reasonably be used by the Department in its
enforcement to compare H-1B nonimmigrant and U.S. workers in the
specific employment in question. Although the Department remains
concerned about the inherent difficulty in comparing the pay of workers
based on subjective factors, it is persuaded that some subjective
factors, such as an evaluation of performance levels, may be legitimate
business factors used in setting the actual wage. However, pursuant to
Sec. 655.760(a)(3), the employer continues to be required to describe
the wage system it used to determine the actual wage paid to H-1B
nonimmigrants.
AILA and NAM (1995 comments) disagreed with the requirement that an
employer establish the actual wage based on the "occupation" in which
the H-1B nonimmigrant is employed. The commenters stated that the
statute requires that H-1B workers be paid at least (the greater of the
prevailing or) actual wage of those with similar qualifications and
experience employed in the "specific employment" in question, a
smaller group than dictated by the NPRM. Therefore AILA suggested that
employers should be required to analyze which jobs are comparable for
actual wage purposes, and pay the H-1B worker at least as much as the
employees in those jobs.
The Department agrees that an employer must determine which workers
are the subject of comparison with the H-1B worker in order to
determine the actual wage required to be paid, at a minimum, to the H-
1B worker. The Department also agrees that the appropriate actual wage
determination comparison for H-1B nonimmigrants is to "individuals
with similar experience and qualifications for the specific employment
in question" and not "occupation." However, in many circumstances
this comparison can only be made if the Department is able to review
the employer's compensation system for employees in the occupational
category, since the employer's compensation system for other employees
in the same occupation bears directly on determinations of the actual
wage required to be paid for the specific employment in question.
Intel (1995 comments) and Microsoft (1995 comments) suggested that
the Department allow blanket approval--as meeting actual wage
requirements--for large employers with established "total
compensation" wage systems which meet certain requirements such as
executive bonuses and profit sharing supplements to base salary. The
Department disagrees with this suggestion. The Department is charged
with enforcement of the statutory requirement that the employer pay the
H-1B worker(s) the higher of the actual or prevailing wage. Such
enforcement includes a determination that H-1B workers have, in fact,
been paid at least the actual wage paid to other workers with similar
experience and qualifications for the specific employment--a
determination that can only be made through an examination of the
application of the employer's actual wage system. Furthermore, it would
be inappropriate for the Department to make exceptions for large
employers; the statute indicates no Congressional intent for differing
obligations for employers depending upon the size of their workforce or
the sophistication or apparent generosity of their compensation
systems.
AILA (1995 comments) and NAM (1995 comments) asked how the
Department can determine the actual wage in the absence of
documentation by using an average (as stated in the preamble to the
1995 NPRM, 60 FR 55341), when the express language of the regulation is
that the actual wage is not an average. AILA recommended that if the
Department is allowed to use an average to compute the actual wage,
employers should be able to use an average as well.
The Department is unable to accommodate the recommendation that
employers be authorized to compute the actual wage by averaging the
wages paid to employees. As stated in the preamble to the 1995 Proposed
Rule, the actual wage is not an average. It reflects application of an
employer's actual pay system. Use of the average by the employer would
not satisfy the statutory requirement. However, the Department must
have some method of determining the actual wage and calculating any
back wages due H-1B workers if the employer has not documented and
cannot reconstruct its actual wage system. In such circumstances,
averaging the wages of non-H-1B workers may be an enforcement method of
last resort. The Department would identify U.S. workers in the specific
employment in question with experience and qualifications similar to
the H-1B nonimmigrant and average their wages to determine the actual
wage back wage assessment.
[[Page 80194]]
ITAA requested that an employer be permitted to set an actual wage
range for a particular position, even if some H-1B workers with similar
skills and education make more than others, as long as the workers are
paid within the range and meet the prevailing wage requirement.
The Department agrees that an actual wage range can be used to
determine compliance with the actual wage requirement, provided the
employer's methodology in assigning wages within the range is based on
acceptable, legitimate business factors and the methodology is applied
in the same manner to H-1B nonimmigrants and U.S. workers. This should
result in U.S. workers and H-1B workers with similar skills and
qualifications being paid the same, where their duties and
responsibilities are the same.
MIT (1995 comments), AILA (1995 comments), NAM (1995 comments),
icrosoft (1995 comments), CBSI (1995 comments), Intel, and Rubin &
Dornbaum objected to the requirement to update and document changes to
the actual wage when the employer's pay system or scale provides for
pay adjustments during the validity period of the LCA. They stated that
Section 212(n)(1)(A)(i) of the INA directs that the required wage rate
determination be "based on the best information available as of the
time of filing the application;" thus an actual wage update should be
required only at the time of filing the LCA. AILA further stated that
to require constant reconsideration of the actual wage (like the
prevailing wage) would be a massive burden on employers which Congress
did not intend to impose.
The Department notes that the INA language referred to in the
comments was included in the Miscellaneous and Technical Immigration
and Naturalization Amendments of 1991 (MTINA), Public Law 102-232, 105
Stat. 1733, and refers to the sources of wage information ("the best
information available") that an employer may use when reporting the
appropriate wage on its LCA. 137 Cong. Rec. S18243 (Nov. 26, 1991)
(Statement of Senator Simpson). As Senator Simpson stated, with the
enactment of MTINA, employers were no longer required "to use any
specific methodology to determine that the alien's wage complies with
the wage requirements of the Act and may utilize a State agency
determination, such as SESA, an authoritative independent source, or
other legitimate sources of wage information."
The Department's interpretation of an employer's actual wage
obligation as an ongoing, dynamic obligation has been the Department's
position since the inception of the H-1B program, as provided by
Sec. 655.731(a)(1) of the existing regulations (which were not open for
notice and comment). The regulation explains that the actual wage
obligation includes adjustments in the actual wage. In response to
comments on the 1993 NPRM expressing concern that infrequent prevailing
wage updates would allow an employer to use "stale" wage data, the
Department stated in the preamble to the December 20, 1994 Final Rule
(59 FR 65654): "[T]he "actual wage rate" has been and will continue
to be a "safety net" for the H-1B nonimmigrant. Assuming the actual
wage is higher than the prevailing wage and thus is the required wage
rate, if an employer normally gives its employees a raise at year's
end, or the employer's system provides for other adjustments, H-1B
nonimmigrants must also be given the raise (consistent with employer-
established criteria such as level of performance, attendance, etc.)."
Conversely, if no raises, bonuses, or other updates are provided U.S.
workers throughout the life of the LCA, the
H-1B worker is not entitled to such payments or adjustments. The
Department's interpretation furthers the Congressional intent of parity
in wages and benefits for U.S. workers and H-1B nonimmigrants.
Several commenters (Microsoft (1995 comment), Motorola (1995
comment), Coopers & Lybrand (1995 comment), ITAA, Intel, ACIP, and AILA
expressed strong concern over the requirement that the employer's
compensation system be sufficiently detailed and documented in the
public access file to enable a third party to apply the system to
arrive at the actual wage. The commenters contended that such a
requirement is unrealistic and imposes an impossible burden on
employers. Microsoft (1995 comment) recommended that the pertinent
portion of Appendix A be revised to read: "The explanation of the
compensation system should be sufficiently detailed to illustrate to a
third party, in the event of an enforcement action, how the employer
applied the system to arrive at the actual wage for an H-1B
nonimmigrant." MIT (1995 comment) agreed with the requirement of an
equitable wage system for all employees, and recommended that the
wording of the provision be changed to indicate that only a general
explanation of the compensation system be provided. Similarly, Intel
recommended that the employer be required to provide a general
description of its compensation system sufficient to enable a third
party to clearly understand how wages were determined. Intel also
stated that it was unclear whether the employer had to do a detailed
analysis for each LCA or an overview of the compensation system to
support the third party review. ACIP and AILA indicated that it was
unrealistic to expect a third party to be able to calculate a
particular worker's salary based on the employer's documentation of its
actual wage system. ACIP was troubled that an employer could be
debarred for having inadequate documentation and urged the Department
to eliminate or simplify this requirement. AILA recommended that
employers should make the analysis of comparable employee, decide the
appropriate documentation of the analysis, and leave the rest to
enforcement.
The Department is persuaded that its proposed Appendix A
requirement for a public access file with the detail sufficient to
enable a third party to determine the actual wage rate for an
H-1B nonimmigrant is an impractical requirement for employers. The
explanation of the compensation system found in the public access file
must be sufficiently detailed for a third party to understand how the
employer applied its pay system to arrive at the actual wage for its H-
1B nonimmigrant(s). It is the Department's view that although third
parties may not have the information needed to arrive at the specific
actual wage for the H-1B nonimmigrant(s), the information should be
sufficient to allow them to make a judgement on the potential for an
actual wage problem. At a minimum, the description of the actual wage
system in the public access file should identify the business-related
factors that are considered and the manner in which they are
implemented (e.g., stating the wage/salary range for the specific
employment in the employer's workforce and identifying the pay
differentials for factors such as education and job duties).
Computation of U.S. and H-1B workers' particular wages need not appear
in the public access file; that information must be available for
review by the Department in the event of an enforcement action (such as
in each worker's personnel file maintained by the employer).
4. What Records Must the Employer Keep Concerning Employees' Hours
Worked? (Sec. 655.731(b)(1))
The Department sought further comment on proposed amendments to
Sec. 655.731(b)(1), the basic recordkeeping obligation to support an
employer's
[[Page 80195]]
wage obligation. This provision was published for comment in the
Proposed Rule dated October 31, 1995 (60 FR 55339). An earlier
amendment to Sec. 655.731(b)(1) was promulgated in the Department's
Final Rule of December 20, 1994 (59 FR 65646), which was enjoined by
the court in NAM, for lack of prior notice and comment.
The proposed regulation would require employers to keep specified
payroll records for H-1B workers and "for all other employees for the
specific employment in question at the place of employment." Hours
worked records would be required if (1) the employee is not paid on a
salary basis, (2) the actual wage is expressed as an hourly rate, or
(3) with respect to H-1B workers only, the prevailing wage is expressed
as an hourly rate.
The Department has made a number of accommodations already to
concerns expressed regarding the requirements of this rule,
particularly in regard to the circumstances in which hours worked
records must be maintained. Therefore a detailed rulemaking history is
useful.
The regulations currently in effect at 20 CFR 655.731(b)(1) (1993)
(i.e., the regulations which are not under injunction), require that
payroll records be maintained for H-1B workers and for "all other
individuals with experience and qualifications similar to the H-1B
nonimmigrant for the specific employment in question at the place of
employment." Hours worked records are required if the employee is paid
on other than a salary basis, or if the prevailing wage or actual wage
is expressed as an hourly wage.
The 1994 Final Rule (set forth in the CFR, but enjoined in NAM),
like the current NPRM, required that an employer maintain payroll
records for H-1B workers and for "all other employees for the specific
employment in question at the place of the employment." Upon further
consideration, the Department issued a Notice of Enforcement Position
(60 FR 49505, September 26, 1995) announcing that, with respect to any
additional workers for whom the Final Rule may have applied
recordkeeping requirements (i.e., U.S. workers in the specific
employment in question who did not have similar qualifications and
experience), the Department would enforce the provision to require the
employer to keep only those records which are required by the Fair
Labor Standards Act (FLSA), 29 CFR Part 516. The Department concluded
that, in virtually all situations, the records required by the FLSA
would include those listed under the H-B Final Rule.
In the October 1995 NPRM, the Department proposed to require
employers to retain records of hours worked for all employees in the
same specific employment as the H-B worker if (1) the employee is not
paid on a salary basis, (2) the actual wage is expressed as an hourly
rate, or (3) with respect to H-1B workers only, the prevailing wage is
expressed as an hourly rate. Thus unlike the rule currently in effect
(or the final rule enjoined in NAM), where the actual wage is expressed
as a salary but the prevailing wage is expressed as an hourly wage,
hourly records would not be required for U.S. workers in the specific
employment question.
The January 1999 NPRM was identical to the October 1995 proposed
rule, as described above.
The Department received one comment on the proposed modification of
the documentation requirements in response to the 1995 NPRM and five
additional comments in response to the 1999 NPRM.
A law firm (Moon) (1995 comment) commended the Department for
"revising the recordkeeping requirement to release employers from any
obligation to keep records of hours worked by FLSA-exempt [U.S.]
employees." At the same time, it criticized the proposal insofar as it
requires records to be kept for FLSA-exempt H-1B workers where the
prevailing wage is expressed as an hourly rate--a requirement it
characterized as artificial and inconsistent with traditional FLSA
principles. The firm recommended that the Department instead require
SESAs to issue prevailing wage determinations on a salaried basis for
exempt workers.
Intel asserted that all of its H-1B workers are paid on a salary
basis (and apparently are listed as such on their LCAs); Intel noted,
however, that SESAs sometimes issue rates on an hourly basis and
suggested that the rule be clarified so that this alone would not
trigger a recordkeeping requirement. Intel and ACIP both suggested that
the provision should be modified to make plain that such records need
be kept only where an employer includes an hourly rate on an LCA. ACIP
stated that it should not matter if the SESA lists the rate as an
hourly wage. It further argued that if recordkeeping is required in all
instances where a SESA issues an hourly rate, this requirement would
"muddy up" the FLSA-status of the workers. Another commenter (Rubin)
expressed similar concerns, stating that considerable paperwork will be
generated if recordkeeping is triggered simply because a SESA, without
regard to the practice within a profession, issues a rate as an hourly
wage.
The Department appreciates the concern expressed by commenters that
SESAs sometimes issue hourly rates for certain occupations without
regard to whether workers are commonly paid on a salary basis or the
FLSA-exempt nature of the job. The Department notes that while SESAs
ordinarily base prevailing wage determinations on the U.S. Bureau of
Labor Statistics, Occupational Employment Statistics survey (OES),
which are generally expressed as an hourly wage, the SESAs will issue
the prevailing wage as a salary rate upon request. In addition, to
alleviate the concerns of employers and to avoid confusion with regard
to the nature of the prevailing wage or recordkeeping obligations, the
Department is modifying Sec. 655.731(a)(2) to expressly authorize the
employer to convert the prevailing wage determination into the form
which accurately reflects the wage which it will pay (i.e., where the
prevailing wage is expressed as an annual "salary," it may be
converted to an hourly rate by dividing the amount by 2080; where the
prevailing wage is expressed as an hourly rate, it may be converted to
a salary by multiplying the amount by 2080). The modified regulation
instructs that the employer shall state the prevailing wage on the LCA
in the manner in which the wage will be paid, i.e., as an hourly rate
or a salary. However, the prevailing wage must be expressed as an
hourly wage if the worker is part-time, in order to ensure that the
part-time worker is in fact paid for the proportion of the week in
which he or she actually works.
In addition, after review, the Department has concluded that a
further revision of the regulation is appropriate to remove the
requirement that an employer keep hourly wage records for its full-time
H-1B employees paid on a salary basis. (Employers are also directed to
Sec. 655.731(a)(4) (not revised in this rule), which explains payment
of wages to employees paid on a salary basis.) The regulation continues
to require employers to keep hours worked records for part-time
employees, as well as hourly employees. It is the Department's view
that there is no other way to ensure that employers comply with their
obligation to pay these workers at least the prevailing wage for all
hours worked. Otherwise, for example, an employer would be able to
state on its H-1B petition that an employee will be paid 20 hours per
week, pay the employee an annual salary based on 20 hours per week,
keep no record of hours worked, and actually
[[Page 80196]]
work the employee 30 hours a week. In any event, the Department
believes that most employers keep hours worked records for their part-
time employees.
Another commenter (Latour) agreed that it was reasonable for DOL to
require the retention of the records enumerated in the proposal, which
it stated were records kept by typical employers. However, it expressed
concern over a perceived requirement that all the documentation must be
included in the public access file. Another commenter (Baumann)
expressed concern over the requirement that the records be kept
beginning with the date the LCA is submitted throughout the period of
employment. This commenter stated that the proposal, read in the
broadest sense, requires an employer to continue to update the public
access file each time a new worker is hired or a current employee
receives a pay increase. He requested the Department to make clear that
the wage information relating to non-H-1B workers is limited to the
period before the filing of the LCA.
It appears that these commenters have misunderstood the
documentation requirement as it relates to the public access file. The
basic payroll information required to be maintained does not need to be
included in the public access file, but rather must be available to the
Wage and Hour Division in the event of an investigation. As provided in
Sec. 655.760(a), the public access file is required to contain only the
wage rate to be paid the H-1B workers, an explanation of the employer's
actual wage system (discussed in IV.O.3, above), and the documentation
used to establish the prevailing wage.
5. What Are the Requirements for Posting of "Hard Copy" Notices at
Worksite(s) Where H-1B Workers Are Placed? (See IV.F, above)
6. What Are the Time Periods or "Windows" Within Which Employers May
File LCAs? (Sec. 655.730(b) and Sec. 655.731(a)(2)(iii)(A)(1))
Regulations with respect to the time periods or "windows" within
which employers may file labor condition applications were first
published by the Department as Secs. 655.730(b) and
655.731(a)(2)(iii)(A)(1) in the December 20, 1994 Final Rule. That rule
provides at Sec. 655.730(b) that "a labor condition application shall
be submitted * * * no earlier than six months before the beginning date
of the period of intended employment shown on the LCA." Section
655.731(a)(2)(iii)(A)(1) states that "[a]n employer who chooses to
utilize a SESA prevailing wage determination shall file the labor
condition application not more than 90 days after the date of issuance
of such SESA wage determination."
These provisions were challenged in the NAM litigation as violative
of the notice and comment provision of the APA, 5 U.S.C. 553(b)(3). The
district court in NAM, however, concluded that Secs. 655.730(b) and
655.731(a)(2)(iii)(A)(1) "lie on the procedural side of the spectrum
and are exempt from the notice and comment requirement of the APA."
The court further found that the "plaintiff has failed to demonstrate
that the two time periods are so short that they encroach upon an
employer's ability to utilize the H-1B workers, and plaintiff has
failed to show that the rules alter any substantive standard by which
[the Department] will evaluate LCAs." Therefore these rules are
currently in effect.
On October 3, 1995, during the pendency of the NAM litigation, the
Department republished these sections for comment. The 1999 NPRM
republished these sections for comment without modification.
Six commenters (Intel, CBSI, Motorola, Moon, AILA, MIT) responded
to the republication of these sections in the 1995 Proposed Rule. With
respect to the requirement that an LCA be filed within 90 days of
issuance of a SESA prevailing wage determination, all six commenters
asserted that the requirement would make more work for employers and
that it would slow down the LCA process. Two of these commenters (CBSI,
IT) also suggested that the validity period of a SESA determination
should be 180 days, and one commenter (Moon) suggested that SESA
determinations should carry no expiration date.
Three commenters (AILA, BRI, ITAA) responded to these sections as
republished in the 1999 NPRM. ITAA supported the provision permitting
employers to file LCAs up to six months before the beginning date of
the period of intended employment as shown on the LCA, stating the
proposal reflected an "appropriate balance" of the Department's and
business interests. One commenter (BRI) sought clarification on whether
an LCA already certified could be used any time during the validity of
the LCA, assuming the prevailing wage was obtained from a source other
than a SESA.
AILA objected to the 90-day validity period for the SESA prevailing
wage as arbitrary and--because most U.S. employers make annual wage
assessments--unrelated to the "real world wage." Therefore, AILA
asserted, requesting a prevailing wage from the SESA every 90 days
places an undue burden on U.S. employers. AILA recommended that SESA
prevailing wages should be valid for a period of one year, based on the
observation that SESAs rely on the OES survey--an annual survey--to
obtain wage information for purposes of issuing prevailing wage
determinations.
The Department has considered the comments offered in response to
its proposals regarding the time frames in which LCAs may be filed by
employers.
Because there has been no objection to the requirement of
Sec. 655.730(b) that an LCA be filed within six months of the beginning
date of intended employment, the Department will adopt that regulation
as proposed.
With regard to the length of the "validity period" of SESA-issued
wage determinations--the period during which the determination may be
used by an employer to support a visa petition--the Department has
concluded that the proposed rule can be modified to accommodate the
views of the commenters, while maintaining the crucial principle that
prevailing wage determinations should reflect rates which are current
and accurate for the locality and the occupational classification. The
Interim Final Rule therefore provides that the SESA's issuance of a
prevailing wage determination shall include a specification of a
validity period, which shall be not less than 90 days and not more than
one year from the date of the issuance. The Department will provide
guidance to the SESAs with regard to their assignment of validity
periods. The Department notes that the Bureau of Labor Statistics'
Occupational Employment Statistics (OES) survey and most employer-
provided surveys are updated on a regular basis, and the update cycles
for such surveys can be readily determined--unlike the update cycle for
prevailing wages based on Service Contract Act and Davis-Bacon wage
determinations or collective bargaining agreements. The Department
anticipates that the validity period will be 90 days where the wage
rate is based on SCA, Davis-Bacon, or collective bargaining agreements.
The Department anticipates that where the wage rate is based on the OES
survey or on a survey provided by the employer and found acceptable by
the SESA, the validity period will ordinarily be until the next update,
provided it is at least 90 days and no more than one year from the date
of issuance. This will reduce the burden of employers and SESAs in
filing and responding to wage determinations without any adverse affect
on worker wages.
[[Page 80197]]
7. How May an Employer Challenge a SESA/ES-Issued Prevailing Wage
Determination? (Sec. 655.731(a)(2)(iii)(A)(1) and (d)(2),
Sec. 655.840(c))
H-1B regulations specifically explaining the procedures available
to employers to challenge a SESA-issued prevailing wage determination
were first published by the Department in the December 1994 Final Rule.
That rule provides at Secs. 655.731(a)(2)(iii)(A)(1), 655.731(d)(2) and
655.840(c) that irrespective of whether the wage determination is
obtained by the employer prior to filing the LCA or by the Wage and
Hour Division in an enforcement proceeding, employers must assert any
challenge to the wage determination under the Employment Service (ES)
complaint system at 20 CFR part 658, Subpart E, rather than in an
enforcement proceeding before the Office of Administrative Law Judges
pursuant to Subpart I of part 655. Furthermore, pursuant to
Sec. 655.731(a)(2)(iii)(A)(1), an employer which wishes to appeal a
SESA-issued wage determination must file the appeal and obtain a final
ruling pursuant to the ES complaint system prior to filing any LCA
based on that determination. Section 655.731(d)(2) provides that where
a prevailing wage determination is obtained by Wage and Hour pursuant
to Sec. 655.731(d)(1), an employer must file any appeal within 10 days
of receipt of the wage determination; notwithstanding the provisions of
Secs. 658.420 and 658.426, the appeal is filed directly with ETA,
rather than with the SESA.
These provisions of the 1994 Final Rule were challenged in the NAM
litigation as contrary to the requirements of the APA. The court, in
that matter, concluded that these provisions were procedural
regulations, exempt from APA notice and comment requirements, and
further found that the plaintiffs in that case had failed to
demonstrate that an employer's substantive rights had been altered by
these provisions. Accordingly, the regulations were not enjoined and
remain in effect. During the pendency of that litigation, these
provisions were republished for notice and comment in the October 1995
Proposed Rule. The identical provisions were republished for notice and
comment in the January 1999 Proposed Rule.
The Department received five comments (AILA, Frost & Jacobs, Moon,
otorola, NAM) in response to the proposals republished in 1995. All
commenters opposed the proposed provisions. One commenter (Moon)
asserted that the ES system was inadequate because it "handcuffs the
employer by gagging the SESA from revealing information." The
commenter was alluding to the language in Sec. 655.731(d)(2), which
states that neither ETA nor the SESA may divulge any employer wage data
which was collected under the promise of confidentiality. Another
commenter (Frost & Jacobs) urged that any challenge of a SESA
determination be required to be resolved by the ES in a timely manner
(recommended 30-day time limit). Motorola was also concerned with the
ability of the ES to timely respond to SESA challenges, especially in
situations of H-1B visa extensions or changes in status from an F-visa
to an H-1B. In these situations, this commenter noted, an employer is
forced to accept the challenged wage in order to obtain the LCA so that
the application may be filed with the INS in sufficient time to prevent
removing an individual from the payroll for lack of work authorization.
In their comments to the 1995 proposals, NAM and AILA contended
that allowing challenges to prevailing wage determinations to be made
only pursuant to the ES complaint system deprives employers of their
procedural due process protections. These organizations commented that
a paper appeal to an administrative agency, staffed by paid employees
of the very agency which determined the prevailing wage, without any
rights to discovery, an examination of the evidence in support of the
wage determination, or an express written decision, does not substitute
for the right to be heard by an independent ALJ where all of these
rights are guaranteed.
The 1999 NPRM republication of the 1995 proposals on this issue
sought further comment on these proposals. AILA, the sole commenter on
this issue, stated that a poll of its members revealed that the
complaint process is rarely used because of failure by either the ES or
SESA Prevailing Wage Unit to publicize it. AILA further criticized the
complaint system as laborious, complicated and protracted, requiring
handling by several different offices of the SESA and ETA. Furthermore,
the opportunity for a hearing before a DOL administrative law judge is
permitted only at the discretion of the ETA Regional Administrator.
AILA stated that without the opportunity for meaningful review of a
SESA wage determination by an impartial judicial tribunal, such as in
an ALJ hearing, employers feel that a meaningful and fair review might
not be possible under the ES complaint system.
The Department continues to be of the view, as stated in the
preamble to the December 1994 Final Rule, that "permitting an employer
to operate under a SESA prevailing wage determination and later
contesting it in the course of an investigation or enforcement action
is contrary to sound public policy; such a delayed disruptive challenge
would have a harmful effect on U.S. and H-1B employees, competing
employers, and other parties who may have received notice of and/or
relied on the prevailing wage at issue."
Challenges to SESA prevailing wage determinations prior to filing
the LCA (as distinguished from challenges to prevailing wage
determinations obtained by Wage and Hour) must be made through the ES
complaint system by filing a complaint with the SESA. However, it
should be clarified that complaints need not be initiated at the ES
local office level. The complaint may be filed directly with the
organization within the SESA responsible for alien labor certification
prevailing wage determinations. This office is usually part of the
central state office. Since the implementation of the OES program, SESA
local offices are not involved in making or issuing prevailing wage
determinations. See ETA's General Administrative Letter 2-98 (October
3, 1997).
Furthermore, although the regulations at Sec. 658.421(h) provide
that the offer of a hearing before an administrative law judge is
discretionary, it is ETA's policy that where the employer is appealing
a wage determination obtained by Wage-Hour pursuant to Sec. 655.731(d),
the ETA Regional Administrator will offer a hearing before an
Administrative Law Judge in every H-1B case which is not resolved to
the employer's satisfaction.
With regard to comments that challenges to a SESA prevailing wage
determination should be resolved more expeditiously, the Department
believes that allowing employers to initiate a challenge to the a SESA
prevailing wage determination at the State rather than the local office
level will simplify and reduce the time necessary to resolve those
complaints. The regulations governing the ES complaint system provide
that if the complaint has not been resolved within 30 working days the
State office shall make a written determination. Furthermore, appeals
to wage determinations obtained by Wage-Hour are filed directly with
the ETA Regional Administrator, thus shortening the process.
As indicated above, one commenter to the 1995 Proposed Rule
objected to the provision at Sec. 655.731(d)(2) which
[[Page 80198]]
states, in relevant part, that neither ETA nor the SESA shall divulge
any employer wage data which was collected under the promise of
confidentiality. This regulatory provision prohibiting release of wage
information codified a longstanding ETA policy of not releasing such
information because release of such information would inhibit employers
responding to SESA conducted prevailing wage surveys. Furthermore,
since January 1998, SESAs, pursuant to ETA's General Administrative
Letter 2-98 (October 3, 1997), have based their prevailing wage
determinations on the wage component of the Bureau of Labor Statistics'
expanded Occupational Employment Statistics (OES) program. The
occupational employment statistics questionnaire used to conduct
occupational employment surveys informs potential respondent employers
that "[t]he Bureau of Labor Statistics and the State agency collecting
this information will use the information you provide for statistical
purposes only and will hold the information in confidence to the full
extent permitted by law." This statement reflects longstanding BLS
policies and practices, as well as longstanding ETA policies and
practices, which are essential to obtain the information needed to
provide timely and accurate statistics to the public. Accordingly, the
Department is leaving unchanged the provision at Sec. 655.731(d)(2)
which states that in a challenge to a SESA wage determination "neither
ETA nor the SESA shall divulge any employer wage data which was
collected under the promise of confidentiality."
AILA has maintained that one reason that the ES complaint system
has not been widely used is that it has not been widely publicized;
AILA contends that despite the stated obligation at 20 CFR 658.410(d),
not all State agencies have publicized the use of the ES complaint
system through the prominent display of an ETA-approved ES complaint
system poster in each local office. ETA operating experience indicates
that a failure to display an ETA-approved ES complaint system poster in
each local office is a rare occurrence. Such a failure would be a basis
for a complaint about ES actions or omissions under ES regulations (20
CFR 658.401). Further, the availability of the ES complaint to
challenge SESA prevailing wage determinations issued under the H-1B
program is clearly set forth in the H-1B regulations.
The Department has concluded that at this time further measures to
streamline the complaint process for challenging SESA prevailing wage
determinations are not warranted. The basic structure of the current
system appears to be adequate in view of the few complaints (about six)
concerning SESA wage determinations that have been received and
processed since publication of the 1994 Final Rule. On review, however,
the Department has concluded that classification determinations,
including specifically whether an employee is properly classified as an
experienced or inexperienced worker, are properly the subject of ALJ
enforcement proceedings pursuant to part 655, subpart I, since a
determination of whether an employee has been appropriately classified
can best be determined upon a review of the actual duties performed by
the employee. Accordingly, Secs. 655.731(a)(2)(iii)(A)(1) and (3), and
655.731(d)(2)(ii), are revised to remove references to determinations
by the SESA or the ETA Regional Administrator regarding occupational
classification.
P. What Additional Interpretative Regulations Did the Department
Propose?
The Department proposed a new Appendix B to the regulations in
order to explain the Department's interpretation of several provisions
of the regulations which were not themselves open for notice and
comment. As the Department stated in the NPRM, these interpretations
concerned questions that had arisen in its administration of the
program and had been discussed with interest groups. It was the
Department's view that because of the interest raised over these
questions, its interpretations should be included in the regulations,
either as an appendix or as regulatory text. As discussed below, on a
number of the issues, the provisions have been removed from Appendix B
into the regulations.
1. What Constitutes an H-1B Worker's "Worksite" or "Place of
Employment" for Purposes of the Employer's Obligations Under the
Program? (See IV.O.1.b, Above)
2. Under What Circumstances May an H-1B Worker "Rove" or "Float"
From His/Her "Home Base" Worksite? (See IV.O.1.c, Above)
3. What H-1B Related Fees and Costs Are Considered To Be an Employer's
Business Expenses? (Sec. 655.731(c)(9)(ii)&(iii), Previously in
Proposed Appendix B, Section c)
Section 655.731(c)(7)(iii)(C) of the current regulations excludes
from deductions which are authorized to be taken from the required wage
those deductions which are a recoupment of the employer's business
expenses. Paragraph (c)(9) further explains that where the imposition
of the employer's business expense(s) on the H-1B worker has the effect
of reducing the employee's wages below the required wage (the
prevailing wage or actual wage, whichever is greater), that will be
considered an unauthorized deduction from wages. These provisions were
not open for notice and comment.
The Department sought comment on proposed Appendix B, which
explains its interpretation of the operation of these provisions in the
context of the H-1B petition process. The NPRM notes that the filing of
an LCA and the filing of an H-1B petition are legal obligations
required to be performed by the employer alone (workers are not
permitted to file an LCA or an H-1B petition). Therefore the NPRM
provides that any costs incurred in the filing of the LCA and the H-1B
petition (e.g., prevailing wage survey preparation, attorney fees, INS
fees) cannot be shifted to the employee; such costs are the sole
responsibility of the employer, even if the worker proposes to pay the
fees.
The NPRM further notes that bona fide costs incurred in connection
with visa functions which are required by law to be performed by the
nonimmigrant (e.g., translation fees and other costs relating to visa
application and processing for prospective nonimmigrant residing
outside of the United States) do not constitute an employer's business
expense. The Department stated, however, that it would look behind what
appear to be contrived allocations of costs.
The Department received 21 comments on this issue. All of the
commenters (a number of whom were attorneys commenting only on this
issue) opposed the Department's position in the NPRM. As a general
matter, these commenters contended that the question of how fees are
allocated between the employer and the H-1B worker is a question which
should be decided between the employer and the employee.
Immigration attorneys and their professional association (AILA), as
well as Senators Abraham and Graham, argued that the Department is
interfering with the H-1B workers' right to counsel. AILA argued that
how the H-1B petition is drafted is critical to an employee, since it
may affect his or her maintenance of status and ability to stay in the
United States. Another attorney (Freedman) stated that attorney
representation of the alien has acted as a buffer against employer
abuses, that there is no reason to imply that an
[[Page 80199]]
attorney representing an employer is more competent or more impartial
than an attorney suggested by an alien, and that employers may not be
aware of the expertise necessary to file H-1B petitions. This attorney
also suggested that the requirement that employers pay attorney fees
would intimidate a potential whistleblower.
Many commenters (AILA, ACIP, and a number of attorneys, businesses
and trade associations) argued, in effect, that since Congress, in
drafting the ACWIA, specifically prohibited employers from imposing the
additional petition fee on employees, the failure to prohibit the
payment of other expenses by employees evidences an intention to allow
their imposition by an employer.
ITAA and ACIP argued that the current law is directed toward
prohibiting certain deductions from an employee's salary that will push
it below the required wage rate. In other words, as long as the H-1B
worker receives at least the required wage, it should not be a
violation if the worker then spends that money for job-related matters
such as fees. ACIP and ITAA stated that as a minimum, if the H-1B
worker's wages minus the expenses equals or exceeds the required wage
rate, there should be no violation. Latour agreed with the Department
that if an H-1B worker's wage is below the prevailing wage, it would be
a violation to deduct attorney fees from the worker's compensation, but
stated that there is no basis for prohibiting the employer from having
the employee handle the payment if the fees, when subtracted from the
worker's pay, would not result in compensation less than the prevailing
wage.
BRI pointed out that many employers provide payment of immigration
expenses as a benefit to employees. Making it mandatory that all
employers pay such fees will disadvantage those employers who offer
payment of fees as a benefit. BRI also suggested that employer payment
of fees would make H-1B workers more likely to take advantage of the
system.
ACIP, AILA, and ITAA asserted that an employer should be able to
collect these expenses as liquidated damages if the H-1B nonimmigrant
prematurely terminates an employment contract. One attorney (Freedman)
contended that by listing attorney fees as an employer business
expense, the Department was establishing a regulatory basis for
repayment as liquidated damages--thereby promoting the abusive actions
for which the ACWIA was enacted.
Educational and research institutions (ACE, AIRI, University of
California, Johns Hopkins) noted that the INS has determined that
because ACWIA has allowed an exemption from the additional fee for H-1B
petitions from higher education institutions, affiliated or related
research institutions, and nonprofit and governmental research
organizations, these institutions are also exempt from the requirement
that employers pay the $110 filing fee. Thus, they stated that INS has
determined that H-1B workers may pay the cost of the filing fee, as in
the past. These commenters therefore urged that DOL accept this
approach so there is no conflict between Federal agencies. The
University of California also stated that an employer does not have an
interest in a worker being in the United States prior to commencement
of employment and therefore should not bear the cost of a change of
status. Finally, three attorney commenters (Latour, Quan, and Stump)
argued that forbidding legal fee payment by nonimmigrant workers will
be especially onerous to small businesses, small private schools, and
other financially-limited groups which are not familiar with the
requirements of the H-1B program.
At the outset, the Department wants to clarify an apparent
misconception by some commenters regarding the restrictions placed upon
employers in assessing the employer's own business expenses to H-1B
workers. An H-1B employer is prohibited from imposing its business
expenses on the H-1B worker--including attorney fees and other expenses
associated with the filing of an LCA and H-1B petition--only to the
extent that the assessment would reduce the H-1B worker's pay below the
required wage, i.e., the higher of the prevailing wage and the actual
wage.
"Actual wage" is explained at Sec. 655.731(a)(1) of the existing
regulations as "the wage rate paid by the employer to all other
individuals with the similar experience and qualifications for the
specific employment in question." The regulation continues by noting
that "[w]here no such other employees exist at the place of
employment, the actual wage shall be the wage paid to the H-1B
nonimmigrant by the employer."
The Department also wishes to emphasize, as provided in
Sec. 655.731(c)(9) of the existing regulations (renumbered in the
Interim Final Rule as Sec. 655.731(c)(12)), that where a worker is
required to pay an expense, it is in effect a deduction in wages which
is prohibited if it has the effect of reducing an employee's pay (after
subtracting the amount of the expense) below the required wage (i.e.,
the higher of the actual wage or the prevailing wage). An employer
cannot avoid its wage requirements by paying an employee a check at the
required wage and then accepting a prohibited payment from a worker
either directly, or indirectly through the worker's payment of an
expense which is the employer's responsibility.
The Interim Final Rule continues to provide that any expenses
directly related to the filing of the LCA and the H-1B petition are a
business expense that may not be paid by the H-1B worker if such
payment would reduce his or her wage below the required wage. These
expenses are the responsibility of the employer regardless of whether
the INS filing is to bring an H-1B nonimmigrant into the United States,
or to amend, change, or extend an H-1B nonimmigrant's status. As stated
in the NPRM, the LCA application and H-1B petition, by law, may only be
filed by the H-1B employer. The employer is not required to seek legal
representation in completing and filing an LCA or H-1B petition, but
once it utilizes the services of an attorney for this purpose, it has
incurred an expense associated with the preparation of documents for
which it has legal responsibility.
H-1B nonimmigrants are permitted to pay the expenses of functions
which by law are required to be performed by the nonimmigrant, such as
translation fees and other costs related to the visa application and
processing. The Department also recognizes that there may be situations
where an H-1B worker receives legal advice that is personal to the
worker. Thus, we did not intend to imply that an H-1B worker may never
hire an attorney in connection with his or her employment in the United
States. While the illustrative expenses (translation fees and other
costs relating to the visa application) were not denominated in the
NPRM as legal expenses, if they were provided through an attorney these
costs and associated attorney fees would be personal to the worker and
may be paid by the worker, rather than expenses that would have to
borne by the employer. Similarly, any costs associated with the H-1B
worker's receipt of legal services he or she contracts to receive
relative to obtaining visas for the worker's family, and the various
legal obligations of the worker under the laws of the U.S. and the
country of origin that might arise in connection with residence and
employment in the U.S., are not ordinarily the employer's business
expenses. As such, they appropriately may be borne by the worker.
An employer, however, may not seek to pass its legal costs
associated with the
[[Page 80200]]
LCA and H-1B petition on to the employee. With respect to the concerns
regarding small employers who may not have familiarity with H-1B
requirements and may not know an attorney specializing in this area of
law, there is nothing to prohibit an H-1B worker from recommending to
the employer an attorney familiar with the requirements of the H-1B
program. In addition, if an applicant for a job hired an attorney
clearly to serve the employee's interest, to negotiate the terms of the
worker's employment contract, to provide information necessary for the
H-1B petition or review its terms on the worker's behalf, or to provide
the applicant with advice in connection with application of U.S.
employment laws, including the various employee protection provisions
of the H-1B program and its new whistleblower provisions, the fees for
such attorney services are not the employer's business expense. In its
enforcement, the Department will look behind any situation where it
appears that an employee is absorbing an employer's business expenses
in the guise of the employee paying his or her own legitimate fees and
expenses.
Contrary to the view of many commenters, the Department does not
read the ACWIA's proscription against an employer's assessment of the
additional petition filing fee on the H-1B worker as evincing an
intention that an employer may assess any other expenses against the
worker. Neither the language of this provision, nor its place within
the statute's larger context, allows a conclusion that Congress
intended this provision to affect the ability of an employer to assess
other costs to H-1B workers. The ACWIA prohibition against charging the
H-1B worker for the filing fee is much more sweeping than the
regulatory provision at issue. The ACWIA prohibits an employer from
charging the fee, even where there would not be a resulting wage
violation, and even as a part of the liquidated damages an employer may
contract with a worker to pay for early termination.
The Department concurs with the comments that the ACWIA does not
preclude the recovery of expenses in connection with the filing of the
LCA and H-1B petition as liquidated damages. It is the Department's
view that there is no basis for distinguishing attorney fees and other
expenses in connection with these filings from other expenses which may
be permitted, under state law, as liquidated damages. However, as set
forth in IV.K, above, the Interim Final Rule provides that the $500/
$1,000 filing fee may not be collected through liquidated damages.
As stated above, education and research groups stated that INS has
taken the position that qualified education and research organizations
who are exempt from paying the additional filing fee will not be
required to pay the separate $110 petition filing fee themselves, but
rather INS will accept payment made by the H-1B workers. The Department
does not believe that this statement is inconsistent with its position,
since, as discussed above, employers are not prohibited from requiring
workers to make these payments where the workers are paid above the
required wage. To the extent these commenters may be suggesting that
the Department should create an exception for academic and research
institutions, the Department sees no basis for this suggestion. The
status of these institutions as exempt from the additional filing fee
does not change the fact that they are employers who, as such, are
required to file the LCA and the H-1B petition, and to pay the
attendant costs if payment by the H-1B worker would bring the worker's
wages below the required wage.
In the Interim Final Rule, the discussion of expenses of the H-1B
program which the employer may not impose on H-1B workers has been
removed from Appendix B and incorporated in the regulations at
Sec. 655.731(c)(9)(ii) and (iii).
4. When Is the Service Contract Act Wage Rate Required To Be Applied as
the "Prevailing Wage"? (Sec. 655.731(a)(2)(i)(B), Previously Set
Forth in Proposed Appendix B, Section d)
Under Sec. 655.731(a)(2)(i) and (iii)(A) of the regulations, if
there is an applicable wage determination issued under the McNamara-
O'Hara Service Contract Act (SCA) for the occupational classification
in the area of employment, that SCA wage determination is considered by
the Department to constitute the prevailing wage for that occupation in
that area. This use of the SCA wage determination applies regardless of
whether the employer is an SCA contractor, and regardless of whether
the workers will be employed on an SCA contract. In the NPRM, the
Department addressed questions that have arisen concerning application
of the SCA wage rate for computer occupations where the wage rate on
the wage determination is $27.63, and application of the SCA wage rate
where the employer is of the view that the workers are exempt from the
SCA.
The NPRM provided at Appendix B, section d, that where an SCA wage
determination for an occupational classification in the computer
industry states a rate of $27.63, that rate will not be issued by the
SESA and may not be used by the employer as the prevailing wage. That
rate does not constitute a statement of the prevailing wage; it is the
highest wage that any worker in a skilled computer occupation is
required to be paid under the SCA. Under that statute, workers are
exempt from the Act's requirements if they earn more than $27.63 per
hour, regardless of whether they are paid on a salary basis an hourly
rate. (See 29 CFR 4.156; 541.3). In such a case, the SESA will use the
OES survey--rather than the SCA rate--and the employer, if it chooses
not to obtain a prevailing wage rate from the SESA, will need to
consult the OES survey or another source for wage information.
Proposed Appendix B also provided that the question of whether the
nonimmigrant worker(s) who will be employed will be exempt or non-
exempt from the SCA is irrelevant to use of the SCA wage determination
to access the prevailing wage. Therefore, in issuing the SCA wage rate
as the prevailing wage determination, the SESA will not consider
questions of employee exemption, and, in an enforcement action, the
Department will consider the SCA wage rate to be the prevailing wage
without regard to whether any particular H-1B employee(s) would be
exempt from the SCA if employed under an SCA contract.
The Department received six comments on this issue. ACIP expressed
confusion over the Department's singling out the SCA wage rate for
computer operations, and urged reconsideration of this position before
issuing interim final regulations. AILA stated that the Department's
proposal is inconsistent because of this singling out of the SCA rate
for computer operations, and contended, along with two other commenters
(Rubin & Dornbaum, Cowan & Miller), that by designating the SCA wage as
the prevailing wage, the Department virtually requires employers to use
SESA determinations instead of the other wage sources permitted by law.
Finally, AILA questioned the proposal to disregard the exempt status of
the H-1B workers, contending that this is inconsistent with the
practice used in the Permanent Program, as recognized in the Technical
Assistance Guide at page 114. Network Appliance and FHCRC objected to
application of the SCA wage rate where the employer is not subject to
that Act.
[[Page 80201]]
The significant role in the regulations of SCA determinations of
the prevailing wage is founded in the legislative history of the H-1B
program in IMMACT 90, which evidences Congressional intent that
prevailing wage determinations be made as in the Permanent Alien Labor
Certification (immigrant worker) Program, 20 CFR 656.40. See Conf. Rep.
No. 101-955, 101st Cong., 2d Sess. 122 (1990), 1990 U.S.C.C.A.N. 6787.
In any event, the general provisions governing use of wage rates in SCA
wage determinations set forth in the regulations at
Sec. 655.731(a)(2)(i) and (iii)(A) were not published for comment.
Proposed Appendix B, section d, addressed only two specific questions:
application of the SCA wage rate to skilled workers in computer
occupations, and the broader question of the relevance of whether
workers would be exempt from the SCA.
The Department continues to be of the view that SCA wage
determinations cannot properly be used for computer occupations where
the wage is stated as $27.63 per hour. As explained above, this wage
rate is not in any sense a statement of the prevailing wage for the
occupation. Rather, this rate is instead a "cap" on the SCA-required
wage that results from an SCA statutory provision which has no
application in the H-1B program. Allowing the use of the $27.63 rate as
the prevailing wage would therefore undermine the statutory requirement
that workers be paid at least the prevailing wage, and create an
economic incentive to utilize H-1B workers rather than U.S. workers.
Furthermore, computer occupations are treated differently than other
occupations with regard to the use of SCA rates because these
occupations are treated uniquely under the SCA. Only for skilled
computer occupations is there a cap on the wage set under the SCA, by
virtue of a Congressional enactment exempting workers who are paid more
than $27.63 per hour from the Fair Labor Standards Act, and therefore
from the SCA. See 41 U.S.C. 357(b); Pub. L. 101-583, Sec. 2, Nov. 15,
1990, 104 Stat. 2871, as amended by Pub. L. 104-188, 110 Stat. 1929.
For several reasons, the Department also continues to be of the
view that the potential SCA-exempt status of the nonimmigrant workers
who will be employed under the LCA is irrelevant. SCA wage
determinations (with the exception of computer professionals, as
discussed above) are the Department's statement of the prevailing wage
of the occupations listed, and are made without regard to the exempt
status of workers surveyed. Furthermore, exemption status cannot be
determined in advance, based on an employee's occupation. Rather,
determinations are made only on examination of the actual duties
performed by individual employees and on an examination of the manner
in which the employees are paid. With the exception of computer
professionals, doctors and attorneys, SCA-exempt employees must be paid
either on a salary or fee basis. See 29 CFR part 541. The Department
notes that this interpretation is not in fact inconsistent with the
provisions of the Permanent Program's Technical Assistance Guide, which
requires use of the SCA wage determination "[i]f the job opportunity
is in an occupation and a geographic area for which DOL has made a wage
determination" under the SCA. Page 114 of the Guide simply points out
that executive, administrative, and professional employees are exempt
from the SCA, but does not state that the exemption is intended to
limit the application of the SCA wage determination in determining the
prevailing wage under the permanent program. In any event, it is the
Department's intention to conform its prevailing wage determinations
under the Permanent Program to the interpretations in this Rule, as set
forth in Sec. 655.731(a)(2)(i)(B) (rather than in Appendix B, as
proposed).
5. How Are the "PMSA" and "CMSA" Concepts Applied? (Sec. 655.715,
Previously in Proposed Appendix B, Section e)
The regulations at Sec. 655.731(a)(2) require that the prevailing
wage be determined for the occupational classification in the area of
intended employment. "Area of intended employment" in turn is defined
to include "the area within normal commuting distance" of the place
where the H-1B worker will be employed. This definition further
provides that "[i]f the place of employment is within a Metropolitan
Statistical Area (MSA), any place within the MSA is deemed to be within
normal commuting distance of the place of employment."
Proposed Appendix B, section e, further explained that in computing
prevailing wages for an "area of intended employment," the Department
will consider all locations within either an MSA or a primary
metropolitan statistical area (PMSA) to constitute "normal commuting
distance." The NPRM further stated that "a consolidated metropolitan
statistical area (CMSA) will not be used in this manner in determining
the prevailing wage rates." The Department sought to explain,
parenthetically, that this simply meant that all locations within a
CMSA will not necessarily be deemed to be within normal commuting
distance. The Department determined, based on its operational
experience, that CMSAs can be too geographically broad to be used in
this manner. Because the Department has not adopted any rigid measure
of distance as a "normal commuting area," locations near the
boundaries of MSAs and PMSAs, and locations within or near the
boundaries of CMSAs may be within normal commuting distance, depending
on the factual circumstances.
The Department received four comments (ACIP, AILA, Intel, Latour)
on this issue. ACIP believes that there is no justification for
eliminating the use of CMSAs for prevailing wage purposes, and that
requiring the use of PMSAs and MSAs will unnecessarily inflate the
prevailing wage rate for employers located in certain metropolitan
areas. That organization further commented that the fact that many wage
surveys use CMSAs supports their contention that workers do in fact
commute within these regions and CMSAs should continue to be a valid
statistical area.
AILA expressed its agreement that employers should make good faith
efforts to utilize surveys which fit a geographical area, but noted
that it is not always possible. Thus, it recommended that employers be
able to use broader geographic surveys where no valid local surveys can
be found. Intel expressed a similar view. Latour stated that it has
used "normal commuting distance" since IMMACT 90, and the
Department's proposal would only create confusion for employers.
These comments demonstrate a misunderstanding on the part of the
commenters of the Department's view on the use of CMSAs. The Department
did not intend to place a blanket prohibition on the use of CMSAs.
Rather, the Department intended only to clarify, albeit
parenthetically, that, unlike MSAs and PMSAs, locations within a CMSA
are not automatically deemed to be within normal commuting distance. If
an employer can show that it could not get an adequate sample at the
SA or PMSA level, a survey based upon a CMSA may, in fact, be
appropriate. In such a situation, the employer should demonstrate that
it was not possible to obtain a representative sample of similarly
employed workers within the MSA or PMSA. Upon such a showing, the CMSA
survey should be acceptable. Furthermore, if an employer is unable to
obtain a representative sample at the MSA or PMSA level, GAL 2-98
(ETA's prevailing wage policy directive)
[[Page 80202]]
specifically directs that the geographic base of the survey should be
expanded. The Department's proposals on this issue also sought to
introduce the PMSA concept into the regulation, which had previously
discussed only MSAs. The Department has therefore amended the
definition of "Area of intended employment" in Sec. 655.715,
consistent with this discussion, and has removed the discussion from
proposed Appendix B, section e.
6. How Does the "Weighted Average" Apply in the Determination of the
Prevailing Wage, and What Other Issues Have Arisen Concerning the
Determination of the Prevailing Wage? (Sec. 655.731(b)(3)(iii)(B)(1),
Previously in Proposed Appendix B, Section f; Sec. 655.731(a)(2)(vii);
and Proposed Revisions to Sec. 655.731(a)(2)(iii) and (d)(4))
Proposed Appendix B, section f, explained that, due to the
inadvertent omission of the word "weighted" from one provision of the
regulation, there had been a suggestion of confusion regarding whether
an employer which uses an "independent authoritative source" to
determine prevailing wages was required to use a "weighted average"
methodology. Therefore proposed Appendix B described this methodology
and how and when it is to be used.
The Department received no comments on this provision. The
Department has amended Sec. 655.731(b)(3)(iii)(B)(1) to expressly
require a weighted average and has removed this section from Appendix
B.
As discussed above in IV.O.4, the Department has concluded that an
employer will not be required to keep hourly wage records for full-time
H-1B workers paid on a salary basis where the prevailing wage is
expressed as an hourly wage. In order to permit this change in the
recordkeeping provisions, it is necessary that the regulations be
amended to explain that the hourly wage may be converted to a salary.
Section 655.731(a)(2)(vii) is therefore amended to provide that an
hourly rate may be converted to a weekly salary by multiplying the rate
by 40, and may be converted to an annual salary by multiplying by 2080,
etc.
7. What is the Effect of a New LCA on the Employer's Prevailing Wage
Obligation Under a Pre-Existing LCA? (Sec. 655.731(a)(4), Previously in
Proposed Appendix B, Section g)
The Department, in the 1999 NPRM, acknowledged the possibility of
confusion among employers regarding the prevailing wage obligation of
an employer which has filed more than one LCA for the same occupational
classification in the same area of employment. In such circumstances,
the Department observed, the employer could have H-1B employees in the
same occupational classification in the same area of employment brought
into the United States (or accorded H-1B status) based on petitions
approved pursuant to different LCAs (filed at different times) with
different prevailing wage determinations. Therefore, the Department
advised in proposed Appendix B to Subpart H, that the prevailing wage
rate as to any particular H-1B nonimmigrant is prescribed by the LCA
which supports that nonimmigrant's H-1B petition. The regulations
require that the employer obtain the prevailing wage at the time that
the LCA is filed (Sec. 655.731(a)(2)). The LCA is valid for the period
certified by ETA, and the employer must satisfy all the LCA's
requirements for as long as any H-1B nonimmigrants are employed
pursuant to that LCA (Sec. 655.750). Where new nonimmigrants are
employed pursuant to a new LCA, that new LCA prescribes the employer's
obligations as to those new nonimmigrants. The prevailing wage
determination on the later/subsequent LCA does not "relate back" to
operate as an "update" of the prevailing wage for the previously-
filed LCA for the same occupational classification in the same area of
employment. The Department also cautioned employers that every H-1B
worker is to be paid in accordance with the employer's actual wage
system (regardless of any difference among prevailing wage rates under
various LCAs), and thus is to receive any pay increases which that
system provides (e.g., merit increases; cost of living increases).
One commenter, AILA, welcomed the acknowledgment that a prevailing
wage on an LCA is not changed by later prevailing wage determinations.
However, AILA expressed opposition to the reminder that an employer is
obligated to pay any wage increases provided by its actual wage system.
The Department has removed its discussion of this issue from
Appendix B to the regulations at Sec. 655.731(a)(4). The issue of
payment of wage increases under the actual wage system is discussed
above in IV.O.3 of the preamble.
Q. Miscellaneous Matters
The Department has also made minor changes to the regulations not
discussed above.
Section 655.700(c)(2) has been amended to explain the effect of the
ACWIA amendments upon the entry and employment of a nonimmigrant who is
a citizen of Mexico pursuant to the provisions of the North American
Free Trade Agreement (NAFTA). As a general matter, the H-1B
requirements continue to apply. To avoid the imposition of more
stringent requirements on the entry of such nonimmigrants (who are
classified as "TN"), however, neither the recruitment nor the
displacement provisions apply to these nonimmigrants. The Interim Final
Rule also continues the practice of applying the statutory and
regulatory provisions for registered nurses (most recently the Nursing
Relief for Disadvantaged Areas Act of 1999, Pub. L. 106-95) to TNs.
In addition, several places (e.g., Secs. 655.700, 655.705,
655.715), have been revised to reflect the amendments made by the ACWIA
and the October 2000 Amendments, and to reflect the current
Departmental organizational structure.
V. Executive Order 12866
Because of its importance to the public and to the Administration's
priorities, the Department is treating this rule as a "significant
regulatory action" within the meaning of section 3(f)(4) of Executive
Order (E.O.) 12866. E.O. 12866 requires a full economic impact analysis
only for "economically significant" rules as defined in section
3(f)(1). An "economically significant" rule pursuant to section
3(f)(1) is one that may "have an annual effect on the economy of $100
million or more, or adversely affect in a material way the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities."
As noted in the NPRM, 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 not filled by U.S.
workers. In order to protect U.S. workers' wages and eliminate any
economic incentive or advantage in hiring temporary foreign workers,
Section 212(n) of the INA imposes various requirements on employers,
including the requirement that the employer pay an H-1B worker the
higher of the actual wage or the prevailing wage. This Interim Final
Rule implements statutory changes in the H-1B visa program enacted by
the ACWIA. The ACWIA (1) temporarily increases the maximum number of H-
1B visas permitted each year; (2) temporarily requires, during the
increased H-1B cap period, new non-displacement (layoff) and
recruitment attestations by "H-1B-
[[Page 80203]]
dependent" employers and employers found to have committed willful
violations or misrepresentations; (3) requires employers of H-1B
workers to offer the same fringe benefits to H-1B workers as they offer
U.S. workers; (4) requires employers in certain cases to pay H-1B
workers in a non-productive status; and (5) provides whistleblower
protections to employees (including former employees and applicants)
who disclose information about potential violations or cooperate in an
investigation or proceeding. In addition, this Rule contains final
rules on certain proposals previously published for comment in October
1995, and on proposals relating to the Department's interpretations of
the INA and its existing regulations.
The Department, in the NPRM, concluded that this rule is not
"economically significant" because the direct, incremental costs that
an employer would incur because of this rule, above customary business
expenses associated with recruiting qualified job applicants and
retaining qualified employees in specialized jobs, are expected to be
minimal. Collectively, the changes proposed by this rule will not have
an annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a sector of the economy,
productivity, jobs, the environment, public health or safety, or State,
local, or tribal governments or communities. Therefore, the Department
concluded that this rule is not a "significant regulatory action" as
defined by section 3(f)(1) of E.O. 12866, and no economic impact
analysis is required under section 6(a)(3).
Four commenters (ACIP, AILA, Hammond and TCS) specifically
responded to the Department's findings with respect to E.O. 12866.
Hammond disagreed with the Department's assessment that a full economic
impact analysis is not required. That commenter stated its belief that
the direct, incremental costs an employer would incur because of this
rule are above the customary and usual business expenses for recruiting
qualified job applicants and for retaining qualified employees in
specialized jobs. Hammond contended that the rule will impose
significant costs that will have an annual effect on the economy of
$100 million or more, and will adversely affect the computer industry
and its productivity.
All four commenters stated their view that the Department has
underestimated the additional burdens and costs to be attributed to the
new regulatory provisions on all H-1B employers, and that the economic
impact of the rule is not limited to H-1B-dependent employers. AILA
urged the Department to provide a more accurate and reasonable estimate
of the burden created by its regulatory provisions, using reliable data
and computations, before imposing the regulations in final form. In the
alternative, and in the absence of data to support a reasonable
estimate of the economic impact on H-1B employers, AILA recommended the
adoption of regulations that are less burdensome.
For the reasons discussed above and in the preamble of the NPRM,
the Department continues to believe that the Interim Final Rule is not
an "economically significant" regulatory action under E.O. 12866,
section 3(f)(1). Furthermore, as described in detail above, the
Department has made significant changes in several provisions which
will lessen the perceived burden to employers. Accordingly, the Rule
does not require an assessment of costs and benefits under section
6(a)(3) of that E.O. The Rule, however, was treated as a "significant
regulatory action" under E.O. 12866, section 3(f)(4), because of its
importance to the public and to the Administration's priorities and
was, therefore, reviewed by the Office of Management and Budget.
VI. Final Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires agencies
to prepare and make available for public comment an initial regulatory
flexibility analysis, describing the anticipated impact of the proposed
rule on small entities. This initial analysis was published as part of
the NPRM. The initial regulatory flexibility analysis concluded that
the proposed rule would not have a significant economic impact on a
substantial number of small entities within the meaning of the
Regulatory Flexibility Act. The Regulatory Flexibility Act also
requires agencies to prepare a final regulatory analysis, assessing
comments received on the initial analysis, describing any significant
alternatives affecting small entities that were considered in arriving
at the final rule, and the anticipated impact of the rule on small
entities.
In the initial regulatory flexibility analysis, the Department
noted that available data and analyses indicated that most of the
businesses in the industries in which H-1B workers likely would be
employed would meet SBA's definition of "small." The Department,
however, stated its conclusion that the economic impact of the rule
would not be significant. As there explained, most of the new
compliance obligations addressed in this rulemaking apply to only a
small subset of the full universe of employers that participate in the
H-1B program, namely, those that meet the new definition of "H-1B
dependent employer" and those found to have committed willful
violations or misrepresentations ("willful violators"), which the
Department estimated to be no more than 200 employers.
Upon further analysis, including review of the comments received by
the Department, we have concluded that the Department's initial
assessment was correct, i.e., the rules will not have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act.
The discussion which follows addresses the statutory requirements
bearing on this final analysis. While much of the discussion closely
tracks the language in the Department's initial analysis, we address
below the comments received bearing upon the impact of the rule on
small entities. The reader should review the supplementary information
section of the preamble (particularly section IV) for a full discussion
of the various alternatives considered by the Department in crafting
the IFR. However, we discuss below some aspects of these alternatives
as they relate to small entities.
1. What Are the Objectives of, and the Legal Basis for, the Interim
Final Rule?
On October 21, 1998, President Clinton signed into law the American
Competitiveness and Workforce Improvement Act of 1998 (ACWIA), which
was enacted as Title IV of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act for Fiscal Year 1999 (Public Law 105-
277). The ACWIA amended the Immigration and Nationality Act (INA), as
amended (8 U.S.C. 1101 et seq.), relating to the H-1B visa program.
Under the H-1B visa program, employers may temporarily employ
nonimmigrants admitted into the U.S. under H-1B visas in specialty
occupations and as fashion models, instead of employing U.S. workers,
under certain conditions. Section 412(d) of the ACWIA provides that
some of the amendments made by the ACWIA do not take effect until the
Department promulgates implementing regulations, which are the subject
of this rulemaking.
The Interim Final Rule is issued pursuant to provisions of the INA,
as amended, and the ACWIA, 8 U.S.C. 1101(a)(15)(H)(i)(b), 1182(n), and
1184; 29 U.S.C. 49 et seq.; sec. 303(a)(8), Pub. L. 102-232, 105 Stat.
1733, 1748 (8
[[Page 80204]]
U.S.C. 1182 note); and sec. 412(d) and (e), Pub. L. 105-277, 112 Stat.
2681. The objectives of the rule are to enable employers to understand
and comply with applicable requirements under the amended H-1B visa
program, and to advise employees and applicants of the protections
afforded by the amendments to U.S. and H-1B workers.
2. What Comments Were Received Addressing the Initial Regulatory
Flexibility Analysis, How Does the Department Assess the Comments, and
What Changes, if Any, Were Made as a Result of the Comments?
As discussed below, the Department received only a few comments
(from ACIP, AILA, Hammond and ITAA) that specifically discussed the
initial regulatory flexibility analysis. The comments specifically
directed at the initial regulatory flexibility analysis addressed only
the commenters' disagreement with the Department's estimate of the
number of U.S. employers that would be affected by the rule's
requirements pertaining to H-1B-dependent employers or willful
violators. Employers with such status (generally those employers with
more than 15 percent of their workforce comprised of nonimmigrants or
employers found to have willfully violated H-1B requirements) must
follow requirements not imposed on the much larger number of employers
that employ a smaller percentage of nonimmigrant workers. Since the
comments received specifically relate to the Department's estimate
regarding the number of small entities affected by the IFR, the
comments are discussed in the next section of this analysis.
Although not raised in connection with the initial analysis,
numerous commenters, as detailed in the preceding sections of the
preamble to the Interim Final Rule, objected to the recordkeeping
burdens imposed by the rule; a few commenters (Chamber of Commerce,
IEEE, Simmons) expressed a general concern that the regulations would
impose requirements that small businesses would find burdensome. (See
sections IV.D.7, D.8, E.1.)
The Department has taken these comments into account, clarifying
the particular requirements in several respects. While many of these
comments did not differentiate among employers by size, the Department
has made many adjustments in the Interim Final Rule, as discussed
above, that will benefit small employers. The comments reflected some
misunderstanding regarding the need to create, as distinguished from
retaining or maintaining, documents relating to the H-1B employment
process. The Rule requires the creation of documents in only a
relatively few instances. And, in most instances, the maintenance of
these documents already is required by other statutes and regulations.
For example, while the regulation requires employers in some instances
to maintain basic payroll and hours worked records for certain
employees, employers are already required to do so by other federal
statutes, such as the Fair Labor Standards Act. In a related matter,
the Interim Final Rule clarifies that employers need not segregate H-1B
documents in a file or system separate from other employment documents.
Finally, the Rule, at Sec. 655.760, clarifies the documents that need
to be kept in a public access file and simplifies the employer's
obligations in this regard. These aspects of the Rule are discussed in
full in the earlier sections of the preamble. The reader's particular
attention to the following points is recommended: The Paperwork
Reduction Act summary in section I; non-displacement documentation
(IV.D.8); recruitment practices (IV.E.2); recruitment documentation
(IV.E.5); benefits documentation (IV.G.2); location of documents
(IV.D.3); hours worked documentation (IV.O.4); public access rules
clarified (IV.O.4 and Sec. 655.760 of the Rule).
The Rule also contains several provisions that will particularly
benefit small businesses. The Department has provided: A toll free fax
number to file LCAs (see IV.B); free or nominal charge resources for
determining "master's degree equivalence" (see IV.C.2) and
determining "specialities related to" a master's degree (see IV.C.3).
Other aspects of the Rule that may be of particular assistance to some
small entities include the use of a download program that can be used
with Apple Macintosh systems (see IV.B.5) and employer options
regarding the payment of benefits to H-1B workers already employed
abroad by the employer or its affiliate (see IV.G.1). The Department's
outreach efforts to explain the requirements of the ACWIA and the Rule
also benefit small entities. As part of these efforts, the Department,
as discussed in the preamble above, at section IV.B, plans to make
available soon its small business compliance guide and to set up a
computer program that will enable individuals and employers to obtain
answers to their H-1B questions.
The Department received some miscellaneous comments that concern
small entities. As noted above, at section IV.N of the preamble, the
Department received a comment requesting that state school districts
and private schools be included in the special prevailing wage
provisions. The Department has concluded that the statute does not
allow for such exemption.
One commenter (Gurtu & McGoldrick) expressed the summary view that
the rules would impose excessive recordkeeping requirements on small
businesses. As noted here and throughout the preamble, we believe that
the Interim Final Rule imposes only minimal obligations on employers,
and that the ACWIA does not allow the latitude to except small entities
from the requirements necessary to ensure compliance with the statute.
(See section 8 below.)
Another commenter (SBSC) expressed the view that the Department's
use of established definitions and regulations from areas of the law
external to immigration would prove costly to small employers. We
believe that we have provided ample information to allow all employers
to understand and comply with all aspects of the H-1B program. No
employer is required to look beyond the regulations in order to meet
these obligations. At the same time, the references in the preamble to
other statutes should assist employers by providing them with
potentially useful guides to help them in meeting these requirements
and by reminding them that other laws may bear on the employment of H-
1B workers.
3. How Many Small Entities Will Be Covered by the Interim Final Rule?
A. As the Department noted in the initial regulatory flexibility
analysis, the rule will have the greatest impact on "H-1B-dependent"
employers and "willful violators." Other aspects of the rule will
apply all to employers which seek to temporarily employ nonimmigrants
admitted into the U.S. under the H-1B visa program in specialty
occupations and as fashion models. The initial analysis distinguished
between "H-1B dependent employers"/"willful violators" and all
other H-1B employers and we follow that approach here in discussing
these two groups of employers.
Section 412 (a)(3) of the ACWIA defines "H-1B-dependent employer"
as an employer that has 25 or fewer full-time equivalent employees
employed in the U.S. and more than 7 H-1B nonimmigrants, at least 26
but not more than 50 full-time equivalent employees and more than 12 H-
1B nonimmigrants, or at least 51 full-time equivalent employees and a
workforce of H-1B nonimmigrants comprising at least 15
[[Page 80205]]
percent of its full-time equivalent employees. The ACWIA requires H-1B-
dependent employers and employers found to have willfully violated H-1B
requirements to attest that they will not displace (layoff) U.S.
workers and replace them with H-1B workers in essentially equivalent
jobs, that they will not place H-1B workers with other employers
without first inquiring as to whether they intend to displace U.S.
workers, and that they have taken good faith steps to recruit in the
United States for U.S. workers to fill the jobs for which they are
seeking H-1B workers. An employer filing an LCA pertaining only to
"exempt H-1B nonimmigrants" need not comply with the non-displacement
and good faith recruitment attestations, regardless of status as an H-
1B-dependent or willful violator. "Exempt H-1B nonimmigrants" are
defined as those who earn at least $60,000 annually or who have
attained a master's degree or its equivalent in a specialty related to
the intended employment.
B. The definition of "small" business varies considerably,
depending on the policy issues and circumstances under review, the
industry being studied, and the measures used. The size standards used
by the U.S. Small Business Administration (SBA) to define small
business concerns according to their Standard Industrial Classification
(SIC) codes are codified at 13 CFR 121.201. SBA's small size standards
are generally expressed either in maximum number of employees or annual
receipts (in millions of dollars).
As explained in the initial analysis, we could apply SBA's size
standards and gauge precisely how many of the affected businesses are
"small" if we were able to construct a profile of each business that
used H-1B workers, showing both the total number of workers employed
and the portion that are H-1B workers, together with total annual
receipts and the applicable SIC industry code. Unfortunately, the
precise data required for this analysis are not available. However, we
know that by far the greatest number of occupations in LCAs certified
under the H-1B program have historically been for computer-related
occupations, and for therapists (principally physical and
occupational).\1\ Looking just at these categories would present a view
of 60 to 70 percent of all the certified job openings under the H-1B
program.
---------------------------------------------------------------------------
\1\ Our initial analysis, utilizing 1997 data, showed that
398,324 job openings were certified--44.4 percent in computer-
related occupations and 25.9 percent for therapists. More recent
data for FY 1999 shows 53.2 percent of 1,089,524 openings certified
were in computer-related occupations and 17.7 percent were
therapists (of whom 118,350 or 88.27 percent were filed by one
employer). For the period October 1, 1999 through May 31, 2000,
514,263 openings were certified--61 percent in computer-related
occupations and only 0.5 percent therapists.
---------------------------------------------------------------------------
For Major Group 73, Business Services, the SBA's small business
size standards for SIC codes in which computer-related occupations
would likely be employed are all at the $18 million level (annual
receipts).\2\ Data from the 1992 Census of Service Industries:
Establishment and Firm Size (published February 1995) indicate that
39,511 out of a total 40,242 firms (or 98.18 percent) have annual
receipts less than $18 million.
---------------------------------------------------------------------------
\2\ Major Group 73 includes the followng SIC industries:
Computer Programming Services (7371); Prepackaged Software (7372);
Computer Intergrated Systems Design (7373); Computer Processing and
Data Preparation and Processing Services (7374); Information
Retrieval Services (7375); Computer Facilities Management Services
(7376); Computer Rental and Leasing (7377); Computer Maintenance and
Repair (7378); and Computer Related Services. Not Elsewhere
Classified (N.E.C.) (7379).
---------------------------------------------------------------------------
The Business Services category would not include other users of H-
1B workers in computer-related occupations, such as computer equipment
manufacturers. For computer and other electronic equipment
manufacturers, the SBA's small size threshold is 1,000 employees.\3\ In
1994 (latest data on size distribution), 1.6 percent of the
establishments employed 1,000 or more workers (comprising 42.1 percent
of the employment in the industry).\4\ There were more than 14,000
establishments in this industry in 1996.
---------------------------------------------------------------------------
\3\ According to BLS, the following five SICs comprise the
electronic equipment manufacturing industry: 357, Computer and
Office Equipment; 365; Household Audio and Video Equipment; 366,
Communications Equipment; 367, Electronic Components and
Accessories; and 381, Search and Navigation Equipment. These five
SICs share common need for high levels of computer programmers,
analysts, engineers and other computer scientists. BLS has published
data on establishment size for the industry as a whole, but not its
five components. See Career Guide to Industries, BLS Bulletin 2503,
pp. 53-56, January 1998. The products of this industry include
computers and computer storage devices such as disk drives;
semiconductors (silicon or computer chips or integrated circuits),
which are the core of computers and other advanced electronic
products; computer peripheral equipment such as printers and
scanners; calculating and accounting machines such as automated
teller machines; and other electronic equipment using highly skilled
computer and other scientists and professionals.
\4\ BLS Bulletin 2503 (January 1998). Source: U.S. Department of
Commerce. County Business Patterns, 1994.
---------------------------------------------------------------------------
For Major Group 80, Health Services, the SBA's small size threshold
for all categories within the group are at the $5 million (annual
receipts) level. Data from the 1992 Census of Service Industries:
Establishment and Firm Size (February 1995) indicate that 244,437 out
of a total 249,052 firms (or 98.15 percent) have annual receipts less
than $5 million.\5\
---------------------------------------------------------------------------
\5\ SIC industries 8021 (Offices and Clinics of Dentists), 8042
(Offices and Clinics of Optometrists), 8072 (Dental Laboratories),
and 8092 (Kidney Dialysis Centers) were subtracted from the total
number of health service firms in SIC 80 for purposes of this
analysis, based on the assumption that such firms would not likely
employ physical or occupational therapists.
---------------------------------------------------------------------------
Based on the above data, we concluded in the initial analysis that
the vast majority (over 98 percent) of the businesses in the industries
in which H-1B workers are likely to be employed would meet SBA's
definition of "small." In the initial analysis, the Department
estimated that approximately 50,000 employers a year file LCA's for H-
1B nonimmigrants. The Department also estimated that not more than ten
(10) employers a year will be found to have committed willful
violations. The Department has received no comments, nor possesses any
other information, that would call into question this approach or the
estimate it yielded in the initial analysis. Based upon its updated
review of the number of LCAs filed per year and taking into
consideration the increase in petitions permitted by the October 2000
amendments to the INA, the Department currently estimates that 63,500
employers a year will file LCAs.
C. As noted in the initial analysis, there are no data available to
determine how many "H-1B-dependent" employers will exist under the
rule. We arrived at our estimate of the number of "H-1B-dependent"
employers for purposes of the initial analysis, as follows. Although
the test for H-1B dependency varies with the size of the employer, an
employer must employ at least seven H-1B workers to be dependent.
Therefore, we stated that if we assume that every H-1B-dependent
employer had the smallest workforce threshold (25 full-time equivalent
employees) and therefore subject to the "more than seven H-1B"
workers test, we can estimate the maximum potential number of H-1B-
dependent employers in computer-related fields and health services
(using therapists) by determining how many of those employers submitted
LCAs seeking certification of more than seven H-1B nonimmigrants on a
single LCA. This approach undercounts the potential number of H-1B-
dependent employers because some employers requesting fewer than seven
H-1B workers on a single LCA may already employ other H-1B workers or
may file more than one LCA. For purposes of the initial analysis,
therefore, we calculated the number of employers for which more
[[Page 80206]]
than five (5) H-1B nonimmigrants were certified on a single LCA to work
in computer-related fields or as therapists in FY 1997, to estimate an
upper-bound limit of the maximum potential number of H-1B-dependent
employers. This yielded a total of 1,425 employers (8.7 percent of the
total in the sample). This approach for setting the maximum upper limit
greatly overstates H-1B dependency, however, because many larger firms
employing more than 25 full-time employees would automatically be
included in the count of H-1B dependents. For example, we know, that
many major employers of H-1B workers have workforces larger than 25
full-time equivalent employees. In addition, some employers file LCAs
certifying a need for H-1B workers but for various reasons never fill
all the positions.
Both ACIP and AILA asserted that the Department's premises and
conclusion were not logically connected and, along with the other two
commenters, contended that the Department's estimate is not supported
by reliable data. AILA stated that the number of affected employers and
the resultant burden "may be significantly higher than the DOL
suggests." ACIP and AILA asserted that the Department's estimated
"upper limit" of 1,425 H-1B dependent employers was based on an
unsupported and, in their view, incorrect assumption that employers
generally file "blanket LCAs." Hammond recommended that the
Department work with the INS to analyze the economic information
required in an H-1B petition to determine the probable number of small
and H-1B dependent employers that will be affected by the proposed
regulations.
As the Department explained in both the initial regulatory analysis
and in other sections of the preamble to the NPRM, aside from
reasonable estimates, there are no data available to determine
precisely how many "H-1B dependent" employers will exist under the
rule in any given year, nor how many employers will be found to have
committed willful violations or misrepresentations. Such precision
would require a profile of each business that used H-1B workers,
showing both the total number of workers employed and the portion that
are H-1B workers, together with total annual receipts and the
applicable SIC industry code for each business. Additional data
identifying the education and earnings profiles of the H-1B workers
would be needed to determine whether H-1B-dependent employers would
likely be filing LCAs for only exempt workers. In the course of
developing the NPRM, the Department requested available information
from the INS and was advised that information required in an H-1B
petition would not enable us or the INS to determine the probable
number of small or H-1B-dependent employers that would be affected by
the proposed regulations. The Department's conclusion that no such data
existed was borne out by the lack of any suggestions in the comments
that such data exist. Similarly, we received no suggestions for
arriving at a better estimate of the number of employers that would be
affected by the rule.
After review of the comments and available data, the Department has
concluded that there are no data to assist it in determining the likely
number of H-1B-dependent employers and willful violators. The
Department has received no information that leads it to question its
estimate in the initial analysis that the number of H-1B-dependent
employers and willful violators who would be subject to the new
recruitment and displacement attestations would be between 100 and 200
employers. The Department does not believe that the increase in the cap
for H-1B workers will have a proportionate effect on the number of
dependent employers, since the Department believes that most such
employers are already dependent. To take into account employers that
may have been close to H-1B-dependency under the former cap who could
now employ a larger number of H-1B workers, the Department now
estimates the number of H-1B-dependent employers and willful violators
to be 150 to 250 employers, at a midpoint of 200 employers.
4. What Are the Projected Reporting, Recordkeeping and Other Compliance
Requirements of the Interim Final Rule, Which Small Entities Will They
Affect, and What Type of Professional Skills Are Needed To Meet the
Requirements?
The reporting and recordkeeping requirements of the Rule are not
overly complex, and in most cases simply require that a copy be kept of
a record made for other purposes or that a simple arithmetic
calculation be performed. There are no requirements for technical,
specialized or professional skills to comply with the reporting or
recordkeeping provisions of the rule. The particular reporting and
recordkeeping requirements of this Rule are described above in the
Supplementary Information section entitled "Paperwork Reduction Act"
and in various places throughout the preamble. Some of these
requirements are also briefly summarized below.
As noted, most new recordkeeping and compliance requirements
imposed by the ACWIA and this rule apply only to employers meeting the
new definition of "H-1B-dependent employer" or employers found to
have committed willful violations or misrepresentations, which we
estimate to number between 125 and 225. To determine if it meets the
new definition of "H-1B-dependent employer," an employer of H-1B
workers must compare the number of its H-1B workers to the number of
full-time equivalent employees. H-1B-dependent employers and willful
violators must comply with the new "non-displacement" and "good
faith recruitment" requirements of the ACWIA. In many cases, it will
be readily apparent, at either end of the spectrum, whether an employer
is or is not H-1B dependent and no actual computation will be
necessary. Based on the comments, the Interim Final Rule provides an
easy test for determining if H-1B-dependency status is readily
apparent. In the few instances where actual computations will be
required, the Rule also provides an easier, alternative method of
determining full-time equivalent employees.
The ACWIA provisions on non-displacement and recruitment of U.S.
workers do not apply if the LCA is used for petitioning only "exempt
H-1B nonimmigrants." If INS determines in the course of adjudicating
an H-1B petition that an H-1B nonimmigrant is exempt, the employer must
keep a copy of the determination in the public access file.
The Interim Final Rule would require an H-1B-dependent employer or
willful violator that is seeking to place an H-1B nonimmigrant with
another employer to secure and retain a written assurance from the
second employer, a contemporaneous written record of the second
employer's verbal statement, or a prohibition in the contract between
the two employers, stating that the second employer has not displaced
and intends not to displace a U.S. worker.
H-1B-dependent employers and willful violators must maintain
documentation that they have not displaced U.S. workers for a period 90
days before and 90 days after the employer petitions for an H-1B
worker. The Interim Final Rule, like the proposed rule, requires
covered employers to maintain typical personnel records that would
ordinarily be readily available, including name, last known mailing
address, title and description of job, and any documentation kept on
the employee's experience and
[[Page 80207]]
qualifications and principal assignments, for all U.S. workers who left
employment during the 180-day window. The employer must also keep all
documents concerning the departure of any such U.S. employees and the
terms of any offers of similar employment made to them and their
responses. In most cases no special records need to be created to meet
these requirements. EEOC requires under its regulations that any such
existing records be maintained by employers.
H-1B-dependent employers and willful violators must make good faith
efforts to recruit U.S. workers using procedures that meet industry-
wide standards before hiring H-1B workers. These employers will be
required to keep documentation of the recruiting methods they used,
including the places, dates, and contents of advertisements or
postings, and the compensation terms (if not included in contents of
advertisements and postings). These employers must also summarize in
the public disclosure file the principal recruitment methods used and
the time frame within which the recruitment was conducted. As discussed
above at section IV.E.5 of the preamble to this Rule, the NPRM
requested comments on how employers should determine industry-wide
standards, and how to make this determination available to U.S.
workers. (See IV.E.1, E.5.) Inasmuch as the requirements are based on
industry-wide standards, meeting this statutory standard should not
impose significant burdens on affected employers in most cases. To
ascertain whether employers have given good faith consideration to U.S.
worker/applicants, the Interim Final Rule also requires the retention
of applications and related documents, rating forms, job offers, etc.
Retention of such records already is required by EEOC, so no additional
burden will be imposed. (See IV.D.8, above.)
All employers of H-1B workers must offer fringe benefits to H-1B
workers on the same basis and terms as offered to similarly-employed
U.S. workers. To document that they have done so, employers must keep
copies of their fringe benefit plans and summary plan descriptions,
including rules on eligibility and benefits, evidence of what benefits
are actually provided to workers, and how costs are shared between
employers and employees. Because regulations of the Pension and Welfare
Benefits Administration and the Internal Revenue Service generally
require employers to keep copies of such fringe benefit information,
meeting this requirement should not impose any additional burdens on
most affected employers, and in the few cases where such information is
not currently retained, it is anticipated that the additional burden
will be minor. (See IV.G.1, above.)
As noted in the initial analysis, the Department republished and
asked for comment on several provisions of the December 20, 1994 Final
Rule (59 FR 65646) that were published for notice and comment on
October 31, 1995 (60 FR 55339). As explained above, H-1B workers are
required to be paid at least the actual wage or the prevailing wage,
whichever is higher. To ensure this requirement is met, employers are
required to include in the public access file documents explaining
their actual wage system, and to maintain payroll records for the
specific employment in question for both their H-1B workers and their
U.S. workers. The Interim Final Rule revises the proposal to require
that hours worked records be retained with respect to U.S. workers only
if the employee is not paid on a salary basis or the actual wage is
expressed as an hourly rate, and further that hours worked records be
kept for H-1B workers only if the worker is part-time or is not paid on
a salary basis. In virtually all cases, these employees would be paid
hourly and hourly pay records would therefore be kept. (See IV.O.4,
above.)
5. Are There any Federal Rules That Duplicate, Overlap or Conflict With
the Interim Final Rule?
There are no Federal rules that directly duplicate, overlap or
conflict with the Interim Final Rule. Title VII of the Civil Rights Act
of 1964 (42 U.S.C. 2000e et seq.), enforced by the EEOC, prohibits
national origin discrimination by employers with 15 or more employees
(see 29 CFR part 1606). The Immigration Reform and Control Act of 1986
(see 8 U.S.C. 1324b; 8 U.S.C. 1103(a)), enforced by the U.S. Department
of Justice, prohibits national origin discrimination by employers with
between four and fourteen employees (those not covered by Title VII),
and citizenship-status discrimination by employers with at least four
employees (see 28 CFR part 44). In addition, under the ACWIA, an "H-1B
dependent" employer must attest that it has taken good faith steps to
recruit in the U.S. for the position for which it is seeking the H-1B
worker, and that it has offered the job to any U.S. worker/applicant
who is equally or better qualified. The Department of Labor is
responsible for enforcing the required recruitment, and the Department
of Justice is responsible for administering an arbitration process
detailed in the ACWIA if U.S. worker/applicants complain that they were
not offered a job for which they were equally or better qualified, as
required.
6. Are There Significant Alternatives Available Such as Differing
Compliance or Reporting Requirements or Timetables for Small Entities?
The compliance and reporting requirements of the Interim Final
Rule, together with those significant alternatives which have been
identified, are discussed in the "Supplementary Information" section
of the preamble above. Different timetables for implementing the
statutory requirements for smaller businesses would not be consistent
with the statute. The statute temporarily increases the maximum
allowable number of nonimmigrants that may be admitted into the U.S. to
perform specialized jobs not filled by U.S. workers, and temporarily
adds corresponding provisions intended to protect the wages and working
conditions of U.S. workers in similar jobs during the same period.
7. Can Compliance and Reporting Requirements Be Clarified,
Consolidated, or Simplified Under the Interim Final Rule for Small
Entities?
The compliance and reporting requirements of the Interim Final
Rule, and each of the alternatives considered together with their
expected advantages and disadvantages, are described in the preamble
above. The Department has attempted to keep new recordkeeping
requirements to the minimum necessary for the Department to ascertain
compliance and for the public to be aware of the primary documentation
relied on by the employer to satisfy the statutory requirements. (See
Section 212(n)(1) of the INA.) Moreover, most of the recordkeeping
requirements already are imposed by other statutes, or only require
retention of documents which, in any event, would be kept as a matter
of prudent business practice.
Upon further review and consideration if the comments received, the
Department has clarified several aspects of the rule. Among other items
clarified are the documents to be kept in the public disclosure file
and other documents which, in contrast, need not be segregated within
the employer's system of records. (See Sec. 655.760.)
In this connection, the Department also considered the use of
performance rather than design standards in the regulations. The
proposed rules discussed such alternatives, such as establishing a
presumption of good faith recruitment based on the employer's hiring a
significant number of U.S.
[[Page 80208]]
workers and, thereby, accomplishing a significant reduction in the
ratio of H-1B workers to U.S. workers in the employer's workforce. (See
IV.E.1, E.2, above.) The comments received on these proposals were
negative and these alternatives were not included in the Interim Final
Rule.
8. Can Small Entities Be Exempted From Coverage of the Rule, or Any
Part of the Rule?
Exemption from coverage under this Interim Final Rule for small
entities would not be appropriate under the terms of the controlling H-
1B statutory mandates. The ACWIA contains no authority for the
Department to grant such an exemption except to the extent that the
statute itself grants an exemption (e.g., the definition of "H-1B-
dependent employer"). Further, as discussed above, the Department
believes that the impact on small businesses will not require
significant, additional expenditures. The direct, incremental costs
associated with the customary and usual business expenses for
recruiting qualified job applicants and retaining qualified employees
in specialized jobs should be minimally affected by implementation of
this Rule. Most employers, including the smallest entities, should
already have systems in place to meet the additional requirements
prescribed by the ACWIA and this Rule.
VII. Small Business Regulatory Enforcement Fairness Act
The Department, in the NPRM, concluded that the proposed rule is
not a "major rule" within the meaning of the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 801 et
seq.. The rule will not likely result in (1) an annual effect on the
economy of $100 million or more; (2) a major increase in costs or
prices for consumers, individual industries, Federal, State or local
government agencies, or geographic regions; or (3) significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of U.S. based enterprises to compete with
foreign-based enterprises in domestic or export markets.
Five commenters (ACIP, AILA, Hammond, ITAA and SBSC) responded to
the Department's conclusion that this rule is not a "major rule"
within the meaning of SBREFA. The commenters generally focused on their
belief that the Department has underestimated the costs to employers of
complying with the rule. They asserted that a reasonable, reliable
estimate of costs would show that the rule is a major one requiring
approval by Congress. ACIP and AILA contended that the Department has
underestimated the cost of this rule to employers because it has not
included in its analysis the costs to employers for legal services,
training materials, computers, files and other systems necessary for
compliance.
The Department believes that employer compliance with the
additional requirements of the ACWIA will not require significant,
additional expenditures as suggested by commenters. The direct,
incremental costs associated with the customary and usual business
expenses for recruiting qualified job applicants and retaining
qualified employees in specialized jobs should be minimally affected by
implementation of this rule. Those systems needed for compliance with
the few additional requirements of the ACWIA should largely already be
in place. The Department has concluded that collectively, the changes
set forth in this Rule will not have an economically significant
impact, and therefore the Rule is not a major rule under SBREFA.
VIII. Unfunded Mandates Reform Act of 1995; Executive Order 13132
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531
et seq.) directs agencies to assess the effects of Federal regulatory
actions on State, local, and tribal governments, and the private
sector, "* * * (other than to the extent that such regulations
incorporate requirements specifically set forth in law)." The
Department concluded in the NPRM that for purposes of the Unfunded
andates Reform Act, this rule does not include any Federal mandate
that may result in increased annual expenditures in excess of $100
million by State, local or tribal governments in the aggregate, or by
the private sector. Moreover, the requirements of the Unfunded Mandates
Reform Act do not apply to this Rule because it does not include a
"Federal mandate," which is defined to included either a "Federal
intergovernmental mandate" or a "Federal private sector mandate." 2
U.S.C. 658(6). Except in limited circumstances not applicable here,
those terms do not include "a duty arising from participation in a
voluntary program." 2 U.S.C. 658(5)(A)(I)(II) and 7(A)(ii). A decision
by an employer to obtain an H-1B worker is purely voluntary and the
obligations arise "from participation in a voluntary Federal
program."
AILA specifically took issue with the Department's description of
the H-1B program as "voluntary." AILA believes that there is very
little that is "voluntary" about the H-1B program. Rather, that group
asserts, Congress recognized an urgent need for additional qualified
professionals in certain fields and responded to that need by enacting
ACWIA. AILA describes the H-1B program as a "government monopoly"
where businesses have no choice but to accept the burdensome
requirements of the program if they are to obtain the highly skilled
foreign workers necessary for their economic survival. While from an
employer's perspective, use of the H-1B visa program may be an economic
necessity, participation in the program remains voluntary since it
applies only to employers who choose to participate in the program.
In addition, the Rule will not have substantial direct effects on
the States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government, within the meaning of Executive Order
13132. Therefore, in accordance with Executive Order 13132, it is
determined that this rule does not have sufficient federalism
implications to warrant the preparation of a federalism summary impact
statement.
IX. Catalog of Federal Domestic Assistance Number
This program is listed in the Catalog of Federal Domestic
Assistance at 17.252.
List of Subjects in 20 CFR Parts 655 and 656
Administrative practice and procedure, Agriculture, Aliens,
Employment, Forest and forest products, Health professions,
Immigration, Labor, Longshore work, Migrant labor, Penalties, Reporting
requirements, Students, Wages.
The Interim Final Rule
Parts 655 and 656 of Chapter V of Title 20, Code of Federal
Regulations, are amended as follows:
PART 655--TEMPORARY EMPLOYMENT OF ALIENS IN THE UNITED STATES
1. The table of contents for part 655, subparts H and I, is revised
to read as follows:
Subpart H--Labor Condition Applications and Requirements for Employers
Using Nonimmigrants on H-1B Visas in Specialty Occupations and as
Fashion Models
655.700 What statutory provisions govern the employment of H-1B
nonimmigrants and how do employers apply for an H-1B visa?
655.705 What federal agencies are involved in the H-1B program,
and what are the
[[<a href="65_FED_REG_80109_3.HTM">Continued on page 80209</a>]]
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