A SYNOPSIS OF INTERIM FINAL H-1B REGULATIONS

IMPORTANT: The regulations are broad, intricate and greatly comprehensive. The present synopsis attempts to summarize a few amendments set off by the regulations. It would be pertinent to note, that not all the issues raised by the regulations are dealt with here.

How to file the Labor Condition Application (LCA): The ETA has introduced a new LCA form (of 3 pages), which may be filed via a Fax-back system using an “800” telephone number or may be submitted by mailing it (no couriers), to ETA-H1B, PO Box 13640, Philadelphia, PA 19101. In case the form is mailed, it shall be scanned into the Fax-back system. During the transitional period from January 19, 2001 to February 5, 2001 the Fax-back system was not utilized and LCAs were submitted only by mail. It is important to note that from January 19, 2001 onwards, the ETA shall accept only the new LCA form which may be downloaded (along with a form filler program) from the Department of Labor’s (DOL) website at http://ows.doleta.gov. The form includes a new “cover page” with the actual text of the basic attestations. It is not necessary to submit this “cover page” to DOL, but should be included in the public access file and also in any posting of the form (electronic or hard copy) and the same should be made available to the H-1B employee.

Portability Provision: Till such time that an H-1B petition is filed with INS and duly supported by a certified LCA, the AC21’s H-1B portability provision cannot be utilized.

Corporate Restructuring: In the event of a corporate restructuring process being carried out, there is no need for new LCAs to be filed to continue employment of existing H-1B employees, as long as the DOL requirements are complied with. However, it is mandatory for the new restructured company to maintain a list of the H-1B employees transferred to it as also, a list (in the public access file) of the concerned LCA numbers with their dates of certification, an account of the new company’s actual wage system, a sworn statement from an official of such new company taking on the liabilities and obligations of the existing LCAs (including, as per the preamble, assumption of liability for any violations by the prior company under the LCA) and the EIN of the new entity. In accordance with the new regulations, the newly restructured company “shall not” employ any of the predecessor’s H-1B employees till such statement is executed and placed in the public access file or new LCAs and petitions are filed. Existing LCAs of the predecessor company will not be available to successors to file new petitions or extend existing petitions. In case the reorganization alters the company’s dependency status, the employer’s obligations will not be affected with regard to the existing H-1B employees, however, any new H-1Bs or extensions of status for existing H-1Bs will be governed by such new rules as are applicable to the company (dependant or non-dependant).

H-1B Employees Who Travel: One of the most significant questions that needs to be answered is,

what is to be done, under these new regulations, when H-1B employees travel.

Firstly, one has to determine whether the employee’s travel matters at all. For all intents and purposes, if the employee’s travel does not involve going to a new ‘place of employment’ or ‘worksite’, then there is no cause for concern regarding any special traveling employee rules.

The new regulations now include a comprehensive definition of ‘place of employment’. A ‘place of employment’ cannot be deemed to be one if the nature and duration of the employee’s work functions demand repeated changes of location with not much time spent at any one place. In order to meet this criteria, the occupation (as opposed to the employer’s business) must be nomadic in nature, the duties should entail that a major part of the work time be spent at one location but occasional travel for short terms is essential to other locations, and such travel must be on “a casual, short-term basis, which can be recurring but not excessive (i.e., not exceeding five consecutive workdays for any one visit by a peripatetic worker, or ten consecutive workdays for any one visit by a worker who spends most work time at one location and travels occasionally to other locations).”

The regulations mention examples that meet these criteria for not being a new place of employment. These examples take account of Computer Engineers who troubleshoot at customer sites; Physical Therapists who make home visits “within an area of employment”, or sales representatives making customer calls.

Examples of those employees not meeting these criteria, and thus going to ‘places of employment’, include Computer Engineers who work on projects for weeks or months at a time; Physical Therapists who ‘fill in’ for other therapists for extensive periods or who are positioned by contractor companies; or a Sales Representative who is allocated on a continuing basis to a location away from the head office. If the H-1B employee is temporarily at a different site for development activity (conferences, seminars etc.), then such a different location is also not a ‘place of employment’, except if the employee is an instructor or a member of support staff who ‘continuously or regularly’ executes duties at the site. The preamble does not stipulate a time limit for attendance at a different location for developmental activity.

As per the new rules, whenever an employee travels to a site that is not construed as a new ‘place of employment’, then the LCA requirements are fixed to the regular location of work. In such cases,

it is obligatory for the employers to reimburse any travel expenses so incurred.

On the other hand, if the travel comprises going to a new ‘place of employment’, a few more details need to be looked into.

· Travel within the same area of intended employment: If the H-1B employee travels within the same area of intended employment, the rules entail that notices should be posted at new worksites within that area on or before the date that the employee reports to that site.

· Travel outside the area of intended employment: If the H-1B employee has to travel outside the area of intended employment as revealed on the LCA, then the new rules entail that either a new LCA should be filed before such travel takes place or ‘short-term placement’ rules must be adhered to. These rules limit short-term placements to 30 workdays at any worksite not listed on the LCA in any calendar or fiscal year. Nevertheless, a short-term placement can also be for up to 60 workdays in a one-year period, in case the H-1b employee’s place of residence is in the area and if such employee maintains a work station at the permanent worksite and spends considerable time there during the year. Under the regulations, it is illegal for the employers to place the employee at a ‘short-term placement’ location for his initial assignment. Where the employer has a certified LCA for an occupational classification, the rules also strictly prohibit the employer from using the short-term placement rules in any such area of employment. In such a situation, the employer should apply the conditions of that LCA (wage rate, lockout or strike) to the new H-1B employee.

The preamble states that in case the employer’s LCA contains open ‘slots’, nothing more should be done. But, if the employer shifts more H-1B employees into the area than the available ‘slots’, DOL declares in the preamble that it expects the employer to correct the circumstances by filing new LCAs. It is also mentioned that DOL also may, “in it’s discretion, overlook ‘overcrowding’ of the LCA, if it is not substantial”.

Employers need to note, that in case they decide to utilize the short-term placement rule (rather than file a new LCA) for areas where LCAs are not available, they must carry on paying the required wage based on the permanent worksite, and must also compensate the employee for his actual cost of travel, lodging, meals and incidentals for workdays and non-work-days at the short-term site. According to the preamble, in an enforcement proceeding if the employer is not able to document the actual expenses, DOL will use the GSA per diem schedules to determine appropriate reimbursement, but otherwise, it is NOT mandatory for the employer to meet GSA schedules.

Even though the regulations are quite unclear as to whether an LCA should be certified at the time the workday limit is reached at any location, they do mention that at such time, the employer must either file an LCA for that site or remove the employee.

Another important aspect of the rules is that, in case any employee exceeds the time limit, or the employer in any manner “violates the terms of” the LCA, then the short-term placement option cannot thereafter be taken advantage of by that employer for any H-1B employees in that occupational classification in that area of employment. Employers are also warned against continuously rotating H-1B non-immigrants to an area of employment “in a manner that would defeat the purpose of the short-term placement option”.

Prevailing wage (Service Contract Act wages): Under the SCA wage determinations, it is immaterial whether the employee is employed on a SCA-wage subject contract, and if the employee is exempt from the SCA under the ‘professional employee’ exemption test. Further, in case an SCA wage determination for a computer professional states a rate of $27.63 per hour, such rate may not be implemented (according to the regulations, on account of a peculiarity in the SCA system). This provision appears to be operative immediately.

Acquiring a new Prevailing wage: The regulations show that the LCA that supports an individual H-1B petition particular to an H-1B employee, determines that employee’s prevailing wage and that prevailing wage determinations on subsequent LCAs for the same occupation do not function as an ‘update’ of the prevailing wage of earlier LCAs. Then again, the regulations specify that the actual wage could increase and generate an obligation to increase the wages of the H-1B employees under old LCAs due to an increase in wages for new employees on account of an increase in the prevailing wage, since the DOL considers actual wage as a “dynamic” matter.

7. Certification for Actual wages: The Notice of Proposed Rulemaking (NRPM) which earlier called for employers to have an impartial wage system “sufficiently detailed to enable a third party to apply the system to arrive at the actual wage rate computed by the employer for any H-1B nonimmigrant” has been removed in the regulations. In fact, the entire Appendix A has been deleted from the NPRM, which comprised of the DOL’s ‘guidance’ on the subject of documentation/certification of the actual wage.

In the preamble to the rules, DOL declares that the system need not be “objective” but must only utilize “legitimate business factors”. The fact that DOL is “persuaded that some subjective factors, such as an evaluation of performance levels”, may be justifiable. Further, the certification/documentation must be so comprehensive that a third party can “understand how the employer applied its pay system to arrive at the actual wage for it’s H-1B nonimmigrant(s).” The preamble also mentions the public access file should, at the least, include an account of the business related issues that are used in establishing wages and ways in which they are applied (e.g., the array of wages/salaries that may be paid for a particular position and the various differences in wages taking into consideration several aspects such as education and job experience).

Prevailing wage for workers in Governmental or Nonprofit Research Organizations or Institutions of Higher Education: In order to utilize the separate prevailing wage category for this category, institutions of higher education must be recognized and approved or pre-accredited. Governmental research organizations (should only be U.S. government entities) and nonprofit research organizations must have a main aim of promotion of basic or applied research that can include sciences, social sciences or humanities. This stipulation is operative immediately and is retroactive as to prevailing wage determinations “that were not final as of October 21, 1998.”

Advantages: The regulations state that H-1B’s must be given the same benefits or advantages as U.S. workers and that the H-1B employees cannot be subjected to more stringent eligibility standards than U.S. workers and also that they cannot be treated as “temporary employees” for purposes of such benefits only because of their nonimmigrant status. The advantages/benefits obtained by the H-1B employee may not be exactly the same as those received by the U.S. workers, as long as the same benefits package was offered to the H-1B employee and he voluntarily preferred different benefits (such employees should also actually receive the chosen benefits/advantages).

Multinational companies may keep transferred employees on the foreign payroll and offer “home country” benefits under certain circumstances.

Further, the regulations state that the employers must maintain, a copy of the benefit plans, attestations of the benefits received, descriptions provided to the employees, attestations and any rules used for differentiating benefits amongst groups of employees, as proof as to what benefits are actually provided to U.S. workers and H-1B nonimmigrants, and the benefits chosen by the employees. In case the employer is a multinational employer providing “home country” benefits, confirmation of the benefits made available to the H-1B employee before and after the shift to the U.S. also must be maintained.

Section 655.810 gives DOL the right to appraise payment of “back….fringe benefits”. The preamble states that certain benefits “are in the nature of compensation for services rendered” and are worth in financial terms (such as paid vacations, bonuses, termination pay and life and disability compensation etc.).

Benching: The rules categorically state that in case an H-1B employee, on account of a “decision by the employer”, is in a nonfunctional position, e.g. he has no work assignments and no permit or license, the employee must still be compensated with the full pro-rata sum due. Part time employees in a nonfunctional capacity must be remunerated at least for the number of hours shown on the petition. In the event, a time period is shown on the petition, then the employee must be paid for the average number of hours he/she normally works. Employers should take note that the DOL may accuse the employer of misrepresentation if an employee generally works more than the part-time hours shown on the petition.

However, it is not mandatory for the employer to pay the employee, if the employee’s nonfunctional period is owing to “conditions unrelated to employment” at the employee’s “voluntary request and convenience” (e.g. taking care of an ill relative) or owing to situations that make the employee unable to report for work (provided that it is not compulsory under the employer’s benefit plan or other statutes, to pay the employee for such period.)

It is clearly stated in the preamble that DOL will not “forgive “employers for not obeying this rule because of annual plant shutdowns or holidays or other events that involve both U.S. workers and H-1B non-immigrants. The DOL makes it quite clear those employers who lay off U.S. workers and not the H-1B non-immigrants would be liable under other nondiscrimination laws and would also be violating the ACWIA layoff attestation/certification for H-1B employers.

Such requirements commence from the time the H-1B employee “enters into employment,” which is estimated to happen when the person first makes himself available. The regulation indicates that “even if the nonimmigrant has not yet ‘entered into employment’,” once the petition is is approved, the requisite wage must start to be paid 30 days after the nonimmigrant is first admitted to the U.S., in case the employee is already in the U.S., 60 days after the nonimmigrant qualifies for the employer. The latter is taken to be the later of the start date portrayed on the petition or the date the INS makes a status determination. The commitment to pay finishes if there has been a “bona fide” termination of the employment. The preamble points out that a “bona fide” termination shall have taken place only if the employer informs the INS of such termination, the H-1B petition is cancelled and the return fare obligation is implemented.

11. Notices to be posted at new worksites: The regulations restore the condition, struck down by the NAM lawsuit, that notices must be posted at the new worksites within the area of intended employment on or before the date that the H-1B employee reports to that site. It also states that such postings are necessary not only in the employer’s own premises, but also at third party worksites. Electronic notices permitted either by a one-time direct notice (e.g. email) to employees in the occupational classification at the place of employment or by making the notice available for 10 days in an electronic manner such as intranet or the bulletin board.

12. Attorney’s charges: Under the new regulations it is a breach of the requisite wage provisions in case the H-1B employee pays “ attorney fees and other costs connected to the performance of H-1B program functions which are required to be performed by the employer (e.g. preparation and filing of LCA and H-1B petition)” that, when removed from the employee’s wage, then such wage would be less than the higher of the actual or prevailing wage. (in case such payments do not in any way decrease the employee’s wage below the required wage, in that case, such payments are allowed).

Some provisions which were included in the old NPRM’s Appendix B, (since abolished), now find a place in the regulations at Section 655.731©(9)(iii)(C0 which states that the deduction of attorney’s fees and costs from the employee’s wages is a “recoupment” of the employer’s business expense”, and Section 655.731©(12) states that “imposing on the employee” such an expense is an unauthorized deduction from wages.

13. No Penalty Payments: In case the H-1B employee terminates his employment earlier than his agreed date, the ACWIA forbids the employer from inflicting any penalty on such employee. However, the employer may get liquidated damages in such an event. The regulations have defined liquidated damages with a reference to state law.

Nevertheless, the regulations show that liquidated damages cannot be gathered by deducting from the employee’s salary check. The preamble mentions that recovery of attorney’s fees may be included in liquidated damages. The rules also go on to show that the $1,000/ “training” fee can never be a part of liquidated damages and cannot be recouped in any way.

14. Investigations, violations and penalties: The regulations establish a new rule whereby an infringement of other rules that “impedes” the ability of the DOL to investigate or the ability of the general public to acquire information necessary to file a complaint can subject the employer to a $1,000/ civil penalty. The preamble specifies that such penalty shall apply for any violation precluding public access or any violation with regard to record keeping.

The preamble discusses at length, DOL’s interpretation that it has the right to “make whole relief” including reinstatement of dismissed employees as part of its “administrative remedies”. DOL also gives itself the right to interview complainants and extend the 30-day period for investigations if on account of reasons “outside of the control” of DOL and additional time is needed in order to acquire information from the employer or other sources.

15. Complaints received from non-aggrieved persons: Under specific circumstances, the DOL has been approved by the ACWIA to carry out investigations, based on information got from parties who would not be deemed aggrieved parties. The regulations determine a process for getting this information, which the DOL will then examine to decide whether the source has relevant knowledge, whether the suspected infringement is willful, does it involve a pattern or practice, whether the information offered is reliable and precise and provides reasonable cause to believe that the employer has committed an infringement and whether the alleged violation includes considerable violations affecting several other employees. The regulations stipulate that “information” does not involve information from DOL employees except if it is acquired in the course of a lawful investigation. The DOL also, as part of the preamble, discusses that this new power bestowed on it, does not lessen, in any way, its right to carry out “directed” investigations without a complaint. Then again the preamble also mentions that during the period this “new source” analytical group is in place, it shall investigate only when an aggrieved party submits a complaint (including any information got from an investigation under the INA or any other law) and arbitrary investigations of willful violators (as ACWIA authorizes).

16. Main dates: Except if otherwise provided, the regulations have been effective from January 19, 2001. Comments were scheduled from February 20, 2001, save for comments on a new proposed form for collecting information to establish if a violation has been committed. These particular comments on such form were due January 19, 2001.