[Federal Register Volume 64, Number 2 (Tuesday, January 5, 1999)]
[Proposed Rules]
[Pages 628-678]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34668]
[[Page 627]]
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Part IV
Department of Labor
_______________________________________________________________________
Employment and Training Administration
_______________________________________________________________________
20 CFR Parts 655 and 656
Labor Condition Applications and Requirements for Employers Using
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion
Models; Labor Certification Process for Permanent Employment of Aliens
in the United States; Proposed Rule
Federal Register / Vol. 64, No. 2 / Tuesday, January 5, 1999 /
Proposed Rules
[[Page 628]]
DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Parts 655 and 656
RIN 1215-AB09
Labor Condition Applications and Requirements for Employers Using
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion
Models; Labor Certification Process for Permanent Employment of Aliens
in the United States
AGENCY: Employment and Training Administration, Labor, in concurrence
with the Wage and Hour Division, Employment Standards Administration,
Labor.
ACTION: Notice of Proposed Rulemaking; request for comments.
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SUMMARY: The Department of Labor is proposing regulations to implement
recent legislation and clarify existing Departmental rules relating to
the temporary employment in the United States of nonimmigrants under H-
1B visas. Specifically, the Department publishes this notice of
proposed rulemaking to obtain public comment on issues to be addressed
in regulations to implement changes made to the Immigration and
Nationality Act (INA) by the American Competitiveness and Workforce
Improvement Act of 1998 (ACWIA). For certain of these ACWIA issues, the
Department is proposing regulatory language for comment; for other
issues, the Department is identifying concerns and its proposed
approach to addressing them or alternative approaches, on all of which
comments are requested. In addition, the Department is providing an
opportunity for additional comments on certain provisions which were
previously published for comment as a Proposed Rule in 1995 (60 FR
55339).
The Department is also proposing to modify regulations to implement
an ACWIA provision which modifies the methodology for the determination
of the prevailing wage under the Permanent Labor Certification program
(20 CFR Part 656), but is not proposing specific regulatory text at
this time. This methodology is also applicable to prevailing wages for
the H-1B program. The Department is working in close cooperation with
the Immigration and Naturalization Service (INS) in developing these
regulations, since certain definitions and terms must be consistently
applied by the two agencies in their respective regulations.
After receiving public comments on this notice of proposed
rulemaking, the Department plans to publish an Interim Final Rule
(inviting further comment) and a Final Rule (after reviewing all the
comments received).
DATES: Submit written comments by February 4, 1999. The Department
encourages submission of comments as soon as possible before that date.
Any comments received by the Department after that date will be part of
the rulemaking record and will be considered, fully, in subsequent
rulemaking, but they may not receive full consideration in the interim
implementing regulations. Congress expressed its intent that the
Department act swiftly to issue regulations by waiving the customary
60-day comment period.
ADDRESSES: Submit written comments concerning Part 655 to Deputy
Administrator, Wage and Hour Division, ATTN: Immigration Team, U.S.
Department of Labor, Room S-3502, 200 Constitution Avenue, NW,
Washington, DC 20210. If you want to receive notification that we
received your comments, you should include a self-addressed stamped
post card. You may submit your comments by facsimile (``FAX'') machine
to (202) 219-5122. This is not a toll free number.
Submit written comments concerning Part 656 to the Assistant
Secretary for Employment and Training, ATTN: Division of Foreign Labor
Certifications, U.S. Employment Service, Employment and Training
Administration, Department of Labor, Room N-4456, 200 Constitution
Avenue, NW, Washington, DC 20210. If you want to receive notification
that we received your comments, you should include a self-addressed
stamped post card. You may submit your comments by facsimile (``FAX'')
machine to (202) 208-5844. This is not a toll-free number.
FOR FURTHER INFORMATION CONTACT: On Part 655, contact either of the
following:
Michael Ginley, Director, Office of Enforcement Policy, Wage and
Hour Division, Employment Standards Administration, Department of
Labor, Room S-3510, 200 Constitution Avenue, NW, Washington, DC 20210.
Telephone: (202) 693-0745 (this is not a toll-free number).
James Norris, Chief, Division of Foreign Labor Certifications, U.S.
Employment Service, Employment and Training Administration, Department
of Labor, Room N-4456, 200 Constitution Avenue, NW, Washington, DC
20210. Telephone: (202) 219-5263 (this is not a toll-free number).
On Part 656, contact James Norris, Chief, Division of Foreign Labor
Certifications, U.S. Employment Service, Employment and Training
Administration, Department of Labor, Room N-4456, 200 Constitution
Avenue, NW, Washington, DC 20210. Telephone: (202) 219-5263 (this is
not a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Paperwork Reduction Act
The H-1B visa program is a voluntary program that allows employers
to temporarily secure and employ nonimmigrants admitted under H-1B
visas to fill specialized jobs in the United States. (Immigration and
Nationality Act (INA), 8 U.S.C. 1101 et seq.). The statute, among other
things, requires that an employer pay an H-1B worker the higher of its
actual wage or the locally prevailing wage, to protect U.S. workers'
wages and moderate any economic incentive or advantage in hiring
temporary foreign workers. Under the Immigration and Nationality Act
(INA), as amended by the Immigration Act of 1990 and the Miscellaneous
and Technical Immigration and Naturalization Amendments of 1991, an
employer seeking to employ an alien in a specialty occupation or as a
fashion model of distinguished merit and ability on an H-1B visa is
required to file a labor condition application with and receive
certification from the Department of Labor before the Immigration and
Naturalization Service (INS) may approve an H-1B visa petition. The
labor condition application (LCA) process is administered by the
Employment and Training Administration (ETA); complaints and
investigations regarding labor condition applications are the
responsibility of the Wage and Hour Division, Employment Standards
Administration (ESA).
This proposed rule would implement statutory changes in the H-1B
visa program made to the INA by the American Competitiveness and
Workforce Improvement Act of 1998 (ACWIA) (Title IV of Pub. L. 105-277,
Oct. 21, 1998; 112 Stat. 2681). The ACWIA, among other things,
temporarily increases the maximum number of H-1B visas permitted each
year; temporarily requires new non-displacement (layoff) and
recruitment attestations by ``H-1B dependent'' employers (as defined by
ACWIA) and by employers found to have committed willful violations or
misrepresentations; and requires all employers of H-1B workers to offer
the same fringe benefits
[[Page 629]]
to H-1B workers as it offers to U.S. workers.
A. Labor Condition Application (LCA)
Summary: The process of protecting U.S. workers begins with a
requirement that employers file a labor condition application (Form ETA
9035) with the Department. In this application the employer is required
to attest: (1) that it will pay H-1B aliens prevailing wages or actual
wages, whichever are greater; (2) that it will provide working
conditions that will not adversely affect the working conditions of
U.S. workers similarly employed; (3) that there is no strike or lockout
at the place of employment; and (4) that it has publicly notified its
employees of its intent to employ H-1B workers. In addition, the
employer must provide the information required in the application about
the number of aliens sought, occupational classification, wage rate,
the prevailing wage rate and the source of such wage data, the date of
need and period of employment.
Need: Pursuant to ACWIA, new attestation requirements become
applicable to H-1B dependent employers or willful violators after
promulgation of implementing regulations. The LCA, currently approved
by OMB under OMB No. 1205-0310, is being revised to identify H-1B
dependent employers and willful violators and provide for their
attestation to the new requirements, and to accommodate electronic
processing.
Respondents and frequency of response: ACWIA increased the number
of available H-1B nonimmigrant visas from 65,000 to 115,000 in fiscal
years 1999 and 2000 and to 107,500 in fiscal year 2002. Besides the
increase in LCAs filed for these additional workers, the proposed
regulation provides that H-1B dependent employers could be required to
file new LCAs. It is estimated that 249,500 LCA's will be filed
annually by 50,000 H-1B employers (dependent and nondependent). This
estimate is based on the assumption that the alternative LCA format
preferred by the Department is selected.
Estimated total annual burden: The only added LCA burden is for
employers to determine if they are dependent. In most cases employers
will be able to immediately answer this question, without review of
their payroll records. Where dependent or non-dependent status is not
readily apparent, employers would be required to make a mathematical
calculation to determine if they must make the additional attestations
required of an H-1B employer. (See C. below for further explanation.)
The time required to review records and make the determination is
estimated to take an average of 30 minutes per employer. Since it is
estimated that only 50 H-1B employers will find it necessary to make
this calculation, out of a total of 50,000 H-1B employers, the estimate
of the average time necessary to complete the form remains at 1 hour.
Total annual burden is 249,500 hours.
B. Documentation of Corporate Identity
Summary: Currently, the regulatory requirement is that a new labor
condition application (LCA) must be filed when an employer's corporate
identity changes and a new Employer Identification Number (EIN) is
obtained. Under the proposed rule, an employer who merely changes
corporate identity through acquisition or spin-off need merely document
the change in the public file (including an express acknowledgement of
all LCA obligations on the part of the successor entity), provided it
satisfies the Internal Revenue Code definition of a single employer,
found at 26 U.S.C. 414 (see 8 U.S.C. 1182(n)(3)(C)(ii)).
Need: The regulation is designed to eliminate a burden on
businesses to file a new LCA, while at the same time ensuring that the
public is aware of the changes and that the employer will continue to
follow its LCA obligations.
Respondents and Proposed Frequency of Response: It is estimated
that 500 H-1B employers will be required to file the subject
documentation annually.
Estimated total annual burden: It is estimated that the recording
and filing of each such document will take 15 minutes for a total
annual burden of 125 hours.
C. Determination of H-1B Dependency
Summary: An H-1B employer must calculate the ratio between the
number of H-1B workers it employs and the number of full-time
equivalent employees (FTEs) to determine whether it meets the statutory
definition of an H-1B dependent employer . (8 U.S.C. 1182 (n)(3)(A)).
When it is a close question, this determination would ordinarily be
made by examination of an employer's quarterly tax statement and last
payroll or other evidence as to average hours worked by part-time
employees to aggregate their hours into FTEs, together with a count of
the number of workers employed under H-1B petitions. Documentation of
this determination must be made where non-dependent status is not
readily apparent and a mathematical determination must be made. A copy
of this determination must be placed in the public disclosure file. In
addition, if an employer changes from dependent to non-dependent
status, or vice versa, a simple statement of the change in status must
be placed in the public disclosure file. An employer must retain hours
worked records or other evidence of the average work schedules of part-
time employees only, and copies of H-1B petitions for its H-1B workers.
Need: Documentation of a determination of an H-1B dependency where
it is a close question is necessary to determine employer compliance
with H-1B requirements, and to advise the public of an employer's
status. The underlying documentation must be retained to allow the
Department to check this determination.
Respondents and proposed frequency of response: All employers will
be required to keep the underlying documentation. It is estimated that
approximately 50 H-B employers will be required to review their records
in order to make the determination, with 25 employers who are found not
to be dependent employers required to document this determination
annually.
Estimated annual burden: The making and documentation of each such
determination will take approximately 15 minutes, and occur at least
twice annually, for a total annual burden of 12.5 hours.
D. Filing of Copy of INS Documentation for Exempt H-1B Employees in
Public Access File
Summary: The ACWIA provisions regarding non-displacement and
recruitment of U.S. workers do not apply where the LCA is used only for
petitions for exempt H-1B workers. (8 U.S.C. 1182(n)(1)(E)(ii)) Where
the Immigration and Naturalization Service (INS) determines a worker is
exempt, employers are required to maintain a copy of such documentation
in the public access file.
Need: Determinations as to whether or not H-1B workers meet the
requirements to be classified as exempt H-1B nonimmigrants will be made
initially by the INS in the course of adjudicating the petitions filed
on behalf of H-1B nonimmigrants by dependent employers. In the event of
an investigation, it is anticipated that considerable weight will be
given to the INS determination that H-1B nonimmigrants were exempt
based on the educational attainments of the workers, since INS has
considerable experience in evaluating the educational qualifications of
aliens. Retention of copies of such determinations will aid DOL in
determining compliance with the H-1B requirements.
[[Page 630]]
Respondents and frequency of response: It is estimated that 28,125
such documents will need to be filed annually.
Estimated total annual burden: Each such filing will take
approximately one minute for an annual burden of approximately 468.8
hours.
E. Record of Assurance of Non-displacement of U.S. Workers at Second
Employer's Worksite
Summary: 8 U.S.C. 1182(n)(1)(F)(ii) generally requires an H-1B
dependent employer not to place H-1B nonimmigrant with another employer
unless it has first inquired as to whether the other employer will
displace a U.S. worker. The proposed regulation would require an
employer seeking to place an H-1B nonimmigrant with another employer to
secure and retain either a written assurance from the second employer,
a contemporaneous written record of the second employer's oral
statements regarding non-displacement, or a prohibition in the contract
between the H-1B employer and the second employer.
Need: Pursuant to ACWIA, 8 U.S.C. 1182(n)(2)(E), an H-1B employer
may be debarred for a secondary displacement ``only if the Secretary of
Labor found that such placing employer * * * knew or had reason to know
of such displacement at the time of the placement of the nonimmigrant
with the other employer.'' Congress clearly intended that the employer
make a reasonable inquiry and give due regard to available information.
In order to assure that the purposes of the statute are achieved, the
Department is developing a regulatory provision to require that the H-
1B employer make a reasonable effort to inquire about potential
secondary displacement and to document those inquiries.
Respondents and proposed frequency of response: It is estimated
that approximately 150 employers will place H-1B nonimmigrants with
secondary employers where assurances are required.
Estimated total annual burden: It is estimated each such assurance
will take approximately 5 minutes and each such employer will obtain
such assurances 5 times annually for an annual burden of 62.5 hours.
F. Documentation of Non-Displacement of U.S. Workers
Summary: ACWIA (8 U.S.C. 1182(n)(1)(E) prohibits H-1B dependent
employers and willful violators from hiring an H-1B nonimmigrant if
their doing so would displace a U.S. worker from an essentially
equivalent job in the same area of employment. The regulations will
require H-1B dependent employers to keep certain documentation with
respect to each former worker in the same locality and same occupation
as any H-1B worker, who left its employ 90 days before or after an
employer's petition for an H-1B worker. For all such employees, the
Department proposes that covered H-1B employers maintain the name,
last-known mailing address, occupational title and job description, and
any documentation concerning the employee's experience and
qualifications, and principal assignments. Further, the employer is
required to keep all documents concerning the departure of such
employees and the terms of any offers of similar employment to such
U.S. workers and responses to those offers.
Need: These records are necessary for the Department to determine
whether the H-1B employer has displaced similar U.S. workers with H-1B
nonimmigrants.
Respondents and proposed frequency of response: It is estimated
that 200 H-1B-dependent and willfully violating employers will need to
maintain documentation for any workers who leave their employment
during the prescribed period.
Estimated total annual burden: No records need be created to comply
with these requirements, since the Equal Employment Opportunity
Commission (EEOC) already requires under its regulations that the
records described above be maintained.
G. Documentation of U.S. Worker Recruitment
Summary: Pursuant to ACWIA (8 U.S.C. 1182(n)(1)(G)), H-1B dependent
employers are required to make good faith efforts to recruit U.S.
workers before hiring H-1B workers. Under the regulations, H-1B
employers will be required to retain documentation of the recruiting
methods used, including the places and dates of the advertisements and
postings or other recruitment method used, the content of the
advertisements or postings, and the compensation terms. In addition,
the employer must retain any documentation concerning consideration of
applications of U.S. workers, such as copies of applications and
related documents, rating forms, job offers, etc. The Department has
also requested comments regarding how employers should determine
industry-wide standards, and how to make this determination available
for public disclosure to U.S. workers and others.
Need: The documentation noted above is necessary for the Department
of Labor to determine whether the employer has made a good faith effort
to recruit U.S. workers and for the public to be aware of the
recruiting methods used and the industry standard. Retention of the
records regarding consideration of applications is required to ensure
employers have given good faith consideration of applications from U.S.
workers.
Respondents and proposed frequency of response: It is estimated
that annually 200 H-1B dependent employers will need to document their
good faith efforts to recruit U.S. workers.
Estimated total annual burden: The filing of such records will take
approximately twenty minutes per employer for an annual burden of
approximately 66.7 hours. The retention of documents relating to
applications by U.S. workers is already required by EEOC regulations,
and therefore no additional burden is created.
H. Documentation of Fringe Benefits
Summary: Pursuant to ACWIA (8 U.S.C. 1182(n)(2)(C)(viii)), all
employers of H-1B employees are required to offer benefits to H-1B
workers on the same basis and under the same terms as offered to
similarly employed U.S. workers. The regulations require employers to
retain copies of all fringe benefit plans and any summary plan
descriptions, including all rules regarding eligibility and benefits,
evidence of what benefits are actually provided to individual workers
and how costs are shared between employers and employees.
Need: These records are necessary for the Department to determine
whether the H-1B nonimmigrants are offered the same fringe benefits as
similarly employed U.S. workers.
Respondents and proposed frequency of response: Records are
required to be retained for all H-1B employers, estimated to total
50,000. Because copies of fringe benefit plans and records are
generally required to be maintained by the Pension and Welfare Benefits
Administration (PWBA) and Internal Revenue Service (IRS) regulations,
there should be no additional recordkeeping burden from these
requirements. It is also believed that a prudent businessman would keep
these records, in the order course of business, in any event. However,
because some plans such as unfunded vacation plans and cash bonuses may
not be documented, it is estimated that approximately 5%, or 2,500
employers, will need to record and retain some
[[Page 631]]
documentation which would not otherwise be kept.
Estimated annual burden: It is estimated that 2,500 employers will
spend approximately 15 minutes each documenting unwritten plans for an
annual burden of 625 hours.
I. Wage Recordkeeping Requirements Applicable to Employers of H-1B
Nonimmigrants
Summary: The Department has also republished and asked for comment
on several provisions of the December 20, 1994 Final Rule (59 FR
65646), which were published for notice and comment on October 31, 1995
(60 FR 55339). All H-1B employers are required to document their
objective actual wage system to be applied to H-1B nonimmigrants and
U.S. workers. They are also required to keep payroll records for non-
FLSA exempt H-1B workers and other employees for the specific
employment in question. This proposal would decrease the burden on
employers of keeping hourly pay records for U.S. workers, requiring
such records only if the worker is either not paid on a salary basis,
or if the actual wage is stated as an hourly wage. For H-1B workers,
such records must also be kept if the prevailing wage is expressed as
an hourly rate.
Need: The statute requires that the employer pay H-1B nonimmigrants
the higher of the actual or prevailing wage. In order to determine
whether the employer is paying the required wage, the Department must
be able to ascertain the system an employer uses to determine the wages
of non-H-1B workers. The Department also believes that it is essential
to require the employer to maintain payroll records for the employer's
employees in the specific employment in question at the place of
employment to ensure that H-1B nonimmigrants are being paid at least
the actual wage being paid to non-H-1B workers or the prevailing wage,
whichever is higher.
Respondents and proposed frequency of response: The Department
estimates that approximately 50,000 employers employ H-1B
nonimmigrants. The documentation of the actual wage system must be done
only one time for each employer. Hourly pay records would have to be
prepared with respect to all affected employees each pay period.
Estimated annual burden: The Department estimates that the public
burden is approximately 1 hour per employer per year to document the
actual wage system for a total burden to the regulated community of
50,000 hours in a year. The payroll recordkeeping requirements are
virtually the same as those required by the Fair Labor Standards Act
(FLSA) and any burden required is subsumed in OMB Approval No. 1215-
0017 for those regulations at 29 CFR Parts 516, except with respect to
records of hours worked for exempt employees. There will be no burden
for U.S. workers since as a practical matter, hours worked records will
be required for U.S. workers only if they are not exempt from FLSA, or
if they are exempt but paid on an hourly basis (certain computer
professionals). The Department estimates that 55,000 H-1B workers will
be paid on a salary basis. Hours worked records would be required for
these workers only if the prevailing wage is expressed as an hourly
rate--estimated to be 17 percent of all cases. The Department estimates
a burden of 2.5 hours per worker per year, for 9350 workers, and a
total of 23,375 hours.
Retention of Records: Pursuant to section 655.760(c) of
Regulations, 20 CFR Part 655, copies of the LCAs, and its documentation
are to be kept for a period of one year beyond the end of the period of
employment specified on the LCA or one year from the date the LCA was
withdrawn, except that if an enforcement action is commenced, these
records must be kept until the enforcement procedure is completed as
set forth in Part 655, Subpart I. The recordkeeping requirements in
this proposed rule would be subject to the same retention period,
except, as required by 20 CFR 655.760(c), the payroll records for the
H-1B employees and other employees in the same occupational
classification, which must be retained for a period of three years from
the date(s) of the creation of the record(s); if an enforcement
proceeding is commenced, all payroll records are to be retained until
the enforcement proceeding is completed as set forth in Part 655,
Subpart I. The existing record retention requirements in 20 CFR
655.760(c) have been approved by OMB under OMB No. 1205-0310.
Total public burden: H-1B employers and employees of H-1B employers
may be from a wide variety of industries. Salaries for employers and/or
their employees who perform the reporting and recordkeeping functions
required by this regulation may range from several hundred dollars to
several hundred thousand dollars where the Corporate Executive Office
of a large company performs some or all of these functions themselves.
Absent specific wage data regarding such employers and employees,
respondent costs are estimated at $25 an hour. Total annual respondent
hour costs for all information collections are estimated at
$8,105,887.50 ($25.00 x 324,235.5 hours).
Request for comments: The public is invited to provide comments on
this information collection requirement so that the Department of Labor
may:
(1) Evaluate whether the proposed collections of information are
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimates of the burdens
of the collections of information, including the validity of the
methodology and assumptions used;
(3) Enhance the quality, utility and clarity of the information to
be collected; and
(4) Minimize the burden of the collections of information on those
who are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses.
Written comments should be sent to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Attention: Desk
Officer for Employment Standards Administration, U.S. Department of
Labor, Washington, D.C. 20503. Office of Management and Budget,
Attention: Desk Officer for Employment Standards Administration, U.S.
Department of Labor, Washington, DC 20503.
II. Background
On November 29, 1990, the Immigration and Nationality Act was
amended by the Immigration Act of 1990 (IMMACT) (Pub. L. 101-649, 104
Stat. 4978) to create the ``H-1B visa program'' for the temporary
employment in the United States (U.S.) of nonimmigrants in ``specialty
occupations'' and as ``fashion models of distinguished merit and
ability.'' The H-1B provisions of the INA were amended on December 12,
1991, by the Miscellaneous and Technical Immigration and Naturalization
Amendments of 1991 (MTINA) (Pub. L. 102-232, 105 Stat. 1733). Further
amendments were made to the H-1B provisions of the INA on October 21,
1998, by enactment of ACWIA.
These cumulative amendments of the INA assign responsibility to the
Department of Labor (Department or DOL) for implementing several
provisions of the Act relating to the temporary employment of certain
categories of nonimmigrants who have
[[Page 632]]
been granted entry into the United States by INS. The H-1B provisions
of the Act govern the temporary entry of foreign ``professionals'' to
work in ``specialty occupations'' in the U.S. under H-1B visas. 8
U.S.C. 1101(a)(15)(H)(i)(b), 1182(n), and 1184(c). The H-1B category of
specialty occupations consists of occupations requiring the theoretical
and practical application of a body of highly specialized knowledge and
the attainment of a Bachelor's or higher degree in the specific
specialty as a minimum for entry into the occupation in the U.S. 8
U.S.C. 1184(i)(1). In addition, an H-1B nonimmigrant in a specialty
occupation must possess full State licensure to practice in the
occupation (if required), completion of the required degree, or
experience equivalent to the degree and recognition of expertise in the
specialty. 8 U.S.C. 1184(i)(2). The category of ``fashion model''
requires that the nonimmigrant be of distinguished merit and ability. 8
U.S.C. 1101(a)(15)(H)(i)(b).
The ACWIA made numerous significant changes in the H-1B provisions.
One such change is the temporary increase in the maximum number of H-1B
visas over the next three fiscal years: for fiscal years 1999 and 2000,
the cap is 115,000; for fiscal year 2001, the cap is 107,500; and for
fiscal year 2002 (and thereafter), the cap returns to the original
65,000. Another significant change is the imposition of additional
attestation requirements for certain employers to provide better
protections to some U.S. workers. The additional attestation
requirements apply to an ``H-1B dependent employer'' and an employer
who has been found to have committed a willful failure or
misrepresentation with respect to the H-1B requirements (for ease of
reference, referred to as a ``willful violator''). H-1B-dependent and
willful violating employers must attest that they have not displaced
and will not displace a U.S. worker from a job that is essentially like
the job for which an H-1B worker(s) is being sought, that they will not
place an H-1B worker with another employer without making an inquiry to
assure such displacement will not take place, that they have taken good
faith steps to recruit U.S. workers for the job for which the H-1B
workers are sought, and that they will offer the job to any equally or
better qualified U.S. worker. A labor condition application (LCA) for
an H-1B worker who is ``exceptional,'' an ``outstanding professor or
researcher,'' or a ``multinational manager or executive'' within the
meaning of Section 203(b)(1) of the INA, is not subject to the
recruitment provision. Both the displacement protection and the
recruitment/hiring protection become effective upon the date of the
Department's final regulation and expire with respect to LCAs filed
before October 1, 2001. An H-1B dependent employer or willful violator
filing an LCA which will be used only for ``exempt'' H-1B workers is
not required to comply with the new attestation requirements.
Also enacted via the ACWIA is a new fee of $500, to be collected by
INS, for initial petitions and first extensions filed on or after
December 1, 1998 and before October 1, 2001. Institutions of higher
education, or related or affiliated nonprofit entities, nonprofit
research organizations, or Governmental research organizations are
exempt from the new fee. The fees are to be used for job training, low-
income scholarships, and program administration/enforcement. The ACWIA
includes other generally applicable worker protections, specifically
whistleblower protection, prohibitions against fee reimbursement and
penalizing an H-1B worker who terminates employment prior to a date
agreed with the employer, and a requirement that the employer pay wages
during nonproductive time if such time is not due to reasons occasioned
by the worker. The ACWIA also requires employers to offer H-1B workers
fringe benefits on the same basis and in accordance with the same
criteria as U.S. workers. The ACWIA specifies new civil money penalties
ranging from $1,000 to $35,000 per violation, along with debarment. New
investigative procedures are created, authorizing the Department to
conduct ``random'' investigations of willful violators during the five-
year period after the finding of such violation, and establishing an
alternative investigation protocol based on information indicating
potential violations obtained from sources other than aggrieved
parties.
The ACWIA mandates a particular method of computation of the local
prevailing wage for employees of certain types of employers:
institutions of higher education (as defined in section 101(a) of the
Higher Education Act); nonprofit entities related or affiliated with
such institutions; nonprofit research organizations; and Governmental
research organizations. Under the ACWIA provision, the prevailing wage
level is to take into account only employees at such institutions and
organizations.
The rulemaking history, as published in the Federal Register, is as
follows:
March 20, 1991, Advance Notice of Proposed Rulemaking, 56 FR 11705.
August 5, 1991, Proposed Rule, 56 FR 37175.
October 22, 1991, Interim Final Rule, 56 FR 54720.
January 13, 1992, Interim Final Rule, 57 FR 1316.
October 6, 1993, Proposed Rule, 58 FR 52152.
December 30, 1993, Interim Final Rule, 58 FR 69226.
December 20, 1994, Final Rule, 59 FR 65646.
January 19, 1995, Final Rule, 60 FR 4028.
September 26, 1995, Notice, 60 FR 49505.
October 31, 1995, Proposed Rule, 60 FR 55339.
April 22, 1996, Proposed Rule, 61 FR 17610 (Part 656).
May 3, 1996, Final Rule, 61 FR 19982.
September 30, 1996, Final Rule, 61 FR 51013.
November 30, 1998, Final Rule, 63 FR 65657 (Part 656).
III. The Process of Developing Proposed Regulations
In developing proposed regulations, the Department has identified a
number of issues arising from the provisions of the ACWIA. On some of
these issues, the Department is proposing regulatory language and is
seeking comments on those proposals. But on other issues, the
Department has not yet developed regulatory language and, in this
notice, is seeking public comments on the issues and possible
regulatory approaches or alternatives which are set forth.
In addition, the Department is continuing to examine several
provisions that were previously addressed in a Notice of Proposed
Rulemaking published in the Federal Register on October 31, 1995 (60 FR
55339-55348). The Department considers it appropriate to provide, via
this notice, an additional opportunity for public comment on those
provisions. Some of these existing Final Rule provisions are affected
by the enactment of ACWIA, and for some affected provisions the
Department has not yet developed new or modified regulatory language.
Other Final Rule provisions are being republished for comment, with
limited proposed changes as discussed below.
After review of the comments received, the Department intends to
publish an Interim Final Rule, inviting comments on that rule, which
will contain the full regulatory text. The Department will then review
the comments and issue a Final Rule.
[[Page 633]]
The Department requests comments on each of the following issues
and proposals, and on any other related matters concerning the
temporary employment in the U.S. of nonimmigrants under the H-1B visa
program.
A. What Constitutes an ``Employer'' for Purposes of the ACWIA
Provisions?
In enacting certain new LCA attestations for ``H-1B-dependent''
(and certain other) employers in the ACWIA, Congress directed (in the
definition of H-1B-dependent employer) that ``any group treated as a
single employer under subsection (b), (c), (m), or (o) of section 414
of the Internal Revenue Code of 1986 shall be treated as a single
employer.'' These provisions, found at 26 U.S.C. 414(b), (c), (m) and
(o), concern the circumstances in which separate businesses are treated
as a single employer for purposes of the Internal Revenue Code (IRC).
Specifically, the IRC provisions concern treatment of a controlled
group of corporations (Sec. 414(b)); partnerships, proprietorships,
etc., under common control (Sec. 414(c)); an affiliated service group
(Sec. 414(m)); as well as separate organizations, employee leasing, and
other arrangements (Sec. 414(o)). See Internal Revenue Service (IRS)
regulations at 26 CFR 1.414(b)-1, 1.414(c)-1. See also 26 CFR 1.414(q)-
1T.
Further, the Department is considering the effect and implications
of adopting this single definition of ``employer'' for all purposes
under this program, to the extent it may serve to accommodate common
business activities and facilitate administration and enforcement of
the program. The Department is interested in learning from commenters
the consequences of a regulation which would provide that where an
``employer'' files an LCA and thereafter undergoes some change of
structure (e.g., buy-out by a successor corporation; corporate
restructuring of subsidiaries), the ``employer'' for LCA purposes would
be the entity which satisfies the Internal Revenue Code definition of a
single employer. The Department is considering whether and how, under
this approach, it may be able to modify its position that a new LCA
must be filed when the corporate identity changes and a new Employer
Identification Number (EIN) is obtained. Thus an employer which merely
changes its corporate identity through acquisition or spin-off would be
allowed to document this change in its public disclosure file
(including an express acknowledgment of all LCA obligations on the part
of the successor entity), provided that it satisfies the Internal
Revenue Code definition of a single employer.
The Department seeks comments on this proposed regulation and on
other related matters, such as whether and how the Internal Revenue
Code interpretation of ``single employer'' should be used for other
purposes in the H-1B program, such as corporate restructuring, and
whether another approach should be utilized to address corporate
restructuring.
B. Which Employers are ``H-1B-dependent'' for Purposes of the ACWIA
Provisions?
The ACWIA requires new non-displacement and recruitment
attestations by ``H-1B-dependent employers'' and by employers found
after the date of enactment to have committed a willful violation or
misrepresentation during the 5-year period preceding the filing of the
LCA (see item M.2 below, regarding the ``finding'' of such violations).
The ACWIA definition of ``H-1B-dependent employer'' provides a formula
for comparing the number of H-1B nonimmigrants to the total number of
full-time equivalent employees (including H-1B nonimmigrants) in the
employer's workforce. ``Exempt H-1B nonimmigrants'' are not included in
the H-1B-dependency computation during a certain period after enactment
of the ACWIA (i.e., the longer of the period of six months from the
date of enactment (until April 21, 1999), or the date of the
Department's interim final rule on this provision).
The Department is developing regulations on the following issues,
and seeks comments on these and any other related matters.
1. What Is a ``Full Time Equivalent Employee''?
The ACWIA definition of ``H-1B-dependent employer'' includes a term
that is not defined: ``full-time equivalent employees'' (FTEs), as part
of the calculation to determine an employer's H-1B dependency status
based on the ratio between the number of H-1B workers (a ``head
count'') and FTEs (the employer's workforce of employees, expressed as
FTEs). Thus ACWIA defines an ``H-1B-dependent employer'' as an employer
that has--
25 or fewer full-time equivalent employees who are
employed in the United States, and employs more than 7 H-1B
nonimmigrants;
At least 26 but not more than 50 full-time equivalent
employees who are employed in the United States, and employs more than
12 H-1B nonimmigrants; or
At least 51 full-time equivalent employees who are
employed in the United States; and employs H-1B nonimmigrants in a
number that is equal to at least 15 percent of the number of such full-
time equivalent employees.
For larger employers (at least 51 full-time equivalent employees),
the number of H-1B workers is the numerator and the number of FTEs is
the denominator in this computation; if 15 percent or more of the
employer's workforce are H-1B workers, as computed in this ratio, then
the employer is ``H-1B-dependent.''
The term ``full-time equivalent'' lends itself to various
interpretations, some of which could significantly increase an
employer's possible paperwork burden. One interpretation would require
maintaining a record and computing the hours worked in a period of time
(a year, a workweek, or some intermediate period of time) for each
worker in the entire workforce. For example, the total of all hours
worked by all employees would be divided by the full-time ``standard''
in order to arrive at the FTE figure. Such an approach would
necessitate collection and maintenance of hourly records for all
workers, not just hourly wage earners. Moreover, the complexity of such
an approach and the related computations could make it difficult for
employers to recognize if and when they become H-1B-dependent. A less
onerous approach would allow an employer to simply count the number of
workers it employs on a full-time basis, using some standard threshold
(e.g., 35 hours per week or more) for identifying a ``full-time''
schedule. This approach would only additionally require a showing of
the average weekly hours worked by part-time employees, through hours
worked records or by evidence regarding their standard working
schedules. (It has been the Department's experience that hours worked
records are ordinarily kept for part-time workers since they are
ordinarily paid on an hourly basis and typically are not exempt from
the Fair Labor Standards Act.) The number of FTEs in the workforce
would then be determined by aggregating the average hours of the part-
time workers, dividing that total by the standard for a full-time
schedule, and adding the resulting number to the number of full-time
workers in the workforce.
The Department proposes a procedure by which the determination
would be made by an examination of the employer's quarterly tax
statement (or
[[Page 634]]
similar document) to determine the number of workers on the payroll
(assuming there is no issue as to whether all employees are listed on
the tax statement), and a further examination of the last payroll (or
the payrolls over the previous quarter if the last payroll is not
representative) or other evidence as to average hours worked by part-
time employees, to aggregate the average hours of the part-time workers
into FTEs based on the employer's definition of full-time employment.
The Department would accept an employer's definition of full-time
employment, provided that it is at least 35 hours or more per week; in
the absence of such an employer definition, the Department would use 40
hours per week as a full-time schedule. However, in no case would a
single employee count as more than one FTE, even if the employee
commonly worked more hours per week than the ``full-time'' schedule.
Finally, it should be noted that the count would be made only of
employees of the employer, including both H-1B nonimmigrants and U.S.
workers, but would not include bona fide consultants and independent
contractors who do not meet the employment relationship test described
below (see item D.1). It is important to note that the number of H-1B
nonimmigrants (the numerator in the H-1B-dependency ratio) would be
determined by the number of H-1B nonimmigrants employed by the employer
in the period reviewed--a simple ``head count''--without regard to
their full-time or part-time status.
The Department seeks comments on its proposed approach to
determining full-time equivalency, and any other approaches which might
be used to accurately make the determination without undue paperwork
burden.
2. When Must an Employer Determine H-1B Dependency?
The ACWIA definition of ``H-1B-dependent employer'' and the new LCA
attestation elements that are required of such an employer do not
clearly define the timing of the dependency determination. Certainly
such a determination must be made when a new LCA is filed. The two
issues to be resolved are when a new LCA must be filed, and what
obligations, if any, an employer has if its dependency status changes.
The Department is particularly concerned about the obligations of
employers who already hold or may soon obtain certified LCAs. The
Department's current regulations provide that an LCA is valid for three
years from its date of certification, during which time the employer
may file petitions for H-1B workers based on that LCA (not to exceed
the number of positions shown on the LCA). The new recruitment and
displacement attestation provisions of the ACWIA are expressly
applicable to LCAs filed by a certain subset of H-1B employers after
the date of issuance of the Department's interim final regulations. We
expect that most H-1B-dependent employers have LCAs in effect and that
many such employers may file additional LCAs during the period prior to
the effective date of the regulations. Therefore--if this issue is not
directly addressed by these regulations--these H-1B-dependent employers
could avoid any application of the law's new dependency provisions,
which are applicable only to applications filed before October 1, 2001,
by continuing to use current or newly certified LCAs. Since this would,
as a practical matter, potentially nullify these ACWIA requirements for
all or many H-1B-dependent employers, the Department proposes that any
current (or non-dependent) LCA will become invalid for H-1B-dependent
employers by operation of these regulations with respect to any future
H-1B petitions (including extensions), although an employer's
obligations under the LCA would continue with respect to all H-1B
nonimmigrant petitions under that LCA. The regulations would,
therefore, require that all H-1B-dependent employers with existing LCAs
file new LCAs if they wish to petition for any new H-1B nonimmigrants
(or if they wish to seek the extension of any existing H-1B visas) on
or after the effective date of the interim final regulations.
Similarly, an employer with an existing LCA which is not H-1B-dependent
on the effective date of the regulations but which later becomes H-1B-
dependent, would be required to file a new LCA if it wishes to petition
for new H-1B nonimmigrants (or seek extensions of existing H-1B visas)
at any time after the date it becomes dependent. An employer who fails
to take such action but instead uses an existing LCA contrary to these
regulations would be subject to sanctions, including debarment and
civil money penalties. The Department seeks comments on this proposed
approach and on any other approaches which might be used to ensure that
U.S. workers are provided with the protections which the Act intended
with regard to H-1B-dependent employers.
As suggested above, the Department also recognizes that the makeup
of an employer's workforce, and the ratio of H-1B nonimmigrants to
total FTEs, could change significantly over the three-year validity
period of an LCA. Thus an employer which is not H-1B-dependent at the
time it files an LCA under these regulations might later become
dependent, or an employer which is initially H-1B-dependent might later
become non-dependent. The Department, after careful consideration, has
concluded that, in order for the Congressional intent for the new
provisions to be appropriately implemented, an employer's H-1B
dependency may need to be redetermined as the composition of the
workforce changes after the filing of the LCA, where the employer plans
to take actions which require recruitment and non-displacement
commitments by H-1B-dependent employers (or their clients).
Thus, the Department proposes that an employer would be required to
make a determination of dependency not just prior to or on the
effective date of these regulations, but when it files any new LCA or
H-1B petition (including extensions) after that date. If an employer is
not H-1B-dependent at the time an LCA is filed, it would have a
continuing obligation to ensure that if it later becomes H-1B-dependent
and wishes to file new H-1B petitions (including extensions), it takes
the steps necessary to comply with the requirements of the law and the
Department's regulations applicable to dependent employers during the
period it is H-1B-dependent, with respect to all H-1B nonimmigrant
petitions filed under that LCA. Similarly, if an employer which is
initially dependent and files an LCA so indicating its dependency later
determines that it has become not dependent, it would not be required
to comply with the attestation elements applicable to dependent
employers with respect to any H-1B workers during any period in which
it is not dependent.
The Department believes that this approach is necessary to properly
effectuate the law's new requirements and does not believe that this
continuing obligation places any undue burden on employers. As a
practical matter, the Department's experience in the H-1B program is
that the large majority of employers which use the program clearly will
not meet the test for H-1B-dependency and that most program users
would, therefore, be entirely unaffected by this ACWIA provision and
the Department's regulations. With regard to the small minority of
employers who would meet the H-1B-dependency test, the
[[Page 635]]
Department's experience is that most such employers employ H-1B workers
in such a large proportion that they would almost certainly be subject
to the non-displacement and recruitment requirements during the entire
LCA validity period. As a practical matter, therefore, any continuing
obligation for an employer to monitor its workforce ratio would apply
only in the very rare instance where the H-1B-dependency determination
is a close question for a ``borderline'' employer on the effective date
of these regulations, or upon the date of a subsequent LCA filing or
petition and thereafter.
The Department also considered whether the same issues would arise
with respect to employers found after the effective date of ACWIA to
have committed willful violations or misrepresentations. However, a
finding of a willful violation or misrepresentation would commonly
result in debarment and consequently, invalidation of all the
employer's LCA's. The employer would then be required to file a new
LCA(s) to petition for additional H-1B nonimmigrants (or to extend
petitions) after the debarment period ends, attesting to the new
attestation elements for H-1B dependent employers and willful
violators.
The Department seeks comments on its proposal, and specifically
whether there are other ways to effectively accomplish the statutory
intent that H-1B-dependent employers comply with the new attestation
elements. For example, another possible regulatory approach could be to
have the dependency up-date determined on a set, regular basis, such as
for each calendar quarter. Alternatively, the Department could limit
the use of an attestation to a shorter period, such as 90 or 180 days,
instead of the current three years.
3. What Kind of Records Are Required Concerning the H-1B-Dependency
Determination?
The Department is considering several matters relating to
documentation. First, the Department is examining the issue of the kind
of record which might need to be made by an employer concerning its
determination of whether it is or is not H-1B-dependent at the time
that an LCA is completed and filed. It is the Department's view that no
record needs to be created or maintained to show how an employer made
that determination when its H-1B-dependency or non-dependency status is
apparent, and it files an LCA reflecting that obvious status. As
discussed above, the Department believes that for the vast majority of
employers there is either such a small or large proportion of H-1B
nonimmigrants employed that an employer's dependency status will not be
a close question. With regard to an employer for which the H-1B-
dependency or non-dependency status is not readily apparent, the
question of appropriate records is more difficult. The Department
believes that it is important that the employer make this determination
with proper care and consideration. Further, the Department believes
that, in the event of an inquiry by an affected U.S. worker (concerning
possible rights regarding displacement or recruitment) or an
investigation by the Department, documentation of an employer's
determination that it is not H-1B-dependent needs to be available to
ascertain and evaluate the method by which the determination was made.
Therefore the Department proposes that such documentation be required
wherever the determination that an employer is not dependent is not
readily apparent and a mathematical calculation must be made (i.e.,
where the ratio of H-1B workers to U.S. workers is close to that set
forth in the statute for dependency). The Department solicits comments
on whether the regulations need to define an explicit standard (for
example, all circumstances where H-1B workers are 10 percent or more of
the workforce) to determine the subset of employers which must make and
retain such documentation when an attestation is made.
The Department also is considering whether a record must be kept of
an employer's H-1B-dependency status determinations (if any) which are
made after the filing of an LCA which is used in support of a petition
for an H-1B nonimmigrant worker. The Department believes that--in order
that U.S. workers are aware of their rights concerning nondisplacement
and recruitment, and that the Administrator is able to conduct fair and
effective investigations on those matters--a record needs to be
maintained of an employer's determination if at any time an employer
which was non-dependent determines that it is dependent, or if an
employer which was dependent determines that it is non-dependent. The
Department is therefore proposing that a copy of the determination and,
where an employer determines that it is not dependent, the underlying
computation, be placed in the public disclosure file.
The Department also requests comments on whether it would be
feasible and appropriate to specify that no record of an employer's
computations would be necessary, if the determination could be made
from publicly available documents. This approach presents some
difficulties, in that, for example, a publicly available list of an
employer's employees may not show the workers' full-time or part-time
status, or may not accurately reflect the number of workers who meet
the ``employment relationship'' test, and these documents may not be
readily available to U.S. workers. The Department therefore solicits
comments as to the feasibility of this approach and whether there are
any generally available public documents which would normally contain
the required information.
It is also necessary that an employer have the underlying records
necessary to make the dependency determination. The records required to
determine the number of workers on the payroll are required by
Sec. 655.731(b) of the existing regulations. An employer would also be
required to have a record of the hours worked by part-time workers, or
a document showing their normal work schedule if no records of their
hours of work are maintained. As discussed above (see item B.1), it has
been the Department's experience that most part-time workers are paid
on an hourly basis and, therefore, that employers maintain hours-worked
records for such workers. Finally, the employer would need to maintain
copies of its H-1B petitions, in order to determine the number of H-1B
nonimmigrants on its payroll.
The Department seeks comments on all of these issues and possible
approaches.
4. What Information Will Be Required on the LCA Regarding an Employer's
Status as H-1B-Dependent?
The Department expects that every employer will need to read the
instructions for determining H-1B dependency and make a determination
that it is or is not dependent, in order to determine whether to attest
to dependency. In most cases, the Department expects that the
determination will be so clear that the employer will not need to make
any mathematical calculation. The Department also believes that it is
important that those employers constituting the vast majority of those
filing LCAs not be subject to any unnecessary burden because of the
relatively small number of employers who are dependent.
The Department believes that the revised attestation form (LCA), at
a minimum, should require that every
[[Page 636]]
employer which is H-1B-dependent affirmatively acknowledge its status
and obligations by checking a box attesting to its dependency and its
compliance with the additional attestation requirements concerning non-
displacement and recruitment of U.S. workers. Further, as discussed
above, the Department proposes that H-1B-dependent employers which
filed an LCA before these regulations become effective, may not use
such an LCA in support of an H-1B petition filed after the effective
date, or, if they do not become dependent until sometime after the
effective date of the regulations, may not use such an LCA in support
of an H-1B petition filed after they become dependent.
The question arises as to what information should be required of
employers who are not H-1B dependent when they file an LCA after the
effective date of these regulations. The Department is considering
three alternative revisions to the LCA form for such employers:
1. The employer would expressly attest that it is not dependent and
that if it later becomes dependent, it will comply with the additional
attestation requirements; or
2. The employer would not have to attest that it is not dependent,
but the LCA would clearly state--and by signing the form the employer
would agree--that the employer is required to comply with the
additional attestation requirements if it does become dependent; or
3. The employer would not have to attest that it is not dependent,
but the LCA would clearly state that it could not be used in support of
any H-1B petition filed after the employer became dependent.
Under all of the alternatives an employer will be expected to make
an initial determination as to whether it is or is not dependent; to
remain cognizant as to its status if it later files a new H-1B
petition; and would commit misrepresentation if it falsely fails to
attest that it is dependent. The first two alternatives do not require
the filing of a new LCA should a formerly non-dependent employer become
dependent, but such employer will be obliged to comply with the
substantive obligations of the additional attestation elements
applicable to dependent employers. The third alternative would parallel
the approach proposed for H-1B dependent employers with LCAs filed
before the effective date of the regulations in that an employer which
initially was not dependent would be required to file a new LCA if it
later became dependent and would be subject to sanctions, including
debarment and civil money penalties, if it failed to do so.
The Department is concerned about the burden of requiring the
filing of a new LCA as well as the burden of requiring the overwhelming
majority of employers who are not dependent to check a box so
attesting. The Department therefore proposes to utilize the second
alternative, where the non-dependent employer would not be required to
check any additional box(es). The Department is aware that under this
alternative the lack of such identification will make it particularly
important that the form clearly lay out the obligations of employers.
The Department therefore seeks comments on the above alternatives, and
the layout and clarity of the proposed attestation form, attached as
Appendix I as well as any other comments on these and related matters.
5. What Changes Are Proposed for the Labor Condition Application Form
and the Department's Processing Procedures?
Based on the preceding discussion, the Department is publishing for
public comment a proposed revised Labor Condition Application form (ETA
9035), and providing advance public notice of a planned change in the
existing system for processing LCAs. At present, such applications are
submitted by mail, fax or private carrier to one of ten ETA regional
offices with jurisdiction, as set forth in Sec. 655.720. The Department
has been developing the capacity to automatically receive and, in many
cases, automatically process LCAs submitted. The Department intends to
implement an automatic system whereby all faxed LCAs will be processed
in Philadelphia and San Francisco beginning in January 1999. This new
capacity requires changes in the LCA form as well as in the filing
instructions.
The Department has redesigned the LCA form (attached as Appendix I)
to both reflect the statutory changes in the ACWIA and facilitate the
automated receipt and processing of applications. With the exception of
the changes occasioned by the provisions of the ACWIA, as discussed in
this proposed rulemaking, the proposed revisions to the LCA form are
merely aesthetic. The Department's revised processing procedures will
not require any substantive changes with respect to the information
required of employers in preparing the LCA. When the Department
publishes the Interim Final Rule pursuant to this proposal, contingent
upon approval by the Office of Management and Budget, the revised form
will become the sole form for public use; thereafter, prior versions of
the ETA 9035 will not be accepted for processing.
The Department proposes that, after the effective date of the
Interim Final Rule, all LCAs--whether submitted by fax or not--will be
filed with one of two ETA regional offices. Employers within the
jurisdiction of ETA's current Boston, New York, Philadelphia, and
Atlanta regions will submit LCAs only to the Philadelphia regional
office; employers within the jurisdiction of ETA's current Chicago,
Kansas City, Dallas, Denver, Seattle and San Francisco regions will
submit LCAs only to the San Francisco regional office. There will be an
automated back-up capacity in the Washington, D.C. headquarters for
automated processing of LCAs, in the event of a system failure in one
of the regional offices.
The proposed revised LCA form can be completed in several ways--in
handwriting, in typewriting, or through use of a new ``form filler''
electronic program that will be generally available to program users.
The new LCA form will be posted and thereafter can be down-loaded and
printed from the Department's World Wide Web site at http://
www.doleta.gov. The ``form filler'' electronic program will also be
available to be down-loaded from this web site, or can be obtained from
ETA headquarters, on request, via e-mail or on diskette. This ``form
filler'' electronic program will enable the user to easily complete the
LCA form with a font that can be reliably read by the Department's
automated LCA processing system.
The Department proposes that, under the Interim Final Rule, the LCA
form--whether completed using the ``form filler'' program, in
typewriting, or in handwriting--will be submitted by employer
applicants to one of the two ETA regional offices either by facsimile
transmission (fax), which is preferred, or by mail or private carrier.
The Interim Final Rule and the LCA form itself will so indicate and
will provide the appropriate fax numbers. The Department anticipates
that LCAs submitted by fax can be readily received and processed by the
automated system, and that a response--approval or rejection--can be
returned to the employer's sending FAX number (i.e., the telephone
number designated in the ``Return Fax Number'' block on the LCA form),
usually within 48 hours of submission/receipt by ETA. For employer-
applicants without the capacity to send the LCA by FAX and receive
ETA's response to the employer-applicants' sending FAX machine, the
[[Page 637]]
LCA may still be submitted by mail or other delivery in hard-copy paper
form (either typewritten or handwritten) to the two ETA regional
offices with jurisdiction Such non-FAX submissions will be processed by
the ETA office by being faxed internally or scanned electronically into
the automated system, and the ETA decision will be mailed to the
submitter.
The automated processing system will electronically scan the
incoming facsimile, extract the information contained in the LCA,
record the information to a database, and--in most cases--make the
appropriate determination to approve/certify or reject the application,
with little intervention by system administrators. As under the current
manually-operated system, the LCA will be approved/certified and faxed
(or mailed) back to the submitter if the appropriate boxes are checked
and the required information is provided on the form. If the LCA is
incomplete or contains obvious inaccuracies, it will be rejected under
the automated system as it is under the manually-operated system.
Comments are requested on the proposed electronic transmission
system described and on the proposed form to be utilized.
C. What H-1B Worker Would be an ``Exempt H-1B Nonimmigrant''?
The ACWIA provisions concerning non-displacement and recruitment of
U.S. workers do not apply where the only H-1B workers sought in the LCA
at issue are ``exempt H-1B nonimmigrants.'' In addition, for a limited
time after the ACWIA's enactment, determining whether the employer is
H-1B-dependent does not include ``exempt'' H-1B workers. The ACWIA
contains alternative definitions of ``exempt H-1B nonimmigrant'' as one
``who * * * receives wages (including cash bonuses and similar
compensation) at an annual rate equal to at least $60,000; or * * *
[who] has attained a master's or higher degree (or its equivalent) in a
specialty related to the intended employment.''
The Department notes that the statutory language seems clear--an H-
1B-dependent employer, or an employer found to have committed willful
violations, is required to comply with the new attestation elements
unless the only workers employed pursuant to the LCA are exempt
workers. The non-displacement obligation, for example, applies for the
period beginning 90 days before and ending 90 days after the filing of
any H-1B petition supported by the LCA. The Department therefore reads
the statute as requiring that an employer which uses an LCA in support
of a petition for any non-exempt worker must comply with the new
attestations with respect to all of its H-1B nonimmigrants employed
pursuant to the LCA, even the exempt H-1B nonimmigrants.
The Department recognizes that employers commonly apply for
multiple positions, and often for multiple locations, on the same LCA.
Further, the Department recognizes that when an employer recruits U.S.
workers, it often cannot know whether in fact the H-1B worker for whom
it eventually petitions will qualify as exempt or non-exempt, since it
is not uncommon for both exempt and non-exempt workers to be qualified
for the same job. In any event, the Department points out that an H-1B-
dependent (or willful violating) employer is free to file separate LCAs
for its exempt and non-exempt workers, thereby obviating the
requirement of complying with the new attestation elements for its
exempt workers.
Determinations as to whether or not H-1B workers meet the
requirements necessary to be classified as exempt H-1B nonimmigrants
will be made initially by the Immigration and Naturalization Service
(INS) in the course of adjudicating the petitions filed on behalf of H-
1B nonimmigrants by employers. Employers should maintain, in the public
access file, a copy of the INS determinations with the petitions
approved for exempt H-1B workers. In the event of an investigation, it
is anticipated that considerable weight will be given to INS'
determinations that H-1B nonimmigrants, based on the educational
attainments of the workers, were ``exempt'' since INS has considerable
experience in evaluating the educational qualifications of aliens.
However, with respect to H-1B workers claimed to be exempt on the basis
of annual wages, employers will be expected in the event of an
investigation to be able to document that such H-1B nonimmigrants
received sufficient pay to satisfy the statutory wage ``floor'' of
$60,000.
The Department seeks comments on this proposed regulation, and on
any other related matter including but not limited to the following
questions.
1. How Would the $60,000 Annual Rate be Determined?
The ACWIA sets the wage ``floor'' for an ``exempt'' H-1B
nonimmigrant at $60,000 annually, which is to include ``cash bonuses
and similar compensation.'' In order to ensure that this statutory
standard is in fact met, the Department is of the view that this
standard should be interpreted consistent with the existing DOL
regulations for determining if an employer has satisfied its other wage
obligations under the H-1B program (20 CFR 655.731(c)(3)). Future
(i.e., unpaid but to-be-paid) cash bonuses and similar compensation
would be ``counted'' toward the required wage if their payment is
assured, but not if they are conditional or contingent on some event
such as the employer's annual profits (unless the employer guarantees
that the worker will receive payment of at least $60,000 per year, in
the event the bonus contingency is not met). In addition, such bonuses
and compensation are to be paid ``cash in hand, free and clear, when
due * * *,'' meaning that they must have readily determinable market
value, be readily convertible to cash tender, and be received by the
worker when due (which must be within the year for which the employer
wants to ``count'' the compensation).
Similarly, in assessing payment to an H-1B nonimmigrant claimed to
be ``exempt,'' the Department interprets the statutory language ``* * *
receives wages (including cash bonuses and similar compensation) at an
annual rate equal to at least $60,000; * * *'' to mean that the worker
actually receives the $60,000 compensation in the year. Therefore, an
H-1B nonimmigrant working part-time, whose actual annual compensation
is less than $60,000, would not qualify as exempt on this basis, even
if the worker's earnings, if projected to a full-time work schedule,
would theoretically exceed $60,000 in a year.
The Department seeks comments on this proposal and any alternative
approaches that would ensure the $60,000 wage standard for ``exempt''
workers would be met.
2. How Would the ``Equivalent'' of a Master's or Higher Degree be
Determined?
The second definition of ``exempt H-1B nonimmigrant'' requires that
the nonimmigrant ``has attained a master's or higher degree (or its
equivalent) in a specialty related to the intended employment.'' Based
on the language of this provision, the Department and the INS are of
the view that work experience cannot be converted to the ``equivalent''
of an academic degree at the master's level or higher. The ACWIA's
language differs from INA section 214(i) (8 U.S.C. 1184(i)), which
explicitly authorizes a ``time equivalency'' approach. Section 214(i)
provides that one of the ways to meet the requirements of a bachelor's
or higher degree (or its equivalent) is by experience in the specialty
equivalent to
[[Page 638]]
the completion of such a degree and ``recognition of expertise in the
specialty through progressively responsible positions relating to the
specialty.'' The contrast between these INA provisions demonstrates
that when Congress intended to authorize a ``time equivalency,'' such
authorization was expressly stated. Further, the statement of one of
the sponsors of the legislation shows the intent of Congress: ``the
term `or its equivalent' refers only to an equivalent foreign degree.
Any amount of on-the-job experience does not qualify as the equivalent
of an advanced degree.'' (144 Cong. Rec. H8571-05, H8584, Sept. 24,
1998, remarks of Rep. Smith). The Department's proposed regulation,
therefore, does not allow a work experience equivalency and recognizes
only those foreign academic degrees as would be equivalent to a
master's or higher degree in the U.S.
The Department is consulting with the INS on this matter, and will
work in close cooperation with that agency in developing regulations.
As indicated above, the Department will give considerable weight to INS
determinations concerning the academic credentials of H-1B
nonimmigrants who are claimed to be ``exempt.'' Employers should note
that INS' review of academic credentials for its determination on
``exempt H-1B nonimmigrants'' is distinct from its review of academic
credentials for its determination on ``specialty occupations'' under
Section 214(i) of the INA and 8 CFR 214.2(h)(4).
The Department seeks comments on this regulatory proposal, and on
any other or alternative interpretations of the ``equivalency''
provision.
3. How is ``a Specialty Related to the Intended Employment'' Defined?
The H-1B nonimmigrant who holds an advanced academic degree would
be ``exempt'' only if that degree is in ``a specialty related to the
intended employment.'' The Department proposes to make it clear that,
in order for the degree specialty to be sufficiently ``related'' to the
employment, the specialty must be generally accepted in the industry or
occupation as an appropriate or necessary credential or skill for the
person who undertakes the employment in question. Any ``specialty''
which is not generally accepted as appropriate or necessary to the
employment would not be sufficiently ``related'' to afford the H-1B
worker status as an ``exempt H-1B nonimmigrant.''
The Department is consulting with the INS on this matter, and will
work in close cooperation with that agency in developing regulations.
As indicated above, the Department will give considerable weight to INS
determinations concerning the academic credentials of H-1B
nonimmigrants who are claimed to be ``exempt.'' Again, employers should
note that INS' review of academic credentials for its determination on
``exempt H-1B nonimmigrants'' is distinct from its review of academic
credentials for its determination on ``specialty occupations'' under
Section 214(i) of the INA and 8 CFR 214.2(h)(4).
The Department seeks comments on this regulatory proposal, and on
any other or alternative interpretations of the ``related'' provision.
4. Should the LCA be Modified to Identify Whether it Will be Used in
Support of Exempt and/or Non-Exempt H-1B Nonimmigrants?
The ACWIA provides that ``[a]n application is not described in this
clause [i.e., is not subject to the new attestation requirements] if
the only H-1B nonimmigrants sought in the application are exempt
nonimmigrants.'' The Department is considering whether an employer's
intention to use the attestation for exempt and/or non-exempt H-1B
nonimmigrants should be indicated on the LCA, or whether this issue
should be addressed in some other way. The Department recognizes that
employers may wish to use separate LCAs for exempt and non-exempt H-1B
workers, so they would not be required to comply with the attestations
with respect to any exempt H-1B workers. As explained in the
introductory discussion, the statutory language seems to require that
an employer which initially believed its LCA would be used only for
exempt H-1B nonimmigrants would have been obliged to comply with the
attestations with respect to all of its H-1B workers under the LCA--
exempt and non-exempt--if it later used that LCA in support of a
petition for any non-exempt worker.
The Department therefore considered whether there would be any
advantage to requiring such separate attestations. The Department is
aware, however, that for many occupations, such as in information
technology, two different workers might both be qualified for the same
job, but because of education, for example, one might be exempt and
another non-exempt. Therefore an employer might not know in advance
whether the worker will be exempt.
At the same time, the Department believes it is important than an
H-1B-dependent employer which intends to use the LCA only for exempt H-
1B workers attest that the LCA will only be used to petition for such
workers. The INS has made this request so as to allow both INS and the
Department to know for which H-1B workers the ``exempt'' status must be
ascertained. The Department therefore proposes to require such an
attestation on the LCA. Of course, this requirement would not prevent
an H-1B-dependent employer from either using separate LCAs for its
exempt and non-exempt workers, or using one LCA for all H-1B workers
(both exempt and non-exempt) and complying with the new attestation
elements for all such workers.
Comments are sought on this proposed approach and on any other
alternatives.
D. What Requirements Apply Regarding no ``Displacement'' of U.S.
Workers Under the ACWIA?
The ACWIA imposes new obligations on an H-1B-dependent employer
(see discussion in items A and B, above) and an employer found to have
committed willful violations within the 5 years preceding the filing of
an LCA (beginning on or after the date of the ACWIA's enactment). Such
an employer is prohibited from ``displacing'' a U.S. worker who is
``employed by the employer'' or is employed by some other employer at
whose worksite the sponsoring employer places an H-1B nonimmigrant
where there are ``indicia of employment'' between the H-1B worker and
that other employer. The prohibition on displacement within the
employer's own workforce applies for 90 days before and 90 days after
the date of filing of any H-1B petition based on the LCA. The
prohibition on ``secondary'' displacement, at another employer's
worksite, applies for 90 days before and 90 days after the placement of
H-1B worker(s) at the worksite. These prohibitions do not apply to the
placement of ``exempt'' H-1B workers, if the employer's LCA involves
only ``exempt'' nonimmigrants. (See discussion in item C, above).
The Department recognizes that the non-displacement provisions in
the ACWIA raise several issues, and proposes regulatory provisions on
each of the following matters. The Department seeks comments on all of
these proposed provisions, and on any other related matters.
1. What Constitutes ``Employed by the Employer,'' for Purposes of
Prohibiting a Covered Employer From Displacing U.S. Workers in its Own
Workforce?
The ACWIA provides that a U.S. worker ``employed by the employer''
is protected from displacement by that employer's H-1B workers.
However, the
[[Page 639]]
ACWIA contains no definition of the phrase ``employed by the
employer.'' In this circumstance, where Congress has not specified a
legal standard for identifying the existence of an employment
relationship, the Department is of the view that Supreme Court
precedent requires the application of ``common law'' standards in
analyzing a particular situation to determine whether an employment
relationship exists. Nationwide Mutual Insurance Co. v. Darden, 503
U.S. 318 (1992). See Community for Creative Non-Violence v. Reid, 490
U.S. 730 (1989). Mindful of the Supreme Court's teaching that since the
common-law test contains ``no shorthand formula or magic phrase that
can be applied to find the answer, * * * all of the incidents of the
relationship must be assessed and weighed with no one factor being
decisive'' (NLRB v. United Ins. Co. of America, 390 U.S. 254, 258
(1968)), the Department proposes regulatory language setting out
factors that would indicate the existence of an employment relationship
under the common law test. These factors would include:
The firm or the client has the right to control when,
where, and how the worker performs the job;
The work does not require a high level of skill or
expertise;
The firm or the client rather than the worker furnishes
the tools, materials, and equipment;
The work is performed on the premises of the firm or the
client;
There is a continuing relationship between the worker and
the firm or the client;
The firm or the client has the right to assign additional
projects to the worker;
The firm or the client sets the hours of work and the
duration of the job;
The worker is paid by the hour, week, month or an annual
salary, rather than for the agreed cost of performing a particular job;
The worker does not hire or pay assistants;
The work performed by the worker is part of the regular
business (including governmental, educational, and non-profit
operations) of the firm or the client;
The firm or the client is itself in business;
The worker is not engaged in his or her own distinct
occupation or business;
The firm or the client provides the worker with benefits
such as insurance, leave, or workers' compensation;
The worker is considered an employee of the firm or the
client for tax purposes (i.e., the entity withholds federal, state, and
Social Security taxes);
The firm or the client can discharge the worker; and
The worker and the firm or client believe that they are
creating an employer-employee relationship.
(Factors adapted from EEOC Policy Guidance on Contingent Workers,
Notice No. 915.002, Dec. 3, 1997). The Department is aware that these
analytical factors--all of which are drawn from the Supreme Court's
decision in Darden--may be expressed somewhat differently. See, e.g.,
Restatement (Second) of Agency Sec. 220(2) (1958) (listing
nonexhaustive criteria for identifying master-servant relationship);
Rev. Run. 87-41, 1987-1 Cum. Bull. 296, 298-299 (providing 20 factors
as guides in determining whether an individual qualifies as a common-
law ``employee'' in various tax law contexts). The Department is also
aware that some factors, such as the level of the worker's skill or
expertise, have little relevance in the context of this program where,
by the terms of the Act, all of the H-1B workers and similarly employed
U.S. workers are skilled.
The Department recognizes that there are a number of legal
standards--other than the common law test--for determining the
existence of an employment relationship. For example, it would appear
that the standard most analogous to the H-1B worker protection
provisions would be that found in the Fair Labor Standards Act, which
provides minimum wage and overtime wage protections to ``employees.''
In addition, there is some suggestion of a preference on the part of
some Members of Congress for the use of the Internal Revenue Service
standards for the identification of an employment relationship under
the ACWIA provisions (see Cong. Rec. S12751, Oct. 21, 1998; remarks of
Sen. Abraham). While the Department considers both the FLSA and tax
standards (which contain some special exemptions from the common law
test) to be inappropriate under this statute, in light of the Supreme
Court precedents discussed above, the Department would carefully
consider any comments which suggest and support these or other
alternate tests for determining whether an employment relationship
exists.
The Department seeks comments on the proposed regulation applying
the common law standards, and on any other, related matters regarding
the appropriate factors.
2. What Constitute ``Indicia of an Employment Relationship,'' for
Purposes of the Prohibition on Secondary Displacement of U.S. Workers
at Worksites Where the Sponsoring Employer Places H-1B Workers?
In a provision described herein as the ``secondary displacement
prohibition,'' the ACWIA prohibits the displacement of U.S. workers
employed by another (``secondary'') employer, if an H-1B-dependent
employer (or willful violator) intends or seeks to place its own H-1B
workers with that other employer in a situation where, among other
things, there are ``indicia of an employment relationship between the
nonimmigrant and such other employer.'' The Department, after careful
consideration, has concluded that this term--``indicia of an employment
relationship''--identifies a relationship which is less than an
employment relationship but more than the H-1B worker's mere
performance of duties at the secondary employer's worksite (such as
being dispatched for a brief part of a work day to diagnose or repair
equipment at that other employer's location). Further, the Department
has concluded that, for purposes of clarity and consistency, the
standards indicative of ``indicia of an employment relationship'' with
the secondary employer should be consistent with and a sub-set of the
criteria which are used in determining an employment relationship
between the covered (or ``primary'') employer and its own U.S. workers
for purposes of the displacement prohibition concerning such workers
(i.e., U.S. workers ``employed by the employer''). The Department
considered proposing that indicia of employment would be found to exist
wherever a certain number of these criteria are met, but does not
believe such a quantitative standard to be appropriate since the
determination requires consideration of all of the relevant facts of
the relationship, with no single factor or set of factors decisive.
The Department reviewed the factors considered in determining
employment relationship, as discussed above, and proposes a sub-set of
those factors which it believes are most useful in determining whether
indicia of employment are present in evaluating a placement at another
company's worksite (here referred to as ``the client''). The sub-set
does not include those factors which are relevant to determining
whether a worker is an employee of any company (e.g. worker's skill
level). Such factors do not seem relevant where the H-1B worker is an
[[Page 640]]
acknowledged employee of some entity (i.e., the company filing the
LCA), and would virtually never arise in a secondary placement of the
H-1B worker (e.g., client's payment of wages and benefits to worker).
The sub-set of factors the Department believes are relevant ``indicia
of an employment relationship'' include:
The client has the right to control when, where, and how
the worker performs the job;
The client furnishes the tools, materials, and equipment;
The work is performed on the premises of the client;
There is a continuing relationship between the worker and
the client;
The client has the right to assign additional projects to
the worker;
The client sets the hours of work and the duration of the
job;
The work performed by the worker is part of the regular
business (including governmental, educational, and non-profit
operations) of the client;
The client is itself in business; and
The client can discharge the worker from providing
services to the client.
(See discussion in item D.1 above). The Department seeks comments
on this regulatory standard, including the factors to be considered and
the manner in which the factors might be applied or weighed.
The Department recognizes that alternative approaches may be
available, such as some standard other than the common law factors, or
having no regulatory standard. The Department seeks comments on any
such alternative approaches, and on any other, related matters
including, but not limited to, the possible contents and consequences
of a regulation which would apply different standards.
3. What Constitutes an ``Essentially Equivalent Job,'' for Purposes of
the Non-Displacement Provisions of ACWIA?
The ACWIA definition of the prohibited displacement of a U.S.
worker states, in part, that such displacement is ``lay[ing] off the
[U.S.] worker from a job that is essentially the equivalent of the job
for which the nonimmigrant or nonimmigrants is or are sought. A job
shall not be considered to be essentially equivalent of another job
unless it involves essentially the same responsibilities, was held by a
United States worker with substantially equivalent qualifications and
experience, and is located in the same area of employment as the other
job.'' This definition, thus, requires three comparisons to determine
whether displacement occurs: job responsibilities; workers; and
locations.
The Department is of the view that the job responsibility
comparison must focus on the core elements of and competencies for the
job, such as supervisory duties, or design and engineering functions,
or budget and financial accountability. Peripheral, non-essential
duties that could be tailored to the particular abilities of the
individual workers would not be determinative in the comparison of the
jobs. In other words, the job responsibilities must be similar and both
workers capable of performing those duties. In this connection, the
Department believes it may be useful to utilize standards under the
Equal Pay Act (29 U.S.C. 206(d)(1)) for determining the essential
equivalence of jobs. These standards focus on actual job duties and
responsibilities, rather than a comparison of sometimes artificial job
titles and position descriptions, and recognizes that precise overlap
between jobs is not necessary to achieve essential equivalence (see the
regulations at 29 CFR 1620.13 et seq.). Like the Equal Pay Act, ACWIA's
remedial purpose could be thwarted by requiring a match of
insubstantial aspects of jobs as a condition for determining their
equivalence. The Department therefore seeks comments on the
appropriateness of adapting these standards to ACWIA.
As to the qualifications and experience of the workers, the
Department considers the comparison to be confined to matters which are
normal and customary for the job, and which are necessary for
successful performance of the job. Thus, while it would be appropriate
to compare whether the workers in question are qualified by virtue of
education, skills and experience to perform the job, it would not be
appropriate to compare their relative ages or their ethnic identities,
nor whether they are exactly alike--which would virtually never be the
case--in their educational background and work experience. For example,
an H-1B worker who is ``over-qualified'' for a particular job could
still ``displace'' a U.S. worker.
The area of employment is defined in ACWIA as ``the area within
normal commuting distance of the worksite or physical location where
the work of the H-1B nonimmigrant is or will be performed. If such
worksite or location is within a Metropolitan Statistical Area, any
place within such area is deemed to be within the area of employment.''
This statutory definition is much the same as the Department's current
regulatory definition of ``area of intended employment'' for prevailing
wage purposes (20 CFR 655.715). (See item P.5, below.)
The Department proposes regulatory language to implement these
provisions and seeks comments on these and any other related matters.
4. How Does the ACWIA Distinguish Between a Prohibited ``Lay Off'' and
a Permissible Termination of an Employment Relationship?
The ACWIA distinguishes a ``lay off'' of a U.S. worker from certain
other circumstances in which a worker's employment relationship may
end. The ACWIA's non-displacement prohibition applies only to a ``lay
off.''
The ACWIA specifies that, even though an H-1B worker may be placed
in a job similar to one formerly held by a U.S. worker, no
``displacement'' or ``lay off'' is considered to have occurred if the
U.S. worker left the job through ``voluntary departure or voluntary
retirement.'' As a logical and obvious matter, the requirement of
``voluntariness'' is crucial to the effectiveness of this provision in
assuring appropriate protections of U.S. workers' jobs in situations
where nonimmigrants are being hired. The Department takes the view that
the totality of the circumstances must be considered in assessing
whether a U.S. worker's departure was ``voluntary.'' Therefore, the
Department will look to well-established principles concerning
``constructive discharge'' of workers who are pressured to leave
employment (e.g., a resignation letter would not be conclusive proof of
``voluntariness'' where other information indicates coercion). The
Department proposes a regulation that reflects this fair, common sense
view of ``voluntary departure or voluntary retirement.''
The ACWIA also specifies that no ``lay off'' is considered to have
occurred where the U.S. worker's loss of employment is caused by the
expiration of a grant or contract, other than a temporary employment
contract entered into in order to evade the employer's obligations
under the attestation. The Department believes that this language was
designed to address the common situation where scientists and other
academic personnel at universities are expressly hired to work under a
contract or grant from another institution. Where such funding is lost,
and the worker is not replaced because the project funded by the
contract or grant ends, there would be no lay off within the meaning of
the ACWIA. Similarly, a staffing firm or other commercial firm may hire
an employee expressly to work on a specific project under a contract it
has
[[Page 641]]
obtained from another entity. If the contract project ends and is not
renewed, and the employer does not have a practice of then moving its
employees to work under other contracts, or placing its employees on a
call-back list or its equivalent, but rather terminates the employment
relationship for lack of work, there would be no lay off. The
Department does not believe, however, that this ACWIA provision applies
to the common situation where a staffing firm, which places employees
at other businesses, does not hire employees for a specific client
contract, and (upon the expiration, termination, or loss of a client
contract) ordinarily would move its employees to perform work under a
different contract or on a different project. In such a situation, the
Department may find a displacement has occurred if an employer
terminates employment of its U.S. workers and hires H-1B workers to
perform essentially the same job under a different contract at a
different worksite in the same area of employment. The Department notes
that the ACWIA provision expressly excludes temporary employment
contracts entered into to evade the employer's obligations. The
Department intends to closely scrutinize situations under commercial
contracts and grants, as well as employment contracts, where it appears
that such evasion may be occurring. The Department recognizes, however,
that there are situations where employment contracts, like the
commercial contracts described above, are excluded from the Act's
definition of ``lays off.'' Such situations might include, for example,
visiting professors who are hired for a semester or a year because of
their special expertise. The expiration of such a contract would not
constitute a ``lay off'' of the U.S. worker, unless the circumstances
showed some subterfuge or contrivance by the employer to avoid the
ACWIA prohibition.
The Department seeks comments on this proposed approach, and on any
related matters.
5. What Constitutes ``a Similar Employment Opportunity'' for a U.S.
Worker, Which--if Offered--Would Not Constitute a Prohibited ``Lay
Off'' or Displacement of That Worker?
The ACWIA further provides that, even though an H-1B worker is
placed in a job formerly held by a U.S. worker, no ``displacement'' or
``lay off'' is considered to have occurred if the U.S. worker was first
offered but refused ``a similar employment opportunity with the same
employer.'' This provision thus allows an employer an affirmative
defense to its displacement of a U.S. worker if the employer can
establish that it offered a bona fide transfer opportunity to the
worker. The Department interprets the ACWIA language to require not
just that the U.S. worker be offered another job with a similar title,
but that the offer must involve a similar opportunity in terms such as
a similar level of authority and responsibility, a similar opportunity
for advancement within the organization, similar tenure and work
scheduling.
The Department proposes a regulation to reflect this statutory
requirement of ``opportunity'' for the U.S. worker who has lost a job.
At a minimum the Department believes that an offer of a ``similar
employment opportunity'' must be a bona fide offer, rather than an
offer designed so as to induce the employee to refuse, or with the
expectation that the employee will refuse the offer.
The Department seeks comments on this proposed regulatory
provision, and on any other related matters.
6. What Constitutes ``Equivalent or Higher Compensation and Benefits''
for a U.S. Worker, for Purposes of the Other Job Offer to That Worker
so as to Not Constitute a Prohibited ``Lay Off'' or Displacement?
The ACWIA provides that no prohibited ``lay off'' of a discharged
U.S. worker has occurred, if the U.S. worker is offered another
employment opportunity with the same employer ``at equivalent or higher
compensation and benefits than the position from which the employee was
discharged.'' It would appear obvious that an ``opportunity'' could not
be considered to provide ``equivalent or higher compensation and
benefits'' if that ``opportunity'' would provide the worker a lower
disposable income or would require the worker to incur expenses that
drive down his/her financial standing. By specifying ``equivalent or
higher'' pay and benefits, Congress must have intended that the U.S.
worker be offered a positive, rather than negative, ``employment
opportunity.'' In this regard, one of the sponsors of the ACWIA
compromise legislation stated that ``[t]he intent of Congress is that
the `similar employment opportunity with the same employer at
equivalent or higher compensation and benefits' would be a meaningful
offer. It is Congress' intent that an employer should not be able to
evade liability for a violation of the displacement attestation because
an offer of an alternative employment opportunity was made without
considerations such as relocation expenses and cost of living
differentials if the alternative position was in a different
geographical location.'' (See Cong. Rec. E2324, Nov. 12, 1998, remarks
of Rep. Smith). Assuming the regulations provide that a ``similar
employment opportunity'' may include a transfer to another commuting
area, the Department takes the position that an alternative
``opportunity'' offered to the U.S. worker must take into consideration
matters such as cost of living differentials and relocation expenses
(e.g., a New York City ``opportunity'' offered to a worker ``laid off''
in Kansas City would provide a wage adjustment from the Kansas City pay
scale and would include relocation costs). The Department is also
considering adapting relevant provisions of regulations defining
equivalent compensation and benefits under the Equal Pay Act
regulations (see item D.3, above) and of the Family and Medical Leave
Act regulations, 29 CFR 825.215(c)-(d). The Department seeks comments
on this proposal and on any related matters that encompass this
concept.
7. What is Required of an H-1B-dependent (or Willful Violator) Employer
Which Seeks Information About Displacement or Potential Displacement of
U.S. Workers at a Second Employer's Worksite?
The ACWIA's secondary displacement prohibition requires that
certain H-1B employers (H-1B-dependent; willful violator) not place any
H-1B worker at another employer's worksite (to work under ``indicia of
employment'' with such secondary employer), ``unless the [H-1B]
employer has inquired of the other employer as to whether, and has no
knowledge that ... the other employer has not displaced or intends to
displace a United States worker employed by the other employer'' within
the period of 90 days before and 90 days after the H-1B worker's
placement at that worksite. The ACWIA further specifies (in the
enforcement and penalties provisions) that the H-1B employer may be
debarred for a secondary displacement ``only if the Secretary of Labor
found that such placing employer ... knew or had reason to know of such
displacement at the time of the placement of the nonimmigrant with the
other employer.'' The language and structure of these provisions
demonstrates that Congress intended for the H-1B employer to take
proactive steps to ascertain whether placement of H-1B workers would
correspond with the lay off of similarly-employed U.S. workers. In
enacting this provision, Congress clearly intended that the employer
make a reasonable inquiry and
[[Page 642]]
give due regard to available information. Simply making a pro forma
inquiry would not insulate a covered employer from liability should the
secondary employer displace a U.S. worker from a similar job which
would be performed by an H-1B worker.
The Department recognizes that the ACWIA obligation concerning
``secondary displacement'' could easily be subverted if a placing H-1B
employer were merely to make a pro forma inquiry and rely on a pro
forma reply. Thus, in order to assure that the purposes of the statute
are achieved, the Department proposes to develop a regulatory provision
to require that the H-1B employer make a reasonable minimal effort to
inquire about potential secondary displacement. The Department believes
that a covered H-1B employer may demonstrate such effort through a
variety of methods that include, but are not limited to, the following:
Securing and retaining a written assurance from the
secondary employer that it has not and does not intend to displace a
similarly-employed U.S. worker within the period 90 days before and 90
days after the placement of an H-1B worker at the work site; or
Preparing and retaining a note to the file, prepared at
the same time or promptly after receiving the secondary employer's oral
statement (including the substance of the conversation, the date of the
communication, and the names of the individuals involved) that the
secondary employer has not and does not intend to displace a similarly-
employed U.S. worker within the period 90 days before and 90 days after
the placement of an H-1B worker at the work site; or
Including a secondary displacement clause in the contract
between the H-1B employer and the secondary employer, whereby the
secondary employer would agree that it has not and will not displace
similarly-employed U.S. workers at the work site at any time within the
period 90 days before and 90 days after the placement of an H-1B
worker.
Further, even with such assurance, a placing H-1B employer should
not be able to ignore other information that comes to its attention--
such as newspaper reports of relevant lay-offs by the secondary
employer--if such information becomes available before its placement of
H-1B workers with that other employer. Under such circumstances, the
employer would be expected to recontact the secondary employer and
receive credible assurances that no lay offs are planned or have
occurred in the applicable time frame.
The Department seeks comments on the methods described above, and
any other methods for demonstrating that a placing employer has made a
reasonable inquiry concerning potential secondary displacement of U.S.
workers.
8. What Documentation Will be Required of Employers About ACWIA's Non-
Displacement Provisions?
The ACWIA prohibits the small affected class of H-1B employers--H-
1B-dependent or willful violators--from hiring H-1B workers if their
doing so would displace similar U.S. workers from an essentially
equivalent job in the same area of employment. The employer will not be
considered to have displaced the U.S. worker if that worker left
voluntarily, was dismissed for a valid reason, or turned down the
employer's offer of a similar employment opportunity with equivalent or
higher compensation and benefits (as previously discussed).
The Department proposes to require that covered H-1B employers
retain certain documentation with respect to each U.S. worker in the
same locality and same occupation as any H-1B nonimmigrants hired, and
who left its employ in the period 90 days before or after the
employer's petition for the H-1B worker(s). In addition, because an
employer generally takes action to effectuate a layoff at a point
before a worker's employment terminates, such documentation would be
required for any such employee for whom the employer has taken any
action during the period 90 days before or after the petition to cause
the employee's termination (e.g., a notice of future termination of the
employee's job). For all such employees, the Department proposes that
covered H-1B employers maintain the name, last-known mailing address,
occupational title and job description, as well as any documentation
concerning the employee's experience and qualifications, and principal
assignments. In addition, the Department proposes that the employer
maintain copies of all documents concerning the departure of such
employees, such as notification by the employer of termination of
employment prepared by the employer or the employee and any responses
thereto, evaluations of the employee's job performance, etc. Finally,
the employer would be required to retain copies of the terms of any
offers of similar employment to such U.S. workers and the employee's
response thereto. Because EEOC regulations (29 CFR 1602.14) currently
require retention of all personnel or employment records, the
Department does not believe that this requirement in the H-1B
regulation would impose any new burden on employers.
The Department seeks comments on this proposed regulation, and on
any related matters.
E. What Requirements Does the ACWIA Impose Regarding Recruitment of
U.S. Workers, and Which Employers are Subject to Those Requirements?
The ACWIA requires that an H-1B-dependent employer (or employer
found by DOL to have committed willful H-1B violations within a 5-year
period) take ``good faith steps to recruit, in the United States using
procedures that meet industry-wide standards and offering compensation
that is at least as great as that required to be offered to H-1B
nonimmigrants . . ., United States workers for the job for which the
nonimmigrant or nonimmigrants is or are sought.'' The Department is
charged with enforcing this obligation, while the Attorney General
administers a special arbitration process to address complaints
regarding an H-1B employer's companion obligation to ``offer the job to
any United States worker who applies and is equally or better qualified
for the job for which the nonimmigrant or nonimmigrants is or are
sought.'' The ACWIA further provides that ``[n]othing in subparagraph
(G) [this new attestation element on recruitment] shall be construed to
prohibit an employer from using legitimate selection criteria relevant
to the job that are normal or customary to the type of job involved, so
long as such criteria are not applied in a discriminatory manner.'' An
H-1B employer is not subject to these recruitment requirements if its
labor condition application involves only ``exempt'' H-1B workers, or
if the H-1B worker has ``extraordinary ability,'' or is an
``outstanding professor or researcher'' or a ``multinational manager or
executive,'' as defined in section 203(b)(1)of the INA.
It should be noted that the statutory attestation language requires
the employer to affirm the statement that, ``prior to filing the
application--[the employer] has taken good faith steps to recruit. .
.'' This language appears to be based on the presumption that employers
file LCAs for individual workers at the time the need for that worker
arises. In fact, however, employers may and often do file one LCA for
many workers and use that LCA into the future in support of H-1B
petitions filed when the actual
[[Page 643]]
employment need does arise. For example, an LCA filed for 100 computer
programmers may be used up to 100 times over a period of months or even
years (through the three year validity period) in support of separate
petitions for individual workers.
Given this common practice by employers, it is not reasonable to
assume Congressional intent to require a separate LCA for each worker,
particularly in light of the existing regulatory provision allowing the
listing of multiple positions and work locations on a single
application, which was not altered by ACWIA. At the same time, it is
not reasonable to assume that Congress expects employers using the H-1B
program (in this case, only H-1B-dependent employers and willful
violators) to be able to attest--on the LCA filing date--that they have
already recruited in good faith in the U.S. for every job for which
they may wish to petition for H-1B workers over the three-year life of
the LCA, and further, that they already have offered that job to every
equally or better qualified U.S. worker who applies. As a practical
matter, it would be virtually impossible for employers to be able to
conduct such recruitment, since they have not yet identified every job
opportunity which might arise at some point in the LCA's three-year
validity period, for which the employer might wish to file an H-1B
petition for an H-1B worker. In this context, the Department believes
that the ``good faith recruitment'' attestation must be read,
interpreted and applied to mean that the employer promises--and agrees
to be held accountable--that it has or will recruit with respect to any
job opportunity for which the application is used, whether that
recruitment occurs before or after the application is filed (if the
application is to be used in support of multiple petitions for future
workers). The Department invites comments on this approach and any
alternative suggestions for how to appropriately balance employers'
practices under the program with their good faith recruitment
obligations in the context of the statutory language on this labor
condition statement.
The Department recognizes that the ACWIA requirements for a small
sub-set of H-1B employers to recruit U.S. workers present several
points on which views might differ. Therefore, the Department proposes
a regulation addressing the following matters and seeks comments on all
of these points, as well as on any other related matters.
1. How are ``Industry-wide Standards'' for Recruitment to be
Identified?
The benchmark for minimal U.S. worker recruitment under the ACWIA
is ``industry-wide'' procedures. This provision allows employers to use
normal recruiting practices which are common among similar employers in
their industry in the United States (even though, in some cases at
least, these have been demonstrably unsuccessful by virtue of the
employer seeking access to foreign labor markets). The statute does not
require employers to comply with any specific recruitment regimen or
practice, nor does the Department believe it is authorized to prescribe
any explicit regimen. In this regard, the Department is of the view
that the H-1B-dependent employer should look, in particular, to those
recruitment strategies by which employers in an industry have
successfully recruited U.S. workers; through this rulemaking proposal,
the Department solicits and will consider the views of major industry
associations, employee organizations, and other interest groups
concerning successful recruitment practices and strategies.
The Department is considering a number of options regarding the
type or level of recruitment necessary, ranging from prescribing
specific required recruitment efforts to simply allowing employers to
pursue what they perceive to be industry standard procedures.
There are a number of recognized methods for successfully
soliciting U.S. worker applicants, including: advertising in general
distribution publications, trade or professional journals, or special
interest (e.g., ethnic-oriented) publications; America's Job Bank or
other Internet sites advertising job vacancies; outreach to trade or
professional associations; use of public and/or private employment
agencies, referral agencies, or ``headhunters;'' outreach to colleges,
universities, community/junior colleges and business/trade schools; job
fairs; contact with labor unions; and recruitment, development or
promotion from within an employer's organization (or its competitors),
including workers who may have been displaced from similar jobs. The
Department's expectation is that good faith recruitment will ordinarily
involve several of these methods of solicitation, both passive (where
potential applicants find their way to an employer's job announcements,
such as to advertisements in publications and the Internet) and active
(where the employer takes proactive steps to identify and get
information about it's job openings into the hands of potential
applicants, such as through job fairs, outreach at universities, use of
``headhunters,'' and providing training to incumbent employees in the
employer's organization).
The Department is considering whether the regulation should
recognize that if an employer uses at least three of these recognized
solicitation tools (at least one or two of which are active), it will
be presumed to meet the ``good faith'' standard in this regard. This
approach would, in effect, create a presumption for employers which do
not wish to demonstrate industry practice for recruitment. An employer
which did not use at least three of these approaches could still
demonstrate its ``good faith'' by showing that its recruitment methods
comport with the industry norm, as discussed below. However, the
Department believes that good faith recruitment must, at a minimum,
involve solicitation efforts which include advertising in relevant and
appropriate print media or the Internet (where common in the industry),
in publications and at facilities commonly used by the industry (e.g.,
higher education institutions), as well as solicitation of U.S. workers
within the employer's organization. Of course, an employer would have
to use good faith in the recruitment conducted. For example, an
employer would be expected to advertise for a reasonable period of
time, and would be expected to do so in those publications and to
attend those job fairs which would ordinarily be read or attended by
the types of workers being recruited. The Department seeks comments as
to whether this approach offers an effective means of implementing the
Act's objectives, including specifically whether such a presumption
should be established and, if so, whether it should involve at least
three recognized solicitation tools or some other number.
The Department considers it important that there be a general
recognition that good faith recruitment must involve some active
methods of solicitation, rather than just passive methods such as
posting job announcements at the employer's work site(s) or on its
Internet web page. The Department's view is that ``industry-wide
standards'' do not mean the lowest common denominator--i.e., the
minimum recruitment or least effective methods in attracting U.S.
workers used by companies in an industry. Rather, solicitation must be
at a level and through methods and media which are normal, common or
prevailing in an industry--the ``standard''--including at
[[Page 644]]
least the medium most prevalently used in the industry and employing
those strategies that have been shown to be successfully used by
employers in an industry to recruit U.S. workers.
The Department believes that, as a general matter, the statutory
intent of the recruitment attestation is best effectuated if employers
are required to utilize the recruitment methods of the set of employers
which primarily compete for the same types of workers as those who are
the subjects of the H-1B petitions to be filed pursuant to the LCA. For
example, a hospital, university, or computer software development firm
would be required to use the standards utilized by the health care,
academic, or information technology industries, respectively, in hiring
workers in the occupations in question. Similarly, a staffing firm,
which places its workers at job sites of other employers, would be
required to utilize the standards of the industry which primarily
employs such workers--e.g., the health care industry, if the staffing
firm is placing physical therapists (whether in hospitals, nursing
homes, or private homes); or the information technology industry, if
the staffing firm is placing computer programmers, software engineers,
or other such workers. These firms are competing for the same kind of
workers and the ``industry standard'' should recognize that fact and
not reward lack of success in attracting U.S. workers by some sectors
of an industry.
The Department seeks comments on this proposed regulation and on
any other related matters, including any possible alternative
regulatory standards and their contents and consequences.
2. What Constitute ``Good Faith Steps'' in Recruitment?
The essential requirement for good faith recruitment, as mandated
by the ACWIA, is that employers maintain a fair and level playing field
for all applicants and be able to show that they have not skewed their
recruitment process against U.S. workers. The Department believes that
``good faith'' recruitment does not involve only the steps taken to
communicate/advertise job openings and solicit applications (ending
upon the employer's receipt of the applications), but also encompasses
pre-selection treatment of the applicants. The level playing field for
U.S. applicants mandated by the ACWIA cannot be guaranteed if only
those steps taken to find potential applicants and solicit applications
are considered; the pre-selection treatment of applicants must also be
considered if good faith is to be assured. For example, an application
screening process tailored to favor H-1B workers and bypass U.S.
applicants would represent as much a violation of the good faith
recruitment requirement as a failure to seek U.S. applicants in the
first place.
The Department does not propose any specific regimen or practice
for pre-selection treatment of applications and applicants. However, in
circumstances where H-1B employers are demonstrably unsuccessful (or
less successful than their competitors) in hiring U.S. workers, the
Department intends to scrutinize the recruitment process, including
pre-selection treatment, to insure that U.S. workers are given a fair
chance for consideration for a job, rather than being ignored or
rejected through some tailored screening process based on an employer's
preferences or prejudices with respect to the make up of its workforce.
Examples of such processes could include a practice of interviewing H-
1B applicants but not U.S. applicants with equivalent qualifications,
or assigning different staff to the screening or interviewing of H-1B
and U.S. applicants.
The Department solicits comments on this issue and the relevance of
these examples in identifying less than ``good faith'' recruitment, and
the existence of any other practices with a similar design or impact.
The Department is of the view that--as a practical matter--there
may be little reason to examine the particulars of an employer's
recruitment efforts if the results of those efforts amply demonstrate
the employer's good faith in employing U.S. workers. Thus, the
Department is considering whether to craft a presumption of good faith
recruitment based on an employer's hiring of a significant number of
U.S. workers and, thereby, accomplishing a significant reduction in the
ratio of H-1B workers to U.S. workers in the employer's workforce. Of
course, such a presumption would not affect an individual worker's
claim that he/she was discriminated against in recruitment or
otherwise, or an individual U.S. worker's complaint that he/she was
equally or better qualified than an H-1B worker and was not given an
offer of employment (a matter which is under the jurisdiction of the
Department of Justice). The Department seeks comments on the
possibility, the contents, and the consequences of such a presumption.
The Department's regulation will include notification of its
intention to refer any potential violations of U.S. discrimination
statutes revealed through this scrutiny to the appropriate enforcement
agency.
In addition, the Department's regulation will inform employers that
the assessment of ``good faith'' recruitment will be based on the whole
recruitment process, but will not include an examination or ``second
guessing'' of the work-related screening criteria or the hiring
decision(s) with regard to any particular applicant(s) (a matter
specifically assigned by the ACWIA to the Attorney General's
procedures).
The Department seeks comments on this proposed regulation and on
any other related matters.
3. How are ``Legitimate Selection Criteria Relevant to the Job That are
Normal or Customary to the Type of Job Involved'' to be Identified and
Documented?
In conducting the ACWIA-mandated ``good faith'' recruitment of U.S.
workers, an affected H-1B employer is specifically authorized to apply
``legitimate selection criteria relevant to the job that are normal or
customary to the type of job involved.'' This statutory standard, thus,
has several parts. The criteria must be legitimate, which would exclude
any criteria which would, in themselves, be violative of any applicable
laws (e.g., age, sex, race). The criteria must be relevant to the job,
which would require a nexus between the criteria and the job's duties
and responsibilities. And the criteria must be normal or customary to
the type of job involved, which would be based on the practices and
expectations of the industry rather than on the preferences of a
particular employer. The Department considers that this requirement
would be satisfied, for example, if the employer uses criteria taken
from the North American Industrial Classification System (NAICS) being
developed to replace the Standardized Occupational Classifications.
With regard to selection standards, the language and purpose of the
statute mandate that the employer is not to impose spurious hiring
criteria that discriminate against U.S. applicants in favor of H-1B
workers; such employer actions would subvert the obligation to hire an
``equally or better qualified'' U.S. worker. (See Cong. Rec. E2324,
Nov. 12, 1998; Cong. Rec. S12751, Oct. 21, 1998).
In evaluating an employer's ``good faith'' recruitment in the pre-
selection treatment of applicants and applications, the Department will
limit its scrutiny of screening criteria (as opposed to processes) to
those factors set forth in the law.
[[Page 645]]
The Department is proposing a regulatory provision which informs
the employer of these standards for acceptable hiring criteria. The
Department seeks comments on this proposal and on any other related
matters.
4. What Actions Would Constitute a Prohibited ``Discriminatory Manner''
of Recruitment?
In prohibiting the employer's application of otherwise-legitimate
hiring criteria ``in a discriminatory manner,'' the ACWIA mandates that
the employer conduct recruitment on a fair and level playing field for
all applicants without skewing the recruitment process against U.S.
workers. Obviously, the use of hiring criteria prohibited by any
applicable discrimination law (e.g., sex, race, age, national origin)
would constitute a prohibited ``discriminatory'' recruitment. The
Department is proposing a regulatory provision which will inform the
employer of these basic standards, and that solicitation and pre-
selection screening processes or criteria that are applied in a
disparate manner--either between foreign and U.S. workers, or for those
jobs where H-1B workers are involved (as opposed to those where they
are not involved)--shall constitute discriminatory recruitment.
Employers will also be alerted to the Department's compliance with the
Congressional intent that ``[e]mployers who consistently fail to find
U.S. workers to fill positions should receive the Department's special
attention in this context of `good faith' recruitment'' (See Cong. Rec.
E2325, Nov. 12, 1998).
The Department seeks comments on this proposed regulation and on
any other related matters.
5. What Documentation Would be Required of Employers?
In order for an employer to demonstrate that it has engaged in good
faith recruitment of U.S. workers in accordance with industry-wide
standards, and that the compensation offered is at least as great as
that offered to H-1B nonimmigrants, an employer will be required to
maintain certain documentation. The Department believes that it should
not be necessary for the employer to retain actual copies of
advertisements, etc., provided that it maintains documentation of the
recruiting methods used, including the places and dates of the
advertisements and postings or other recruitment methods used, the
content of the advertisements and postings, and the compensation terms
(if such are not included in the content of the advertisements and
postings). In addition, the Department proposes that the employer's
public disclosure file contain information summarizing the principal
recruitment methods used and the time frame in which such recruitment
was conducted.
The Department requests comments on how employers can and should
determine industry-wide standards, for example, by obtaining credible
evidence such as trade organization surveys, studies by consultative
groups, or a statement from a trade organization regarding the industry
norm(s). The Department also seeks comments on how to make the
employer's determination available for public disclosure to U.S.
workers and others.
In order to ensure that good faith recruitment was conducted, the
Department proposes that employers retain any documentation they have
received or prepared concerning the consideration of applications by
U.S. workers, such as copies of applications and/or related documents,
test papers, rating forms, records regarding interviews, job offers,
etc. As discussed above with regard to documentation on the non-
displacement attestation element (see item D.8), the EEOC regulations
already require that employers retain all personnel or employment
records, and the Department therefore believes that this requirement in
the H-1B regulation would create no new obligation for employers.
The Department seeks comments on this proposed regulation and on
any other related matters, including any possible alternative
recordkeeping requirements.
F. What is Required for ``Electronic Posting'' of Notice to Employees
of the Employer's Intention to Employ H-1B Nonimmigrants?
The ACWIA modified the existing 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. In providing this
alternative method for notification to affected workers, Congress in no
way indicated an intention to reduce the effectiveness of the notice
requirement which has been an element of the H-1B program from its
inception. Thus, the ACWIA provision must be understood to mean that
the electronically posted notices are readily available to the affected
workers. An employer may accomplish this by any means it ordinarily
uses to communicate with its workers about job vacancies or promotion
opportunities, including through its ``home page'' or ``electronic
bulletin board'' to employees who have, as a practical matter, direct
access to the home page or electronic bulletin board; or through E-Mail
or an actively circulated electronic message such as the employer's
newsletter. Where employees are not on the ``intranet'' which provides
direct access to the home page or other electronic site but do have
computer access readily available, the employer may provide notice to
such workers by direct electronic communication such as E-Mail. If the
employees lack such electronic access, notification may by provided by
physical (``hard copy'') posting at the worksite.
The Department proposes regulatory language to convey this
requirement, in a revision of the regulation on worksite notices (see
item O.5, below, concerning republication for further comments). The
Department seeks comments on this proposal, as well as on any
alternative standard and its possible consequences for affected
workers.
G. What Does the ACWIA Require of Employers Regarding Benefits to H-1B
Nonimmigrants?
The ACWIA has added to the H-1B statute an express statement of the
inherent obligation of all H-1B employers, under the first attestation
element on wages and working conditions, ``to offer to 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 non-cash 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.'' The Department proposes regulatory provisions
that implement this obligation regarding benefits. The Department seeks
comments on the following and related matters.
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?
In enacting an explicit statement of an employer's obligation to
offer the H-1B worker benefits ``on the same basis, and in accordance
with the same criteria, as the employer offers to [United States]
[[Page 646]]
workers,'' Congress emphasized its intention that the wages and working
conditions of U.S. workers not be adversely affected through the
employment of H-1B workers at wages and fringe benefit levels less than
those provided to U.S. workers. It is the Department's view that an
employer's obligation to provide benefits to workers ``on the same
basis, and in accordance with the same criteria, as the employers
offers to [U.S.] workers'' requires that an employer offer to its H-1B
workers the same benefit package as is offered to U.S. employees, and
on the same basis as it is offered to U.S. workers. In other words, an
employer may not provide more strict eligibility or participation
requirements for H-1B workers. Of course, the benefits actually
provided would not have to be identical, since, for example, one worker
might choose family health insurance coverage, and another individual
coverage, and yet another might choose not to have health benefits
because he or she did not want to pay the employee's share of the
premium in a co-pay package. The comparison of the ``basis'' and
``criteria'' should take into account the categories or types of
workers to whom the benefits are being provided (e.g., full-time
workers compared to full-time workers; professional staff compared to
professional staff); in other words, the comparison is between
similarly-employed workers. The Department also seeks comments as to
whether the ``same basis'' requirement would allow an employer to
provide a different, but equivalent, package of benefits. The
Department recognizes that determining the equivalency of benefits
could be quite burdensome for both employers and the Department--
particularly if the test were a qualitative evaluation of benefits, as
distinguished from a comparison of the cost to employers.
The Department further understands that this provision would allow
an employer to provide greater or additional benefits to H-1B workers
than are offered to U.S. workers--that, with respect to H-1B workers,
the requirement sets a benefits floor, but not a ceiling. This
construction of the statutory language is consistent with the ACWIA
directive that the fringe benefits obligation is imposed under
attestation (1)(A), which embodies the concept that the prescribed
wages and working conditions are minimums which must be afforded the H-
1B workers.
The Department recognizes that an alternative interpretation of the
benefits standard would interpret the ACWIA phrases ``same basis'' and
``same criteria'' to mean literally that they require the same (or
possibly equivalent) treatment of similarly-situated U.S. and H-1B
workers with respect to benefits. Such an interpretation would not
permit more favorable treatment to either U.S. workers or H-1B
nonimmigrants with regard to benefits.
The Department is also aware that there is a possibility of
complications with respect to the ``benefits'' obligations of a U.S.
employer that is part of a multinational corporate operation,
particularly where an H-1B worker works in the U.S. for only a short
period of time. The Department recognizes that under these
circumstances it may not be practical for the U.S. employer to provide
the H-1B worker with exactly the same benefits provided to its U.S.
workers. The Department proposes to provide that while U.S. employers
may cooperate with their corporate affiliate(s) in the H-1B worker's
home country with regard to payment of wages and maintenance of
benefits (such as that country's retirement system), the U.S. employer
is responsible for compliance with the ACWIA requirements. This concern
arises where a foreign affiliate of a petitioning employer is involved
as the agent for payment of wages and provision of benefits to H-1B
workers. The statutory obligations must be fully met in such instances.
The ultimate responsibility for all employer obligations under this
Act, including the provision of benefits to the H-1B worker at least
equal to those offered its U.S. workers, must lie with the U.S.
employer which brings nonimmigrant workers into the country.
Ultimately, it is the U.S. employer, not the foreign subsidiary,
pledging the H-1B worker a benefit package like that of its U.S.
workers. The Department will look with particular care at circumstances
involving a foreign subsidiary where there is an appearance of
contrivance to avoid the sponsoring employer's obligation to provide at
least equal wages and benefits to H-1B and U.S. workers. At the same
time, the Department will carefully examine the circumstances in such
cases to consider non-equivalent but nonetheless equitable benefits,
including in light of the actual length of stay of the H-1B worker in
the U.S.
Further, the Department proposes to modify section 655.732 of the
existing regulations concerning fringe benefits pursuant to the
``working conditions'' attestation, to make it clear that an employer
must provide the H-1B worker at least the fringe benefits and working
conditions provided to the employer's U.S. workers. This modification
would make it clear that the requirement that the employer provide
working conditions that will not adversely affect the working
conditions, including fringe benefits, of U.S. workers similarly
employed necessarily requires consideration of similarly employed
workers in the employer's own work force, as well as to prevailing
conditions in the area of employment in some circumstances.
Finally, the Department seeks comments as to whether the Department
should define ``benefits'' within the meaning of the ACWIA or simply
give a list of examples. Although ``benefits'' are defined in various
programs such as the Employee Retirement Income Security Act of 1974
and the Service Contract Act, the Department notes that the ACWIA
provision on ``benefits'' clearly contemplates the inclusion of various
forms of cash and non-cash compensation, such as bonuses and stock
options, which are ordinarily considered wages.
The Department seeks comments on these matters, as well as on any
other related matters.
2. How will Various Benefits be Evaluated, and What Documentation Would
be Required?
The new statutory language mandates that all employers of H-1B
nonimmigrants offer benefits to H-1B workers ``on the same basis and in
accordance with the same criteria'' as offered to similarly-employed
U.S. workers. To allow the Department to determine whether this
statutory obligation has been met, the Department believes it will be
necessary at a minimum that employers retain copies of fringe benefit
plans and summary plan descriptions provided to workers, including all
rules regarding eligibility and benefits, evidence of what benefits are
actually provided to individual workers, and how costs are shared
between employers and employees.
As discussed above, the Department is considering whether the
statute will permit H-1B nonimmigrants to be provided different
benefits or greater benefits, such as through an affiliate in their
home country. If different benefits are provided, the Department
believes an employer must be required to keep detailed information
regarding the benefits provided to the H-1B worker and information to
demonstrate the value of these benefits, as well as the benefits
provided to U.S. workers. The Department solicits suggestions regarding
exactly what records would be necessary for such determinations.
It is the Department's understanding that these records are
currently kept for most fringe benefits, pursuant to the
[[Page 647]]
requirements of the Employee Retirement Income Security Act of 1974 and
the Internal Revenue Service.
The Department seeks comments on this proposal and any related
matters.
H. What Does the ACWIA Require of Employers Regarding Payment of Wages
to H-1B Nonimmigrants for ``Nonproductive Time''?
In response to concerns and information about many situations in
which H-1B workers were brought for employment in the United States but
were then ``benched'' in a nonproductive status and paid little or none
of the required wages, Congress enacted an explicit requirement--
consistent with the Department's regulation--that the employer pay
wages to an H-1B worker in ``nonproductive status'' in certain
circumstances. This obligation is effective ``after the H-1B worker has
entered into employment with the employer,'' but otherwise not later
than 30 days after the worker's date of admission into the U.S. (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 present in the country when the petition is approved). The
Department is considering whether the H-1B worker ``enters into
employment'' when he first makes himself available for work, such as,
for example, by reporting for orientation or training, or when he
actually begins receiving orientation or training or otherwise performs
work or comes under the control of his employer. Once the worker
``enters into employment'' (or after the 30 or 60 day period expires),
the ``benching'' rules apply. Subject to the qualifications discussed
below, an H-1B worker who is already present in the U.S. is considered
by the Department to be ``eligible to work for the employer'' (and thus
covered by the ``benching'' rules) upon the completion of the visa
issuance process; matters such as the worker's obtaining a State
license would not be relevant to this determination.
In a nutshell, the ``benching'' provisions forbid an employer
paying an H-1B worker less than the required wage for nonproductive
time, except in situations where the nonproductive status is due either
to the worker's own initiative or to circumstances rendering the worker
unable to work. The Department's enforcement experience has
demonstrated that some employers bring H-1B workers into this country
and then, for a variety of reasons, ``bench'' the workers in non-
productive status and fail to pay them the wages attested on the LCA.
Most frequently, such ``benching'' occurs where the employer lacks work
to assign to the H-1B worker, or the worker is engaged in training or
development activities (such as orientation in the employer's
operations or studying for a licensing exam). It is entirely
appropriate--as Congress recognized in the ACWIA enactment--for an
employer to be prohibited from evading its wage obligations to such
workers, who are under the employer's control and entitled to the LCA-
attested wages. The ACWIA provisions recognize, however, that the
employer should not be liable to pay wages for the worker's time which
is nonproductive for reasons unattributable to the employer, such as
the worker's hospitalization or requested leave-of-absence (consistent
with the conditions related to the H-1B worker's maintenance of legal
status in the U.S.).
There is no authorization for a reduction in the prescribed wage
rate for any H-1B worker who is in nonproductive status due to
employment-related conditions such as training, lack of assigned work,
lack of a license, or other such reasons. The H-1B program was not
intended and should not operate to provide an avenue for nonimmigrants
to enter the U.S. and await work at the employer's choice or
convenience. Instead, the H-1B program's purpose is to enable employers
to employ fully-qualified nonimmigrants for whom employment
opportunities currently exist. When the H-1B worker is ``benched'' and
not being paid his/her required wages during nonproductive time, the
worker is not permitted to be employed by any other employer (indeed,
such employment would expose both the worker and the other employer to
INS sanctions). The H-1B worker who is ``benched'' is without any legal
means of support in this country. Thus, an H-1B worker affected by a
temporary reduction in force or a temporary shut-down of the employer's
operations could not accept any other employment (except with an LCA-
certified employer who files a petition for the worker, or with another
employer able to provide some other adjustment of the nonimmigrant's
status under the INA). In contrast, U.S. workers in a reduction in
force or temporary shut-down would be able to seek employment elsewhere
and, in addition, could be eligible for Federal programs such as food
stamps, Aid to Families with Dependent Children, and other similar
benefits not available to the H-1B nonimmigrants. (See, e.g., 7 CFR
273.4; 45 CFR 233.50) Where an employer does not have sufficient work
for the H-1B worker to make the payment of his/her required wages
feasible or advantageous for the employer, such employer may, at any
time, terminate the employment of the H-1B worker, notify the INS, pay
for the worker's return to his/her country of origin as required by
Section 214(c)(5) of the INA and INS regulations at 8 CFR
214.2(h)(4)(iii)(E) (1995), and no longer be subject to the H-1B
program's required wage.
In all particulars, the ACWIA provision is a statutory enactment of
the Department's current regulation, the enforcement of which (along
with some other provisions) was enjoined by a district court on
Administrative Procedure Act procedural grounds (National Association
of Manufacturers v Reich, No. 95-0715, D.D.C. July 22, 1996). The
Department has previously published this regulatory provision for
notice and comment (60 FR 55339, Oct. 31, 1995), and is now
republishing it for further comments. The Department encourages
commenters to review the previous Final Rule and Notice of Proposed
Rulemaking (60 FR 4028 and 60 FR 55339) in making their submissions.
(See item O, below.)
The Department proposes to modify the existing regulation, to
implement the ACWIA provision and to require that the employer pay the
H-1B worker's wages when the worker is in nonproductive status due to
employment-related reasons such as training or lack of assigned work.
The regulation does not require payment of such wages where the
nonproductive status is due to reasons unrelated to employment (such as
the worker's voluntary request and convenience or non-work-related
circumstances rendering him/her unable to work), unless such payment is
required by INS as a condition of the H-1B workers' continued
maintenance of lawful status in the United States, or is required by
some other statute, such as the Family and Medical Leave Act. Thus, the
required wage need not be paid to the worker who--on his/her own
initiative--requests ``time off'' to conduct research on matters
unconnected to his/her employment, or requests a delay in his/her first
day of work in order to have an opportunity to tour the U.S. before
undertaking duties of employment. However, the employer would not be
relieved of the wage obligation to H-1B worker(s) for any required
leave of absence, even if such leave of absence includes U.S. workers.
[[Page 648]]
I. What Special Rule Does the ACWIA Provide for Academic Salaries?
The ACWIA provision on ``benching'' 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 being in an
ostensibly ``unpaid'' status for some part of a calendar year. This
provision specifies that the institution is permitted to disburse an
annual salary over fewer than 12 months if two conditions are met:
the H-1B worker agrees to the compressed salary payments
prior to commencing employment, and
the salary practice does not otherwise cause any violation
of the H-1B worker's authorization to remain in the U.S.
The Department understands this provision to be 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 or some other period during
which the faculty member may be away from the institution, which INS
recognizes.
The Department is proposing regulatory language to implement this
ACWIA provision, and seeks comments on the proposal and any related
matters.
J. What Actions or Circumstances Would be Prohibited as a ``Penalty''
on an H-1B Nonimmigrant Leaving an Employer's Employment?
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.'' The
Department is authorized to ``determine whether a required payment is a
penalty (and not liquidated damages) pursuant to relevant State law.''
This provision embodies well-established principles in employment
contract law. Under those principles, Congress sought to assure that
the application of State law was determinative (rather than the
Secretary's independent interpretation of what constitutes ``liquidated
damages'' under State law) so that non-punitive payments, serving to
compensate an employer for matters such as the loss of proprietary
information, would be permissible but that punitive payments would not.
The Department proposes a regulation that would apprise employers
and H-1B workers that an employer's ability to enforce ``agreed
damage'' provisions in a contract between the parties is limited. The
proposed rule would require employers to obtain a State court judgment
as a condition for seeking to enforce such provisions (i.e., an
employer may not obtain such recovery from the worker without a State
court judgment). In the Secretary's view, this best effects the
statutory prohibition against the enforcement of penalties by leaving
to State courts the resolution of what may be difficult legal
questions. In particular cases, for example, it will be necessary to
determine the applicable State law to apply, requiring consideration
of, among other factors: where the agreement was entered into, and, if
entered into in another country, whether that Nation's laws get
factored into the analysis; whether the parties have agreed that the
contract will be administered in accordance with the laws of a
particular State (and, if so, whether it is appropriate to defer to
their choice); where the employee was located at the time of the
termination; and where the employer seeks to enforce the provision. The
regulation would not set out particular guidelines, since it would not
be feasible or appropriate to digest the law of all the States in this
rule.
In proposing this approach, the Department considered the
alternative of establishing a procedure by which the Department would
determine whether a particular employment agreement provides for
acceptable ``liquidated damages.'' In the Department's view, the State
courts are much better versed than a Federal administrative forum to
answer the various legal questions posed by any agreement between an
employer and an H-1B worker, and to conclusively determine whether a
particular provision runs afoul of State law. The Department has no
particular expertise in interpreting State law, nor in discerning from
the existing State decisional and statutory law (which may not be
easily analogized to the H-1B context) the principles that a State
court would apply in the particular context of a dispute between an
employer and an H-1B worker.
The Department also intends to make it clear that since the ACWIA
does not permit employers to accept reimbursement from an H-1B worker
of the additional $500 fee imposed on H-1B employers (see section K,
below), in no event may the employer collect the fee under the guise of
liquidated damages. The Department is also concerned about attempts by
employers to collect liquidated damages where their violations of the
INA, this program, or other employment law may have caused an H-1B
worker to cease employment. The Department anticipates that State
courts will often recognize that under these circumstances the claimed
payment would constitute a penalty rather than liquidated damages, or
that the payment otherwise would be unenforceable. The Department seeks
comments as to whether guidelines on this issue would be appropriate
and authorized by the statute.
The Department seeks comments on its regulatory proposal and on any
related matters.
K. What Standards Apply to Determine if an Employer Received a
Prohibited Kickback of the Additional $500 Filing Petition fee From an
H-1B Worker?
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 additional $500
filing fee enacted by the ACWIA, which is applicable to H-1B petitions
filed before October 1, 2001. The effect of this ACWIA provision is to
make the employer solely and entirely responsible for the additional
$500 filing fee; the H-1B worker is not in any manner to pay or absorb
the cost of any of the fee. The Department takes the position that the
employee is not to be forced, encouraged, or permitted to rebate any
part of the fee to the employer--directly or indirectly, e.g., through
an intermediary such as an attorney, relative or co-worker.
The Department proposes a regulatory provision making this
requirement clear, and seeks comments on this proposal and any related
matters.
L. What Penalties and Remedies Apply if the Employer Imposes an
Impermissible Penalty or Receives an Impermissible Rebate?
The ACWIA enforcement provision on penalties and kickbacks is self-
contained in that it provides its own sanctions authority. The
Department may impose a civil monetary penalty of $1,000 for each
violation (willful or non-willful) and, in addition, may order the
employer to reimburse the worker (or the Treasury, if the worker cannot
be located) for any such payment. The provision does not authorize
debarment for these penalty and kickback violations. The Department
seeks comments on its regulatory language implementing this ACWIA
provision, and on any related matters.
[[Page 649]]
M. How did the ACWIA Change DOL's Enforcement of the H-1B Provisions?
The ACWIA adds two new specific avenues for conducting
investigations, explicitly protects employees who seek to exercise
their rights against employer retaliation, and enhances the monetary
and debarment sanctions against employers who willfully violate the
requirements of this part. The Department proposes to modify Subpart I
of the current regulations to reflect these new provisions, integrating
them into the existing regulatory scheme. The Department requests
comments on each of the enforcement-related issues identified below and
on any other related matters, including but not limited to the
Department's receipt of allegations of employer violations, the
investigation and adjudication or other resolution of such allegations,
and the extent of the Department's authority to remedy violations.
1. What Changes has the ACWIA Made in the DOL's Enforcement Based on
Complaints From ``Aggrieved Parties''?
The ACWIA adds to the Department's authority to investigate
``aggrieved party'' complaints, by (1) specifically authorizing the
Department to conduct ``random'' investigations of employers which have
been found to have willfully violated their obligations under the H-1B
program, and (2) establishing a specific protocol for investigations of
possible violations based on information from sources other than
aggrieved parties.
2. What Procedure Does the ACWIA Provide for Random Investigations?
The ACWIA authorizes special Departmental scrutiny of any employer
which has been found by the Secretary, after ACWIA's enactment on
October 21, 1998, to have committed a willful failure to meet an LCA
condition or a willful misrepresentation. The same special scrutiny is
authorized where an employer is found by the Attorney General to have
willfully failed to meet its obligation to offer a job to an ``equally
or better qualified'' U.S. worker. ``Random'' investigations of such an
employer may be conducted for a period of up to five years, beginning
on the date of the finding of the willful violation.
The Department proposes a regulatory provision which will interpret
the ``finding'' of willful violation--which triggers such special
scrutiny--to be the agency's final action concerning the violation
(e.g., the Secretary's decision after opportunity for a hearing;
settlement agreement between the Department and the employer; or the
Attorney General's decision after an arbitration proceeding). This
interpretation comports with the Department's current regulation
concerning the debarment notice which is sent to the Attorney General
after the completion of the DOL hearing and review process. 20 CFR
655.855(a); 59 FR 65657 (Preamble to Final Rule). The Department seeks
comments as to whether it should instead use an earlier date, such as
the Wage and Hour Administrator's investigation finding or the ALJ's
finding.
3. What Procedure Does the ACWIA Provide for Investigations Arising
From Sources Other Than Aggrieved Parties?
The ACWIA provides for the investigation of possible violations
which come to the Secretary's attention based on information from
sources other than aggrieved parties. Under this ACWIA provision (which
will sunset on September 30, 2001), the Department will establish
procedures for the receipt and recording of such information,
notification where appropriate to employers regarding possible
violations, and certification by the Secretary for an investigation
where there is reasonable cause to infer the possibility of such
violations and other statutory conditions are satisfied. The focus of
such investigations will be on whether an employer has willfully failed
to meet its statutory obligations, has engaged in a pattern or practice
of such failure, or where its failure is ``substantial'' and affects
multiple employees.
The ACWIA specifies that the allegations must be put in writing,
either by the ``source'' or by a DOL employee on behalf of the source,
``[o]n a form developed and provided by the Secretary . . .''. The
Department is developing this form, which like other DOL forms, will go
through the normal Office of Management and Budget clearance process.
When cleared, the form will be publicly available from Departmental
offices and other sources.
The Department proposes a revision of Subpart I of the regulations
to recapitulate the new investigative protocol (along with the
``random'' investigation process), so as to provide an integrated
procedure for enforcement activities, which would include receiving and
processing allegations of and information pertaining to violations of
H-1B requirements, initiating and conducting investigations, providing
hearings and notifications, and imposing appropriate penalties and
remedies.
4. What Protections are Provided to ``Whistleblowers'' by the ACWIA?
The ACWIA provides explicit protection for 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.'' For purposes of this
protection, ``employee'' is broadly defined to include former employees
and applicants for employment. Like most whistleblower statutes, the
ACWIA provision protects ``internal'' complaints--to the employer or
any other person. The ACWIA provision is, in essence, a statutory
enactment of the Department's long-existing whistleblower regulation
for the H-1B program.
To facilitate whistleblower protection by providing special
assurances to nonimmigrants who might lodge complaints and be subject
to retaliation from employers, the ACWIA directs the Department and the
Attorney General to devise a process to enable such a person to remain
in the U.S. and seek other employment for a period not to exceed the
maximum length of time authorized for an employee in the H-1B
classification (provided that the person is ``otherwise eligible'' to
remain and be employed in this country). Congress intends that this
process would be expeditious and easy to use. (See S12752, Oct. 21,
1998; remarks of Sen. Abraham) The Department and the INS are working
in close cooperation to develop this authorization procedure.
5. What Changes Does the ACWIA Make in Enforcement Remedies and
Penalties?
Before the ACWIA's enactment, the H-1B provisions of the INA
provided one level of civil money penalty (CMP) (``up to $1,000 per
violation'') and one level of debarment from the sponsorship of aliens
for employment (``at least one year''). The ACWIA establishes a three-
tier scheme for sanctions and remedies, depending upon the nature and
severity of the violations. In each of the three tiers, as in the
previous statutory provision, the Department is authorized to impose
``such . . . administrative remedies as the Secretary determines to be
appropriate.'' The three tiers are:
$1,000-per-violation maximum CMP, plus a one-year minimum
debarment, for a failure to meet obligations pertaining to strike/
lockout or non-displacement of U.S. workers; a substantial failure
pertaining to notification, LCA specificity, or recruitment of U.S.
workers; or a
[[Page 650]]
misrepresentation of material fact on the LCA.
$5,000-per-violation maximum CMP, plus a two-year minimum
debarment, for a willful violation of any attestation element, a
willful misrepresentation of a material fact on the LCA; or retaliation
against a whistleblower.
$35,000-per-violation maximum CMP, plus a three-year
minimum debarment, for a willful violation of an attestation element or
a willful misrepresentation of a material fact on the LCA which
involves the displacement of a U.S. worker.
The ``appropriate administrative remedies'' authorized in all of
these ACWIA provisions would, in the Department's view, 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 wages, benefits or
eligibility for benefits.
The above-described penalty provisions do not apply to violations
of the ACWIA prohibitions on penalizing an H-1B worker for early
cessation of employment or kickback by the H-1B worker of the
additional $500 filing fee. As discussed above (see item l), these
violations are subject to separate penalties: $1,000 CMP for each
violation, and restitution of any penalty or kickback to the H-1B
worker (or to the Treasury, if the worker cannot be located).
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''?
The ACWIA requires 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 should only take
into account the wages paid by such institutions and organizations in
the area of employment. This ACWIA directive 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.
On March 20, 1998, 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 (9-INA-386, 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 Final Rule, in effect, allows prevailing wage
determinations made for researchers employed by colleges and
universities, Federally Funded Research and Development Centers (FFRDC)
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 this 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 (see 54 FR 13756).
The ACWIA provision goes considerably beyond the regulatory
amendments made by the Department, in that 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.
The Department is consulting with the INS on the definitional
issues, since that agency is addressing similar issues with regard to
the implementation of the additional $500.00 fee which the ACWIA
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)--
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
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), (c)(4) or (c)(6) of the
Internal Revenue Code of 1986 and has received approval as a tax exempt
organization from the Internal Revenue Service, as it relates to
research or educational purposes.
The Department seeks comments on the proper definitions of the
entities to which the ACWIA prevailing wage provisions apply. The
Department will share these comments with INS in the development of
definitions to apply to both the INS and Departmental regulations.
In order to determine prevailing wages as required by the ACWIA, it
will be necessary for the Department to determine the appropriate
universe(s) to survey, and to determine the availability of relevant,
reliable data. The Act treats the four types of organizations in two
groups: educational institutions and related research organizations;
other nonprofit research organizations and Governmental research
organizations. However, the Act does not seem to require that
prevailing wages must be
[[Page 651]]
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.
Furthermore, the Department 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 entitles 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 is exploring 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. Data
currently being collected by the Office of Personnel Management may be
able to be used to determine prevailing wages for Federal Governmental
research organizations.
The Department seeks comments on the appropriate universes to use
in determining prevailing wages for the entities (employers) mentioned
in the ACWIA, methods to develop 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.
O. What H-1B Regulatory Matters, in Addition to the ACWIA Provisions,
are Addressed in This Notice of Proposed Rulemaking?
The Department is re-publishing for notice and comment some of the
provisions of the Final Rule promulgated in December 1994 which were
proposed for further 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 provisions on
Administrative Procedure Act (APA) procedural grounds (National
Association of Manufacturers v. Reich, No. 95-0715, D.D.C., July 22,
1996; see item H above).
As indicated in the discussion of the ACWIA provisions above, some
portions of these regulations are affected by the enactment of the
ACWIA (e.g., ``benching'' or nonproductive time; posting of notice at
worksites). For those ACWIA-affected provisions, the Department
proposes modifications in the regulations and seeks comments on the new
regulatory language. Other previously published provisions--not
affected by ACWIA--are being re-proposed with some modifications based
on a review of the comments received, as discussed below.
All comments received in response to that earlier Notice of
Proposed Rulemaking will be fully considered along with comments
received in response to this Proposed Rule. Commenters are urged to
review the Notice of Proposed Rulemaking published on October 31, 1995
(60 FR 55339). The re-published provisions concern the following
issues.
1. 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?
The most significant regulatory provision affected by the NAM
decision is the ``short-term placement'' rule (20 CFR 655.735), which
the Department was enjoined from enforcing on APA procedural grounds.
This provision was published in the October 31, 1995, Proposed Rule.
The Department now provides another opportunity for comments, on a
slightly-modified version of the provision--allowing the employer to
track its ``short-term'' placements at a location via a worker-by-
worker count of days of employment in the area (rather than a worksite
tally of cumulative workdays of all H-1B workers).
The short-term placement provision was promulgated in the Final
Rule (published December 20, 1994; 59 FR 65646), based on comments and
suggestions submitted in response to the October 6, 1993, Proposed
Rule. This provision--permitting short-term placement of H-1B workers
at worksites outside the area(s) of employment listed on the LCA--was
intended to allow employers greater flexibility in deploying their H-1B
workers in response to business needs and opportunities in new areas.
While the Department recognized that employers could, in any instance,
choose to file a new LCA for the new area of employment, the Department
provided a mechanism by which an employer desiring to move 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. Simply put, the regulation authorizes the
employer to use H-1B worker(s) in a non-LCA location (i.e., location
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
location. Thus, the employer could use H-1B workers 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 were resolved within the regulation's ``short-term'' window
(i.e., if the H-1B worker(s) were no longer needed at the location),
then a new LCA would never be required. But if the H-1B worker(s) would
be needed in the new location for a longer period, then the employer
would have ample time within which to prepare and file a new LCA while
already using the H-1B worker(s) at the location. The regulation
specified that the ``short-term'' 90-day period would be calculated by
totaling all days of work by all H-1B workers in the area of employment
(thus covering all worksites within that area), beginning with the
first workday by any H-1B worker at any worksite in that area. The 90-
day period is applied separately for each new area of employment (e.g.,
90 cumulative workdays for Los Angeles, 90 cumulative workdays for San
Francisco).
The Department has carefully reviewed the comments received on the
October 31, 1995, Proposed Rule and, in response to those comments,
proposes to modify the regulation to count workdays on a per-worker
basis. Thus, the limit of 90 cumulative workdays (i.e., the end of the
``short-term placement'' period) would be reached when any H-1B worker
works for 90 days at any worksite or combination of worksites in the
new area of employment. As soon as one H-1B worker has worked more than
90 workdays within that area of employment, no more work could be
performed by any H-1B worker at any worksite in that area unless and
until the employer files and ETA has certified an LCA for the area.
Therefore, the regulation, although based on a per-worker count of
workdays, still applies to the employer's entire H-1B workforce and to
all worksites in the new area of employment. For example, where an H-1B
worker works 10 days at Worksite X in Dallas and 80 days at Worksite Y
also in Dallas, the employer has exhausted its 90-day ``short-term
placement'' period and is, therefore, required to file and have
certified a new LCA for Dallas before any H-1B worker may work at any
worksite in Dallas.
Under the proposed rule, as an alternative to filing an LCA for a
new area of employment, an employer could place H-1B worker(s) at
worksite(s) in the new area--without filing a new LCA (and thus without
satisfying the notice and prevailing wage requirements for
[[Page 652]]
such new area)--provided that the employer complies with all three of
the following requirements:
No H-1B worker(s) can work at any worksite(s) in the new
(non-LCA-covered) area of employment beyond the cut off point of 90
cumulative workdays (unless the employer filed and ETA has certified an
LCA for such new area);
Each H-1B worker working in the new area is compensated at
the required wage rate applicable under the employer's already-
certified LCA for that worker's original or permanent work location
plus travel-related expenses in the new area (with the Federal
government per diem travel expense standards serving as the floor or
minimum for such expenses); and
No H-1B worker is placed at a worksite where there is a
strike or lockout in the same occupational classification.
Of course, an employer could at any time avoid the short-term
placement option simply by filing an LCA covering the new area of
employment and complying with all the LCA requirements, including
determination of the prevailing wage rate for that area and providing
notice at worksites in that area. Once an LCA is filed and certified
for the new area of employment, the LCA would define the employer's
obligations and the short-term placement option would no longer apply
in any manner to H-1B workers or worksites in that area. Thus, the
employer would be required to pay at least the prevailing wage for that
area of employment to all H-1B workers placed at worksites there. Any
H-1B worker on temporary business in the new area--away from his/her
permanent worksite located in some other area of employment--could
continue to be paid at the required wage rate for his/her permanent
location. While the employer would pay that worker's travel costs
(including food and lodging) while away from his/her permanent work
location, the Federal government per diem travel expense standards
would not be applicable as a ``floor'' (as they would be for H-1B
workers working in the area under the short-term placement option).
The short-term placement option would not apply when H-1B workers
are sent to any new worksite(s) within an area covered by an already-
certified LCA filed by the employer. Such new worksite(s) would be
fully subject to the requirements of that existing LCA, including
payment of at least the prevailing wage, providing notice at the new
worksite, and providing a copy of the LCA to H-1B worker(s) placed at
the worksite (unless he/she had already received a copy of the LCA).
a. When is the Short-term Placement Option Available?
This option would be available only when an employer wants to send
its H-1B worker(s) (already in the U.S. under 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. The option would enable
the employer to meet its business needs, by sending H-1B worker(s) to
the new worksite(s) without waiting to complete the LCA and revised
petition process. 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 workers; 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 short-term placement option would not apply in any of the
following circumstances:
The H-1B worker being sent to the new areas is initially
coming into the U.S. from outside the country (i.e., such a worker must
be placed at a location covered by the LCA on which the H-1B petition
is based);
The H-1B worker is being relocated to a new worksite
within the same area of employment for which the employer already has a
valid LCA (i.e., new worksite is covered by the same LCA as the
previous worksite); or,
The H-1B worker is being relocated from one area of
employment to another, but the employer has valid LCAs covering both
areas (i.e., new worksite is covered by a different LCA than the LCA
for the previous worksite).
The short-term placement option would be irrelevant in
circumstances where the employer is relocating H-1B workers (who are
already in the U.S.) among worksites in areas covered by valid LCAs. In
these circumstances, the employer would be required to comply with the
LCA applicable to the new worksite (whether that is the same LCA
applicable to the area of the old worksite, or a different LCA
applicable to the area of the new worksite). Employers generally would
be free to relocate H-1B workers among worksites in areas of employment
for which they have valid LCAs, provided that the employer complies
with all LCA obligations for the area--the relocation of an H-1B worker
would be prohibited if there were a strike/lockout involving the H-1B
worker's occupation at the new worksite; a wage adjustment for the
relocated worker might be required; new notice at the worksite would
not be required (assuming notice was already provided at that worksite,
either when the LCA was filed or when some other H-1B worker was sent
there).
The short-term placement option also would be irrelevant in
circumstances where the employer has an LCA in effect for an area of
employment and wants to relocate or temporarily place H-1B worker(s)
who would cause the LCA for that area to be ``overcrowded'' or
``overfilled'' with H-1B workers (e.g., raising the number of H-1B
workers in the area to 11 instead of the 10 stated on the certified
LCA). The short-term placement option does not authorize an ``extra''
workforce of H-1B workers for temporary assignments in an area of
employment covered by an LCA. The number of H-1B workers authorized for
that employer in that area is determined by the employer's LCA (or
combination of LCAs, if the employer has more than one LCA in effect
for the area). Employers have inquired whether an H-1B worker can be
relocated, even temporarily, to a worksite in an area of employment for
which the employer has a valid LCA, if the relocation of that worker
would raise the number of H-1B workers in that area to more than the
number stated on the LCA. The short-term placement option cannot be
invoked by the employer in such circumstances, because the employer has
an LCA in effect for the area of employment and that LCA--applicable to
all worksite in the area--is controlling. As a matter of enforcement
discretion, the Department will look carefully at all the facts and
circumstances surrounding situations in which H-1B workers are
relocated among LCA-covered locations in a manner that results in more
H-1B workers being employed in an area than are stated on the certified
LCA(s) for that area. Absent other violations, in those circumstances
that indicate good faith efforts by the employer to attempt to comply,
the Department would not cite violations relating to the number of H-1B
workers employed in an area, provided that the number employed does not
significantly exceed the number shown on the LCA. In other
circumstances, such as where there are other violations and/or the
number of H-1B workers employed in an area significantly exceeds the
number stated on the LCA(s), the employer may be cited for
misrepresentation of a material fact or for a ``substantial failure''
to accurately state the information specified in the statute. In the
situation identified above--an eleventh H-1B worker relocated to an
area for which the LCA specifies ten H-1B workers--
[[Page 653]]
the Department would not cite a violation, so long as there were no
other violations and there were indications of the employer's good
faith (such as taking timely steps to file an additional LCA and a
revised petition).
b. What Are the Standards for Payment of the H-1B Worker's Travel
Expenses Under the Short-Term Placement Option?
A component of the proposed short-term placement rule is a
requirement that employers who wish to avail themselves of this option
must 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 41 CFR Part 301-7 and Chapter 301, Appendix A. The
Department believes that some uniform guidelines or benchmarks are
necessary so that employers do not require H-1B workers to absorb some
or all travel expenses themselves, or reimburse them at unreasonably
low rates, while the workers are in travel status under the short-term
placement option. Further, the Department is aware of no universally
available source of information on per diem and travel expenses, other
than the GSA regulations which are based on surveys of two-star hotels
and comparable restaurants. Therefore, the Department proposes to
continue to use the GSA regulations as the benchmark.
The Department believes that some clarification of the requirements
is appropriate. The proposed rule clarifies that the H-1B worker's
travel expenses (lodging, transportation, meals and incidentals) are to
be paid for all days in travel status (wages would not be required for
non-workdays). The proposed rule also clarifies the application of the
GSA standards to lodging, transportation, meals and incidental
expenses. For lodging, the regulation would be modified to require the
employer to reimburse no more than the worker's actual cost of lodging
up to the GSA specified level for the location in question, plus
applicable taxes. Where the H-1B worker incurs no lodging cost, no
payment to the worker for lodging would be required. The Department
proposes that the employer may house its workers on travel in company-
owned or company-leased accommodations and make no ``lodging'' payments
to the workers, provided that such accommodations are reasonable and
would be customarily used by its U.S. workers in a similar
circumstance. The Department would consider the furnishing of or
requirement to use overcrowded or otherwise unreasonable
accommodations, as has sometimes been found to be the case, to be an
unacceptable method of meeting the employer's obligation to cover the
worker's lodging costs while on travel. If the employer provides a
lodging allowance to the worker, such allowance would be required to
cover the worker's actual expenses but need not be more than the GSA
rate for the location in question, plus applicable taxes. For
transportation, the employer would be required to pay the actual cost
of transportation expenses, except that where the worker uses a
privately-owned vehicle, the employer must cover the cost to operate
the vehicle at the per-mile rate set out in 41 CFR 301-4, plus out-of-
pocket expenses such as tolls and parking fees. For meals and
incidental expenses, the employer would be required to pay the H-1B
worker at no less than the GSA per diem rate for the location. Back
wages would be assessed based on the GSA rates where the employer fails
to document actual costs or where the employer's payments do not
satisfy the GSA standards.
2. What Are an Employer's Wage Obligations for an H-1B Worker's
``Nonproductive Time''?
As described above (see item H), the Department is publishing for
further notice and comment the provision of the December 20, 1994 Final
Rule concerning an employer's obligation to pay the H-1B worker's
required wages for certain ``nonproductive'' time, which was enjoined
by the district court in NAM for procedural reasons. In addition, the
Department is proposing a modification of this regulation to implement
the ACWIA provision which adds some flexibility for the employer with
regard to an H-1B worker ``who has not yet entered into employment.''
3. What Are the Guidelines for Determining and Documenting the
Employer's ``Actual Wage''?
The Department is publishing for further notice and comment
Appendix A to Subpart H--Guidance for Determination of the ``Actual
Wage,'' certain provisions of which were enjoined by the court in the
NAM litigation for procedural reasons. This provision was also
published in the October 31, 1995, Proposed Rule. As the Preamble to
that proposal stated, the contents of Appendix A--which consists of
examples and guidance on the Department's enforcement policy regarding
the computation and documentation of the actual wage--had first
appeared, in slightly different format, in the Preamble to the January
13, 1992, Interim Final Rule.
Under Appendix A as proposed, the employer would not be required to
create or to document an elaborate ``step'' or ``grid'' type pay
system, such as that used by Federal agencies for government employees;
no rigid or complex system is mandated by the regulations. The
employer's actual wage system may take into consideration any
objective, business-related factors relating to experience,
qualifications, education, specific job responsibilities and functions,
specialized knowledge and other legitimate business factors, including
documented job performance. Whatever factors are used in the employer's
actual wage system are to be applied to H-1B nonimmigrant workers in
the same, nondiscriminatory manner that they are applied to U.S.
workers in the occupational classification. The employer's public
access documentation must include a description of its actual wage
system. The description may consist of a summary document which
identifies the business-related factors that are considered and which
describes the manner in which they are implemented (e.g., stating the
wage/salary range for the occupation in the employer's workforce and
identifying the pay differentials assigned to factors such as holding
an advanced degree or performing supervisory duties). The employer's
description of its actual wage system should be sufficient to enable a
third party--such as an employee looking at the public disclosure
file--to understand how the system would apply to a particular worker
and to derive a reasonably accurate understanding of that worker's
wage. Wage rates for each H-1B worker must be in the public access
file. However, computation of an H-1B worker's particular wage need not
appear in the public access file; that information must be available in
the worker's personnel file maintained by the employer. For clarity,
the Department purposes to modify Appendix A to include job performance
among the legitimate business factors which may be taken into
consideration in determining the actual wage.
4. What Records Must the Employer Keep, Concerning Employees' Hours
Worked?
The Department seeks further comments on section Sec. 655.731(b)(1)
of the regulation, which requires the employer to retain records for
``all employees in the specific employment in question'' (i.e., same
occupation as the H-1B worker). This provision, which has been enjoined
by the NAM
[[Page 654]]
court for procedural reasons, revised former Sec. 655.730(e)(2)(i),
which required the employer to maintain documentation for ``all other
individuals with experience and qualifications similar to the H-1B
nonimmigrant for the specific employment in question.'' For virtually
all employers, this change in the regulation had no impact on
recordkeeping because most records required under the H-1B program
would be the same as those already required under the Fair Labor
Standards Act (``FLSA''). However, for employers with salaried non-H-1B
workers who satisfy the FLSA exemption for ``bona fide executive,
administrative, or professional'' employees (29 CFR Part 541), the
change resulted in a requirement not already imposed under the FLSA: to
keep records of hours worked each day and each week for FLSA-exempt
non-H-1B workers in the ``specific employment in question'' (regardless
of their experience and qualifications) if the prevailing or actual
wage is expressed as an hourly wage.
On September 26, 1995, the Department issued a Notice of
Enforcement Position (60 FR 49505) stating that, until further
rulemaking, the Department would enforce Sec. 655.731(b)(1) of the
Final Rule as stated, except that, with respect to any additional
workers for whom that Rule extended recordkeeping requirements beyond
those specified in the Interim Final Rule, the employer would need to
keep only those records which are required by the FLSA regulations at
29 CFR Part 516.
In the October 31, 1995, Proposed Rule, the Department proposed to
amend Sec. 655.731(b)(1) to make it consistent with FLSA recordkeeping
requirements. Under the proposal, employers would be required to retain
records of hours worked for non-H-1B workers in the specific employment
in question (whether or not the non-H-1B workers have similar
experience and qualifications) only if the non-H-1B workers are paid on
an hourly basis or if the actual wage is expressed as an hourly rate.
Since the first element of the FLSA Part 541 exemption test is that the
employees be paid ``on a salary basis'' (i.e., not paid hourly wages
(29 CFR 541.118)), the effect of this proposal would be that records of
hours worked would be required for U.S. workers only if the worker is
either not paid on a salary basis, or if the actual wage is stated as
an hourly wage. For H-1B workers, such records must also be kept if the
prevailing wage is expressed as an hourly rate.
5. What are the Requirements for Posting of ``Hard Copy'' Notices at
Worksite(s) Where H-1B Workers are Placed?
The Department proposes for comment a revision of
Secs. 655.734(a)(1)(ii)(C) and (D) of the regulation, which it
previously republished for notice and comment in the October 31, 1995,
Proposed Rule. The Department proposes that this provision be modified
to implement the ACWIA provision concerning electronic notification
(see item F), but it would be unchanged with regard to ``hard copy''
notices. Subparagraph (C) requires employers to post notice at
worksites on or within 30 days before the date the LCA is filed.
Subparagraph (D) 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 such worksite on or before
the date any H-1B nonimmigrant begins work there. Under both
subparagraphs, such notice is to remain posted for ten days. The
regulation provides that worksite notice may be accomplished either by
posting hard copies of the notice or by providing electronic notice.
Where the H-1B worker(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, and may make arrangements with the
other employer to accomplish the notice (e.g., have the other employer
``post'' the electronic notice on its intranet or employee newsletter)
.
It should be noted that if a location does not constitute a
``worksite,'' the employer is not required to post notice there. (See
proposed Appendix B, below, regarding clarification of ``place of
employment.'') The requirement to post notice at the ``place of
employment'' is statutory. 8 U.S.C. 1182(n)(1)(C). The Department's
definition of ``place of employment'' focuses on the ``worksite'' or
place where the work is actually performed. This definition achieves
the intent of the law's notice requirement to inform affected employees
that an LCA has been filed and that nonimmigrants may work at that
place of employment. Without such information, potentially affected
employees would not be aware of employer obligations under and
compliance with the LCA conditions, and would be unlikely to be able to
file complaints where the situation would warrant it. As explained in
proposed Appendix B, the Department has reasonably interpreted ``place
of employment'' as not including locations where the H-1B worker's
presence is short-sterm and transitory due to the nature of his/her job
(e.g., computer ``troubleshooter''; sales representative; trial
witness) or due to the developmental nature of his/her activity (e.g.,
management seminar; formal training seminar).
6. What Are the Time Periods or ``Windows'' Within Which Employers May
File LCAs?
The Department seeks further comment on two current regulatory
provisions which restrict the time periods or ``window'' within which
LCAs may be filed--no earlier than 180 days (6 months) prior to the
starting date of the employment period identified on the LCA, and no
later than 90 days (3 months) from the date of any State Employment
Security Agency (SESA) prevailing wage determination used in the LCA.
Both of these provisions are reproposed without modification.
The October 31, 1995, Proposed Rule republished for notice and
comment Sec. 655.730(b), which requires that the employer file the LCA
no earlier than 6 months before the beginning date of the specified
period of employment. This provision addressed the situation of some
employers who were filing LCAs for periods of employment months in the
future. The Department believes that, because the prevailing wage and
notice obligations are based upon actions taken and conditions which
exist at the time the LCA is filed, such premature applications can
defeat the intent of these statutory elements. In one case, for
example, an employer filed an LCA for a period of employment two years
from the time of filing. Such an employer could use a prevailing wage
determination from an independent authoritative source based on wage
information which is up to four years old. By the time the
nonimmigrants actually enter the U.S. two years after the LCA date, the
prevailing wage information would be as much as six years old. In
addition, this employer would post notice for ten days at the time of
filing the LCA, and then import the nonimmigrants two years later. By
that time, U.S. workers who might otherwise file complaints regarding
violations of the LCA would be unaware of essential information listed
on the posted LCA, such as the number of nonimmigrants, rate(s) of pay,
job title(s), and the location where documentation is kept.
The October 31, 1995, Proposed Rule also republished for notice and
comment current
[[Page 655]]
Sec. 655.731(a)(2)(iii)(A)(1), which requires the employer to file an
LCA relying upon a SESA prevailing wage determination within 90 days of
the SESA's issuance of the determination. The 90-day validity period of
a SESA prevailing wage determination is designed to prevent the
employer's use of aged or stale wage determinations, which can
adversely affect the wages of U.S. workers. In the Department's view,
it is unreasonable to permit employers to use SESA determinations which
are more than three months old since those determinations may well be
based on wage information that is already years old, and they may be
relied upon by the employer for the entire 3-year validity period of
the LCA (periodic updates of the prevailing wage not being required
under the Final Rule). An employer's use of SESA prevailing wage
determinations more than three months old would be inconsistent with
the statutory requirement that employers pay at least the wage which is
prevailing at the time the LCA is filed.
It should be noted that employers are not required to use SESA
determinations in filing LCAs. Employers may, instead, determine the
prevailing wage from other sources (i.e., independent authoritative
sources or other legitimate sources of wage information). Those sources
are not subject to a 90-day validity period, but must satisfy the
appropriate regulatory definitions or description.
7. How May an Employer Challenge a SESA-Issued Prevailing Wage
Determination?
The Department seeks further comment on
Secs. 655.731(a)(2)(iii)(A)(1), 655.731(d)(2), and 655.840(c) regarding
the use of the Employment Service (``ES'') complaint system to
challenge any SESA prevailing wage determinations. These provisions
were republished for notice and comment in the October 31, 1995,
Proposed Rule.
Irrespective of whether the SESA wage determination is obtained by
the employer prior to filing the LCA or by the Wage and Hour Division
in an enforcement proceeding, these provisions (taken together) require
employers to assert any challenge to the SESA prevailing wage
determination under the ES complaint system, rather than in an
enforcement proceeding before the Office of Administrative Law Judges.
In designing the program, the Department had envisioned that the ES
complaint process would be used for all challenges of SESA prevailing
wage determinations. However, after substantial enforcement litigation
experience, the Department found that some employers were instead
attempting to contest these wage determinations through the enforcement
hearing provided under Sec. 655.835. That hearing process was not
intended to handle these prevailing wage challenges, and the proposed
regulatory provisions (which are currently in effect) achieve the
Department's original intent.
P. What Additional Interpretative Regulations is the Department
Proposing?
During the course of the Department's administration and
enforcement of the H-1B program, a number of issues have been raised by
employers and interest groups regarding the interpretation and
application of the existing regulations. In order to provide more
complete guidance for these affected parties--and thereby facilitate
compliance, administration, and enforcement under the H-1B program--the
Department is publishing for comment a proposed Appendix B for Part H
of the regulation. The interpretations presented in Appendix B are
matters which have been discussed with employers and interest groups in
numerous outreach meetings over the last several years. The Department
considers it appropriate to include these provisions in the
regulations, either as an appendix or in the regulatory text, and
therefore is providing a more formal process for interested parties to
express their views concerning these interpretations.
The Department seeks comments on the matters addressed in Appendix
B (described below).
1. What Constitutes an H-1B Worker's ``Worksite'' or ``Place of
Employment'' for Purposes of the Employer's Obligations Under the
Program?
The H-1B program's attestation requirements are largely focused on
the H-1B worker's ``place of employment'' or ``worksite.'' That
location--``place'' or ``site''--determines the appropriate prevailing
wage; that location is where the employer must provide notice to
workers concerning the employment of H-1B nonimmigrants; and the
strike/lockout prohibition is applicable to that location. Thus, it is
essential that employers be able to determine whether a particular
location constitutes a ``worksite'' (triggering the program's
requirements) or is, instead, a non-worksite at which the H-1B worker
may perform certain of his/her job duties for a short period of time.
Appendix B explains that ``worksite'' ordinarily encompasses any
location at which the H-1B worker performs his/her job duties, but does
not include a location at which the worker is engaged in employee
development activity (e.g., receiving formal training) or at which the
worker's presence is due to the nature of his/her duties and is of
short duration (e.g., making a sales call on a customer; testifying at
a court hearing; conducting research at a library).
2. Under What Circumstances May an H-1B Worker ``Rove'' or ``Float''
From His/Her ``Home Base'' Worksite?
The Department recognizes that some employers--due to the nature of
their businesses--need to move their H-1B workers from place to place
in order to meet the needs of clients or to respond to new business
opportunities. This practice is described as having H-1B workers
``rove'' or ``float'' from their ``home base'' locations. Because the
H-1B program's requirements focus on the H-1B worker's ``worksite''
(see item O.5), it is important that employers be able to determine the
circumstances under which an H-1B worker may legally be dispatched from
his/her ``home base'' worksite to other location(s) to perform job
duties. In Appendix B, the Department explains that every H-1B worker
is, by law, covered by an LCA and that, consequently, there is no means
by which an H-1B worker may ``float'' in the U.S. economy without being
subject to the wage, working conditions, and other requirements of an
LCA. However, as the Appendix further explains, an H-1B worker may
legally be dispatched from his/her home base location in any of three
circumstances--
H-1B worker is dispatched to a ``non-worksite'' location
(see item O.5). The worker would still be covered by his/her home base
LCA.
H-1B worker is dispatched to a worksite that is covered by
an LCA (either the LCA for the home base, or a different LCA if the new
location is outside the home base LCA's area). The worker would be
covered by the LCA applicable to the new worksite.
H-1B worker is dispatched for a short-term placement under
the regulation authorizing up to 90 workdays of such placement in an
area not covered by an LCA (see item O.1, above). The worker would be
covered by his/her home base LCA.
3. What H-1B Related Fees and Costs Are Considered to Be an Employer's
Business Expenses?
The Department believes that where the employer is required by law
to perform certain functions and no other party can legally perform
those functions, all expenses connected with such functions are the
employer's
[[Page 656]]
business expenses, which must be borne by the employer without being
imposed on the H-1B worker in any manner. As explained in Appendix B,
the application of this analysis to the H-1B program leads,
necessarily, to the conclusion that all fees and costs connected with
the filing of the LCA and the H-1B petition (e.g., prevailing wage
survey preparation; attorney fees; INS fees) are to be borne by the
employer since--by the express terms of the statute--the employer must
file both the LCA and the petition, and the H-1B worker is not
permitted to perform either of those functions. As further explained in
Appendix B, the Department recognizes that expenses connected to the H-
1B worker's own function of filing for and obtaining the visa itself
(e.g., translations of academic records) could appropriately be borne
by the H-1B worker, since such costs would not necessarily be the
employer's business expenses. This interpretation is fully consistent
with the ACWIA provision relating to the new $500 petition filing fee
(see item K).
4. When Is the Service Contract Act Wage Rate Required to Be Applied as
the ``Prevailing Wage''?
The regulation provides that, if there is an SCA wage determination
for the occupational classification in the area of employment for which
an employer is filing an LCA, that SCA wage determination is considered
by the Department to constitute the prevailing wage for that occupation
in that area. Appendix B explains that, because the SCA rates cover the
occupation in the area, these rates are applicable to the LCA, without
regard to whether individual H-1B worker(s) eventually employed under
the LCA may have qualifications or job descriptions that could satisfy
an exemption from the rate if he/she were working on an SCA contract.
Further, Appendix B explains that because the SCA wage determination
for occupations in the computer industry are capped by statute (SCA,
incorporating FLSA) at $27.63, even where the prevailing wage is
higher, the Department has instructed the SESA not to issue a
prevailing wage from the SCA wage determination where that SCA wage is
stated as $27.63.
5. How Are the ``PMSA'' and ``CMSA'' Concepts Applied?
Appendix B explains that in computing prevailing wages for an
``area of intended employment,'' the Department will consider all
locations within either a metropolitan statistical area (MSA) or a
primary metropolitan statistical area (PMSA) to constitute ``normal
commuting distance'' and, thus, subject to the same prevailing wage
rates. Further, Appendix B explains that a consolidated metropolitan
statistical area (CMSA) will not be used in this manner in determining
the prevailing wage rates (i.e., all locations within a CMSA will not
necessarily be deemed to be within normal commuting distance). The
Department has determined, based on its operational experience, that
CMSAs can be too geographically broad to be used in this manner. As
explained in Appendix B, the Department has not adopted any rigid
measure of distance as a ``normal commuting area'' (e.g., 20, 30, 50
miles) and, therefore, locations that are outside any ``statistical
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.
6. How Does the ``Weighted Average'' Apply in the Determination of the
Prevailing Wage?
Appendix B explains that, due to the inadvertent omission of the
word ``weighted'' from one provision in the regulation, there has been
a suggestion of confusion for an employer which uses an ``independent
authoritative source'' to determine the local prevailing wage to be
used on an LCA. When read together, the regulations on the computation
of the prevailing wage require the use of the ``weighted average''
statistical methodology. In Appendix B, the Department describes this
methodology and clearly states how and when it is to be used.
7. What is the Effect of a New LCA on the Employer's Prevailing Wage
Obligation Under a Pre-Existing LCA?
Employers who, over a period of time, file several LCAs for the
same occupation in the same area of employment--so as to increase their
staff of H-1B workers--may well find that these LCAs reflect a changing
prevailing wage for that occupation and area. There is a possibility
for confusion in such situations, concerning the prevailing wage which
is required for the various H-1B workers. As explained in Appendix B,
the Department considers the employer's prevailing wage obligation to
any individual H-1B worker to be prescribed by the LCA which supports
the H-1B petition for that worker. Thus, the employer is required to
pay that worker at least the amount of that prevailing wage; a
different prevailing wage appearing on a different LCA would not be
applicable. The employer is not required to ``adjust'' the prevailing
wage amounts for the entire H-1B workforce, based on a new prevailing
wage that appears on a new (later) LCA. However, as further explained
in Appendix B, the employer would be required to make ``adjustments''
for all H-1B workers in accordance with the employer's actual wage
system (e.g., merit increases; cost of living increases), since all H-
1B workers are covered by the actual wage system (regardless of any
difference among prevailing wage rates under various LCAs).
IV. Summary
The Department welcomes comments on any issues addressed in the
proposed regulations--including the proposals caused by the enactment
of the ACWIA; the reproposal of provisions published for comment in
October, 1995; and the proposed interpretative provisions in Appendix
B--as well as on any other issues that commenters believe need to be
addressed.
V. Executive Order 12866
This proposed rule is being treated as a ``significant regulatory
action'' within the meaning of Executive Order 12866, because of its
importance to the public and the Administration's priorities.
Therefore, the Office of Management and Budget has reviewed the
proposed rule. However, because this rule is not ``economically
significant'' as defined in section 3(f)(1) of E.O. 12866, it does not
require a full economic impact analysis under section 6(a)(3)(C) of the
Order.
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. The statute
requires that the employer pay an H-1B worker the higher of the actual
wage or the prevailing wage, to protect U.S. workers' wages and
eliminate any economic incentive or advantage in hiring temporary
foreign workers. This rule would implement statutory changes in the H-
1B visa program enacted by the ACWIA of 1998. 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
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 it offers
its U.S. workers; (4) requires an employer in certain cases to
[[Page 657]]
pay an H-1B worker even if work is not available and the worker is
placed in a non-productive status (but not for non-productive time due
to non-work-related factors like a voluntary request to be absent); 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.
The direct, incremental costs that an employer would incur because
of this rule above customary and usual business expenses for 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 has concluded that this rule is
not ``economically significant.''
VI. Small Business Regulatory Enforcement Fairness Act
The Department has similarly concluded that this proposed rule is
not a ``major rule'' requiring approval by the Congress under the Small
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et
seq.). It 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.
VII. Unfunded Mandates Reform Act of 1995; Executive Order 12875
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).'' For purposes
of the Unfunded Mandates 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 proposed rule because
it does not include a ``Federal mandate,'' which is defined to include
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.''
For similar reasons, the proposed rule is not an ``unfunded
mandate'' within the meaning of Executive Order 12875. By its terms,
section 1 of E.O. 12875 applies to ``any regulation that is not
required by statute and that creates a mandate upon a State, local or
tribal government.'' The order requires agencies to consult with State,
local, and tribal governments when developing regulatory proposals
containing significant unfunded mandates. For the reasons noted, the
proposed rule does not create any significant unfunded mandate on units
of government.
VIII. Initial 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. The following analysis has been prepared to
assess the impact of the proposed rule on small entities. Based on this
analysis, we have concluded that this rule will not have a significant
economic impact on a substantial number of small entities. The impact
of the rule derives from specific statutory obligations set forth in
the underlying H-1B legislation, which DOL does not have the discretion
to alter. The direct, incremental costs are not believed to be
significant in any case. Moreover, as discussed below, 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,'' which we estimate to number no more than 200.
Even assuming that all of the entities within this subset of 200
employers qualify as ``small,'' the number is not considered
substantial.
1. Why Is This Action Being Considered?
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). 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 visaprogram, employers may temporarily import and 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 ACWIA provides that some of
the amendments made by ACWIA do not take effect until the Department
promulgates implementing regulations, which are the subject of this
proposed rulemaking. Under Section 412(e) of ACWIA, in order to
promulgate implementing regulations in a timely manner, the Department
of Labor may reduce to 30 days the period for public comment on
proposed regulations.
2. What Are the Objectives of, and the Legal Basis for, the Proposed
Rule?
The proposed 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 U.S.C. 1182 note); and sec. 412(d) and (e), Pub. L. 105-
277, 112 Stat. 2681. Its objectives 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.
3. How Many Small Entities Will Be Covered by the Proposed Rule?
At least some parts of this proposed rule would apply to all
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 obligations differ under the law and the rules for
``H-1B-dependent'' employers from those that are not ``H-1B-
dependent.''
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
[[Page 658]]
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).
If we could 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, we could then apply SBA's size
standards and gauge precisely how many of the affected businesses are
``small.'' Unfortunately, the precise data required for this analysis
are not available. However, we know that nearly one-half (44.4 percent)
of the job openings being certified under the H-1B program are for
computer-related occupations, and over one-fourth (25.9 percent) are
for therapists (principally physical and occupational).1
Looking just at these categories would present a view of nearly three-
fourths of all the certified job openings under the H-1B program.
---------------------------------------------------------------------------
\1\ Analysis of number of job openings certified in Fiscal Year
(FY) 1997 by occupational classification. A total of 180,739 LCAs
were filed with the Department in FY 1997, certifying 398,324 job
openings.
---------------------------------------------------------------------------
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 following SIC industries:
Computer Programming Services (7371); Prepackaged Software (7372);
Computer Integrated 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, 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.'' However, as noted
above, the new compliance obligations under ACWIA (and, therefore,
under these regulations) differ for employers who meet a new statutory
definition of being ``H-1B dependent'' or have been found after the
effective date of ACWIA to have committed willful violations or
misrepresentations. Section 412(a)(3) of 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
percent of its full-time equivalent employees. 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.
The Department estimates that approximately 50,000 employers a year
file LCA's for H-1B nonimmigrants. The Department estimates that not
more than ten (10) employers a year will be found to have committed
willful violations. There are no data available to determine precisely
how many ``H-1B-dependent'' employers will exist under the rule. We
tried to estimate the number of ``H-1B-dependent'' employers for
purposes of this analysis, as follows. Although the test for H-1B
dependency varies with the size of the employer, an employer must
employ at least seven (7) H-1B workers to be dependent. Therefore, 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 this
analysis, therefore, we calculated the number of employers for which
more 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
[[Page 659]]
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.
Realistically, we estimate that the actual number of H-1B-dependent
employers and willful violators under the rule to be no more than from
between 100 and 200 employers.
4. What Are the Projected Reporting, Recordkeeping and Other Compliance
Requirements of the Proposed 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 this rule are
described above in the Supplementary Information section entitled
``Paperwork Reduction Act'' and in various places throughout the
preamble. They are also briefly summarized here. In sum, 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.
As noted, most new recordkeeping and compliance requirements
imposed by 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 100 and 200. 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 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. When H-1B dependency is not apparent or it is a
close question, the employer must make a mathematical determination,
and if it determines it is not dependent, document the determination in
its public disclosure file. In order to make the determination,
employers will need to keep copies of H-1B petitions and, for part-time
workers, either hourly payroll records or a document showing the
employee's regular schedule.
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 proposed 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 either 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 it 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 rule proposes that employers 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 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. 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. The
Department has requested comments on how employers should determine
industry-wide standards, and how to make this determination available
to U.S. workers. We expect that most employers would ordinarily follow
industry standards for recruiting qualified job applicants for
specialized jobs. Thus, 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 proposed regulation would also require retention
of applications and related documents, rating forms, job offers, etc.
Retention of such records is already required by EEOC, so no additional
burden will be imposed.
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.
The Department has also republished and asked for comment on
several provisions of the December 20, 1994 Final Rule (59 FR 65646),
which were published for notice and comment on October 31, 1995 (60 FR
55339). 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. This proposal
modifies the payroll recordkeeping requirement with respect to U.S.
workers, to require that hours worked records be retained only if the
employee is not paid on a salary
[[Page 660]]
basis or the actual wage is expressed as an hourly rate. In virtually
all cases, these employees would be paid hourly and hourly pay records
would therefore be kept.
5. Are There Any Federal Rules That Duplicate, Overlap or Conflict With
This Proposed Rule?
Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et
seq.), enforced by the U.S. Equal Employment Opportunity Commission
(EEOC), prohibits national origin discrimination by employers with 15
or more employees (see 29 CFR 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 (4) and 14 employees (those not covered by
Title VII), and citizenship-status discrimination by employers with at
least four (4) employees (see 28 CFR 44). In addition, under 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 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 proposed 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 appear to be
consistent with the statute. The legislation 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 Proposed Rule for Small Entities?
The compliance and reporting requirements of the proposed 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.) In addition, most recordkeeping requirements are already
imposed by other statutes, or only require retention of documents which
would be kept by a prudent businessman. Comments are invited on ways to
clarify or simplify the compliance requirements for small businesses
without undermining the Congressional intent of the new statutory
provisions.
8. Can Other Standards be Used (Such as Performance, Rather Than Design
Standards)?
The underlying legislation allows employers to temporarily import
and employ nonimmigrants admitted into the U.S. under H-1B visas to
fill specialized jobs not filled by U.S. workers. As a condition of
participating in this voluntary program, the employer must pay the H-1B
worker at least the prevailing wage or the actual wage (whichever is
higher). Certain employers of H-1B workers must also engage in good
faith recruitment to try to find qualified U.S. workers to fill their
job openings, and may not displace (lay off) a U.S. worker in order to
hire an H-1B worker in the same job. Given the objectives of the
applicable statutory provisions, the use of performance rather than
design standards has been considered and such alternatives, where
perceived to be appropriate, are discussed. For example, the Department
is considering a presumption of good faith recruitment based on the
employer's hiring a significant number of U.S. workers and, thereby,
accomplishing a significant reduction in the ratio of H-1B workers to
U.S. workers in the employer's workforce. The available alternatives
that were considered in developing this proposed rule are discussed in
the preamble above and are not repeated here.
9. Can Small Entities be Exempted From Coverage of the Rule, or Any
Part of the Rule?
Exemption from coverage under this proposed 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'').
IX. Catalog of Federal Domestic Assistance Number.
This program is not listed in the Catalog of Federal Domestic
Assistance.
List of Subjects in 20 CFR Part 655
Administrative practice and procedure, Agriculture, Aliens,
Employment, Forest and forest products, Health professions,
Immigration, Labor, Longshore work, Migrant labor, Penalties, Reporting
requirements, Students, Wages.
Text of the Proposed Rule
The text of the proposed rule to amend 20 CFR chapter V appears
below. (In addition to the proposed regulatory text, other proposed
changes to parts 655 and 656 are discussed in the preamble.)
PART 655--TEMPORARY EMPLOYMENT OF ALIENS IN THE UNITED STATES
1. The authority citation for Part 655 is proposed to be revised to
read as follows:
Authority: Section 655.0 issued under 8 U.S.C. 1101(a)(15)(H)(i)
and (ii), 1182(m) and (n), 1184, 1188, and 1288(c); 29 U.S.C. 49 et
seq.; sec. 3(c)(1), Pub. L. 101-238, 103 Stat. 2099, 2103 (8 U.S.C.
1182 note); sec. 221(a), Pub. L. 101-649, 104 Stat. 4978, 5027 (8
U.S.C. 1184 note); Title IV, Pub. L. 105-277, 112 Stat. 2681; and 8
CFR 214.2(h)(4)(i).
Section 655.00 issued under 8 U.S.C. 1101(a)(15)(H)(ii), 1184,
and 1188; 29 U.S.C. 49 et seq.; and 8 CFR 214.2(h)(4)(i).
Subparts A and C issued under 8 U.S.C. 1101(a)(15)(H)(ii)(b) and
1184; 29 U.S.C. 49 et seq.; and 8 CFR 214.2(h)(4)(i).
Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184, and
1188; and 29 U.S.C. 49 et seq.
Subparts D and E issued under 8 U.S.C. 1101(a)(15)(H)(i)(a),
1182(m), and 1184; 29 U.S.C. 49 et seq.; and sec. 3(c)(1), Pub. L.
101-238, 103 Stat. 2099, 2103 (8 U.S.C. 1182 note).
Subparts F and G issued under 8 U.S.C. 1184 and 1288(c); and 29
U.S.C. 49 et seq.
Subparts H and I issued under 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 U.S.C. 1182
[[Page 661]]
note); and Title IV, Pub. L. 105-277, 112 Stat. 2681.
Subparts J and K issued under 29 U.S.C. 49 et seq.; and sec.
221(a), Pub. L. 101-649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 note).
Subpart H--Labor Condition Applications and Requirements for
Employers Using Non-Immigrants on H-1B Visas in Specialty
Occupations and as Fashion Models
2. In Sec. 655.700, paragraph (a)(1) is proposed to be revised to
read as follows:
Sec. 655.700 Purpose, procedure and applicability of subparts H and I.
(a) * * *
(1) Establishes the following annual ceilings (exclusive of spouses
and children) on the number of foreign workers who may be issued H-1B
visas or otherwise accorded H-1B nonimmigrant status):
(i) 115,000 in fiscal year 1999;
(ii) 115,000 in fiscal year 2000;
(iii) 107,500 in fiscal year 2001; and
(iv) 65,000 in each succeeding fiscal year;
* * * * *
3. In Sec. 655.715, a new definition of ``Employed or employed by
the employer'' is proposed to be added, to read as follows:
Sec. 655.715 Definitions.
* * * * *
Employed or employed by the employer means the employment
relationship as determined under the common law, under which ``no
shorthand formula or magic phrase * * * can be applied to find the
answer, * * * all of the incidents of the relationship must be assessed
and weighed with no one factor being decisive'' (NLRB v. United Ins.
Co. of America, 390 U.S. 254, 258 (1968)), in considering the following
factors that would indicate the existence of an employment
relationship:
(1) The firm or the client has the right to control when, where,
and how the worker performs the job;
(2) The work does not require a high level of skill or expertise;
(3) The firm or the client rather than the worker furnishes the
tools, materials, and equipment;
(4) The work is performed on the premises of the firm or the
client;
(5) There is a continuing relationship between the worker and the
firm or the client;
(6) The firm or the client has the right to assign additional
projects to the worker;
(7) The firm or the client sets the hours of work and the duration
of the job;
(8) The worker is paid by the hour, week, month or an annual
salary, rather than for the agreed cost of performing a particular job;
(9) The worker does not hire or pay assistants;
(10) The work performed by the worker is part of the regular
business (including governmental, educational, and nonprofit
operations) of the firm or the client;
(11) The firm or the client is itself in business;
(12) The worker is not engaged in his or her own distinct
occupation or business;
(13) The firm or the client provides the worker with benefits such
as insurance, leave, or workers' compensation;
(14) The worker is considered an employee of the firm or the client
for tax purposes (i.e., the entity withholds federal, state, and Social
Security taxes);
(15) The firm or the client can discharge the worker; and
(16) The worker and the firm or client believe that they are
creating an employer-employee relationship.
* * * * *
4. In Sec. 655.730, in paragraph (b), the first sentence is
proposed to continue to read as follows:
Sec. 655.730 Labor condition application.
* * * * *
(b) Where and when should a labor condition application be
submitted? A labor condition application shall be submitted, by U.S.
mail, private carrier, or facsimile transmission, to the ETA regional
office shown in Sec. 655.720 of this part in whose geographic area of
jurisdiction the H-1B nonimmigrant will be employed no earlier than six
months before the beginning date of the period of intended employment
shown on the LCA. * * *
* * * * *
5. In Sec. 655.730, paragraph (d)(4)(i)(B) is proposed to be
revised to read as follows:
Sec. 655.730 Labor condition application.
* * * * *
(d) * * *
(4) * * *
(i) * * *
(B) If there is no such bargaining representative, provides
electronic notice or posts notice of the filing of the labor condition
application in conspicuous locations in the employer's establishment(s)
in the area of intended employment, in the manner described in
Sec. 655.734(a)(1)(ii) of this subpart, and provides a copy of the
labor condition application to the H-1B worker, in the manner described
in Sec. 655.734(a)(2) of this subpart; and
* * * * *
6. In Sec. 655.731, the second sentence of paragraph (a)(1) is
proposed to be amended by adding the phrase ``job performance,'' after
the phrase ``job responsibility and function,''.
7. In Sec. 655.731, paragraph (a)(2)(iii)(A)(1) is proposed to
continue to read as follows:
Sec. 655.731 The first labor condition statement: wages.
(a) * * *
(2) * * *
(iii) * * *
(A) * * *
(1) An 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.
Once an employer obtains a prevailing wage determination from the SESA
and files an LCA supported by that prevailing wage determination, the
employer is deemed to have accepted the prevailing wage determination
(both as to the occupational classification and wage) and thereafter
may not contest the legitimacy of the prevailing wage determination
through the Employment Service complaint system or in an investigation
or enforcement action. Prior to filing the LCA, the employer may
challenge a SESA prevailing wage determination through the Employment
Service complaint system, by filing a complaint with the SESA. See 20
CFR part 658.410 et seq. Employers which challenge a SESA prevailing
wage determination must obtain a final ruling from the Employment
Service complaint system prior to filing an LCA based on such
determination. In any challenge, the SESA shall not divulge any
employer wage data which was collected under the promise of
confidentiality.
* * * * *
8. In Sec. 655.731, paragraph (b)(1) is proposed to be revised to
read as follows:
Sec. 655.731 The first labor condition statement: wages.
* * * * *
(b) Documentation of the wage statement. (1) The employer shall
develop and maintain documentation sufficient to meet its burden of
proving the validity of the wage statement required in paragraph (a) of
this section and attested to on Form ETA 9035. The documentation shall
be made available to DOL upon request. Documentation shall also be made
available for public
[[Page 662]]
examination to the extent required by Sec. 655.760(a) of this part. The
employer shall also document that the wage rate(s) paid to H-1B
nonimmigrant(s) is(are) no less than the required wage rate(s). The
documentation shall include information about the employer's wage rate
for all other employees for the specific employment in question at the
place of employment, beginning with the date the labor condition
application was submitted and continuing throughout the period of
employment. The records shall be retained for the period of time
specified in Sec. 655.760 of this part. The payroll records for each
such employee shall include:
(i) Employee's full name;
(ii) Employee's home address;
(iii) Employee's occupation;
(iv) Employee's rate of pay;
(v) Hours worked each day and each week by the employee if:
(A) The employee is paid on other than a salary basis; or
(B) The actual wage is expressed as an hourly rate; or
(C) With respect only to H-1B nonimmigrants, the prevailing wage is
expressed as an hourly rate;
(vi) Total additions to or deductions from pay each pay period by
employee; and
(vii) Total wages paid each pay period, date of pay and pay period
covered by the payment by employee.
* * * * *
9. In Sec. 655.731, paragraph (b)(3)(iii)(B)(1) is proposed to be
revised to read as follows:
Sec. 655.731 The first labor condition statement: wages.
* * * * *
(b) * * *
(3) * * *
(iii) * * *
(B) * * *
(1) Reflect the weighted average wage paid to workers similarly
employed in the area of intended employment;
* * * * *
10. In Sec. 655.731, paragraph (c)(4) is proposed to be deleted and
reserved.
11. In Sec. 655.731, paragraph (c)(5) is proposed to be revised to
read as follows:
Sec. 655.731 The first labor condition statement: wages.
* * * * *
(c) * * *
(5)(i) In accordance with the standards specified in paragraphs
(c)(5) (ii) and (iii) of this section, an H-1B nonimmigrant shall
receive the full wage which the LCA-filing employer is required to pay,
beginning on the date when the nonimmigrant enters into employment with
the employer and continuing throughout the nonimmigrant's period of
employment. In the case of an H-1B nonimmigrant who has not yet entered
into employment with an employer who has had approved a labor condition
application and an H-1B petition for such nonimmigrant, the employer's
obligation to pay wages in accordance with the standards specified in
paragraphs (c)(5) (ii) and (iii) of this section shall begin 30 days
after the date the nonimmigrant first is admitted into the U.S.
pursuant to the petition, or 60 days after the date the nonimmigrant
becomes eligible to work for the employer (if the nonimmigrant is
present in the U.S. on the date of the approval of the petition).
(ii) If the H-1B nonimmigrant is in a nonproductive status for
reasons such as training, lack of license, lack of assigned work or any
other reason, the employer will be required to pay the salaried
employee the full pro-rata amount due, or to pay the hourly-wage
employee for a full-time week (40 hours or such other number of hours
as the employer can demonstrate to be full-time employment for the
occupation and area involved) at the required wage for the occupation
listed on the LCA. If the employer's LCA carries a designation of
``part-time employment,'' the employer will be required to pay the
nonproductive employee for at least the number of hours indicated on
the I-129 petition filed by the employer with the INS. If during a
subsequent enforcement action by the Administrator it is determined
that an employee designated in the LCA as part-time was in fact working
full-time or regularly working more hours than reflected on the I-129
petition, the employer will be held to the factual standard disclosed
by the enforcement action.
(iii) If, however, during the period of employment, an H-1B
nonimmigrant experiences a period of nonproductive status due to
conditions unrelated to employment which take the nonimmigrant away
from his/her duties at his/her voluntary request and convenience (e.g.,
touring the U.S. prior to commencing performance of duties for
employer, caring for ill relative) or render the nonimmigrant unable to
work (e.g., maternity leave, automobile accident which temporarily
incapacitates the nonimmigrant), then the employer shall not be
obligated to pay the required wage rate during that period, provided
that the INS permits the employee to remain in the U.S. without being
paid, and provided further that such period is not subject to payment
under the employer's benefit plan or other statutes such as the Family
and Medical Leave Act (29 U.S.C. 2601 et seq.) or the Americans with
Disabilities Act (42 U.S.C. 12101 et seq.).
* * * * *
12. In Sec. 655.731, paragraph (d)(2) is proposed to continue to
read as follows:
Sec. 655.731 The first labor condition statement: wages.
* * * * *
(d) * * *
(2) In the event the Administrator obtains a prevailing wage from
ETA pursuant to paragraph (d)(1) of this section, the employer may
challenge the ETA prevailing wage only through the Employment Service
complaint system. See 20 CFR part 658, subpart E. Notwithstanding the
provisions of 20 CFR 658.421 and 658.426, the appeal shall be initiated
at the ETA regional office level. Such challenge shall be initiated
within 10 days after the employer receives ETA's prevailing wage
determination from the Administrator. In any challenge to the wage
determination, neither ETA nor the SESA shall divulge any employer wage
data which was collected under the promise of confidentiality.
(i) Where the employer timely challenges an ETA prevailing wage
determination obtained by the Administrator, the 30-day investigative
period shall be suspended until the employer obtains a final ruling
from the Employment Service complaint system. Upon such final ruling,
the investigation and any subsequent enforcement proceeding shall
continue, with ETA's prevailing wage determination serving as the
conclusive determination for all purposes.
(ii) Where the employer does not challenge ETA's prevailing wage
determination obtained by the Administrator, such determination shall
be deemed to have been accepted by the employer as accurate and
appropriate (both as to the occupational classification and wage) and
thereafter shall not be subject to challenge in a hearing pursuant to
Sec. 655.835 of this part.
* * * * *
13. In Sec. 655.734, paragraph (a)(1)(ii) is proposed to be revised
to read as follows:
Sec. 655.734 The fourth labor condition statement: notice.
(a) * * *
(1) * * *
(ii) Where there is no collective bargaining representative, the
employer shall, on or within 30 days before the date the labor
condition application is
[[Page 663]]
filed with ETA, provide a notice of the filing of the labor condition
application. The notice shall indicate that H-1B nonimmigrants are
sought; the number of such nonimmigrants the employer is seeking; the
occupational classification; the wages offered; the period of
employment; the location(s) at which the H-1B nonimmigrants will be
employed; and that the labor condition application is available for
public inspection at the employer's principal place of business in the
U.S. or at the worksite. The notice shall also include the statement:
``Complaints alleging misrepresentation of material facts in the labor
condition application and/or failure to comply with the terms of the
labor condition application may be filed with any office of the Wage
and Hour Division of the United States Department of Labor. Complaints
alleging failure to offer employment to an equally or better qualified
U.S. worker, or an employer's misrepresentation regarding such offer(s)
of employment, may be filed with the Department of Justice, 10th Street
& Constitution Avenue, N.W., Washington, D.C. 20530.'' The notice shall
be provided in one of the two following manners:
(A) By posting a notice in at least two conspicuous locations at
each place of employment where any H-1B nonimmigrant will be employed.
(1) The notice shall be of sufficient size and visibility, and
shall be posted in two or more conspicuous places so that the
employer's workers at the place(s) of employment can easily see and
read the posted notice(s).
(2) Appropriate locations for posting the notices include, but are
not limited to, locations in the immediate proximity of wage and hour
notices required by 29 CFR 516.4 or occupational safety and health
notices required by 29 CFR 1903.2(a).
(3) The notices shall be posted on or within 30 days before the
date the labor condition application is filed and shall remain posted
for a total of 10 days.
(4) Where the employer places any H-1B nonimmigrant(s) at one or
more worksites not contemplated at the time of filing the application,
but which are within the area of intended employment listed on the LCA,
the employer is required to post notice(s) at such worksite(s) on or
before the date any H-1B nonimmigrant begins work, which notice shall
remain posted for a total of ten days.
(B) By providing electronic notification to employees in the
occupational classification for which H-1B nonimmigrants are sought.
Such notification shall be given on or before the date any H-1B
nonimmigrant begins work, and shall be available to the affected
employees for a total of ten days. Such notification shall be readily
available to the affected employees. An employer may accomplish this by
any means it ordinarily uses to communicate with its workers about job
vacancies or promotion opportunities, including through its ``home
page'' or ``electronic bulletin board'' to employees who have, as a
practical matter, direct access to the home page or electronic bulletin
board; or through E-Mail or an actively circulated electronic message
such as the employer's newsletter. Where employees are not on the
``intranet'' which provides direct access to the home page or other
electronic site but do have computer access readily available, the
employer may provide notice to such workers by direct electronic
communication such as E-Mail.
* * * * *
14. Section 655.735 is proposed to be revised to read as follows:
Sec. 655.735 Special provisions for short-term placement of H-1B
nonimmigrants at place(s) of employment outside the area(s) of intended
employment listed on labor condition application.
(a) Subject to the conditions specified in paragraph (b) of this
section, an employer may place H-1B nonimmigrant(s) at worksite(s)
(place(s) of employment) within areas of employment not listed on the
employer's labor condition application(s) without filing new labor
condition application(s) for the area(s) of intended employment which
would encompass such worksite(s).
(b) The following restrictions must be fully satisfied by an
employer which places H-1B nonimmigrant(s) at worksite(s) (place(s) of
employment) within areas of employment not listed on the employer's
labor condition application(s):
(1) The employer has fully satisfied the requirements of
Secs. 655.730 through 655.734 of this part with regard to worksite(s)
located within the area(s) of intended employment listed on the
employer's labor condition application(s).
(2) The employer shall not place, assign, lease, or otherwise
contract out any H-1B nonimmigrant(s) to any worksite where there is a
strike or lockout in the course of a labor dispute in the same
occupational classification(s) as the H-1B nonimmigrant(s).
(3) For every day of the H-1B nonimmigrant's(s') placement outside
the LCA-listed area of employment, the employer shall:
(i) Pay such worker(s) the required wage (based on the prevailing
wage at such worker's(s') permanent work site, or the employer's actual
wage, whichever is higher);
(ii) Pay such worker(s) the actual cost of lodging (for both
workdays and non-workdays) up to the rate prescribed by the General
Services Administration (``GSA'') for Federal Government employees on
travel or temporary assignment, plus applicable taxes, as set out in 41
CFR Part 301-7 and Ch. 301, App. A.; and
(iii) Provide such worker(s) per diem for meals and incidental
expenses (for both workdays and non-workdays) at rate(s) no lower than
the rate(s) prescribed by the GSA as set out in 41 CFR Part 301-7 and
Ch. 301, App. A.
(iv) Provide such worker(s) the actual cost of transportation
expenses, except that where the worker uses a privately-owned vehicle,
the employer must provide such worker(s) the cost to operate the
vehicle at the rate(s) set out in 41 CFR Part 301-4, plus out-of-pocket
expenses for miscellaneous expenses such as tolls and parking fees.
(4) 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 total of ninety workdays
for any H-1B nonimmigrant within a three-year period. For purposes of
this section, ``workday'' shall mean any day on which an H-1B
nonimmigrant performs any work at any worksite(s) within the area of
employment. For example, three workdays would be counted where a
nonimmigrant works three non-consecutive days at three different
worksites, whether or not the employer owns or controls such
worksite(s), within the same area of employment.
(c) Once any H-1B nonimmigrant has worked 90 workdays in a three-
year period in any area of employment, the employer may not continue to
employ H-1B nonimmigrant(s) in the same occupational classification at
any worksite(s) within the area of employment unless the employer has
filed and received a certified labor condition application for the
area(s) of intended employment encompassing such worksite(s) and
performed all actions required in connection with such filing(s) (e.g.,
determination of the prevailing wage; notice to collective bargaining
representative; on-site notice to workers), whether or not the employer
owns or controls such worksite(s).
[[Page 664]]
(d) The employer may not continuously rotate H-1B nonimmigrants to
an area of employment in a manner that would defeat the purpose of the
short-term placement option, which is to provide the employer with
enough time to file an LCA for areas where it intends to have a
significant presence (e.g., an employer may not rotate H-1B
nonimmigrants to an area of employment for 60-day periods, with the
result that nonimmigrants are continuously or virtually continuously
employed in the area of employment, in order to avoid filing an LCA
would be found to be in violation of these short-term placement
provisions).
(e) The employer may at any time file a labor condition application
for an area of intended employment, performing all actions required in
connection with such labor condition application. Upon certification of
such application, the employer's obligation to comply with paragraph
(b)(3) shall terminate. (However, see Sec. 655.731(c)(7)(iii)(C)
regarding payment of business expenses for employee's travel on
employer's business.)
15. Appendix A to Subpart H is proposed to be revised to read as
follows:
Appendix A to Subpart H--Guidance for Determination of the ``Actual
Wage''
In determining the required wage rate, in addition to obtaining
the prevailing wage, the employer must establish the actual wage for
the occupation in which the H-1B nonimmigrant is employed by the
employer. For purposes of establishing its compensation system for
workers in an occupational category, an employer may take into
consideration objective standards relating to experience,
qualifications, education, specific job responsibility and function,
job performance, specialized knowledge, and other legitimate
business factors. The use of any or all these factors is at the
discretion of the employer. The employer must have and document an
objective system used to determine the wages of non-H-1B workers,
and apply that system to H-1B nonimmigrants as well. It is not
sufficient for the employer simply to calculate an average wage of
all non-H-1B employees in an occupation; the actual wage is not an
``average wage''.
The documents explaining the system must be maintained in the
public disclosure file. The explanation of the compensation system
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 computation of the H-1B
nonimmigrant's individual actual wage rate must be documented in the
H-1B nonimmigrant's personnel file.
Assuming the actual wage is higher than the prevailing wage and
thus is the required wage rate, if an employer gives its employees a
raise at year's end or if the system provides for other adjustments
in wages, H-1B nonimmigrants must also be given the raise
(consistent with legitimate employer-established criteria such as
level of performance, attendance, etc.). This is consistent with
Congressional intent that H-1B nonimmigrants and similarly employed
U.S. workers be provided the same wages.
Where the employer's pay system or scale provides adjustments
during the validity period of the LCA--e.g., cost-of-living increase
or other annual adjustments, increase in the entry-level rate for
the occupation due to market forces, or the employee moves into a
more advanced level in the same occupation--the employer shall
retain documentation explaining the changes and clearly showing
that, after such adjustments, the wages paid to the H-1B
nonimmigrant are at least the greater of the adjusted actual wage or
the prevailing wage for the occupation in the area of intended
employment.
The following examples illustrate these principles:
(1) Worker A is paid $10.00 per hour and supervises two
employees. Worker B, who is similarly qualified and performs
substantially the same job duties except for supervising other
employees, is paid $8.00 per hour because he/she has no supervisory
responsibility.
The compensation differential is acceptable because it is based
upon a relevant distinction in job duties, responsibilities, and
functions: the difference in the supervisory responsibilities of the
two employees. The actual wage in this occupation at the worksite
for workers with supervisory responsibility is $10.00 per hour; the
actual wage in this occupation at the worksite for workers without
supervisory responsibility is $8.00 per hour.
(2) Systems Analyst A has experience with a particular software
which the employer is interested in purchasing, of which none of the
employer's current employees have knowledge. The employer buys the
software and hires Systems Analyst A on an H-1B visa to train the
other employees in its application. The employer pays Systems
Analyst A more than its other Systems Analysts who are otherwise
similarly qualified.
The compensation differential is acceptable because of the
distinction in the specialized knowledge and the job duties of the
employees. Systems Analyst A, in addition to the qualifications and
duties normally associated with this occupation at the employer's
worksite, is also specially knowledgeable and responsible for
training the employer's other Systems Analysts in a new software
package. As a result, Systems Analyst A commands a higher actual
wage. However, if the employer employs other similarly qualified
systems analysts who also have unique knowledge and perform similar
duties in training other analysts in their area of expertise, the
actual wage for Systems Analyst A would have to be at least
equivalent to the actual wage paid to such similarly employed
analysts.
(3) An employer seeks a scientist to conduct AIDS research in
the employer's laboratory. Research Assistants A (a U.S. worker) and
B (an H-1B nonimmigrant) both hold Ph.D's in the requisite field(s)
of study and have the same number of years of experience in AIDS
research. However, Research Assistant A's experience is on the
cutting edge of a breakthrough in the field and his/her work history
is distinguished by frequent praise and recognition in writing and
through awards. Research Assistant B (the nonimmigrant) has a
respectable work history but has not conducted research which has
been internationally recognized. Employer pays Research Assistant A
$10,000 per year more than Research Assistant B in recognition of
his/her unparalleled expertise and accomplishments. The employer now
wants to hire a third Research Assistant on an H-1B visa to
participate in the work.
The differential between the salary paid Research Assistant A
(the U.S. worker) and Research Assistant B (an H-1B nonimmigrant) is
acceptable because it is based upon the specialized knowledge,
expertise and experience of Research Assistant A, demonstrated in
writing. The employer is not required to pay Research Assistant B
the same wage rate as that paid Research Assistant A, even though
they may have the same job titles. The actual wage required for the
third Research Assistant, to be hired on an H-1B visa, would be the
wage paid to Research Assistant B unless he/she has internationally
recognized expertise similar to that of Research Assistant A. As set
out in Sec. 655.731(1)(A) the employer must have and document the
system used in determining the actual wage of H-1B nonimmigrants.
The explanation of the system must be such that a third party may
use the system to arrive at the actual wage paid the H-1B
nonimmigrant.
(4) Employer located in City X seeks experienced mechanical
engineers. In City X, the prevailing wage for such engineers is
$49,500 annually. In setting the salaries of U.S. workers, employer
pays its nonsupervisory mechanical engineers with 5 to 10 years of
experience between $50,000 and $75,000 per year, using defined pay
scale ``steps'' tied to experience. Employer hires engineers A, B,
and C, who each have five years of experience and similar
qualifications and will perform substantially the same
nonsupervisory job duties. Engineer A is from Japan, where he/she
earns the equivalent of $80,000 per year. Engineer B is from France
and had been earning the equivalent of $50,000 per year. Engineer C
is from India and had been earning the equivalent of $20,000 per
year. Employer pays Engineer A $80,000 per year, Engineer B $50,000,
and Engineer C $20,000 as the employer has had a long-established
system of maintaining the home-country pay levels of temporary
foreign workers.
The INA requires that the employer pay the H-1B nonimmigrant at
least the actual wage or the prevailing wage, whichever is greater,
but there is no prohibition against paying an H-1B nonimmigrant a
greater wage. Therefore, Engineer A may lawfully be paid the $80,000
per year. Engineer B's salary of $50,000 is acceptable, since this
is the employer's actual wage for an engineer with Engineer B's
experience and duties. Engineer
[[Page 665]]
C's salary, however, at a rate of $20,000 per year, is unacceptable
under the law, even given the employer's ``long-established `home
country' system,'' since $20,000 would be below both the actual wage
and the prevailing wage. The latter situation is an example of an
illegitimate business factor, i.e., a system to maintain salary
parity with peers in the country of origin, which yields a wage
below the required wage levels.
16. A new Appendix B to Subpart H is proposed to be added, to
read as follows:
Appendix B to Subpart H--Guidance for Determination of the ``Place of
Employment'' and Other Matters.
a. ``Place of employment'' or ``worksite.''
The regulation defines ``place of employment'' as ``the worksite
or physical location where the work actually is performed''
(Sec. 655.715). The Department recognizes that some H-1B employers
have expressed a concern that a strict or literal application of
this definition might lead to absurd and/or unduly burdensome
compliance requirements, particularly with regard to the employer
providing required notices and adjusting the H-1B worker's wages to
comport with different prevailing wages for various locations. These
employers have inquired whether the ``worksite'' definition would be
applicable where, for example, 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.
1. The term ``place of employment'' or ``worksite'' (defined as
``physical location where the work actually is performed'') is
interpreted by the Department as not including any location where
either of the following criteria--1 or 2--is satisfied:
i. Employee developmental activity. An H-1B worker who is
stationed and regularly works at one location may temporarily be at
another location for a particular individual or employer-required
developmental activity such as a management conference, a staff
seminar, a business meeting 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 activity would not be
considered a ``place of employment'' or ``worksite,'' and that
worker's presence at 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 employee 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 employees and, thus, would be subject
to H-1B program requirements with regard to those employees.
ii. Employee's job functions. The nature and duration of an H-1B
worker's job functions may necessitate frequent changes of location
with little time spent at any one location. For such a worker, a
location would not be considered a ``place of employment'' or
``worksite'' if the following 3 requirements are all met--
A. The nature and duration of the H-1B worker's job functions
mandates his/her short-time presence at the location. For this
purpose, either the H-1B worker's job must be peripatetic in nature,
in that the normal duties of the worker's occupation (rather than
the nature of the employer's business) requires frequent travel
(local or non-local) from location to location; or the H-1B worker's
duties must require that he/she spend most work time at one location
but occasionally travel for short periods to work at other
locations; and
B. The H-1B worker's presence at the locations to which he/she
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 as a ``strikebreaker''
(i.e., not performing work in an occupation in which workers are on
strike or lockout).
2. Examples of ``non-worksite'' locations based on worker's job
functions: a computer engineer sent out to customer locations to
``troubleshoot'' complaints regarding software malfunctions; a sales
representative making calls on prospective customers or established
customers within a ``home office'' sales territory; a manager
monitoring the performance of out-stationed employees; an auditor
providing advice or conducting reviews at customer facilities; a
physical therapist providing services to patients in their homes
within an area of employment; an individual making a court
appearance; an individual lunching with a customer representative at
a restaurant; or an individual conducting research at a library.
3. Examples of ``worksite'' locations based on worker's job
functions: a computer engineer who works on projects or accounts at
different locations for weeks or months at a time; a sales
representative assigned on a continuing basis in an area away from
his/her ``home office;'' an auditor who works for extended periods
at the customer's offices; a physical therapist who ``fills-in'' for
full-time employees of health care facilities for extended periods;
or a physical therapist who works for a contractor whose business is
to provide staffing on an ``as needed'' basis at hospitals, nursing
homes, or clinics.
4. Whenever an H-1B worker performs work at a location which is
not a ``worksite'' (under either criterion above), that worker's
``place of employment'' or ``worksite'' for purposes of H-1B
obligations is the worker's home station or regular work location.
The employer's obligations regarding notice, prevailing wage and
working conditions are focused on the home station ``place of
employment'' rather than on the above-described location(s) which do
not constitute worksite(s) for these purposes.
5. In applying this interpretation of ``place of employment'' or
``worksite,'' the Department will look carefully at situations which
appear to be contrived or abusive. The Department would seriously
question any situation where the H-1B worker's purported ``place of
employment'' is a location other than where the worker spends most
of his/her work time, or where the purported ``area of employment''
does not include the location(s) where the worker spends most of
his/her work time. For example, where an H-1B worker is nominally
``home-based'' in City A and is claimed by the employer to be
covered by the LCA for City A, but spends most of his/her time in
City B, going from one customer location to another, the Department
would consider City B to be the worker's ``area of employment'' and,
further, would expect the employer to have a certified LCA for City
B and be in compliance with all of the program requirements under
that LCA.
6. The Department's interpretation of the regulation will not
result in absurd or unduly burdensome situations, and should
alleviate the legitimate concerns of employers seeking to comply
with the requirements of the H-1B program. However, employers should
carefully note that whether or not a location is considered to be a
``worksite''/``place of employment'' for an H-1B worker, the
employer is required to provide reimbursement to the H-1B worker for
expenses incurred in traveling to that location on the employer's
business, since such expenses are considered to be ordinary business
expenses of employers which may not be transferred to employees
(Secs. 655.731(c)(7)(iii)(C); 655.731(c)(9)).
b. ``Roving'' or ``floating'' H-1B employees.
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. While H-1B workers may move about (``floating'' or
``roving'' from their ``homebase'' worksites), they are subject to
the following restrictions and standards.
(1) Employers are advised that, under the H-1B program, every H-
1B worker is protected by an LCA, and no H-1B worker is legally
permitted to ``rove'' or ``float'' without an applicable LCA
prescribing the employer's obligations as to notice, wages, and all
other program requirements for that worker. Every H-1B worker has a
``home station,'' ``home office,'' or ``home base,'' regardless of
frequency of travel or variation in job duties. The LCA for the
worker's ``home station'' area of employment prescribes the
employer's obligations as to that worker, unless or until an LCA for
some other area of employment becomes applicable due to the nature
and duration of the worker's presence at worksite(s) in that other
area.
(2) Employers are cautioned that an H-1B worker may legitimately
and legally be dispatched from his/her home station worksite--thus,
``rove'' or ``float'' from that worksite--only in the following
three circumstances:
(i) Dispatch to non-worksite location(s). An H-1B employee may
leave his/her home station worksite to perform job functions at
location(s) which do not constitute ``worksites(s)'' within the
regulatory definition as interpreted by the Department (see
subparagraph (a), above). The employer's obligations as to that H-1B
worker for work time at that non-worksite location (e.g., wages;
travel expenses) are prescribed by the LCA for the worker's home
station area of employment, even if the non-worksite
[[Page 666]]
location is within an area of employment covered by a different LCA.
(ii) Dispatch to worksite(s) within area(s) of employment
covered by LCA(s). An H-1B worker may leave his/her home station
worksite to perform job functions at worksite(s) within the same
area of employment and thus covered by the same LCA already
applicable for that employee, or at worksite(s) in some other area
of employment covered by a different LCA. The employer's obligations
as to that H-1B worker for that work time (e.g., wages, travel
expenses) are prescribed by the home station LCA unless the worker
is permanently reassigned to the new area or is dispatched to that
area for an extended period of time (to be determined case-by-case,
depending on the nature of the employee's job functions and the
employer's operations in the area). When a different LCA becomes
applicable for the employee, the employer would be required to
assure compliance with that LCA (e.g., wage adjustments, if
appropriate).
(iii) Dispatch to worksite(s) not covered by any LCA, pursuant
to short-term placement option. An H-1B worker may leave his/her
home station worksite to perform job functions at worksite(s) not
covered by any LCA, provided the placement of the worker at such
worksite(s) is in compliance with the short-term placement option
(Sec. 655.735).
c. Attorney fees and H-1B petition fees as employer's business
expense.
(1) Under the regulations, an employer is not permitted to
impose its business expense(s) on its H-1B workers
(Secs. 655.731(c)(7)(iii)(C); 655.731(c)(9)). To the extent that an
employer shifts any portion of business expense(s) to an H-1B
worker, that action constitutes a failure by the employer to satisfy
the required wage obligation to that worker, regardless of whether
the required wage is the employer's actual wage rate or the local
prevailing wage rate.
(2) The employer's business expenses include costs incurred in
the filing of an LCA with ETA and of an H-1B petition with INS
(regardless of whether the INS filing is to bring an H-1B
nonimmigrant into the U.S., or to amend, change, or extend an H-1B
nonimmigrant's visa status). These filing functions are legal
obligations of the employer; the employer is required by law to
perform these functions and the H-1B nonimmigrant is not permitted
by law to do so. Performance of such a legal obligation is
necessarily an integral part of the employer's administration of its
business. Therefore, any costs associated with such filings--
including attorney fees--are business expenses to be borne by the
employer. The regulations prohibit the employer from shifting such
expenses to the H-1B worker(s), either directly (e.g., by the
employer paying an attorney's fees and then recouping the costs
through deduction from the worker's wages) or indirectly (e.g., by
the employer requiring or encouraging the worker to pay for an
attorney's services to perform these functions). Some employers have
contended that they have experienced situations in which prospective
H-1B nonimmigrants have demanded the responsibility for obtaining
and paying the attorney who prepares the LCA and H-1B petition.
Employers are cautioned that their business expenses are not to be
paid by the nonimmigrant, and that an employer cannot acquiesce to
the nonimmigrant's ``demand for responsibility'' which amounts to
shifting the employer's legal responsibilities to the nonimmigrant.
(3) Bona fide costs 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 the U.S.)
do not constitute and will not be considered to be an employer's
business expense. The Department will, however, look behind what
appear to be contrived allocations of costs--such as attorney's fees
for preparing the H-1B LCA and/or H-1B petition being assigned to
the nonimmigrant's visa application or to petitions for the
nonimmigrant's family members--should such situations appear to be
occurring.
d. SCA wage determinations as prevailing wage.
(1) Under the regulation, if there is a Service Contract Act
(``SCA'') wage determination 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 (Sec. 655.731(a)(2)(i) and (iii)(A)). Therefore, the
SCA wage rate will be issued by the SESA in response to a request
for a prevailing wage determination and should be used by the
employer in the event that the employer chooses to determine the
prevailing wage without consulting the SESA. However, 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 represent the actual prevailing
wage but, instead, is reported by the Wage and Hour Division in the
SCA determination merely as an artificial ``wage cap'' as
contemplated by an SCA exemption provision (see 29 CFR 4.156;
541.3). In such circumstances, the SESA and the employer must
consult another source for wage information (e.g., Bureau of Labor
Statistics report).
(2) For purposes of the determination of the H-1B prevailing
wage for an occupational classification through the use of an SCA
wage determination, it is irrelevant whether a particular job or
particular worker would be exempt from the SCA wage determination in
the performance of an SCA contract, through application of the SCA/
FLSA ``professional employee'' exemption test (i.e., duties and
compensation; see 29 CFR 4.156; 541.3). Thus, in issuing the SCA
wage rate as the prevailing wage determination for the occupational
classification, 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) could be exempt from that
wage as SCA contract workers under the SCA/FLSA exemption. An
employer who employs H-1B employee(s) to perform services under an
SCA-covered contract may find that the H-1B employees are required
to be paid the SCA rate as the H-1B prevailing wage even though non-
H-1B employees performing the same services may be exempt from the
SCA rate pursuant to the SCA regulation.
e. ``CMSA'' and ``PMSA.''
(1) There is some possibility for confusion regarding the
appropriate interplay among several concepts or terms--area of
intended employment, area of employment, metropolitan statistical
area (``MSA''), primary metropolitan statistical area (``PMSA''),
and consolidated metropolitan statistical area (``CMSA''). The
following clarification is intended to alleviate any confusion and
to facilitate compliance with H-1B program requirements.
(2) For purposes of determining the applicable locally
prevailing wage under the H-1B program, the procedures at 20 CFR
656.40, governing the Permanent Alien Labor Certification Program,
are to be used. Section 656.40(a)(2)(i) ties the prevailing wage to
the ``area of intended employment.'' ``Area of intended employment''
is defined at 20 CFR Sec. 656.3 as:
`` * * * the area within normal commuting distance of the place
(address) of intended employment. If the place of intended
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 intended employment.''
Pursuant to 44 U.S.C. 3504(d)(3), 31 U.S.C. 1104(d), and Executive
Order No. 10,253 (June 11, 1951), the Office of Management and
Budget (OMB) defines MSAs and PMSAs for use in Federal statistical
activities. The Department takes the position that where a worksite
is within an MSA or PMSA as defined by OMB, any other location
within the MSA or PMSA shall be deemed to be within normal commuting
distance of the worksite and, therefore, within the area of intended
employment for purposes of both the permanent and H-1B programs.
Thus, one prevailing wage determination for an occupational
classification would be applicable throughout an MSA or PMSA.
However, this concept of ``commuting distance'' for prevailing wage
purposes is not extended to all locations within a CMSA, because the
Department has determined, based on its operational experience, that
CMSAs can be too geographically broad for this purpose. Thus, all
locations within a CMSA will not automatically be deemed to be
within ``normal commuting distance.'' This does not mean, however,
that a location outside of an MSA, PMSA, or for that matter a CMSA,
cannot be ``within normal commuting distance'' of a worksite that
is, for example, close to the border of the MSA and adjacent to the
other location.
(3) The Department has not adopted any rigid measure of distance
involved in a ``normal commuting area'' (e.g., 20, 30, 50 miles),
because, in the Department's view, it is necessary that the concept
afford sufficient flexibility to be able to reflect widely varying
factual circumstances among different locations.
f. ``Weighted average'' in determining prevailing wages.
[[Page 667]]
(1) The regulation requires that a legitimate source of wage
information (other than one specified in the regulations such as a
SESA determination or an independent authoritative source) must
``reflect the weighted average wage paid to workers similarly
employed in the area of intended employment''
(Sec. 655.731(b)(3)(iii)(C)(1)). The regulation also requires that
an independent authoritative source must ``reflect the average wage
paid to workers similarly employed in the area of intended
employment'' (Sec. 655.731(b)(3)(iii)(B)(1)). Because the word
``weighted'' was left out of the subparagraph dealing with
independent authoritative sources, there have been some suggestions
of confusion as to whether use of a weighted average of wages for an
occupational classification is necessary only when the employer uses
``another legitimate source'' of wage information.
(2) When used in a statistical sense, the word ``average''
ordinarily refers to the arithmetic mean; i.e., a weighted average.
The Department has always required that a weighted average be used
in determining the prevailing wage (except where either the Davis-
Bacon Act or the McNamara-O'Hara Service Contract Act applies). It
is DOL's long-standing position--because Congress expressly stated
that prevailing wages for the H-1B program are to be determined in
accordance with the methodology used for the permanent employment-
based immigration program, which produces a weighted average--that
the H-1B employer's prevailing wage determination must be based on a
weighted average. (See 20 CFR 656.40(a)(2)(i).) The word
``weighted'' was inadvertently omitted from
Sec. 655.731(b)(3)(iii)(B)(1).
g. Effect of New LCA on Prevailing Wage Obligation Under Old
LCA.
(1) There is some possibility for confusion 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 employer could have H-1B
employees in the same occupational classification in the same area
of employment, brought into the U.S. (or accorded H-1B status) based
on petitions approved pursuant to different LCAs (filed at different
times) with different prevailing wage determinations. Employers are
advised 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 (including the ``required wage'' which encompasses both
prevailing and actual wage rates) 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.
(2) Employers are cautioned that the actual wage component of
the ``required wage'' may, as a practical matter, eliminate any
wage-payment differentiation among H-1B employees based on different
prevailing wage rates stated in applicable LCAs. Every H-1B worker
is to be paid in accordance with the employer's actual wage system,
and thus is to receive any pay increases which that system provides.
Subpart I--Enforcement of H-1B Labor Condition Applications
17. Sec. 655.800 is proposed to be revised to read as follows:
Sec. 655.800 Enforcement authority of Administrator, Wage and Hour
Division.
(a) Authority of Administrator. Except as provided in Sec. 655.806
of this part, the Administrator shall perform all the Secretary's
investigative and enforcement functions under section 212(n) of the INA
(8 U.S.C. 1182(n)) and subparts H and I of this part.
(b) Conduct of Investigations. The Administrator, either pursuant
to a complaint or otherwise, shall conduct such investigations as may
be appropriate and, in connection therewith, enter and inspect such
places and such records (and make transcriptions or copies thereof),
question such persons and gather such information as deemed necessary
by the Administrator to determine compliance regarding the matters
which are the subject of the investigation.
(c) Availability of Records. An employer being investigated shall
make available to the Administrator such records, information, persons,
and places as the Administrator deems appropriate to copy, transcribe,
question, or inspect. No employer subject to the provisions of section
212(n) of the INA (8 U.S.C. 1182(n)) and/or subpart H or I of this part
shall interfere with any official of the Department of Labor performing
an investigation, inspection or law enforcement function pursuant to 8
U.S.C. 1182(n) or subpart H or I of this part. Any such interference
shall be a violation of the labor condition application and these
regulations, and the Administrator may take such further actions as the
Administrator considers appropriate. (Note: Federal criminal statutes
prohibit certain interference with a Federal officer in the performance
of official duties. 18 U.S.C. 111 and 18 U.S.C. 1114.)
(d) Employee Protection. (1) No employer subject to subpart H or I
of this part shall intimidate, threaten, restrain, coerce, blacklist,
discharge or in any other manner discriminate against an employee
(which term includes a former employee or an applicant for employment)
because the employee has
(i) Disclosed information to the employer, or to any other person,
that the employee reasonably believes evidences a violation of section
212(n) of the INA or subpart H or I of this part; or
(ii) Cooperated or sought to cooperate in an investigation or other
proceeding concerning the employer's compliance with the requirements
of section 212(n) of the INA or subpart H or I of this part.
(2) It shall be a violation of Sec. 655.805(a)(12) of this part for
any employer to engage in such retaliatory conduct. Such conduct shall
be subject to the penalties prescribed by section 212(n)(2)(C)(ii) of
the INA and Sec. 655.810 of this part, i.e., a fine of up to $5,000 and
debarment for at least two years, and such further action as the
Administrator considers appropriate.
(3) An employee who has filed a complaint alleging that an employer
has discriminated against the employee in violation of paragraph (d)(1)
of this section may be allowed to seek other appropriate employment in
the United States, provided the employee is otherwise eligible to
remain and work in the United States. Such employment may not exceed
the maximum period of stay authorized for a nonimmigrant classified
under section 212(n) of the INA (8 U.S.C. 1182(n)).
(e) Confidentiality. The Administrator shall, to the extent
possible under existing law, protect the confidentiality of any person
who provides information to the Department in confidence in the course
of an investigation or otherwise under subpart H or I of this part.
18. Section 655.805 is proposed to be revised to read as follows:
Sec. 655.805 Complaints and investigative procedures.
(a) The Administrator shall receive allegations that an employer
subject to subpart H or I of this part has violated section 212(n) of
the INA or these regulations from any aggrieved party (as defined at
Sec. 655.715 of this part, including a government agency other than the
Labor Department) or other sources where these sources meet the
conditions prescribed by Sec. 655.806 of this part, and shall conduct
such investigations as may be appropriate in accordance with
Sec. 655.806 of this part (pertaining to allegations from other
sources), Sec. 655.807 of this part (pertaining to spot
investigations), or as the Administrator, on his or her own
[[Page 668]]
initiative, directs. In conducting such investigations, the
Administrator shall determine whether an H-1B employer has:
(1) Filed a labor condition application with ETA which
misrepresents a material fact; (Note: Federal criminal statutes provide
penalties of up to $10,000 and/or imprisonment of up to 5 years for
knowing and willful submission of false statements to the Federal
Government. 18 U.S.C. 1001; see also 18 U.S.C. 1546);
(2) Failed to pay wages as required under Sec. 655.731 of this part
(including payment of wages for certain nonproductive time), for
purposes of the assessment of back wages;
(3) Failed to provide fringe benefits and other working conditions
as required under Sec. 655.732 of this part;
(4) Filed a labor condition application for H-1B nonimmigrants
during a strike or lockout in the course of a labor dispute in the
occupational classification at the place of employment (see
Sec. 655.733 of this part);
(5) Failed to provide notice of the filing of the labor condition
application as required in Sec. 655.734 of this part;
(6) Failed to be specific on the labor condition application as to
the number of workers sought, the occupational classification in which
the H-1B nonimmigrants will be employed, or the wage rate and
conditions under which the H-1B nonimmigrants will be employed;
(7) Failed to comply with the displacement protections for U.S.
workers (if applicable);
(8) Failed to make the required displacement inquiry provision of
another employer (if applicable);
(9) Failed to take good faith steps in recruitment (if applicable);
(10) Required, accepted, or attempted to require an employee to
remit to the employer payment for any part of the additional $500 fee
incurred in filing a petition in connection with the employee's visa
(if applicable);
(11) Required or attempted to require an employee to pay a penalty
for ceasing employment prior to an agreed upon date (see
Sec. 212(n)(2)(C)(vi)(I) of INA);
(12) Discriminated against an employee as prohibited by
Sec. 655.800(d) of this part;
(13) Failed to make available for public examination the
application and necessary document(s) at the employer's principal place
of business or worksite as required in Sec. 655.760(c) of this part;
(14) Failed to retain documentation as required by Sec. 655.760(c)
of this part; and (15) Failed otherwise to comply in any other manner
with the provisions of subpart H or I of this part.
(b) Failures pertaining to the violations (a)(1) through (a)(9) may
be cited as ``willful'' failures. Failures pertaining to the violations
(a)(5), (6), and (9) may be cited as ``substantial'' failures. The
determination letter (see Sec. 655.815 of this part) shall specifically
cite the appropriate finding and the requirement to notify the Attorney
General and the Employment and Training Administration as required for
purposes of debarment. See section 655.855 of this part.
(c) For purposes of this part, ``willful failure'' means a knowing
failure or a reckless disregard with respect to whether the conduct was
contrary to section 212(n)(1)(A)(i) or (ii) of the INA, or
Secs. 655.731 or 655.732 of this part. See McLaughlin v. Richland Shoe
Co., 486 U.S. 128 (1988); see also Trans World Airlines v. Thurston,
469 U.S. 111 (1985).
(d) Pursuant to Secs. 655.740(a)(1) and 655.750 of this part, the
provisions of this part become effective upon the date of ETA's
notification that the employer's labor condition application is
certified, whether or not the employer hires any H-1B nonimmigrants in
the occupation for the period of employment covered in the labor
condition application. Should the period of employment specified in the
labor condition application expire or should the employer withdraw the
application in accordance with Sec. 655.750(b) of this part, the
provisions of this part will no longer be in effect with respect to
such application, except as provided in Sec. 655.750(b)(3) and (4) of
this part.
(e) Any aggrieved person or organization (including bargaining
representatives and governmental officials) may file a complaint
alleging a violation described in paragraph (a) of this section. The
procedures for filing a complaint and its processing by the
Administrator are set forth in this section. Other persons with
information regarding an employer's alleged violation of section 212(n)
of the INA or subpart H or I of this part instead should follow the
requirements of Sec. 655.806 of this part. With regard to complaints
filed by any aggrieved person or organization--
(1) No particular form of complaint is required, except that the
complaint shall be written or, if oral, shall be reduced to writing by
the Wage and Hour Division official who receives the complaint.
(2) The complaint shall set forth sufficient facts for the
Administrator to determine whether an investigation is warranted, in
that there is reasonable cause to believe that a violation as described
in paragraph (a) of this section has been committed. This determination
shall be made within 10 days of the date that the complaint is received
by a Wage and Hour Division official. If the Administrator determines
that the complaint fails to present reasonable cause for an
investigation, the Administrator shall so notify the complainant, who
may submit a new complaint, with such additional information as may be
necessary. No hearing pursuant to this subpart shall be available where
the Administrator determines that an investigation on a complaint is
not warranted.
(3) If the Administrator determines that an investigation on a
complaint is warranted, the complaint shall be accepted for filing; an
investigation shall be conducted and a determination issued within 30
calendar days of the date of filing.
(4) In the event that the Administrator seeks a prevailing wage
determination from ETA pursuant to Sec. 655.731(d) of this part, or
advice as to prevailing working conditions from ETA pursuant to
Sec. 655.732(c)(2) of this part, the 30-day investigation period shall
be suspended from the date of the Administrator's request to the date
of the Administrator's receipt of the wage determination (or, in the
event that the employer challenges the wage determination through the
Employment Service complaint system, to the date of the completion of
such complaint process).
(5) A complaint must be filed not later than 12 months after the
latest date on which the alleged violation(s) were committed, which
would be the date on which the employer allegedly failed to perform an
action or fulfill a condition specified in the LCA, or allegedly took
an action which, through such action or inaction, demonstrates a
misrepresentation of a material fact in the LCA regarding such action
or inaction. This jurisdictional bar does not affect the scope of the
remedies which may be assessed by the Administrator. Where, for
example, a complaint is timely filed, back wages may be assessed for a
period prior to one year before the filing of a complaint.
(6) A complaint may be submitted to any local Wage and Hour
Division office. The addresses of such offices are found in local
telephone directories. The office or person receiving such a complaint
shall refer it to the office of the Wage and Hour Division
administering the area in which the reported violation is alleged to
have occurred.
(f) When an investigation has been conducted, the Administrator
shall, pursuant to Sec. 655.815 of this part, issue
[[Page 669]]
a written determination as to whether or not any violation(s) as
described in paragraph (a) of this section has been committed.
19. A new Sec. 655.806 is proposed to be added, to read as follows:
Sec. 655.806 Allegations of employer violations by persons other than
aggrieved parties.
(a) Sources other than aggrieved parties may submit information
alleging that an employer may have violated section 212(n) of the INA
or these regulations by committing a willful failure to meet certain of
the conditions prescribed by section 212(n)(2)(G)(i) of the INA. Such
information should be submitted to the Administrator by contacting any
local Wage and Hour Division office. The Administrator shall receive
and process such information in accordance with this subsection,
subject to the personal determination by the Secretary or the Acting
Secretary pursuant to paragraph (e) of this section as to whether an
investigation should be commenced based on the information.
(b) Information from sources other than aggrieved parties must be
submitted not later than 12 months after the latest date on which the
alleged violation(s) were committed. The 12-month period shall be
applied in the manner described in Sec. 655.805(e)(5) of this part.
(c) In submitting information, sources other than aggrieved parties
are encouraged to utilize the form provided by the Administrator for
this purpose. The Administrator will prepare the form where the source
provides information but does not utilize the form.
(d) Where the Administrator receives information from a source
other than an aggrieved party, the Administrator (by mail or facsimile
transmission) shall notify the employer that the information has been
received, describe the nature of the allegation in sufficient detail to
permit the employer to respond (but without providing the identity of
the source), and request that the employer respond to the allegation
within 10 days of its receipt of the notification. The Administrator
may dispense with such notification if the Administrator determines
that such notification might interfere with an effort to secure the
employer's compliance.
(e) Upon the receipt of such information and review of the
employer's response, if any, to the allegations, the Administrator will
determine whether the allegations should be referred to the Secretary
(or the Acting Secretary in the case of the Secretary's absence or
disability) for a determination whether an investigation should be
commenced by the Administrator. The Administrator may request
authorization to commence an investigation where the following
conditions are satisfied:
(1) The source of the information identifies himself or herself;
(2) The source likely possesses knowledge of the employer's
practices or employment conditions or the employer's compliance with
the with the requirements of this part;
(3) The source has provided specific credible information alleging
a violation of the requirements of this part;
(4) The information provided is other than the information
submitted by the employer to the Attorney General or the Secretary in
securing the employment of an H-1B nonimmigrant;
(5) The information originated from a source other than an officer
or employee of the Department of Labor, or, if it originated from an
officer or employee of the Department of Labor, it was obtained in the
course of a lawful investigation; and (6) The information in support of
the allegations provides reasonable cause to believe that an employer
has
(i) Willfully failed to meet a condition established by--
(A) Section 655.731 of this part relating to wages or Sec. 655.732
of this part relating to working conditions;
(B) Section 655.733 of this part relating to strikes or lockouts;
(C) Section 655.------of this part relating to the displacement of
U.S. workers (see Section 212(n)(1)(E) of INA); \1\
---------------------------------------------------------------------------
\1\ Note: The sections referenced in Sec. 655.806(e)(6)(i)(C)
through (E) are under development. See discussion in the preamble.
---------------------------------------------------------------------------
(D) Section 655.------ of this part relating to displacement of
U.S. workers by receiving employer (see Section 212(n)(1)(F) of INA);
or
(E) Section 655.------ of this part relating to recruitment of
qualified U.S. workers (see Section 212(n)(1)(G)(i)(I)); or
(ii) Engaged in a pattern or practice of failures to meet a
condition contained in subparagraph 6(i); or
(iii) Committed a substantial failure, affecting multiple
employees, to meet a condition contained in paragraph (e)(6)(i) of this
section.
(f) No investigation pursuant to this section will be commenced
unless the Administrator requests authorization from the Secretary (or
the Acting Secretary under the circumstances noted above) and the
Secretary or the Acting Secretary personally certifies that the
conditions listed in Sec. 655.806(d) of this part have been met. If the
Secretary issues a certification, an investigation shall be conducted
and a determination issued within 30 days after the certification is
received by the local Wage and Hour office undertaking the
investigation.
(g) No hearing shall be available from a decision by the
Administrator declining to refer allegations addressed by this section
to the Secretary; and none shall be available from a decision by the
Secretary certifying or declining to certify that an investigation is
warranted.
(h) If following the Secretary's certification, the Administrator
determines that a reasonable basis exists for a determination that the
employer has violated a requirement of subpart H or I of this part, the
Administrator shall notify the employer and other interested parties of
the Administrator's determination and their right to a hearing, subject
to the limitation established by paragraph (f) of this section, under
the procedure prescribed in Sec. 655.815 of this part.
(i) The identity of the source of information submitted to the
Administrator shall not be disclosed.
(j) This section shall expire on October 1, 2001 unless section
212(n)(2)(G) of the INA is extended by future legislative action.
20. A new Sec. 655.807 is proposed to be added, to read as follows:
Sec. 655.807 Authority to investigate employers found to have
committed willful violations
(a) The Administrator may conduct random investigations of an
employer during a five-year period beginning on the date of one of the
following findings (on or after October 21, 1998, the date of the
enactment of the ACWIA)--
(1) A finding by the Secretary that the employer willfully failed
to meet a condition of section 212(n) of the INA (pertaining to
attestations in the labor condition application; see Sec. 655.730 et
seq. of subpart H);
(2) A finding by the Secretary that the employer willfully
misrepresented material fact(s) in a labor condition application (see
Sec. 655.730 et seq. of subpart H); or
(3) A finding by the Attorney General that the employer willfully
failed to meet the condition of section 212(n)(1)(G)(i)(II) of the INA
(pertaining to an offer of employment to an equally or better qualified
U.S. worker).
(b) Where the Administrator undertakes such an investigation, the
Administrator shall issue a determination in the manner provided by
Sec. 655.805(e) and Sec. 655.815 of this part.
[[Page 670]]
(c) The Administrator's authority to undertake such investigations
does not affect the Administrator's authority to undertake
investigations under other circumstances (see Secs. 655.805; 655.806).
20. Section 655.810 is proposed to be revised to read as follows:
Sec. 655.810 Remedies.
(a) Upon determining that an employer has failed to pay wages as
required by Sec. 655.731 of this part, the Administrator shall assess
and oversee the payment of back wages to any H-1B nonimmigrant employed
by the employer in the specific employment in question. The back wages
shall be equal to the difference between the amount that should have
been paid and the amount that actually was paid to such
nonimmigrant(s). The Administrator may appropriately impose an
administrative remedy or order for any violation of the Act.
(b) The Administrator may assess appropriate administrative
remedies (including civil monetary penalties in an amount not to exceed
$1,000 per violation) for the following violations:
(1) A failure pertaining to strike/lockout, displacement, or
contractor inquiry;
(2) A substantial failure pertaining to notification, labor
condition application specificity, or recruitment; or
(3) A misrepresentation of material fact on the labor condition
application.
(c) The Administrator may assess a civil monetary penalty of
$1,000--and also issue an administrative order requiring the employer
to return to the employee (or pay to the U.S. Treasury if the employee
cannot be located) any money paid to the employer--for the following
violations:
(1) A penalty paid by the employee to the employer for ceasing
employment with the employer prior to a date agreed to by the employee
and employer; or
(2) A payment or compensation by the employee to the employer of
the additional $500 filing fee required for the filing the petition
under section 214(c)(9) of the INA.
(d) The Administrator may assess appropriate administrative
remedies (including civil monetary penalties in an amount not to exceed
$5,000 per violation) for the following violations:
(1) A willful failure pertaining to wages/working conditions,
strike/lockout, notification, labor condition application specificity,
displacement, or recruitment;
(2) A willful misrepresentation of a material fact on the labor
condition application; or
(3) A discrimination, retaliation or intimidation against an
employee (see Sec. 655.800(d)).
(e) The Administrator may assess appropriate administrative
remedies (including civil monetary penalties in an amount not to exceed
$35,000 per violation) for a displacement violation which is
accompanied by one of the following violations:
(1) A willful failure pertaining to wages/working condition,
strike/lockout, notification, labor condition application specificity,
displacement, or recruitment; or
(2) A willful misrepresentation of a material fact on the labor
condition application.
(f) The Administrator shall notify the Attorney General (pursuant
to Sec. 655.855) for the implementation of the following period(s) of
disqualification of the employer from approval of any petitions filed
by or on behalf of the employer:
(1) Disqualification for at least one year, for violation(s)
specified in paragraph (b) of this section;
(2) Disqualification for at least two years, for violation(s)
specified in paragraph (d) of this section; or
(3) Disqualification for at least three years, for violation(s)
specified in paragraph (e) of this section;
(g) In determining the amount of the civil money penalty to be
assessed, the Administrator shall consider the type of violation
committed and other relevant factors. The factors which may be
considered include, but are not limited to, the following:
(1) Previous history of violation, or violations, by the employer
under the INA and subpart H or I of this part;
(2) The number of workers affected by the violation or violations;
(3) The gravity of the violation or violations;
(4) Efforts made by the violator in good faith to comply with the
provisions of 8 U.S.C. 1182(n) and subparts H and I of this part;
(5) The violator's explanation of the violation or violations;
(6) The violator's commitment to future compliance; and
(7) The extent to which the violator achieved a financial gain due
to the violation, or the potential financial loss, potential injury or
adverse effect with respect to other parties.
(h) Appropriate administrative remedies, which may be assessed by
the Administrator under subparagraphs (b), (d) and (e) of this section,
include make-whole relief for displaced U.S. workers, whistleblowers,
or H-1B workers who failed to receive benefits or eligibility for
benefits.
(i) The civil money penalties, back wages, and/or any other
remedy(ies) determined by the Administrator to be appropriate are
immediately due for payment or performance upon the assessment by the
Administrator, or upon the decision by an administrative law judge
where a hearing is timely requested, or upon the decision by the
Secretary where review is granted. The employer shall remit the amount
of the civil money penalty by certified check or money order made
payable to the order of ``Wage and Hour Division, Labor.'' The
remittance shall be delivered or mailed to the Wage and Hour Division
office in the manner directed in the Administrator's notice of
determination. The payment or performance of any other remedy
prescribed by the Administrator shall follow procedures established by
the Administrator. Distribution of back wages shall be administered in
accordance with existing procedures established by the Administrator.
21. In Sec. 655.815, paragraph (a) is proposed to be revised to
read as follows:
Sec. 655.815 Written notice and service of Administrator's
determination.
(a) The Administrator's determination, issued pursuant to
Secs. 655.805, 655.806, or 655.807 of this part, shall be served on the
complainant, the employer, and other known interested parties by
personal service or by certified mail at the parties' last known
addresses. Where service by certified mail is not accepted by the
party, the Administrator may exercise discretion to serve the
determination by regular mail.
* * * * *
22. Section 655.855 is proposed to be revised to read as follows:
Sec. 655.855 Notice to the Employment and Training Administration and
the Attorney General.
(a) The Administrator shall notify the Attorney General and ETA of
the final determination of any violation requiring the Attorney General
not to approve petitions filed by an employer. The Administrator's
notification will address the type of violation committed by the
employer and the appropriate statutory period for disqualification of
the employer from approval of petitions. Violations requiring
notification to the Attorney General are identified in Sec. 655.810(f).
(b) The Administrator shall notify the Attorney General and ETA
upon the earliest of the following events:
(1) Where the Administrator determines that there is a basis for a
finding of violation by an employer, and no timely request for hearing
is made pursuant to Sec. 655.820 of this part; or
[[Page 671]]
(2) Where, after a hearing, the administrative law judge issues a
decision and order finding a violation by an employer, and no timely
petition for review to the Secretary is made pursuant to Sec. 655.845
of this part; or
(3) Where a petition for review is filed from an administrative law
judge's decision finding a violation and the Secretary either declines
within thirty days to entertain the appeal, pursuant to Sec. 655.845(c)
of this part, or the Secretary affirms the administrative law judge's
determination; or
(4) Where the administrative law judge finds that there was no
violation by an employer, and the Secretary, upon review, issues a
decision pursuant to Sec. 655.845 of this part, holding that a
violation was committed by an employer.
(c) The Attorney General, upon receipt of notification from the
Administrator pursuant to paragraph (a) of this section, shall not
approve petitions filed with respect to that employer under sections
204 or 214(c) of the INA (8 U.S.C. 1154 and 1184(c)) for nonimmigrants
to be employed by the employer, for the period of time required by the
Act and described in Sec. 655.810(f).
(d) ETA, upon receipt of the Administrator's notice pursuant to
paragraph (a), shall invalidate the employer's labor condition
application(s) under subparts H and I of this part, and shall not
accept for filing any application or attestation submitted by the
employer under 20 CFR part 656 or subparts A, B, C, D, E, H, or I of
this part, for the same calendar period as specified by the Attorney
General.
23. In Sec. 655.840, paragraph (c) is proposed to continue to read
as follows:
Sec. 655.840 Decision and order of administrative law judge.
* * * * *
(c) In the event that the Administrator's determination(s) of wage
violation(s) and computation of back wages are based upon a wage
determination obtained by the Administrator from ETA during the
investigation (pursuant to Sec. 655.731(d) of this part), and the
administrative law judge determines that the Administrator's request
was not warranted (under the standards in Sec. 655.731(d) of this
part), the administrative law judge shall remand the matter to the
Administrator for further proceedings on the issue(s) of the existence
of wage violation(s) and/or the amount(s) of back wages owed. If there
is no such determination and remand by the administrative law judge,
the administrative law judge shall accept such wage determination as
accurate. Such wage determination is one made by ETA, from which the
employer did not file a timely complaint through the Employment Service
complaint system or from which the employer has appealed through the ES
complaint system and a final decision therein has been issued. See
Sec. 655.731 of this part; see also 20 CFR 658.420 through 658.426.
Under no circumstances shall the administrative law judge determine the
validity of the wage determination or require source data obtained in
confidence by ETA or the SESA, or the names of establishments contacted
by ETA or the SESA, to be submitted into evidence or otherwise
disclosed.
* * * * *
Signed at Washington, DC, this 23rd day of December, 1998.
Raymond J. Uhalde,
Deputy Assistant Secretary for Employment and Training, Employment and
Training Administration.
John R. Fraser,
Deputy Administrator, Wage and Hour Division, Employment Standards
Administration.
Appendix I (Not to be codified in the CFR): Form ETA 9035.
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[FR Doc. 98-34668 Filed 12-31-98; 8:45 am]
BILLING CODE 4510-27-P; 4510-30-C
