hiring, documenting, and terminating h-1b workers in a climate of increased government scrutiny:...

Hiring, Documenting, and Terminating H-1B Workers in a

Climate of Increased Government Scrutiny: What In-House Counsel

and H.R. Professionals Need to Know

Thursday, March 11, 2010

© Employment Law Alliance

Introduction

Introduction

-2-© Employment Law Alliance

Presenters

Sarah Lea Tobocman, Moderator, Gunster, Yoakley &Stewart P.A., Miami, FL

[email protected]

Gabriella M. Buckley, Vedder Price P.C., Chicago, [email protected]

Jay Carmichael, Gunster, Yoakley & Stewart P.A., Miami, [email protected]

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© Employment Law Alliance

mailto:[email protected]



Presenters

Leigh Polk Cole, Dinse, Knapp, McAndrew, Burlington, VT

[email protected]

Herman W.H. Lee, Alston Hunt Floyd & Ing,

Honolulu, HI [email protected]





Overview of the H-1B Classification

• Substantive requirements:

– Minimum qualification for entry into the profession must be at least a 4-year bachelor’s degree or equivalent specific vocational preparation

– Candidate must hold the required degree or equivalent combination of education and experience



• H-1B status is commonly used for engineers, computer software and technology personnel, college/university professors, researchers, health care professionals including physicians (e.g., professions that require at least a bachelor’s degree)



• H-1B status is not available for all professional positions

– Example A: Registered nurses can hold an associate’s degree or a bachelor’s degree, so RNs are not eligible for H-1B status with any employer

– Example B: Nurse Managers must be RNs but the profession Nurse Manager requires a bachelor’s degree, so it is eligible for H-1B status



• Temporary status for maximum of 6 years

• Can extend H-1B status past 6 years as needed if employer sponsors for permanent residency before the end of the 5th year of H-1B status

• Recapture/remainder time can be recouped


• Requires employer-employee relationship; not available for independent contractors or unpaid interns

• H-1B employment may be full-time or part-time

• Can have more than one H-1B employer at a time



Upcoming Filing Period

• Certified Labor Condition Application– Administered by the U.S. Department of Labor– Start early!

• New DOL iCert portal in April 2009• No more instantaneous LCA Certifications• Minimum wait period of 7 days• iCert Federal Employer Identification

Number delays



• Notice of filing of LCA– Notice must be provided not earlier than 30

days before LCA application and not later than date of LCA application

• Nonimmigrant visa petition– Administered by the U.S. Citizenship and

Immigration Services



– Filing Fees• ACWIA fee• Fraud filing fee• Base filing fee

– Processing time• The F-1 and H-1B “Gap”: F-1 status will expire

before H-1B employment begins on October 1 • Consular processing for H-1B visa


H-1B Cap Issues and Exemptions

• 65,000 H-1B approvals available each federal fiscal year

– Cap exemption for colleges and universities and affiliated nonprofits, and nonprofit and government research organizations


H-1B Cap Issues and Exemptions

– All other employers compete for 65,000 H-1B approvals each year

– H-1B petitions must be filed April 1 for employment to start October 1 (new federal fiscal year) for H-1B cap “lottery”

– 20,000 additional H-1Bs are available for individuals with Masters Degrees from U.S. universities


Period of Stay

• With exceptions, maximum period of stay in H-1B status is 6 years

– Initial H-1B status is up to 3 years– Extension of H-1B status

• Extension must be filed before H-1B status expires

• Extension is not subject to annual H-1B cap on visa numbers


Period of Stay

• Stale LCA• Some exceptions to 6-year period

Labor certification or immigrant visa petition filed at least 1 year before expiration of 6-year period

Immigrant visa petition approved but immigrant visa unavailable


Special Issues

• H-1B Portability:

– Generally an H-1B approval must be obtained before the employment can start

– H-1B portability: if candidate is employed in H-1B status with another employer, new H-1B employment can start when new employer files H-1B petition


Special Issues

– “H-1B Dependent Employers”

• Definition based on number of H-1B workers at the employer: Up to 25 FTE employees: 7+ H-1B workers 26-50 FTE employees: 12+ H-1B workers 51+ FTE employees: 15%+ H-1B workers


Special Issues

• “H-1B Dependent Employers” must make additional attestations regarding recruitment and non-displacement of U.S. workers

– Recipients of Government Economic Stimulus Funds are treated as “H-1B Dependent Employers” (TARP, TALF, PPIP, Section 13 Federal Reserve Act)


Recent USCIS Policy and Practice on Adjudication of H1-B Petitions

• Scrutiny of Employer/Employee Relationship

• Must explain and document with contract, description of responsibilities and reporting, pay stubs


Recent Issues Raised in Requests for Evidence

• Requests for pay stubs (3 months) to show:

• Maintenance of status with prior H-1B employer

• Compliance with H-1B petition for new H-1B employment with petitioner (H-1B portability)


• Financial information about the employer

• Be prepared to submit audited financials, tax returns


Recent Issues Raised in Requests for Evidence

E-3 Status

• Good alternative to H-1B for Australian citizens

• Eligibility is similar to H-1B

• E-3 status is renewable indefinitely in 2-year increments

• E-3 cap (10,000 approvals per year) is not oversubscribed, so E-3s are always available (to date)

• Processing directly at consular post can lead to quick approval

• Filing fees are significantly lower than H-1B petitions


H-1B Enforcement


H-1B Enforcement


• Business Week article/GAO report 10/08

– 13% of H-1B visas were fraudulent – 7% contained technical violations– Recommended increased audits

The Labor ConditionApplication

• Employer’s LCA obligations

– Generally, LCA attestations provide assurance that H-1B workers will not adversely affect wages and working conditions of U.S. workers


Employer Attestations


Ongoing LCAObligations

• Creating and maintaining Public Access file

• Maintaining other documentation for DOL inspection

• Notification to DOL within 3 days of a strike or lockout of workers in the occupation at the place of employment

• Monitoring H-1B dependency status


Ongoing LCAObligations

• Need for amended petition

• Updating H-1B worker’s salary

• Auditing public access and DOL files


Public Access File

• Copy of certified LCA

• Full, clear explanation of the system the employer used to set the actual wage

• Documentation that provides the wage rate to be paid to the H-1B

• Copy of documentation the employer used to establish the prevailing wage


Public Access File

• Copy of the documents used to satisfy the notice requirement (to employees, union, H-1B)

• Summary of benefits and explanation of any differentiation

• Change of corporate structure documentation accepting LCA obligations, liabilities, and undertakings

• Summary of recruitment efforts for (H-1B dependent employers)


Additional Documentation for DOL

• Records showing wage rate for all employees for the specific employment at the place of employment

• Underlying data used to prepare the actual wage memorandum for the public access file

• Other prevailing wage surveys


Additional Documentation for DOL

• Documentation regarding offer of benefits and complete benefits information

• Evidence that the H-1B employee received a copy of the LCA

• Payroll records

• Additional information regarding H-1B dependent employer obligations


Record Retention

• Either at employer’s principal place of business or place of employment

• 1 year beyond the last date on which any H-1B was employed under the LCA (or, if no one was hired, 1 year after expiration of the LCA or after the date it was withdrawn)


Additional Employer Obligations

• Payment of costs and attorney fees associated with the LCA and H-1B petition

• If H-1B terminated before the end of authorized stay, employer liable for reasonable costs of transportation abroad


Additional Employer Obligations

• Mandatory notification to USCIS for bona fide termination

• Movement of H-1B employees

• No Benching


No Benching Rule

• Must continue to pay the required wage to the H-1B worker during non-productive periods at the direction of the employer (i.e., lack of work)

• Not required if lack of productive employment is due to a voluntary request by the H-1B worker (i.e., caring for an ill relative)


Background: The Office of Fraud Detection and National Security (FDNS)

• Division within USCIS• Created in 2004 “to enhance the quality, integrity,

and security of the U.S. legal immigration system”• Primary mission is to detect, deter, and combat

immigration benefit fraud• FDNS is USCIS primary conduit to the law

enforcement and intelligence communities


Background: The Office of Fraud Detection and National Security (FDNS)

• FDNS officers communicate with ICE and other federal, state, and local government offices for criminal prosecution or administrative sanctions

• FDNS is engaged in “assessing” the H 1B program and H 1B employers

• USCIS Vermont Service Center has transferred 20,000 H 1B cases to the FDNS for “assessment”

• Very well funded! $500 anti-fraud fees from H and L petitions will be used to support FDNS


FDNS Assessment Efforts

• Review of public records and information• Contact via written correspondence, electronic

transmission, or telephoneAND:

• Unannounced physical site inspections at the H 1B employer’s principal place of business and/or at the H 1B nonimmigrant’s work location


H 1B Visit: What You and Your H 1B Employees Can Expect

• FDNS investigator will arrive with no warrant or subpoena

• Employer has the right to request that its attorney be present in person or by phone

• The FDNS investigator will likely have a copy of the H 1B petition for a specific individual

• Investigator may ask to speak with the employer representative who signed the I 129 Petition for H 1B status



• Investigator may ask to speak with an HR representative

• May ask to see documentation related to the employer's business

• May ask to take photos of the employer’s facilities and H 1B worker’s workspace

• May ask to see the worker’s H 1B Public Access File



• Will likely inquire as to the H-1B worker's:– Date of hire– Title– Work location– Salary information

• Will ask to speak with the H 1B worker• May ask the H 1B worker to present a photo ID and

paystub



• The H 1B worker may be asked who paid immigration fees/costs

• The H 1B worker may be asked about his/her:– Job title– Job location– Educational background– Job duties– Salary and hours


What Should the Employer Do?

• Request to see FDNS investigator’s credentials and note same

• Contact in-house counsel, head of HR, or immigration counsel

• Identify a person to remain with investigator• With aid of counsel, determine whether to admit

investigator or request to reschedule with counsel present

• If proceeding, determine if H 1B worker is on-site


What Should the Employer Do?

• Invite investigator to a conference room/private area to conduct interviews

• Determine whether employee’s records are on-site or at headquarters

• Memorialize in writing the questions asked/answered during the visit and documents reviewed

• After the visit, confirm that the employer was in compliance with all requirements relating to the H-1B employee


Penalties for Noncompliance

• Civil penalties

– $1,000 and 1-year debarment from immigrant and non-immigrant petition approval

– $5,000 and 2-year debarment for willful violation plus 5 years of random investigations

– $35,000 and 3-year debarment if violation involves displacement of a U.S. worker

– Whistleblower penalties: $5,000 and 2-year debarment



• Civil Penalties– Unconscionable contract provisions: $1,000 fine– Placement with another employer: $1,000 and 1-

year debarment– Remember - penalties are on a per-violation

basis, and can add up!!



• Criminal Penalties– Knowing and willful submission of a false

statement in an LCA may result in up to 5 years of imprisonment and a $10,000 fine


Corporate Liability

• Important:

– A corporation is liable criminally for actions of employees or corporate executives or officers who conduct illegal acts as long as the actions of corporate agents were within the scope of agents’ duties and were intended, at least in part, to benefit the corporation


Corporate Liability

• The Department of Justice and Department of Labor provide guidelines for avoiding liability

• Employers should:– Make a good faith attempt to comply with the law– NOT engage in a pattern or practice of violations– Consider timely and voluntary disclosure of

wrongdoing – Cooperate with investigations– Implement and enforce a compliance policy


Establish and Enforce an ImmigrationH-1B Compliance Policy

• MAKE IT CLEAR!• Appoint a compliance officer• Schedule annual reviews of LCA files by immigration

counsel• Institute a training program – top to bottom• Establish a system for monitoring compliance• Communicate ramifications of policy non-compliance

and enforce them


H-1B Immigration Compliance Policy

• Establish a clear process for audits, visits, and investigations– Identify go-to person in case of government visit– Train front-line personnel to contact appropriate

staff immediately• Provide for post-audit/visit training• Schedule update of LCA files with annual increases,

in addition to updating whenever salary changes• Monitor H-1B dependency



• Ensure additional posting notice obligations and/or amended H-1B filings have been made and reflected in the files

• Review “payback” agreements to ensure compliance with H-1B regulations

• Set up process to ensure post-employment compliance re travel home/withdrawals


• Educate employees and management to ensure that they understand the H-1B category and its importance in creating a world class work force

• Work with employees and management to emphasize the importance of immigration law compliance

• Establish and enforce your immigration compliance policy



In Summary

• How to take advantage of the availability of H-1Bs starting April 1, 2010

– Filing period

– Quotas and quota exemptions

– Substantive requirements

– Procedure

– What to anticipate from USCIS in upcoming filings


• What you need to know in a climate of increased government scrutiny

– Deconstructing the Labor Condition Application– Employer obligations– Maintenance of Public Access Files and

documentation for DOL– What to expect from Administrative Site Visits

by DHS – Best practices – what In-House Counsel and

HR can do to limit liability


In Summary

Take Aways

• Prepare to file H-1Bs as early as possible in the application period, which starts April 1, 2010

• Anticipate USCIS may question the employer-employee relationship, and request financial information from your company

• Work with immigration counsel to prepare Labor Condition Application, Public Access File, and DOL documentation


Take Aways

• Special requirements apply when seeking to terminate, lay off, or furlough an H-1B employee – consult in advance with immigration counsel

• Anticipate DHS Administrative Site Visits

• Establish, enforce, and update your written H-1B compliance policy and provide annual training to management


Parting Thoughts

The H-1B Temporary Worker classification is a useful visa

classification for U.S. employers seeking to fill critical specialty positions. With proper preparation, training, and periodic reviews of H-1B petitions and Labor Condition Application files, compliance with employer obligations can be monitored and maintained.


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hiring, documenting, and terminating h-1b workers in a climate of increased government scrutiny:...

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