Obligations and responsibilities of an H-1B employer
What is the H-1B program?
The H-1B program allows employers to temporarily employ foreign workers in the U.S. on a nonimmigrant basis in specialty occupations or as fashion models of distinguished merit and ability. The intent of the program is to help employers who cannot otherwise obtain needed qualified workers from the U.S. workforce by authorizing the temporary employment of certain individuals who are not otherwise authorized to work in the U.S.
What is an H-1B employer?
An H-1B employer is any entity (a person, a firm, a corporation, a contractor, or any other association or organization) which files a Labor Condition Application (LCA) with the U.S. Department of Labor (DOL) and a Petition for a Nonimmigrant Worker with the U.S. Citizenship and Immigration Services (USCIS). The law establishes certain obligations for H-1B employers in order to protect both American and foreign workers.
What to know before hiring a worker in H-1B status
Before hiring a worker in H-1B status, the employer must first file the LCA with the DOL. In the LCA, the employer must state that:
- The employer will pay the foreign worker at least the local “prevailing” wage or the employer’s “actual” wage (whichever is higher). This means that the employer must compare the “actual” wage paid to its own employees who are similarly situated (i.e. who are employed within the geographical area, who have similar skills and experience, who perform similar duties, etc.) with the “prevailing” or average wage generally paid to similarly employed individuals in the same geographical area. In practice, the “prevailing wage” figure is determined by using the DOL’s wage survey, or by using another wage survey deemed acceptable by the DOL. The employer must then offer to pay the higher of the two wages (actual or prevailing);
- The employer will pay the foreign worker for non-productive time in certain circumstances;
- The employer will offer the foreign worker benefits on the same basis as for U.S. workers;
- The employer will provide working conditions for the foreign worker that will not adversely affect the working conditions of workers similarly employed;
- The employer will not employ the foreign worker at a location where a strike or lockout in the occupational classification is occurring, and will notify the DOL of any future strike or lockout; and
- The employer, on or within 30 days before the date the LCA is filed, will provide proper notice of its intent to hire the foreign worker in H-1B status.
Additional rules regarding the displacement of U.S. workers, the placement of H-1B workers, and the recruitment of U.S. workers apply to the so-called H-1B dependent employers (employers who employ a certain number of workers in H-1B status ) or to those employers who are willful violators of H-1B rules. Furthermore, in addition to the above attestations, the employer is also required to provide the information requested in the LCA and in the forms to be filed with USCIS.
The notice regarding the LCA
An employer must inform U.S. workers of the intent to hire a foreign worker by providing notice of the filing of the LCA. The notice must be provided on or within the 30-day period before submitting the LCA and may occur in one of two methods: hard copy or electronic notice. The hard copy notice must be given to the bargaining representative for workers in the occupation or, if there is no bargaining representative, must remain posted for a total of 10 days in at least two conspicuous locations at the workplace. Notice can also be provided by the electronic means through which the employer normally communicates with its employees (e.g., e-mail, bulletin board, website and so on). The notice must include information related to the employer’s intent to hire H-1B workers, to the offered conditions of employment, to the availability of the LCA for public inspection as well as other information. If the employer is an H-1B-dependent employer or a willful violator, the notice must also contain additional information and statements.
An H-1B employer is required to create and maintain public access folders with specific documentation for each H-1B employee. This “public access file” must contain the following:
- A copy of the certified LCA including cover pages;
- Documents providing the wage rate paid to the H-1B worker;
- The method used to establish the “actual wage” including any periodic increases which the system may provide;
- The “prevailing wage” rate and a general description of the methodology of the source;
- Documents showing satisfaction of the union/employee notification requirements;
- Summary of benefits offered to U.S. and H-1B workers;
- Where the employer utilizes the definition of “single employer” in the Internal Revenue Code (IRC), a list of any entities included as part of the single employer in making the determination as to its H–1B-dependency status; and
- In the event of corporate change, the public access file must also contain: a sworn statement by a successor entity accepting all liabilities of predecessor entity; affected LCA number(s) and effective date(s); description of successor entity’s actual wage system; and successor entity’s employer identification number.
Additional documentation is required for employers who are H-1B-dependent, willful violators, or TARP/Federal Reserve Chapter 13 recipients.
In addition to the Public Access File, an H-1B employer must maintain complete payroll records, which must include the following information:
- Name, address, SSN and occupation for all H-1B workers and any other worker employed by the employer in the same occupation at the place of employment;
- Rate of pay, hours worked (if hourly or part-time), gross pay, deductions, and net pay for all H-1B workers and any other worker employed by the employer in the same occupation at the place of employment;
- Benefits offered and provided.
Obligations to pay the H-1B worker’s wage and to treat the worker fairly
The employer is obligated to pay the H-1B worker’s correct wage. As obvious as this may seem, issues may arise during “non-productive time” caused by the employer or job conditions, such as when the worker is between projects, when business is slow or when the employer is short of funds. In such cases, there still is an obligation to pay the H-1B worker the required wage, regardless of whether any work is actually performed. Furthermore, the employer is obligated to treat the H-1B worker fairly, meaning that it may not intimidate, threaten, blacklist or discriminate against the worker.
After the LCA is certified, the employer must notify the DOL if there is a strike or lockout of workers at the place of employment in the same occupational classification as the H-1B worker. Furthermore, an H-1B employer is under the ongoing obligation to inform USCIS of any “material changes” in the employment. Unfortunately, the law does not provide a clear-cut definition of “material changes.” Therefore, any number of changes could be considered material, such as changes in the worker’s location or job duties, a reduction in hours from full-time to part-time, or a reduction in salary. If such a change occurs, the employer must inform USCIS.
Payment of fees
The question as to who can and must pay the many fees associated with the H-1B program has always been a hot topic. Generally speaking, the employer is responsible for most of the fees, though regulations are either conflicting or lacking on this issue.
The responsibilities of an H-1B employer when the employment terminates
If the H-1B employment ends prior to the expected end date, the employer must contact the appropriate agencies, such as USCIS and the DOL. Furthermore, if the employer terminates the employee, the employer is required to pay for the employee’s “reasonable cost” of return transportation to the last country of residence, which can generally be a plane ticket or cash payment.
Compliance with Federal, State and Local regulations
In addition to the above responsibilities, the H-1B employer must comply with the various Federal, State and local regulations that may apply.
In sum, employing foreign nationals pursuant to the H-1B program entails many critical responsibilities for an employer, and failure to satisfy the minimum requirements and to comply with the law can expose the employer to liability. Therefore, it is always advisable to contact a competent attorney prior to taking any substantial steps towards the employing of a foreign worker pursuant to the H-1B program.