Immigration Law Newsletter, January 2001

The Department of Labor (DOL) on December 20, 2000 issued Interim Final H-1B Regulations (IFR) to implement the American Competiveness and Workforce Improvement Act of 1998 (ACWIA)-which increased the annual quota of H-1B visas from 65,000 to 115,000. The regulations outline in detail new requirements such as recruitment and displacement attestations to be complied with by H-1B dependant employers.

The Regulations are very detailed, comprehensive and cover various issues relating to the H-1B application process. We are providing the highlights of the new H-1B regulations; please contact an immigration attorney for more details and advice on your particular situation. We have divided the highlights into two sections, the first highlight covers provisions relating to H-1B dependant Employers and the second highlight covers provisions of General Applicability.

SECTION I

Highlights of Department of Labor's Interim Final H-1B Regulations (IFR) covering provisions relating to H-1B dependant employers

1. Definition of H-1B Dependent Employers

   According to ACWIA, an employer is considered H-1B dependent if it employs in the U.S.:

   • 1 to 25 or fewer full-time equivalent ("FTE") employees and 7 or more H-1B employees;
   • between 26 and 50 FTE employees and 12 or more H-1B employees;
   • 51 or more FTE employees and a number of H-1B employees is 15% or more of the employer's FTE employees.
2. When do employers need to determine dependency status?

   Employers need to determine H-1B dependency when they file an LCA for an H-1B petition for new employment or for an extension. The LCA must indicate whether the employer is H-1B dependent or not. The employer will have three options to check on the new LCA form:

   • The employer is not H-1B dependent and is not a willful violator (Please see Item No. 3 for definition of "willful violator")
   • The Employer is a H-1B dependant and/or a willful violator.
   • The employer is H-1B dependent and/or a willful violator but will use the LCA only to support H-1B petitions for exempt H-1B nonimmigrants (Please see Item No. 4 below for definition of "exempt" H-1Bs),

    

   H-1B dependant employers must file new LCAs and cannot use existing LCAs even if the LCA has open slots available. H-1B dependant employers are not required to get new LCAs for existing H-1B employees. However, for extension of an existing H-1B employee, the new LCA form will have to be filed.

3. Willful Violator

   A Willful Violator is an H-1B employer who has been found to have committed a willful violation of a condition of the LCA or misrepresented a material fact on the LCA during the past five (5) years on and after October 20, 1998.

4. Exempt H-1B immigration status

   Under the regulations, employers are not required to meet the additional attestations for "exempt" H-1B non-immigrants even if they are H-1B dependent employers. To qualify for "exempt H-IB" status, the prospective H-1B employee must hold a Master's degree or its equivalent in a specialty related to the proposed employment or they must earn an annual salary of $60,000.

5. Attestation Requirements

   All H-1B dependent employers have to abide by the following attestations:

   1. Recruitment Attestation
      1. Standards of Recruitment

         Employers must use internal and external sources and active and passive methods. The rule requires that employers at a minimum recruit both internally-among their own work force and workers whose employment recently terminated because of expiration of a contract or grant-and externally-among U.S. workers elsewhere in the economy. Active methods include job fairs, outreach at universities, use of headhunters, and providing training to incumbent employees in the organization. Passive methods include print, internet ads and internal job postings. H-1B dependent employers are required to utilize good faith recruitment efforts using industry-wide standards in order to hire candidates for all positions.

      2. Selection Standards

         Employers are to base their recruitment and selection decisions on criteria that are legitimate, relevant, and normal to the type of job involved.

      3. Documentation relating to recruitment efforts

         Employers must retain documentation of all recruitment methods used with print and internet advertisements, job fairs, internal job postings, head hunters, etc.

   2. Displacement Attestation
      1. Protected Employees

         According to the regulations, all employees of the principal employer and the other employer (as in the case of contractor situations) are to be protected from displacement by H-1B non-immigrants. The employer will not displace any similarly employed US worker within the period beginning 90 days before and ending 90 days after the filing of a petition for an H-1B nonimmigrant.

         The protected employees must be in an "essentially equivalent job" to that held by the H-1B non-immigrant. The Regulations state that there will be a direct comparison where appropriate between the displaced worker and the H-1B non-immigrant. The comparison will be based on job responsibilities, qualifications and experience.

      2. Secondary displacement prohibition

         The secondary displacement prohibition comes into effect when employers place H-1B employees at a worksite that is owned or operated by another employer (secondary employer) where there are "indicia of employment" between the H-1B employee and the secondary employer. In other words, the secondary employer is providing directions and controlling the work of the H1B employee. There should be no displacement for a period of 90 days before and after the placement of the H-1B nonimmigrant worker.

      3. Permissible terminations

         The regulations clarify that an employer may terminate an employee for violation of workplace rules, inadequate performance or other causes related to performance or behavior on the job. The worker may also retire or voluntarily leave.

6. Effective Dates

   These regulations are effective as of January 19, 2001.

SECTION II

Highlights of Department of Labor's Interim Final H-1B Regulations (IFR) covering provisions of General Applicability.

1. New Labor Condition Application (LCA)
   The DOL will only accept the new three page LCA after January 19, 2001. There will be a transition period between January 19, 2001 till February 05, 2001 during which time the fax back system will not be working and the LCAs will be only accepted by mail.
2. H-1B to H-1B transfer
   H-1B-to-H-1B transfer provisions which allows a H-1B worker to switch employment upon filing of a valid H-1B petition cannot be used unless a petition is filed with the INS which is supported with a certified LCA.
3. Traveling Employees
   The new regulations call for a very detailed inquiry to determine as to what steps the employer needs to take when a H-1B employee travels. The regulations also provide for detailed short-term placement rules.
4. Corporate reorganizations
   No new LCAs need to be filed for existing H-1B visa holders upon a corporate reorganization, as long as the various conditions set by DOL are complied with.
5. Actual Wage Documentation
   DOL's earlier requirement that employers must have an objective wage system "sufficiently detailed to enable a third party to apply the system to arrive at the actual wage rate computed by the employer for any third H-1B nonimmigrant" has been dropped. In its place DOL requires that the wage to use legitimate business factors such as an evaluation of performance levels.
6. Benefits
   The new regulations require that H-1Bs must be offered the same benefit as U.S. workers.
7. Benching
   The regulations state that if the H-1B worker is not working due to absence of contract work, absence of a permit or license, the employer must continue to pay the full salary due to the H-1B employee. The employer is not required to pay the H-1B employee, if the H-1B employee is not working due to reasons not connected to employment, such as leave taken for traveling in the US, maternity or paternity leave, however such leave should not be subject to pay under the employer's benefit plan.
8. Notice Requirements
   The Regulations put back into effect posting of notices at the H-1B worksite on or before the date on which the H-1B employee reports for work. The posting of notices is required to be done even if the H-1B worksite happens to a third party worksite.
9. Attorney's Fees
   The regulations do not allow for the H-1B employee to pay the attorney fees and other costs related to the H-1B program in the event that, when the aforesaid costs are deducted from the employee's salary, the salary would be below the higher of the actual or the prevailing wage.
10. Effective Dates
    These regulations are effective as of January 19, 2001.