EMPLOYER OBLIGATIONS IN H-1B AND LABOR CERTIFICATION SPONSORSHIP
It is more important than ever that Labor counsel understand the responsibilities employers
undertake when sponsoring foreign nationals for certain types of visas and for residence through
the labor certification process.
The purpose of this article is to make counsel aware of the affirmations that an employer makes
when sponsoring a foreign national for an H-1B visa or labor certification. Penalties for
employers who fail to comply with the affirmations made in applications for labor certification
and on the labor condition application for H-1B status include civil monetary penalties,
debarment and criminal penalties in certain instances.
The following attestations apply to all H-1B employers:
H-1B Obligations

ATTESTATIONS
Wages: Using the best information available, the employer must compare the actual
wage the company pays to its own employees who are employed within the geographical
area and who perform similar duties with the “prevailing” or average wage generally paid
to similarly employed individuals in the same geographical area. The employer must
then offer to pay the H-1B worker the higher of the two wages, either the actual wage or
the “prevailing” wage for that position. The employer is required to include in its public
access file a memorandum as to how the actual wage was determined. If the foreign
worker is sponsored for an H-1B visa for only part-time employment, the U.S. employer
must maintain records that indicate the part-time hours actually work in order to
document that the employer is paying the required wage.
Calculating the Required Wages: Both the actual wage and the prevailing wage are
based only on cash wages paid, excluding any fringe benefits. However, the employer
may now credit future bonuses and similar compensation toward satisfying the required
wage if their payment is assured. The law does not require an employer to follow any one
methodology in determining the prevailing wage rate. However, the State Employment
Office (SESA) provides a “safe harbor” against a challenge of the wage paid. Some
private or employer-funded surveys might also serve as an adequate prevailing wage
source. In any event, the employer is required to document the factual basis for its
prevailing and actual wage determination. A print-out of the Department of Labor’s
Occupational Employment Statistics (OES) data for the position offered should be
sufficient protection as the figures obtained will be the same as those actually relied on
by the SESA, and are those gathered by the Bureau of Labor Statistics.
Attorney Fees: Attorney fees paid to counsel to secure the H-1B visa are considered by
the Department of Labor to be business expenses. Thus, if the foreign worker pays these
legal fees and is not reimbursed by the U.S. employer, the Department of Labor considers
these to have come out of the foreign worker’s normal wages as authorized deductions
and must be calculated into the required wage. Nevertheless, only those portions of the
attorney’s legal fees attributable to the preparation and submission of the LCA and the
USCIS petition are considered to be legitimate employer business expenses. There are
other services which the attorney provides to the foreign worker as part of the legal fees
charged which may not directly benefit the U.S. employer.

Employers filing a new H-1B petition or a first-time H-1B extension must pay an
additional $1,500 fee or excise tax. This fee is reduced to $750 for employers with no
more than 25 full-time employees employed in the U.S (this number must be calculated
by including any U.S. subsidiary or affiliate). The government will use this fee to
establish training programs for U.S. workers. The H-1B employer must pay this fee.
The employee cannot pay the fee and may never be required to refund the employer for
the training fee. There are monetary penalties for violations of this provision. Primary
and secondary education institutions, institutions of higher education as defined in section
1001(a) of Title 20, certain non-profit entities related to institutions of higher education,
nonprofit research organizations, and nonprofit entities engaged in established
curriculum-related clinical training of students are exempt from this fee.
All employers filing either an initial petition for either an L (including a Blanket L) or an
H-1B or a petition to employ for the first time an alien who is currently in H or L status
are also liable for paying a new $500 fraud fee.1

Working conditions: The filing of the Labor Condition Attestation indicates to the
Department of Labor that this foreign worker will be employed under the same working
conditions and terms of employment as the U.S. employer’s American workers. Just as
the employer is required to offer to the foreign worker the higher of the actual wage or
the prevailing wage, it is required to offer the same benefit package. Employers must
retain copies of the fringe benefit plans and summary plan descriptions, including all the
rules and eligibility determinations and any routine employee costs for benefits in the
public access file.

No Strike or Lock-out: In addition to certifying the wage rate and working conditions,
the employer must also attest that at the time of filing the labor condition application
there is no ongoing strike or lockout.

Notification to other workers: The employer attests that a copy of the LCA has been
provided to all H-1B employees. The employer also attests that notice of the filing has
been provided to the bargaining representative for employees in the same occupational
classification at the place of employment, or has posted at two places at the work place if
there is no bargaining representative. In lieu of physically posting the ETA 9035, the
employer can post electronically, if applicable. A copy of the entire package of material
1
ARB found employer liable for permitting employee to pay premium processing fee. Morales Toia v. Gardner
Family Care Corp., 2007- LCA- 00006 (4/25/08)
submitted to the Department of Labor and the USCIS as well as any official notices from
either agency should be retained by the employer in its public access file.
RETURN TRANSPORTATION COSTS

In the event the employer dismisses the foreign worker prior to the end of the authorized
H-1B period, the employer is liable for the foreign worker’s return transportation.
However, this obligation is not triggered if the employee terminates the employment
relationship. A penalty assessed to the foreign worker for leaving the position prior to the
agreed termination date is prohibited by the regulations. Nevertheless, the employer may
receive bona fide liquidated damages from the foreign worker if he or she quits early.
State law will govern terms of reasonable liquidated damages, but the employer’s
payment of legal fees and costs in the H-1B process can never be reimbursed. Even if the
employee advises that he or she won’t be departing the U.S. the employer should still
offer to pay the employee’s return transportation in writing.
START DATE AND PROHIBITION ON “BENCHING”

The H-1B employee must start work within 30 days of entering the U.S. or within 60
days of a change of status or extension/amendment with a new employer. Conversely,
the U.S. employer must begin salary payments within the same period of time. This
obligation to pay ends only when the USCIS is notified of the foreign worker’s
termination, the petition is canceled by the USCIS and the obligation to pay the return
transportation costs has been fulfilled if it is required. Thus, notification to the USCIS of
a foreign worker’s termination is now required.

The H-1B law clearly prohibits “benching”, whereby an H-1B employee is involuntarily
laid-off. Voluntary leave for reasons such as vacation or medical is permitted. Should
the foreign worker be “benched” the U.S. employer must pay the laid-off worker the full
pro rata wage due. Part time workers must be paid the number of hours indicted on the
original petition filed with the USCIS. Those part-time workers who are “benched” must
be paid for at least those number of hours specified therein. If a range of hours was
indicated on the petition, the part-time “benched” worker must be paid the number of
hours ordinarily worked, even if they actually worked fewer hours in any given pay
period. 2
“Benching” an H-1B nonimmigrant, that is, placing him in nonproductive status
without pay “due to a decision by the employer (e.g., because of lack of assigned work),
lack of a permit or license,” is a violation of the INA and its implementing regulations. 20
C.F.R. § 655.731(c)(7)(i); 8 U.S.C. § 1182(n)(2)(C)(vii)(I). If this occurs, the employer is
2
TRAVEL AND RELOCATION

U.S. employers are required to post notice when an H-1B worker is relocating within the
commuting area for the base office. Attendance at a training session, conference or
retreat does not constitute relocation. However, the employer must file a new LCA and
USCIS petition when relocating the foreign worker outside of the commuting area of the
base office if:

Most of the H-1B employee’s work is at one location and he or she goes to a new
location for more than 10 consecutive workdays, or if he or she travels to a given location
for more than 60 days per year.

If the job involves no base office where substantial time is spent, then the U.S. employer
must file a new LCA and INS petition when the H-1B worker goes to a new location for
more than 5 consecutive workdays or if he or she travels to a given location more than 30
workdays per year.

The H-1B worker may be transferred to a new location in the same occupation if the LCA
covering that new location has available slots, but the employer must be careful to pay
the wage specified in the LCA for that new area.
ADDITIONAL ATTESTATIONS FOR H-1B EMPLOYERS ONLY


The following additional attestations apply only to H-1B dependent employers and to
employers who have willfully violated any of the above first four attestations. These
employers make more stringent attestations to the government about their hiring
practices. An employer who violates these attestations is subject to very serious penalties.
First, however, it is important to understand if an employer is H-1B dependent. An H-1B
dependent employer is one who has:
25 full-time equivalent employees or less, and more than 7 of those employees in H-1B
status;
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 hourly employees, or the full
amount of the weekly salary for salaried employees) at the required wage for the
occupation listed on the LCA. 20 C.F.R. § 655.731(c)(7)(i). Administrator Wage and Hour
division v. Itek Consulting Inc. 2008-LCA-00046 (5/6/09)
or

26 - 50 full-time equivalent employees, and more than 12 of those employees in H-1B
status;
or

51 or more full-time equivalent employees, 15% of which are in H-1B status

The Snap-Shot Test: The Department of Labor permits a “snap-shot” test to determine if
a U.S. employer is H-1B dependent. No records as to the calculation of dependency need
be maintained if the snap-shot test is utilized. However, if the test indicates that more
than 15% of the employer’s workforce is on H-1B visas, then a thorough analysis must be
completed and retained in the public access file. Though employers are not subject to
dependency provisions for H-1B workers who hold a Master’s degree relevant to and
required by the position duties or earn an annual salary of at least $60,000, these
individuals must be counted in the dependency calculation. Accurate payroll and
educational records must be kept in the public access file should the U.S. employer claim
that certain H-1B workers are exempt from the requisite calculations.

Should an employer be classified as H-1B dependent, the following attestations also
apply:

Non-displacement: For the period of 90 days before and after the placement of any H-1B
worker on a job site, the employer is required to retain all records concerning the
identities and circumstances under which any U.S. worker left the same position in the
same geographical area of employment within the 90 day before and after window. This
information need not be maintained in the public access file but must be made available
to the Department of Labor upon request.

Secondary non-displacement: This provision applies to H-1B employees who are sent to
a work site other than the hiring employer’s own site. In such a scenario, before placing
an H-1B employee with another employer where the worker would function as an
employee of the secondary employer, the original employer must make certain inquires.
It must attest that it has inquired whether the other employer will itself use H-1B workers
to displace U.S. workers. The original employer must also state it has no knowledge that
the secondary employer has done so or intends to do so. The primary employer should
obtain and retain a written assurance from the secondary employer. Such an assurance
may be included in the employment contract and can be attached to an indemnity clause.
Nevertheless, there need not be a formal employment relationship between the primary
and the secondary employer to trigger these requirements. An analysis of the underlying
circumstances of the employment and the control over the work environment is essential
to determine if the secondary placement provisions need to be met.

Recruitment efforts: The H-1B dependent employer must attest that it has taken good
faith efforts to recruit U.S. workers and has offered the opening to any U.S. applicant that
is equally or better qualified for the job than the H-1B candidate. The U.S. employer
must undergo an active and passive recruitment campaign. Employers are expected to
advertise the position opening (passive recruitment) and actively solicit referrals,
participate in job fairs, and contact prior employees who may be qualified for the
position. Nevertheless, this recruitment may be undertaken based on industry-wide
standards and employers are allowed the discretion to identify what those standards are to
be. An analysis of those standards should be maintained in the public access file together
with evidence of all recruitment efforts undertaken.
TARP RECIPIENTS
The Employ American Workers Act (EAWA) requires employers receiving funds under the
Troubled Asset Relief Program (TARP) or Section 13 of the Federal Reserve Act to comply with
recruitment and non displacement obligations when seeking to hire new employees in the H-1B
category. This provision renders these employers ineligible for exemptions from these
provisions. This provision, enacted on February 17, 2009, sunsets after two years. Employers
cease to be subject to this provision once they have repaid TARP funds.
TERMINATION OF THE H-1B EMPLOYEE
EMPLOYERS TERMINATING H-1B EMPLOYEES MUST ADVISE USCIS BY
CERTIFIED MAIL OF THE TERMINATION IMMEDIATELY. THE FAILURE TO
DO THIS CAN SUBJECT THE EMPLOYER TO BACK-PAY.3
In order to relieve itself of back pay obligations, the employer should do the following
upon termination of the H-1B employee:
1) Notify the employee in writing of termination
The employer must notify the Department of Homeland Security (DHS)
that the employment relationship has ended so that the federal government may revoke
approval of the Petition for a Nonimmigrant Worker, and must, under certain circumstances,
provide the nonimmigrant with payment for transportation home. 20 C.F.R. § 655.731(c)(7)(ii); 8
U.S.C.A. § 214.2(h)(11). Pursuant to 8 U.S.C.A. §1184(c)(5)(A) and 8 C.F.R. § 214.2(h)(4)(iii)(E),
an employer will be liable for the reasonable costs of the H-1B nonimmigrant’s return transportation
if the employer dismisses the alien from employment before the end of the authorized admission
period pursuant to section 214(c)(5) of the Act. Administrator Wage & Hour Division v. Help
Foundation of Omaha, Inc. et. al. (ARB 12/31/08). But see (no effect given to employer notice to
immigration where company continued to act as if termination did not occur). Innawlli v.American
Information Technology Corp., 04-165 (ARB 9/29/06)
3
2) Notify USCIS of the withdrawal of the H-1B and send a copy of this notification to the
alien
3) Pay the alien’s return transportation
Proof of these steps should be maintained in the alien’s personnel file.
LABOR CERTIFICATION OBLIGATIONS
ATTESTATIONS
The labor certification requires employers to make representations as to the position offered and
to make certain attestations certifying the conditions of employment. These attestations include
the following:
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•
•
•
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•
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The offered wage exceeds or equals the prevailing wage
The wage offered is not based on commissions, bonuses or other incentives, unless the
employer guarantees a prevailing wage based on a weekly, bi-weekly, or monthly basis
that equals or exceeds the prevailing wage
The employer has sufficient funds to pay the alien the salary offered
The employer will be able to place the alien on the payroll on or before the date of the
alien’s proposed entrance into the U.S.
The job opportunity does not involve any unlawful discrimination
The job opportunity is not vacant because of a strike or lockout or work stoppage
The job opportunity’s terms, conditions and environment are not contrary to law
The job opportunity has been and is clearly open to any U.S. worker
The U.S. workers who applied for the job were rejected for lawful job related reasons
No fee has been paid to the employer or employer’s attorney for labor certification
sponsorship4
The DOL’s review of the labor certification application may lead to an audit of the application.
There is no way to determine in advance if an application will be audited. If an application is
selected for an audit by the DOL, a letter will be sent to the employer requesting documentation
be submitted within 30 days from the date of the letter. Failure to submit the requested
documentation will result in a denial of the application. The DOL may order supervised
recruitment if questions arise concerning the adequacy of the employer’s recruitment.
MAINTENANCE OF AUDIT FILE
4
The employer is prohibited from receiving payment or reimbursement of the employer's attorneys' fees or other
employer costs related to preparing and filing a permanent labor certification application and obtaining permanent
labor certification. DOL has determined that the practice of employee reimbursement to employer of expenses
incurred by in the labor certification process adversely affects compensation of U.S. workers. 20 C.F.R. § 656.12(b)
IN ORDER TO PROPERLY RESPOND TO AN AUDIT, EMPLOYERS MUST
MAINTAIN EXTENSIVE DOCUMENTATION OF RECRUITMENT EFFORTS AND
RESULTS AS SET FORTH BELOW FOR A PERIOD OF 5 YEARS.
The attorney can assist the employer in compiling the documentation for the audit file, but the
attorney should not screen workers for the positions-this is the employer’s duties. The attorney
can however explain to the employer the DOL rules for “lawful rejection” of U.S. workers.
AUDIT RESULTS
Failure to submit documentation requested in an audit will result in the denial of the
application. If the DOL determines that the documents submitted are inadequate or that a
material misrepresentation was made in connection with the application, the DOL may
prohibit the employer from utilizing the PERM process for a two year period. The
employer would be required to undergo supervised recruitment during the following two
year period. Fraud or misrepresentations in an application may be referred to government
authorities for investigation and may result in criminal penalties. Failure to produce the
documents could in certain circumstances lead to the DOL finding that there is possible
fraud or willful misrepresentation in the Labor Certification. If the DOL discovers
possible fraud or willful misrepresentation, it must refer the matter to ICE for
investigation and notify the employer, foreign national beneficiary and DOL Office of
Inspector General in writing. An ICE investigation could be undertaken and if sufficient
evidence were discovered, a criminal indictment or information could be filed by ICE. A
final government determination of fraud or willful misrepresentation could result in
criminal and/or civil penalties as well as debarment of the employer from using the Labor
Certification process for any employee during a certain period. It would also result in
automatic invalidation of the Labor Certification and termination of processing of the
Labor Certification.
It is clear that counsel must advise employers that the employer is assuming responsibilities in
H-1B and labor certification sponsorship. Sponsorship of a foreign national is a legal process, but
it must not be done haphazardly.
Tammy Fox-Isicoff ©