Vigilence Required: H-1Bs, the Labor Condition Application and the Public Examination File
For many employers who have gone through the H-1B process of filing a specialty occupation visa petition for a foreign worker, it is too often the case that after the process is over, the next time the employer seeks immigration counsel is many years later, if ever. If one could ever make a potentially disastrous mistake this could be it. The word on the immigration street is that in combination with one another– United States Citizenship & Immigration Services (”USCIS) and the U.S. Department of Labor (in particular the Employment Training Administration and the Hours and Wage Division) are expected to increase the frequency and severity of their audits of H-1B employers. This means that employers should not only maintain the requisite Public Examination File (H-1B file), which the lawyer probably alluded to, but update the file in connection with changes affecting the H-1B’s conditions of employment. The touch stone of all this is the Labor Condition Application (the “LCA”) which had to be filed with and certified by the Department of Labor prior to the petition filing. The purpose behind the LCA is for the employer to attest that it shall be paying the H-1B worker the prevailing wage and otherwise maintaining acceptable working conditions for all employees, including that H-1B’s shall not be used as strike busters to the detriment of U.S. workers. As part of the LCA process, employers may remember that an H-1B job posting needed to be done and that the actual posting had to be retained in the H-1B file. It is worth noting, however, that the Labor Department Regulations provide that the H-1B file (or the Public Examination File as the DOL describes it) contains other documents which we briefly describe below:
(1) A copy of the Labor Condition Application (Form ETA9035) signed by the employer;
(2) Documentation that supports the wage offered to the H-1B employee
(3) Documents demonstrating the employer’s wage policy. For example, if the H-1B employee is working in a position where the employer has standardized the wage level and benefits, documentation demonstrating this policy should be included in the H-1B file
(4) Documents showing the prevailing wage for the particular occupation in which the H-1B is working. Keep in mind that the Labor Department rule is that an H-1B shall be paid the local prevailing wage or the employer’s own actual wage, whichever is greater, but in no event shall the wage be less than the prevailing wage
(5) A copy of any union notification/employee notification (like the postings previously referred to
(6) Documents describing the employer’s benefits program and how the program differentiates between different levels of employee
(7) If the employer is undergoing reorganization or a merger, there needs to be a sworn statement in the H-1B file to the effect that the successor employer is prepared to undertake the obligations of the former employer under the LCA and a description of the new wage system of the successor employer
(8) Where the employer includes a number of subsidiaries as part of defining itself as a “single employer”, a list of the entities comprising the single employer must be put in the H-1B file (The “single employer” issue is relevant in trying to determine whether an employer may be H-1B dependant, another topic for the future)
(9) If an employer is H-1B “dependant” and H-1B exempt employees are being employed the H-1B file needs to contain a list of exempt H-1B employees and the basis on which each one is exempt, and
(10) where the employer is H-1B dependant and has to go through a recruitment process, documents have to be placed in the H-1B file that describe the process
What should be apparent from reviewing this list, is that the H-1B, Public Examination File should be updated as employment conditions for the H-1B employee change and/or as policies or the character of the employer change that impact upon working conditions: If the employee receives a raise, a memo documenting that raise and describing the employer’s policy in giving raises needs to be placed in the H-1B file. If there is a downsizing that results in American workers being laid off, but not the H-1B worker, documentation needs to be placed in the file justifying both the terminations and the decision not to terminate the H-1B. In the event the Labor Department comes-a-calling for an audit the best defense to claims of impropriety will be an up-to-date and well papered H-1B file. That said, employers must view their relationship with immigration counsel as ongoing so that input can be received on how best to avoid and mitigate potential regulatory problems. As the H-1B climate becomes more difficult, employers who ignore the state of their Public Examination Files will be doing so at their peril.