An IT consulting company based in Southern California recently paid $48,193 to one employee after the Department of Labor (DOL)’s Wage and Hour Division (WHD) found that the company violated provisions of the H-1B visa program by failing to comply with Labor Condition Application (LCA) requirements. Specifically, the WHD found in its investigation that Assigncorp had failed to pay the wage rate required by the LCA to its employee. Notably, in calculating the back wages owed to the employee, the WHD determined that the employer’s wage obligation began even before the H-1B petition it filed for the employee was approved by the U.S. Citizenship and Immigration Service (“USCIS”). The Assigncorp investigation is a reminder to employers to be aware of the events triggering the obligation to pay an H-1B worker.
LCA wage requirements
An employer of an H-1B worker must file an LCA with the DOL prior to filing an H-1B petition. By submitting and signing the LCA, the employer agrees to pay the required wage, for the required period of time, to H-1B workers holding the proposed position. This agreement to pay the required wage is enforceable by the WHD.
Regardless of whether employment has actually begun, when an H-1B petition is approved, the obligation to pay wages begins no later than 1) 30 days from the start date of employment in the H-1B petition, if the H-1B worker is in the U.S. when the petition is approved, or 2) 60 days from the date the H-1B worker enters the U.S. to begin H-1B employment pursuant to the approved H-1B petition, if the worker is not in the U.S. when the petition is approved. However, as the WHD investigators concluded for Assigncorp, an employer may be required to pay an H-1B worker the required wage prior to the approval of the H-1B petition, if the worker has already entered into employment with the employer.
H-1B portability allows some employment to begin upon the filing of an H-1B petition
Workers who are not already in H-1B visa status must wait until the USCIS approved start date of employment to begin employment with the employer who filed the H-1B petition on his or her behalf. However, H-1B “portability” provisions allow certain workers who are already in H-1B status to begin working for a new employer once the new employer has filed an H-1B petition with a request for a change in employer. Specifically, H-1B workers who “port” to new employers do not need to wait for the new H-1B petition to be approved before beginning work with the new employer within the LCA validity period.
Obligation to pay wage begins when H-1B worker enters employment
Naturally, H-1B portability presents a challenge to determining when an employer’s obligation to pay wages begins. Since an H-1B worker may port to a new employer prior to the approval of an H-1B petition, it follows that in some cases, an employer must begin paying the full required wage to an H-1B worker before the H-1B petition is approved. In these situations, the future approval date of the H-1B petition does not control.
So what does control in the portability context? The answer is not always straightforward, but the WHD looks to the date an H-1B worker enters employment with an employer. Sometimes this date is fairly simple to determine. For example, when an employee reports for work with the new employer and begins performing the job duties listed in the H-1B petition, it is plain to see that the H-1B worker must be paid when he or she begins work.
However, what happens when an employee reports to work for an H-1B employer, but does not actually begin performing the job offered in the H-1B petition? In this scenario, which commonly arises when a worker is waiting for a work assignment from the employer, the H-1B worker is considered to be in “nonproductive” status. H-1B employers must pay the full required wage to H-1B workers for nonproductive time caused by conditions of employment (lack of a work assignment or permit, studying for a licensing exam). The obligation to pay wages for nonproductive time begins on the date the worker first makes him/herself available for work to the employer or otherwise “comes under the control of the employer.” 20 C.F.R. § 655.73l(c)(6)(i). Examples of being available for work or under the control of the employer include waiting for a work assignment, reporting for orientation, going to an interview or meeting with a client, or studying for a license/permit exam.
Assigncorp was liable for wages owed to its employee who was available for work before the H-1B petition’s approval
The WHD determined that Assigncorp had failed to pay its H-1B employee while she was in nonproductive status after “porting” from her prior H-1B employer and making herself available to work for Assigncorp while Assigncorp’s H-1B petition was still pending. As such, the worker had entered into employment with Assigncorp and was due the required wage from Assigncorp from the date she made herself available to work, even though she had not begun a work assignment. The date the H-1B petition was approved, therefore, did not control, and the H-1B employee was entitled to back wages from the date that she entered into employment with Assigncorp following the date of filing of Assigncorp’s H-1B petition.
Lessons from Assigncorp
Employers must take note of the situations that trigger an obligation to begin paying the required wage rate to an H-1B worker. As a general rule, the enforcement actions taken against Assigncorp can be avoided by ensuring that all H-1B employees have actual, non-speculative work assignments that will last for the duration of employment; doing so will prevent the occurrence of employees in nonproductive time.
An employer is not required to pay an H-1B worker for nonproductive time caused by reasons unrelated to employment. As such, it is imperative to carefully document any voluntary requests by the worker for vacation or other leave. Furthermore, employers should communicate clearly with H-1B workers regarding expectations for the start date of employment (e.g., in the offer letter), and retain any documentation related to an H-1B worker’s availability for employment. For example, evidence that a worker was still employed full-time with a prior employer during the pendency of an H-1B petition may demonstrate that the worker was not yet available for work with the new employer and therefore the employer’s wage obligation had not yet begun.
By staying informed as to when the obligation to pay an H-1B worker begins, ensuring that the assignment specified in the H-1B petition will be immediately available when the worker begins employment, communicating with the worker about the expected start date, and retaining all relevant documentation, employers can make sure that their H-1B employees are paid the required wage from the date the obligation to pay begins. Doing so should safeguard employers from hefty fines and unexpected back wage payments.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
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