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Hiring, Documenting, and Terminating H-1B Workers in a Climate of Increased Government Scrutiny: What In-House Counsel and H.R. Professionals Need to Know Thursday, March 11, 2010 © Employment Law Alliance
Introduction -2- © Employment Law Alliance
Presenters Sarah Lea Tobocman, Moderator, Gunster, Yoakley &Stewart P.A., Miami, FL Gabriella M. Buckley, Vedder Price P.C., Chicago, IL Jay Carmichael, Gunster, Yoakley & Stewart P.A., Miami, FL -3- © Employment Law Alliance
Presenters Leigh Polk Cole, Dinse, Knapp, McAndrew, Burlington, VT Herman W.H. Lee, Alston Hunt Floyd & Ing, Honolulu, HI -4- © Employment Law Alliance
Overview of the H-1B Classification Substantive requirements: –Minimum qualification for entry into the profession must be at least a 4-year bachelor’s degree or equivalent specific vocational preparation –Candidate must hold the required degree or equivalent combination of education and experience -5- © Employment Law Alliance
Overview of the H-1B Classification H-1B status is commonly used for engineers, computer software and technology personnel, college/university professors, researchers, health care professionals including physicians (e.g., professions that require at least a bachelor’s degree) -6- © Employment Law Alliance
Overview of the H-1B Classification H-1B status is not available for all professional positions –Example A: Registered nurses can hold an associate’s degree or a bachelor’s degree, so RNs are not eligible for H-1B status with any employer –Example B: Nurse Managers must be RNs but the profession Nurse Manager requires a bachelor’s degree, so it is eligible for H-1B status -7- © Employment Law Alliance
Overview of the H-1B Classification Temporary status for maximum of 6 years Can extend H-1B status past 6 years as needed if employer sponsors for permanent residency before the end of the 5 th year of H-1B status Recapture/remainder time can be recouped -8- © Employment Law Alliance
Requires employer-employee relationship; not available for independent contractors or unpaid interns H-1B employment may be full-time or part- time Can have more than one H-1B employer at a time -9- © Employment Law Alliance Overview of the H-1B Classification
Upcoming Filing Period Certified Labor Condition Application –Administered by the U.S. Department of Labor –Start early! New DOL iCert portal in April 2009 No more instantaneous LCA Certifications Minimum wait period of 7 days iCert Federal Employer Identification Number delays -10- © Employment Law Alliance
Upcoming Filing Period Notice of filing of LCA –Notice must be provided not earlier than 30 days before LCA application and not later than date of LCA application Nonimmigrant visa petition –Administered by the U.S. Citizenship and Immigration Services -11- © Employment Law Alliance
Upcoming Filing Period –Filing Fees ACWIA fee Fraud filing fee Base filing fee –Processing time The F-1 and H-1B “Gap”: F-1 status will expire before H-1B employment begins on October 1 Consular processing for H-1B visa -12- © Employment Law Alliance
H-1B Cap Issues and Exemptions 65,000 H-1B approvals available each federal fiscal year –Cap exemption for colleges and universities and affiliated nonprofits, and nonprofit and government research organizations -13- © Employment Law Alliance
H-1B Cap Issues and Exemptions –All other employers compete for 65,000 H-1B approvals each year –H-1B petitions must be filed April 1 for employment to start October 1 (new federal fiscal year) for H-1B cap “lottery” –20,000 additional H-1Bs are available for individuals with Masters Degrees from U.S. universities -14- © Employment Law Alliance
Period of Stay With exceptions, maximum period of stay in H-1B status is 6 years –Initial H-1B status is up to 3 years –Extension of H-1B status Extension must be filed before H-1B status expires Extension is not subject to annual H-1B cap on visa numbers -15- © Employment Law Alliance
Period of Stay Stale LCA Some exceptions to 6-year period Labor certification or immigrant visa petition filed at least 1 year before expiration of 6-year period Immigrant visa petition approved but immigrant visa unavailable -16- © Employment Law Alliance
Special Issues H-1B Portability: –Generally an H-1B approval must be obtained before the employment can start –H-1B portability: if candidate is employed in H-1B status with another employer, new H-1B employment can start when new employer files H-1B petition -17- © Employment Law Alliance
Special Issues –“H-1B Dependent Employers” Definition based on number of H-1B workers at the employer: Up to 25 FTE employees: 7+ H-1B workers FTE employees: 12+ H-1B workers 51+ FTE employees: 15%+ H-1B workers -18- © Employment Law Alliance
Special Issues “H-1B Dependent Employers” must make additional attestations regarding recruitment and non-displacement of U.S. workers –Recipients of Government Economic Stimulus Funds are treated as “H-1B Dependent Employers” (TARP, TALF, PPIP, Section 13 Federal Reserve Act) -19- © Employment Law Alliance
Recent USCIS Policy and Practice on Adjudication of H1-B Petitions Scrutiny of Employer/Employee Relationship Must explain and document with contract, description of responsibilities and reporting, pay stubs -20- © Employment Law Alliance
Recent Issues Raised in Requests for Evidence Requests for pay stubs (3 months) to show: Maintenance of status with prior H-1B employer Compliance with H-1B petition for new H-1B employment with petitioner (H-1B portability) -21- © Employment Law Alliance
Financial information about the employer Be prepared to submit audited financials, tax returns -22- © Employment Law Alliance Recent Issues Raised in Requests for Evidence
E-3 Status Good alternative to H-1B for Australian citizens Eligibility is similar to H-1B E-3 status is renewable indefinitely in 2-year increments E-3 cap (10,000 approvals per year) is not oversubscribed, so E-3s are always available (to date) Processing directly at consular post can lead to quick approval Filing fees are significantly lower than H-1B petitions -23- © Employment Law Alliance
H-1B Enforcement -24- © Employment Law Alliance
H-1B Enforcement -25- © Employment Law Alliance Business Week article/GAO report 10/08 –13% of H-1B visas were fraudulent –7% contained technical violations –Recommended increased audits
The Labor Condition Application Employer’s LCA obligations –Generally, LCA attestations provide assurance that H-1B workers will not adversely affect wages and working conditions of U.S. workers -26- © Employment Law Alliance
Employer Attestations -27- © Employment Law Alliance
Ongoing LCA Obligations Creating and maintaining Public Access file Maintaining other documentation for DOL inspection Notification to DOL within 3 days of a strike or lockout of workers in the occupation at the place of employment Monitoring H-1B dependency status -28- © Employment Law Alliance
Ongoing LCA Obligations Need for amended petition Updating H-1B worker’s salary Auditing public access and DOL files -29- © Employment Law Alliance
Public Access File Copy of certified LCA Full, clear explanation of the system the employer used to set the actual wage Documentation that provides the wage rate to be paid to the H-1B Copy of documentation the employer used to establish the prevailing wage -30- © Employment Law Alliance
Public Access File Copy of the documents used to satisfy the notice requirement (to employees, union, H-1B) Summary of benefits and explanation of any differentiation Change of corporate structure documentation accepting LCA obligations, liabilities, and undertakings Summary of recruitment efforts for (H-1B dependent employers) -31- © Employment Law Alliance
Additional Documentation for DOL Records showing wage rate for all employees for the specific employment at the place of employment Underlying data used to prepare the actual wage memorandum for the public access file Other prevailing wage surveys -32- © Employment Law Alliance
Additional Documentation for DOL Documentation regarding offer of benefits and complete benefits information Evidence that the H-1B employee received a copy of the LCA Payroll records Additional information regarding H-1B dependent employer obligations -33- © Employment Law Alliance
Record Retention Either at employer’s principal place of business or place of employment 1 year beyond the last date on which any H-1B was employed under the LCA (or, if no one was hired, 1 year after expiration of the LCA or after the date it was withdrawn) -34- © Employment Law Alliance
Additional Employer Obligations Payment of costs and attorney fees associated with the LCA and H-1B petition If H-1B terminated before the end of authorized stay, employer liable for reasonable costs of transportation abroad -35- © Employment Law Alliance
Additional Employer Obligations Mandatory notification to USCIS for bona fide termination Movement of H-1B employees No Benching -36- © Employment Law Alliance
No Benching Rule Must continue to pay the required wage to the H-1B worker during non-productive periods at the direction of the employer (i.e., lack of work) Not required if lack of productive employment is due to a voluntary request by the H-1B worker (i.e., caring for an ill relative) -37- © Employment Law Alliance
Background: The Office of Fraud Detection and National Security (FDNS) Division within USCIS Created in 2004 “to enhance the quality, integrity, and security of the U.S. legal immigration system” Primary mission is to detect, deter, and combat immigration benefit fraud FDNS is USCIS primary conduit to the law enforcement and intelligence communities -38- © Employment Law Alliance
Background: The Office of Fraud Detection and National Security (FDNS) FDNS officers communicate with ICE and other federal, state, and local government offices for criminal prosecution or administrative sanctions FDNS is engaged in “assessing” the H1B program and H1B employers USCIS Vermont Service Center has transferred 20,000 H1B cases to the FDNS for “assessment” Very well funded! $500 anti-fraud fees from H and L petitions will be used to support FDNS -39- © Employment Law Alliance
FDNS Assessment Efforts Review of public records and information Contact via written correspondence, electronic transmission, or telephone AND: Unannounced physical site inspections at the H 1B employer’s principal place of business and/or at the H1B nonimmigrant’s work location -40- © Employment Law Alliance
H1B Visit: What You and Your H1B Employees Can Expect FDNS investigator will arrive with no warrant or subpoena Employer has the right to request that its attorney be present in person or by phone The FDNS investigator will likely have a copy of the H1B petition for a specific individual Investigator may ask to speak with the employer representative who signed the I129 Petition for H1B status -41- © Employment Law Alliance
H1B Visit: What You and Your H1B Employees Can Expect Investigator may ask to speak with an HR representative May ask to see documentation related to the employer's business May ask to take photos of the employer’s facilities and H1B worker’s workspace May ask to see the worker’s H1B Public Access File -42- © Employment Law Alliance
H1B Visit: What You and Your H1B Employees Can Expect Will likely inquire as to the H-1B worker's: –Date of hire –Title –Work location –Salary information Will ask to speak with the H1B worker May ask the H1B worker to present a photo ID and paystub -43- © Employment Law Alliance
H1B Visit: What You and Your H1B Employees Can Expect The H1B worker may be asked who paid immigration fees/costs The H1B worker may be asked about his/her: –Job title –Job location –Educational background –Job duties –Salary and hours -44- © Employment Law Alliance
What Should the Employer Do? Request to see FDNS investigator’s credentials and note same Contact in-house counsel, head of HR, or immigration counsel Identify a person to remain with investigator With aid of counsel, determine whether to admit investigator or request to reschedule with counsel present If proceeding, determine if H1B worker is on-site -45- © Employment Law Alliance
What Should the Employer Do? Invite investigator to a conference room/private area to conduct interviews Determine whether employee’s records are on-site or at headquarters Memorialize in writing the questions asked/answered during the visit and documents reviewed After the visit, confirm that the employer was in compliance with all requirements relating to the H-1B employee -46- © Employment Law Alliance
Penalties for Noncompliance Civil penalties –$1,000 and 1-year debarment from immigrant and non-immigrant petition approval –$5,000 and 2-year debarment for willful violation plus 5 years of random investigations –$35,000 and 3-year debarment if violation involves displacement of a U.S. worker –Whistleblower penalties: $5,000 and 2-year debarment -47- © Employment Law Alliance
Penalties for Noncompliance Civil Penalties –Unconscionable contract provisions: $1,000 fine –Placement with another employer: $1,000 and 1- year debarment –Remember - penalties are on a per-violation basis, and can add up!! -48- © Employment Law Alliance
Penalties for Noncompliance Criminal Penalties –Knowing and willful submission of a false statement in an LCA may result in up to 5 years of imprisonment and a $10,000 fine -49- © Employment Law Alliance
Corporate Liability Important: –A corporation is liable criminally for actions of employees or corporate executives or officers who conduct illegal acts as long as the actions of corporate agents were within the scope of agents’ duties and were intended, at least in part, to benefit the corporation -50- © Employment Law Alliance
Corporate Liability The Department of Justice and Department of Labor provide guidelines for avoiding liability Employers should: –Make a good faith attempt to comply with the law –NOT engage in a pattern or practice of violations –Consider timely and voluntary disclosure of wrongdoing –Cooperate with investigations –Implement and enforce a compliance policy -51- © Employment Law Alliance
Establish and Enforce an Immigration H-1B Compliance Policy MAKE IT CLEAR! Appoint a compliance officer Schedule annual reviews of LCA files by immigration counsel Institute a training program – top to bottom Establish a system for monitoring compliance Communicate ramifications of policy non-compliance and enforce them -52- © Employment Law Alliance
H-1B Immigration Compliance Policy Establish a clear process for audits, visits, and investigations –Identify go-to person in case of government visit –Train front-line personnel to contact appropriate staff immediately Provide for post-audit/visit training Schedule update of LCA files with annual increases, in addition to updating whenever salary changes Monitor H-1B dependency -53- © Employment Law Alliance
H-1B Immigration Compliance Policy Ensure additional posting notice obligations and/or amended H-1B filings have been made and reflected in the files Review “payback” agreements to ensure compliance with H-1B regulations Set up process to ensure post-employment compliance re travel home/withdrawals -54- © Employment Law Alliance
Educate employees and management to ensure that they understand the H-1B category and its importance in creating a world class work force Work with employees and management to emphasize the importance of immigration law compliance Establish and enforce your immigration compliance policy -55- © Employment Law Alliance H-1B Immigration Compliance Policy
In Summary How to take advantage of the availability of H-1Bs starting April 1, 2010 –Filing period –Quotas and quota exemptions –Substantive requirements –Procedure –What to anticipate from USCIS in upcoming filings -56- © Employment Law Alliance
What you need to know in a climate of increased government scrutiny –Deconstructing the Labor Condition Application –Employer obligations –Maintenance of Public Access Files and documentation for DOL –What to expect from Administrative Site Visits by DHS –Best practices – what In-House Counsel and HR can do to limit liability -57- © Employment Law Alliance In Summary
Take Aways Prepare to file H-1Bs as early as possible in the application period, which starts April 1, 2010 Anticipate USCIS may question the employer- employee relationship, and request financial information from your company Work with immigration counsel to prepare Labor Condition Application, Public Access File, and DOL documentation -58- © Employment Law Alliance
Take Aways Special requirements apply when seeking to terminate, lay off, or furlough an H-1B employee – consult in advance with immigration counsel Anticipate DHS Administrative Site Visits Establish, enforce, and update your written H-1B compliance policy and provide annual training to management -59- © Employment Law Alliance
Parting Thoughts The H-1B Temporary Worker classification is a useful visa classification for U.S. employers seeking to fill critical specialty positions. With proper preparation, training, and periodic reviews of H-1B petitions and Labor Condition Application files, compliance with employer obligations can be monitored and maintained © Employment Law Alliance
Wrap-Up Immediately following the webinar, after you disconnect, a survey will automatically appear on your computer screen asking you to evaluate the webinar. Please take a few minutes to complete it so that we can continue to improve the quality and delivery of future ELA-sponsored webinars. To listen to this webinar again or to any past webinars, please visit our website at: We regret that we cannot give CLE or HRCI credit for this webinar; however, a Certificate of Attendance and the necessary supporting materials are now posted on the ELA website. Click this webinar name on the ELA website and scroll down to the link for “certificate of attendance.”www.employmentlawalliance.com -61- © Employment Law Alliance
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