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Summary Of The Labor Condition Application For H-1B (Specialty Worker) Visa Classification

Background

As of October, 1991, all employers using the H-1B Category must first file a Labor Condition Application (LCA) with the U.S. Department of Labor (DOL). Only upon receipt of a certified LCA may an employer submit a Visa Petition to the Citizenship and Immigration Service (CIS) to sponsor a foreign national for H-1B Employment. This summary discusses only the Labor Condition Application-related issues and does not examine the Visa Petition phase of an H-1B Classification request.

The Labor Condition Application

The LCA, itself, is not complicated. However, before filing an LCA with the USDOL, an employer must collect and retain documentation to support the assertions that the employer makes in its LCA. This required documentation must be in an employer's Public Inspection file when the LCA is submitted to the government, and must be made available for inspection on demand.

LCA Attestations -- Summary

The LCA requires an employer to attest to four things:
  • That H-1B workers will be paid the actual wage for the occupation at the place of employment paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question or the prevailing wage level for the occupation in the area of employment, whichever is higher;
  • That the employment of H-1B Workers will not adversely affect the working conditions of workers similarly employed in the area of intended employment;
  • That there is no strike, lockout or work stoppage in the course of a labor dispute in the occupation in which the H-1B will be employed at the place of employment; and
  • That as of the date the LCA is filed, notice of the LCA has been provided to workers employed in the occupation in which H-1B workers will be employed and that a copy of the LCA has been, or will be, provided to the H-1B employee at the time the employee reports for work.
Attestations -- Detail

First: Actual or Prevailing Wage

Before an employer can attest that it will pay the actual wage or the prevailing wage, whichever is higher, it must determine both the prevailing wage and the actual wage for the offering position. 

The Prevailing Wage: There are several methods an employer may use to determine the prevailing wage.

  • Federal Law Governs: If the occupation is subject to the Davis-Bacon Act (governing construction trades and crafts and contracts with or financed by the U.S. Government) or the McNamara-O'Hara Service Contract Act (governing minimum compensation of employees working for contractors and subcontractors under contract with the U.S. Government) the prevailing wage is determined by either of these two Acts.

  • Union Contract: If the job is covered by a union contract, the contract sets the prevailing wage.

  • State Employment Service: An employer may ask the State Workforce Agency (SWA) to make a prevailing wage finding. To do this, the SWA needs information about the job title, the duties to be performed, and the education, training, experience and other job requirements. To have a "safe harbor" in the event of a USDOL audit or investigation, the employer must request, and rely upon, the SWA wage determination as the basis for the prevailing wage. If the employer disagrees with the SWA determination, it must challenge it before using the determination as a basis for filing the LCA.

    If an employer uses this option, it should keep in its Inspection File the determination from the SWA which specifies the prevailing wage.

  • Independent Authoritative Survey: An employer may rely on an Independent Authoritative wage survey. For the wage survey to be acceptable to the USDOL, it must (a) reflect the weighted average wage paid to similarly employed workers in the area of intended employment, (b) be based on information collected within the previous 24 months, and (c) be the latest published prevailing wage finding by the authoritative source.

    Many wage surveys are not sufficiently focused geographically. A national survey, or even a regional survey, is unacceptable because according to the USDOL, the area of intended employment means the area within normal commuting distance to work.

  • Other Legitimate Sources: An employer may rely on Other Legitimate Sources of wage data. For instance, an employer might wish to use a survey other than an Independent Authoritative one as described above. Such a survey would have to be "reasonable and consistent with recognized standards and principles in producing a prevailing wage." If a complaint were to be filed, an employer would have to demonstrate the legitimacy of the prevailing wage as determined using this Other Legitimate Source of wage information.
The USDOL prefers that an employer determine the prevailing wage using one of the alternatives above and in the order in which we have listed them. The source that the employer uses to determine the prevailing wage must be noted on the LCA. 

The Actual Wage:

  • Definition: The actual wage means "the wage rate paid by the employer to all individuals with experience and qualifications similar to the H-1B nonimmigrant's experience and qualifications for the specific employment in question at the place of employment." The actual wage is not an average of the wage rates paid to all workers employed in the occupation.
  • Purpose: The purpose of the actual wage requirement is to ensure that the H-1B employee is paid consistently with similarly situated employees who are performing essentially the same job duties at the same worksite.
  • Criteria: To determine the actual wage rate paid to all individuals with similar experience and qualifications for the specific employment in question, an employer may consider the following factors: experience; qualifications; education; job responsibility and function; specialized knowledge; other legitimate business factors.

    "Other legitimate business factors" means facts (relating to the job) that are necessary to consider in determining salary because they conform to recognized principles or can be demonstrated by accepted rules and standards. The USDOL has offered an example of the development of a patent (for a worker such as a research chemist). 

    "Illegitimate" factors include sex, race, national origin, age, religion, the H-1B Employee's willingness to work for less, the parity of the H-1B's salary with peers in his or her country of origin, and skills irrelevant to the position.
  • Determination: Where there are other employees with substantially similar experience and qualifications in the specific employment offered to the H-1B Nonimmigrant, the actual wage is the amount paid to these other employees at the worksite, the actual wage is the amount offered to the H-1B Nonimmigrant. Job titles are not controlling in determining whether an employer has employees in the same occupation as the H-1B employee; an employer must look to the job duties that the H-1B employee performs.
  • Actual Wage Documentation: One of the items that must be included in an employer's LCA file is documentation -- usually a memorandum to the file -- explaining how an employer determined this actual wage for the offered position. This documentation can include a copy of an employer's pay system for the occupation at the worksite, coupled with a memorandum explaining why the H-1B Nonimmigrant will receive the same, lower or higher salary as compared with other similarly employed workers. Any differences in compensation between the H-1B Nonimmigrant and other employees with similar responsibilities and qualifications must be clearly explained in the memorandum.
Other Important Wage Issues: Only compensation which is treated as the H-1B Nonimmigrant's earnings for income tax and FICA purposes can be consider "wages" paid to the employee.

If the employer raises the wage rates of similarly employed employees in the same occupational classification (e.g., a cost-of-living increase), the employer must give the H-1B Nonimmigrant he same kind of raise. 

The employer may make authorized deductions from the H-1B Nonimmigrant's pay, such as those required by law (e.g., FICA), those which are reasonable and customary (e.g., for health insurance premiums covering all employees), or those which are made in accordance with a voluntary, written authorization by the employee primarily for the benefit of the employee (e.g., housing or food allowances).

Second: Terms and Conditions of Employment

The second attestation requires an employer to document that it is offering prevailing working conditions. Working conditions include hours, shifts, vacations and fringe benefits. If a complaint is filed, an employer must be able to show that the working conditions of similarly employed workers were not affected by the employment of an H-1B worker. An employer will have to establish that the working conditions are similar to the working conditions which were in existence before the H-1B worker was hired. 

The DOL does not require that the public inspection file contain evidence of prevailing working conditions. Only if a complaint is filed will an employer be responsible for proving compliance with this element. However, it might be wise to collect and retain in the LCA file evidence of working conditions, such as a summary of an employer's current benefit package. Also, if information about the working conditions for the industry, occupation and locale -- such as published studies, surveys, or articles -- is available, it might be prudent to collect and file this information as well. Should a complaint later be filed, it will be much more difficult to establish later what working conditions were in effect at the time the LCA was filed.

Third: No Strike, Lockout or Work Stoppage

Only in response to the complaint will an employer have to prove that no strike, lockout or work stoppage exists. An employer is not required to maintain documentation regarding this attestation.

However, if a strike or lockout of workers in the same occupational classification as the H-1B nonimmigrant occurs at the place of employment, the employer must provide to the DOL written notice of the strike or lockout within three days. In this situation, the employer may not file any new H-1B Petitions relating to this worksite and may not assign any H-1B Nonimmigrants to this worksite during the dependency of the strike or lockout. 

Fourth: Notice

An employer must comply with the notice element by notifying the bargaining representative if the position is unionized or, if not, by posting a notice in at least two conspicuous, internal locations at the worksite where the services will be performed. The notice may also be a slightly modified photocopy of the completed LCA form, and must remain up for at least 10 days.

The following statement must appear on the notice: "Complaints alleging misrepresentation of material facts in the Labor Condition Application and/or failure to comply with the terms of the Labor Condition Application may be filed with any office of the Wage and Hour Division of the U.S. Department of Labor."

On the same day that an employer files its LCA with the DOL - if not earlier - it must begin to post two notices and, after 10 days, take the notices down and place them in its Inspection File. An employer should indicate on each posting (a) the date the notice was posted, (b) the date the notice was removed, and (c) the exact location where the notice was posted.

Storing Supporting Documentation

An employer should have a public Inspection File for each LCA submitted for each H-1B Employee. Into the LCA file should go:

  • A copy of the LCA (Form ETA 9035); when the DOL returns a certified copy, the employer should put it into the Inspection File;
  • Documentation which states the wage rate to be paid to the H-1B employee (a short memorandum to the file is acceptable);
  • A clear explanation of the system that was used to set the "actual wage" for the occupation in which the H-1B employee will be engaged. For instance, a memorandum to the file summarizing the system or a copy of an employer's pay system (payroll records are not required) would suffice;
  • Documentation which the employer relied on to arrive at the "prevailing wage" for the H-1B's occupation. The DOL says that a "general description of the source and methodology" is all that is required, and that the underlying individual wage data used in determining the prevailing wage is not necessary; and
  • Documents establishing how an employer complied with the notice requirement i.e., the letter to the bargaining representative or the two notices which were posted, annotated with the dates and locations.
An employer must retain copies of the LCA and the other supporting documentation for one year beyond the end of the period of employment specified on the LCA or one year from the date the LCA was withdrawn, except in the case of DOL enforcement action.

Payroll Records

An employer must retain payroll records for the H-1B employees and all other employees in the occupational classification for a period of three years from the date the records were created. 

Payroll records for each employee must include the following:
  • Employee's full name;
  • Employee's home address;
  • Employee's occupation;
  • Employee's rate of pay;
  • Hours worked by the employee each day and each week, if paid on other than a salary basis;
  • Total additions to or deductions from pay each pay period by employee; and
  • Total wages paid each pay period, date of pay and pay period covered by the payment by employee.
These payroll records are not part of the Inspection File containing evidence of wages, working conditions, and notices, and should be kept separately. As mentioned earlier, any pay adjustments or raises affecting the H-1B Employee's occupation must be documented. 

Short Term Placement at New Worksites

If the employer must assign the H-1B Nonimmigrant to a new worksite which is not located in a city listed on the LCA, the employer should consider consulting legal counsel because of the complications such a placement may trigger. The employer might chose to file a new LCA covering the new city or, alternatively, rely on a regulatory provision which allows the employer to assign H-1B Employees to worksites in a new city for up to a cumulative period of 90 days without filing a new LCA -- if certain conditions are met. The DOL's rules in this area are complex.

Conclusion

It is not possible to cover every issue appearing in the DOL's 34-page, small-print regulations and supplementary information. To make this Summary manageable, we necessarily had to omit information which, under certain circumstances, could be important. The information in this Summary is a general description of the law and is not intended to provide specific legal advice.


 

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