by
A recent U.S. Court of Appeals
decision in Greater
Missouri Medical Pro-Care Providers, Inc.
ARB Case No. 12-015, ALJ Case No. 2008-LCA-26 (2014), is worth noting as it addressed
the issue of how much latitude the DOL has to investigate an H-1B employer’s
H-1B documents and records.
As background, an employer
seeking to employ a temporary foreign worker in H-1B (also H-1B1 or E-3)
nonimmigrant status must, as the first step in the petition process, file a Labor
Condition Application (LCA) with the Department of Labor (DOL) and receive
certification. The LCA is completed on electronic Form 9035 and submitted
through the DOL’s iCERT system. The LCA collects information about the
occupation including the occupational title, the number of immigrants sought,
the gross wage rate to be paid, the starting and ending dates of employment,
the place of employment, and the prevailing wage for the occupation in the area
of intended employment. The LCA contains special attestation requirements for
employers who previously committed willful violations of the law or for
employers who are deemed to be H-1B dependent. The employer must also state that
its employment of nonimmigrants will not adversely affect the working
conditions of workers similarly employed in the area of intended employment. An
employer is permitted to file the LCA no more than six months before the
initial date of intended employment. See 8
U.S.C. § 1182(n)(1)ID); 20 C.F.R. §§ 655.730-733.
Once the LCA is filed, the DOL
must approve it within 7 days unless the application is incomplete or obviously
inaccurate. 20 C.F.R. §§ 655.740(a)(1)-(2). Within one day of the LCA filing, the
employer must maintain a public access file accessible to interested and
aggrieved parties. The file must be available at either the principal employer’s
place of business or at the employee worksite. 20 C.F.R. § 655.760(a). An aggrieved
employee has 12 months after the latest date on which an alleged violation was committed
to file a complaint with the DOL Wage and Hour Division (WHD). 20 C.F.R. §
655.806(a)(5).
In Greater Missouri, the employer hired numerous physical and
occupational therapists from the Philippines on H-1B status. As required, the
employer filed LCA applications for the desired workers. One H-1B employee, a physical
therapist from the Philippines, filed a complaint alleging that she had
personally paid all the fees, including attorney’s fees, to file and to extend
her H-1B status and that the employer failed to pay her during a nonproductive
period of over one year when she was reviewing for her licensing exam. The
employee also questioned whether the H-1B employer was legally permitted to
charge her a fee for “breach of contract” due to her early termination of her
employment.
Upon review of the employee’s
complaint (forwarded to the DOL by the Missouri state regulators), the DOL
treated it as an “aggrieved party” complaint and the DOL investigator concluded
that there was “reasonable cause” to investigate the charge that the H-1B
employer had attempted to require the employee to pay a penalty for ceasing her
employment early. Based only on the determination that this one charge was
worth investigating, the DOL investigator launched a full scale investigation
and sent a letter to the H-1B employer requesting all of its H-1B documents and
records. The DOL investigator also interviewed the aggrieved employee and the employer’s
other H-1B workers.
Based on its investigations, the
DOL found that the employer improperly failed to pay wages to employees who it
had placed in nonproductive status (benched); made improper deductions from
employee wages for H-1B petition fees; and required or attempted to require
improper penalty payments from some employees for early termination. The
employer was ordered to pay over $380,000 in back wages to 45 employees.
The employer fought back by requesting
a hearing before an Administrative Law Judge (ALJ). The employer argued that the applicable statute
and regulations limited the DOL’s investigation to the specific issues of the complaint
that was filed and only to that aggrieved party’s LCA. The employer also argued
that the statute and regulations impose a 12 month time limit for investigating
violations. However, the ALJ held that the 12 month time limit only refers to
when a complaint can be filed and does not refer to the scope of remedies that
can be meted out. The ALJ issued a decision ordering the employer to pay back
wages, fees for illegal fee deductions and amounts to employees for illegally
withholding paychecks. When the ALJ failed
to hold in the employer’s favor, the employer petitioned for review before the Administrative
Review Board (ARB).
The ARB held that the DOL indeed had
the authority to investigate alleged violations involving H-1B workers who did
not file complaints but also held that violations that occurred outside of the
12 month period prior to the filing of a complaint are not actionable. However, the ARB affirmed the order for employer
to pay awards. The employer took the case up to the District Court which
affirmed the ARB’s decision and payment of awards. The employer then appealed
to the US Court of Appeals. The DOL did not appeal the District Court’s ruling
that violations that occurred outside the 12 month period are not actionable.
In the end, the Court of Appeals
held that the DOL’s initial investigatory authority is limited to the complaint
that was filed and to those specific allegations and the DOL was not authorized
to launch a comprehensive investigation of the employer based only on a single
allegation by one employee. The Court of Appeals recognized that additional
violations could come to light in the course of the DOL’s investigation of a
single complaint and that the DOL may need to modify or expand its
investigation based on reasonable cause. However, the Court of Appeals found
that this was not how the investigation proceeded in the instant case. The Court
of Appeals held that the awards cannot stand because the ARB’s finding of
violations and the resulting awards were based entirely on the DOL’s
unauthorized investigation of matters other than the allegation in the
aggrieved party’s complaint. The US Court of Appeals reversed the judgment of
the District Court.
While this was ultimately a
victory for the H-1B employer and it is good to note that the DOL does not have
sweeping authority to investigate allegations of violations that fall outside
of the 12-month statute of limitations, this case is nevertheless a cautionary
tale for all H-1B employers. Even a single complaint from one disgruntled employee
could lead to a comprehensive investigation of the employer’s H-1B practices. Even
though the Court of Appeals in Greater
Missouri found that the DOL had overstepped in its initial investigation,
the court also pointed out that the DOL may modify its investigation of a
single complaint if other violations come to light. Greater Missouri also highlights the
fact that once allegations are made, the employer bears the burden of proof to
prove that it has complied with the LCA attestations. Therefore, the importance
of excellent record keeping cannot be overstated.
Going into 2016, it would be a
good idea for any H-1B employer that is not 100% confident in its LCA records, and
its ability to withstand a DOL audit of those records, to conduct a self-audit on behalf of the employer and
bring to light any issues that the employer can immediately correct and ensure
that it is in compliance. Such a self-audit will give the employer the
confidence that it needs should the DOL ever launch an investigation and will help
the employer to avoid the potential financial and reputation damage that
could come from such an investigation. When it comes to DOL investigations, the proactive approach
is always best.
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