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Awakening of a Slumbering Giant:
The DOL steps up LCA investigations
Business Immigration Quarterly, Fall 2002
Michael F. Hammond
As of June 2002, the Department of Labor (DOL) completed fifty-seven (57)
Labor Condition Application (LCA) audits, found forty-four (44) violations
and ordered companies to pay $1.3 million dollars. Compare those numbers to
fiscal year 1999 when the DOL completed thirty-two (32) audits, found
twenty-four (24) violations and ordered companies to pay only $325,000.00.
Currently, the DOL has over 250 open investigations and is receiving an
average of twelve (12) complaints per day in the San Francisco Bay area
alone. Clearly, we are seeing an increase in complaints, investigations, and
enforcement of the LCA regulations. This article will focus on the most
common complaints the DOL is reporting and give employers some specific
advice relating to avoiding an audit and handling that call when it comes.
This article presumes some significant knowledge of the LCA rules as it
explores some common scenarios being reported by the DOL and faced by
employers hard hit by the current economic conditions.
The DOL has been given the authority by Congress to investigate complaints
against employers who utilize the H-1b program and allegedly violate the LCA
requirements. Essentially, the LCA regulations are designed to protect the
U.S. and H-1b worker from unscrupulous practices of U.S. employers as they
relate to the hiring and employment of foreign workers under the H-1b
program. The regulations divide employers into two distinct classifications,
dependent and non-dependent, and impose different requirements based upon
said classifications. A description of the two classifications and the
requirements imposed is outside the scope of this article, but an
explanation can be found on our web site. The scenarios described herein are
relevant to both classes of companies. A forthcoming article will focus on
issues specific to dependent companies.
The enforcement of the LCA regulations is a complaint driven process which
mandates that the DOL receive a complaint from an interested party before an
investigation can begin. Interestingly, the DOL has designated itself as an
interested party and permits itself to be a complaining party. The reality,
however, is that the DOL has to date only rarely used such power. The DOL
reports that the vast majority of complaints come from previously terminated
employees followed by current employees, and competitors.
The most common complaints are: benching without pay, pay cuts below
prevailing wage, forced leave of absences, unlawful deductions from pay upon
termination and most recently those relating to RIFs. The DOL reports that
upon investigation, they find violations most commonly relating to unlawful
benching, forced leave of absences, incorrect pay classifications, location
violations, failure to post and paperwork failures.
Quite often, an employer’s own attempt at good will creates a violation. For
example, Company ABC has employee X who has worked very hard for the company
for the past two years and is in the I-140/485 stage of his green card
process when his project ends and ABC determines that they must lay him off.
The company knows that such an action will end his green card process so
instead, they place him on a leave of absence until such time as his I-485
is pending for more then 180 days. They then expect employee X to find
another similar position and finish his green card with the new employer. To
cover themselves, ABC has X sign a written request for a leave of absence so
he can travel the country and visit friends and family. By taking such
action, ABC has committed clear LCA violations and possibly even visa fraud.
ABC would likely be ordered to pay back pay to employee X and fined for
their actions, possibly even facing the severe penalty of debarment. Hint:
Do not place employees on an unpaid leave of absence for lack of work. Do
not promise positions which do not exist simply to “help” your former
employees complete their green card process.
A second common scenario has Company ABC filing green card cases with
“enhanced” job descriptions/requirements so as to permit its employees to be
placed in the higher EB-2 category. A common investigatory approach of the
DOL is to request copies of all labor certification applications filed and
compare the representations made there with those made in the H-1 and LCA
applications. Unfortunately, the DOL often finds that in the H-1/LCA
application the position has been classified as low as possible whereas the
labor certification often classifies the position as high as possible, often
without any factual justification. In these circumstances, the DOL will
often award back pay at the higher level for the entire period of
employment. Hint: Do not enhance labor certification applications simply to
pacify a request from an employee.
A third common scenario has Company ABC deducting money from Employee X’s
final pay check when he has left the company. The DOL is very specific as to
the circumstances in which a deduction can be made even if the money being
deducted is lawfully owed by the departing employee. Hint: Do not deduct any
monies owed by a departing employee without either getting the employee’s
voluntary and written consent or checking with counsel.
A fourth common scenario has a company reducing an employee’s wage, often in
conjunction with an “across the board wage reduction”, without filing the
necessary amended petitions and/or new LCAs. Hint: Do not presume that you
can reduce an H-1b employee’s wage simply because every other worker’s wage
is being reduced. Unfortunately, many of the rules created by Congress and
the DOL serve to protect the H-1b worker at the expense of the U.S. worker.
Since over 50% of the complaints are from departed employees, a company can
often minimize the risk by simply not antagonizing departed employees. Think
long and hard before you file a small claims court complaint to recover a
small sum of money owed or before beginning an action to enforce a
non-compete clause or other breach of contract.
A company can also take several steps to minimize its exposure should an
audit occur. First, it should make sure that it has good, complete, Public
Access Files. At a recent audit this author attended for a client, the DOL
investigator reported that less then half of the companies he investigates
have any type of Public Access Files. Having good Public Access files makes
a good first impression and shows an attempt at compliance with the rules.
These files should be audited yearly to insure that corrective action, if
needed, is taken early. Secondly, an employer should be well versed in the
standards to which it is being held. Many of the standards are not intuitive
and belie logic so training must be a regular part of a company’s HR or
legal department. Thirdly, a company should not by its own behavior create
an unnecessary risk by bypassing the rules to “help” out an employee.
Lastly, a company should work closely with its immigration counsel to
develop a plan for compliance which takes into consideration the specific
needs of the business.
Michael F. Hammond, Esq.
mfh@hammondlawfirm.com
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