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American Bar Association - Defending Liberty, Pursuing Justice

June 2008

Vol. 4, No. 3

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Litigation

 

Computer Staffing Firm Fined $2.65 Million in Back Wages and Penalties for Immigration Law Violations

Take Heed and Take Steps to Assure That Your Company Is in Compliance

The H-1B visa program allows foreign workers to enter and work temporarily in the United States in professional level jobs, among them computer programmers, engineers, scientists, and teachers. H-1B workers must be paid at least the same wage rates and benefits as those paid to U.S. workers already doing the same job in the same area.

On March 9th, 2005, the Department of Labor (DOL) reported that Computech Inc., a Southfield, Michigan, firm that places computer professionals at locations throughout the United States, agreed to pay $2,250,000 in back wages to 232 computer professionals and a $400,000 fine to settle immigration law violations relating to prevailing wage rates not paid and the improper practice of “benching” H-1B employees without pay.

An investigation by the Labor Department’s Wage and Hour Division found that Computech brought nonimmigrant H-1B workers into the United States, but failed to pay them the minimum required wage rates in the areas where they were employed. The investigation also disclosed that Computech frequently “benched” the workers without compensation contrary to the requirements of the H-1B program.

“The Department of Labor aggressively enforces the law to ensure that temporary foreign workers are compensated fully and fairly,” said Secretary of Labor Elaine L. Chao. “Abuse of the temporary foreign worker program is not tolerated and violators, as this case shows, are vigorously pursued.”

The settlement, approved by a U.S. Labor Department administrative law judge, ordered the company to pay $2,250,000 to 232 foreign workers and a $400,000 fine in addition to the back wages. The company was also prohibited from participation in the H-1B visa program for 18 months. As you can see, penalties for noncompliance are severe.

What Can Your Company Do to Guard Against Immigration Fines?

In addition to fines for failure to pay the appropriate wage scale or for failure to pay during a period of “benching,” an employer can also be guilty of violation for failure to have a properly completed LCA for locations where an employee has been moved after the H-1 is approved. If you are aware an employee will work at multiple locations, an LCA is needed for each one. Managers must be made aware of the LCA requirement so that transfers are made only after the requirements are met.

It is also advised that the beneficiary not be promoted or have a material chance in their job dates prior to counsel determining if a new or amended petition will be required. In addition, employers do not always properly complete their H-1B public inspection folders with respect to maintaining proper memoranda of how the actual and prevailing wages were determined.

Employers should know that in addition to having a copy of the prevailing wage finding from the State Employment Service Administration (SESA) or a copy of prevailing wage survey for the occupation published by an independent authoritative source dated within the 24-month-period immediately preceding the filing of the employer’s application, a memorandum must also be included in the public inspection folder that lists the:

  • Alien’s job title;
  • Current job description;
  • Location where alien is working;
  • Identification of the source of documentation used to establish the prevailing wage;
  • Description of the actual wage paid to similarly employed individuals

If an employer has not prepared and included similar memoranda in its public inspection folders, then it is not in compliance, and we strongly suggest that the employer contact immigration counsel and conduct an H-1B Labor Condition Application audit and training session to confirm compliance.

Benefits of Private H-1B/LCA Audit and Training Session

The wisdom of engaging immigration counsel to conduct a private LCA audit becomes apparent when one considers these potential benefits:

  1. A private LCA audit will reveal many correctable errors that would be quite costly if discovered by DOL in an audit;
  2. Correcting errors in advance of a DOL inspection not only limits liability by reducing the number of "problem" LCAs, but also would be a mitigating factor and may even be a good faith defense to a fine;
  3. An LCA audit can be done at a pace set by the employer-client, rather than at a pace set by a Wage and Hour Division investigator; therefore, the employer's resources and emotional state will not be strained by trying to too quickly (and not thoroughly enough) review and produce documentation; and,
  4. A private LCA audit will alert the employer to common errors made by managers and reveal systemic problems in the employer's LCA compliance program, if any. This will give the employer the opportunity to remedy these errors by developing stronger systems and procedures.

The Department of Labor is now taking a much more aggressive enforcement stance, and the potential penalties include back wages, civil money penalties ($1,000 per violation), and other remedies determined by the administrator, including a debarment from filing future H-1s for at least one year.

Neil S. Dornbaum and Kathleen Peregoy are members of Dornbaum & Peregoy LLC Newark, New Jersey. Their practice is limited to immigration and naturalization with special emphasis on employment-based immigration. The firm is listed in Martindale-Hubbell’s “Preeminent Lawyers,” and both members are listed in “Best Lawyers in America” and in New York. They also appear in New Jersey Magazine’s listing of “Top Lawyers” for their work in immigration law, and the “Super Lawyers” publications.

© Copyright 2008, American Bar Association.