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H-1B Dependent Employer: Wake up and Act OR What Do You Do After You Have Been Hit on the Head?
by Mira Mdivani

On January 19, 2001, the long-awaited regulations on Labor Conditioning Applications were finally adopted by the Department of Labor. Reading the 245-page document put me in a trance-like state, and when I finally came back to my senses, the bells went off: OH MY GOD! SOME OF MY CLIENTS ARE H-1B DEPENDENT! It is not that we did not know the regulations were coming. It is not that we did not advise our clients as soon as we started working on our first H-1B for them; we told them that they should do certain things to prevent the blow of being declared "H-1B Dependent" (which, by the way, in the eyes of the DOL is equal to being a "Willful Violator," judging by the Regulations’ combining of these notions into one heading and imposing almost identical compliance requirements on both categories. It is that my clients are normal people who believe in the benevolence of government and think that government agencies should help American businesses to go about their businesses, including the business of obtaining adequate number of foreign workers who have skills in short supply in the local job market. Such as IT professionals. Or engineers. Or health workers! Thus, we have situations when after a conversation with me about the new regulations, (a) some of my clients think that I am crazy, which they should know better since we have been though so much together already dealing with the INS and DOL, or (b) they start feeling depressed and think about closing down the doors of their businesses here and moving them to greener pastures of countries with more friendly governments.

WHO IS A DEPENDENT EMPLOYER?

  1. The employer who has 25 or fewer full-time employees in the U.S., and employs more than seven H-1B non-immigrants;
  2. The employer has at least 26 but not more that 50 full-time employees in the U.S., and employs more than 12 H-1B nob-immigrants, or
  3. The employer has at least 51 full-time employees in the U.S., and whose full-time workforce is comprised of at least 15 percent of H-1B non-immigrants.

The Regulations explain what a "full time" employee is and suggest how to deal with cases when you are in doubt. Thus, if you have a borderline case on your hands, you will have to either read the Regulations or call your attorney.

WHAT ARE THE NEW OBLIGATIONS?

In short, the DOL imposes two obligations on H-1B employers: not to displace U.S. workers from jobs, and to recruit U.S. workers before hiring H-1B non-immigrants.

NON-DISPLACEMENT: Attestations should be made regarding Non-Displacement of U.S. Workers: An H-1B dependent employer should not lay off U.S. workers when H-1B non-immigrants hold essentially equivalent jobs as those held by U.S. workers. While the regulations still allow discharge of U.S. workers for inadequate performance, violations of workplace rules, and other reasons, employers must document the reasons for their actions having in mind compliance with the new obligations. In the case of a consulting firm, attestations regarding non-displacement should be procured from the company where the H-1B employee actually performs services.

RECRUITMENT OF US WORKERS: H-1B Dependent Employers must make good faith efforts to recruit U.S. workers in the U.S. for the job(s) for which the H-1B non-immigrant is sought. The recruitment shall use the "procedures that meet industry-wide standards and offer compensation that is at least as great as the required wage to be paid to H-1B non-immigrant or the employer’s actual wage." The regulations describe a process which should precede the filing of the LCA, which reminds me of the reduction in recruitment (RIR) procedure we engage in before filing labor certifications. The DOL states that the employer must use both active and passive methods of recruitment. Active methods include direct communication to incumbent workers at the employer’s business and to workers previously employed by the employer or by the industry; providing training to incumbent workers in the employer’s organization, contact and outreach through labor unions, trade and professional associations; participation in job fairs, use of placement services of colleges, universities, and business/trade schools, use of public and private employment agencies, referral agencies, and headhunters. Passive recruitment includes advertising in general distribution publications, trade or professional journals, or special interest publications, the Internet, notices at the employer’s worksite(s) and on the employer’s Internet homepage. The employer must maintain documentation of the recruitment methods used, as well as any documentation regarding any applicants, including copies of applications, test papers, and records of interviews. In addition to conducting good faith recruitment of U.S. workers, the employer is required to have offered the job to any US worker who applies and is equally or better qualified than the H-1B nonimmigrant.

Each employer who is planning to file a new LCA, to file H-1B petitions, or requests for extensions of H-1B status between January 19, 2001, and October 1, 2003, is required to determine whether it is an H-1B dependent employer. The DOL promulgated a new, 3-page LCA form to reflect this determination. For all practical purposes, this requirement means that after January 19, 2001, all new H-1B petitions and all H-1B extensions should be filed with the new LCA. Employees who are H-1B dependent cannot continue to file H-1B petitions using otherwise valid LCA filed before January 19, 2001, even for extensions.

Who is EXEMPT?

When an LCA is filed for a worker who has a master’s or higher degree (or equivalent) in the field of the specialty occupation related to the intended employment or who is going to be paid at least $60,000 per year, such worker shall be considered "exempt" and the LCA filed for such worker’s H-1B is not subject to additional attestation obligations. The regulations state that the equivalence to a U.S. academic degree cannot be established through experience.

CRUCIAL QUESTION: WHETHER TO COUNT THOSE EXEMPT H-1B IN DETERMINING THE COMPANY’S H-1B DEPENDENCY?

It is important to understand that the law is painfully clear on this issue: Yes, even "exempt" H-1B employees shall be counted in the employer’s determination of H-1B dependency status. Thus, while they can "help themselves" and sail though the LCA process without burdening the employer with additional obligations, each one of them is counted against the H-1B dependency.

WHAT IS THE GAME PLAN?

  1. Discuss the regulations with your attorney. Make a plan. In my opinion, careful planning is the key to avoiding major headaches in the future.
  2. Determine whether your company is H-1B dependent. Do not forget that many affiliated companies will be treated as one employer for the purposes of H-1B dependency.
  3. If your business is H-1B dependent, and you are planning to extend H-1B petitions of your existing workers or to file new petitions for any workers without advanced degrees or with a salary less than $60,000:
    1. Look at your existing H-1B employees and come up with a game plan on the fastest way to move them from H-1B into green card holder status so as to change the H-1B/U.S. worker ratio as soon as possible;
    2. Initiate an RIR (reduction of recruitment) process or make sure that your existing process complies with the new DOL requirements for the recruitment of US workers. If done right, you may be able to get double mileage out of RIR, and use it for your permanent labor certifications as well as for the new LCA attestations;
    3. If you need to file a new H-1B now and you cannot temporarily comply or if you think you will never be able to comply with the new attestation requirements, hire only "exempt" H-1B candidates and encourage your current employees to obtain master’s degrees, before their H1B extension is due, or pay everyone who needs a new H-1B at least $60,000. Again, it is important to understand that these steps do not fix your H-1B dependency problem unless a 100% of your workforce is "exempt:" it only helps to obtain an H-1B for the particular "exempt" worker.
    4. Document everything;
    5. Read the next paragraph and talk to your attorney often.

WHEN SHOULD THE GAME PLAN BE REVISED?

Often. The regulations came into effect a few days ago. We are in uncharted territory, and everything that you have read so far is based only on the text of the regulations. You have just read a short summary of the new law, and many issues are not immediately apparent at this time. No doubt, there will be new interpretations which will appear in time and space as H-1B dependent employers start adjusting their lives to this totally different ball game. I am planning to write regarding the new developments in the area of law regularly, so stay tuned.


About The Author

Member of the American Immigration Lawyers Association, Mira Mdivani heads the immigration practice at the firm of Klamann & Hubbard, P.A. She obtained her Juris Doctor degree from University of Missouri, Kansas City School of Law in 1999. She was the recipient of the Mark E. Grady and Frederick W. Hess Memorial Scholarship. Ms. Mdivani received American Jurisprudence Awards for her achievements in Philosophy and the Law and Feminist Jurisprudence. Ms. Mdivani's undergraduate degree was awarded by Moscow State Moris Thores Institute of Foreign Languages, currently Moscow State Linguistic University in Russia, where Ms. Mdivani studied Russian, French, Latin and English. She is admitted to the American Bar Association, the Association of Trial Lawyers of America, the Missouri Bar Association, and the Kansas Bar Association. Ms. Mdivani is licensed to practice before the Supreme Court of Missouri, the Supreme Court of Kansas, the United States District Court for the Western District of Missouri, and the District Court for the District of Kansas.

Ms. Mdivani was born in Suzdal, Russia in 1967. She emigrated to the United States in 1993. She lives in Kansas City, Missouri with her husband Dennis Ayzin and their daughter Maria.

Contact Mira Mdivani via e-mail
MMdivani@kh-law.com



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