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DOL's Rule on Attorney Fees in the H-1B Program
by Cyrus D. Mehta

The Department of Labor (DOL) plays a significant role in administering the H-1B program. It recently promulgated an Interim Final Rule to implement provisions of the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA). The rule, which took effect on January 19, 2001, also makes changes to existing DOL rules that have no relationship to ACWIA.

One troubling non-ACWIA change is the rule that an employer may be penalized if the H-1B worker pays attorney fees and other costs connected to the performance of the H-1B program (such as preparing and filing the Labor Condition Attestation (LCA) and the H-1B petition), such that, when deducted from the employee's wage, it would fall below the higher of the prevailing or actual wage.

By signing the LCA, the employer attests that the H-1B worker will be paid the required wage, which is the higher of the actual wage or prevailing wage for the occupational classification in the area of intended employment.

The actual wage is the wage paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question. In determining such a wage level, the following factors may be considered: experience, qualifications, education, job responsibilities and function, specialization knowledge, and other legitimate business factors.

Where there are other employees with substantially similar experience and qualifications in the specific employment in question, the actual wage is the amount paid to other employees. If no such other employees exist at the place of employment, the actual wage shall be the wage paid to the H-1B employee.

The prevailing wage is the average wages paid to workers similarly employed in the geographical area of intended employment. It can be determined from federal prevailing wage laws, a collective bargaining agreement, a determination by a State Employment Security Agency (SESA) or an independent authoritative source or another legitimate source.

After the actual and prevailing wage is determined, the employer is obligated to pay the higher of the two. If the attorney fee is deducted from the required wage, to the extent that it falls below the higher of the actual or required wage, an employer will be penalized with fines as well as possible debarment from the H-1B program.

The DOL allows certain deductions from the required wage, especially when the employer makes payments principally for the benefit of the employee such as housing and food allowances. Thus, the monetary value of the benefits may be added to the wage to meet the required wage. Such deductions, however are prohibited when they are a recoupment of the employer's business expenses such as transportation costs or hotel expenses while on the employer's business. The DOL rule now characterizes attorney fees as an employer's business expense. If the employee advances the fee to the attorney, it would be a violation if after deduction the employee's wage went below the required wage - the higher of the actual or prevailing wage.

The new rule clearly impinges on an individual's right to choose an attorney. It also seeks to regulate whether and to what extent an H-1B worker may have assistance of counsel, potentially violating the unfettered right to counsel under the Sixth Amendment of the U.S. Constitution.

It is axiomatic that the party whose attorney drafts a contract is the party in the strongest position to control the terms of the contract. Similarly, the party whose attorney drafts the H-1B petition is the party who has strongest control over the terms and conditions laid out therein. While the employer is the party who files the petition, the legal rights of both the employer and the employee are affected by its contents. Although an employer may be wise to have its attorney prepare the documentation, a prudent employee may also wish to have his or her own attorney prepare the petition, or play an equal role with the employer's attorney. The employee has a significant legal interest in the H-1B petition. If only an employer must pay the attorney fee, the employer is likely to dictate to the employee its choice of attorney. Many employees prefer their own attorney over the employer's.

Several small businesses and non-profits will now have to bear the attorney fees, in addition to the INS fee of $1110, which might dissuade them from hiring an H-1B worker. The preamble to the DOL rule suggests that an employee may pay an attorney for functions which by law are required to be performed by the nonimmigrant, such as translation fees, credential evaluation fees and other costs related to the visa application and processing. If an employee retains an attorney to review the terms of the H-1B petition or to advise him or her of his status and rights under the H-1B program, it would be permissible for the employee to pay the attorney without the fee being deducted from the required wage.

Regardless of these limited exceptions, the DOL rule would inhibit an employee to choose an attorney to prepare and draft the H-1B petition. This rule could potentially affect attorneys who usually represent employees rather employers. It would further deprive the attorney of his or her ability to freely negotiating a fee with the individual. Even if the employer advances the fee, could this attorney continue to bill this employer in case the employee requires representation that goes beyond the scope of the retainer?

The DOL presupposes that one attorney can represent both the employer and the employee. This is usually the case in immigration petitions where an attorney may engage in dual representation as long as the two parties are not in conflict. But with the increasing complexities brought on by ACWIA and later amendments in the H-1B program, an employee may often either be in conflict or potential conflict with the employer. The DOL rule would discourage such an employee from retaining an attorney, even if the employer has an attorney, from playing an equal role in preparing the H-1B petition and safeguarding his or her interests under the H-1B visa program.

About The Author

Cyrus D. Mehta, a graduate of Cambridge University and Columbia Law School, practices immigration law in New York City. He is Vice Chair of the American Immigration Lawyers Association's National Labor Department Liaison Committee, trustee of the American Immigration Law Foundation and recipient of the 1997 Joseph Minsky Young Lawyers Award. He is also Chair of the Immigration and Nationality Law Committee of the Association of the City Bar of New York. He frequently lectures on various immigration subjects at legal seminars, workshops and universities and may be contacted at 212-686-1581 or

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