Is GAL 2-98 Dead?
Corporate immigration lawyers suffer from the same PR steamroller that bowls over legitimate used car salesmen, honest politicians and non-bargained-for Presidential pardons. That is, the odd mad-cow spoils the whole barrel of monkeys. One of the many preconceived notions that I have to refute is the idea that my work is facilitating the importation of cheap foreign labor, which in turn steals US worker's jobs. Unlike most legal arguments, in which premises lead to conclusions, this notion works in reverse since many Americans would like to believe that US workers' entitled jobs are stolen by cheap foreign labor.
In order for a US company to hire a foreign national under the oft-utilized H-1B visa program, the company must make a number of attestations. One of the most important is that the alien will be paid the greater of "actual or prevailing wage." An employer must make this determination for each H-1B foreign national hired. The actual wage is the wage of like workers employed within the sponsoring company. This is often referred to be an "inward-looking" wage. The prevailing wage is the average wage of similar workers in the same geographical area employed by other companies. The prevailing wage is the "outward-looking" wage. The purpose of this article is to discuss the problems associated with the prevailing wage and then to raise some unanswered questions and inconsistencies associated with recently published Department of Labor (DOL) Regulations.
Included in the rash of last-minute regulations published before President Clinton slipped out of Washington was a series of long-pending DOL regulations implementing changes made to the Immigration and Nationality Act (INA) by the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA). Although the regulations have dramatically modified many aspects of the H-1B process,1 the basic approach to applying for an H-1B remains the same. First, the employer must establish the prevailing wage for similarly employed workers in the intended area of employment.2 The determined prevailing wage must meet regulatory requirements to insure that it is valid. The wage must be computed for workers in the same position and in the same geographic area as that sought by the H-1B beneficiary. For instance, an employer who wants to hire a computer programmer for the New York City area cannot submit a wage for a plumber from Kokomo, Indiana. The employer then submits the determined prevailing wage to the DOL on Form ETA 9035, the Labor Condition Application (LCA).3 The DOL merely examines the LCA for "obvious inaccuracies" and then certifies the wage.4 "Obvious inaccuracies" do not include any analysis as to whether or not the proffered prevailing wage meets the regulatory requirements and is valid.
Since LCA certification is really just a "rubber-stamp" from the DOL, a company's true liability is from faulty prevailing wage determinations discovered in a DOL "audit" against the employer.5 The DOL may conduct audits for a variety of reasons, including complaints by aggrieved and non-aggrieved parties6 and random investigations.7 In a DOL audit, foreign nationals' wages are compared with the proffered prevailing wages at the time of filing. Functionally, the DOL auditors examine certified LCAs for inconsistencies with the DOL Regulations. The fact that the LCA was earlier certified by the DOL is immaterial. Indeed, many employers are shocked when they are hit with major penalties based upon putatively acceptable LCAs. Such penalties may include civil money penalties, back wages paid to aliens, and debarment from the H-1B process.8
By regulation, employers are "not required to use any specific methodology to determine the prevailing wage."9 Quixotically, and in the very next sentence, the DOL reverses course and demands that "[o]ne of the following sources shall be used to establish the prevailing wage."10 These sources are: SESAs,11 independent authoritative sources, and other "legitimate" sources of data.12 For employment covered by the Davis-Bacon Act (DBA),13 McNamara-O'Hara Service Contract Act (SCA),14 and union contracts, alternative rules may apply.
The employer's safest approach is to obtain a SESA determination, which is often obtainable via fax form filing. Typically, these forms ask for basic information, such as a job title, a job description, and a job locale. The SESA will establish the current prevailing wage through its own system. Where the employer uses the SESA process, the DOL will not question the validity of the wage or of the finding of the SESA.15 Since 1998, SESAs have used the federal Occupational Employment Statistics Survey (OES) in its determination of wages. The OES is a geographically-specific two-tiered survey that lumps all job classifications into two broad types of experience. Level One workers are beginners, fresh out of university. Level Two workers are everyone else, from those just completing their first year in employment to sage old veterans. The obvious problem that occurs is that employers who use SESA determinations for second-year workers discover that the SESAs "code" the job as Level Two. This often results in a wage that is much greater than an actual market-determined wage. Therefore, most employers are hesitant to use SESA determinations.
If the employer does not wish to use the OES wage, or is unwilling to wait the oft-lengthy time for the SESA determination16 or, it may use an "independent wage source" or "any other legitimate source of wage information."17 Functionally, "other legitimate" sources of wage information are employer-generated surveys.18 Since the OES Survey provides for skewed high-end salaries in many professions, it is customary for practitioners to use independent surveys and employer-sponsored surveys.
Both types of surveys must reflect the weighted average paid to workers similarly employed in the area of intended employment.19 "Similarly employed" and "area of intended employment" are terms of art within the prevailing wage scheme.20 "Similarly employed" means "having substantially comparable jobs in the occupational classification." Generally, "area of employment" is the metropolitan area in which the employee works. In addition, independent surveys need to have been published within the prior twenty-four months. Independent surveys must also represent the latest published data by that source.21 Finally, employer-sponsored surveys needed to be based on "recent and accurate information" and be "reasonable and consistent with recognized standards and principles."22 Still, there remains much confusion as to what the DOL's standards require.
In response to a fair amount of confusion, the DOL's Acting Administrator for Regional Management issued General Administration Letter No. 2-98 on October 31, 1997 (GAL 2-98).23 GAL 2-98 sought to provide clarification and procedural guidance for making prevailing wage determinations. It was through the publication of this Letter that the OES wage system became a formal part of the SESA prevailing wage determination. Although GAL 2-98 contains some glaring errors,24 it provided a workable framework for prevailing wage analysis. Namely, GAL 2-98 lists a seven-factor test to determine a valid survey. Unfortunately, GAL 2-98 also contained several major inconsistencies with the regulations.
For one, GAL 2-98 failed to distinguish between independently published surveys and employer-generated ones.25 This was in stark contrast to the DOL's regulations, which established a clear distinction.26 The DOL's Regulations provide that independent surveys merely had to be "published by an independent source [such as] a book, newspaper, periodical, loose-leaf service, newsletter or some other similar medium."27 However, GAL 2-98 put a burden on employers to prove that these surveys were "reasonable and consistent with recognized standards and principles."28
Second, GAL 2-98 adds a burden to surveys whose reach extends beyond OES-established metropolitan areas. In these instances, GAL 2-98 compels employers to prove that there are not sufficient workers in the specific occupational classification to reflect a representative sample.29 This burden is not found in the regulations. According to the regulations, surveyors' practices must only be reasonable and consistent with recognized principles of surveying.30 Plainly, the GAL 2-98 approach is too strict. Indeed, the DOLs intent was to allow more leeway for truly independent surveys. This requirement proved to be a monumental task, as employers were asked to prove a negative, i.e. that there were not enough workers in a geographical area to form a representative sample. Moreover, it was impossible to make a credible argument that there were insufficient workers in a Metropolitan area when the OES had already found that there were sufficient workers. The net effect was that a number of otherwise acceptable surveys were deemed unacceptable because of variances on metropolitan area measurement.31 Therefore, if the OES had found a representative sample within Metropolitan Area X, an independent survey was de facto unacceptable if it expanded beyond Metropolitan Area X.
Third, GAL 2-98 demanded that the wage data must have been collected across industries that employ workers.32 This requirement is not found in the regulations. Therefore, if the employer submitted a survey that did not contain cross-industry analysis, the burden fell on the employer to prove that other industries did not employ workers. Again, this creates the "prove a negative" problem.
Finally, the employer was compelled to include information that the methodology used by the survey was reasonable and consistent with recognized statistical standards and principles in producing a prevailing wage, whether the survey was independent or employer-generated.33 This language contradicted the Regulations, which provided that only employer-generated surveys must meet this standard.
Congress passed ACWIA on the heels of GAL 2-98.34 Since the passage of ACWIA, the DOL had long-promised regulations clarifying ACWIA. Practitioners have longed for these Regulations hoping that they would clear up the analysis of prevailing wages.35 On December 20, 2000, that day finally came, with a 150-page entry into the Federal Register. Unfortunately, with respect to prevailing wages, the DOL merely re-stated the prior Regulations with new cites. Otherwise the language is identical to pre-GAL 2-98.
This begs several questions:
1 Including the much-discussed H-1B-dependent employer attestations.
About The Author Christopher T. Musillo, Esq. is an immigration attorney whose practice is concentrated on business immigration matters. He is an associate with the Hammond & Associates law firm and works out of the firm's Cincinnati office. Chris has been an Associate of Hammond & Associates since September 1998, after completing his legal studies at the University of Cincinnati's College of Law. Prior to law school, Chris worked for three years for a mid-sized New York City Financial Consulting firm. He is a graduate of Villanova University, Villanova, Pennsylvania and Chaminade High School, Mineola, New York. Chris was raised in the Long Island suburban community of Oyster Bay. When not zealously representing his clients, Chris enjoys outdoor sports, listening to music, traveling and reading. Please contact Chris at firstname.lastname@example.org or by visiting his firm's website, www.hammondlawfirm.com.
Christopher T. Musillo, Esq. is an immigration attorney whose practice is concentrated on business immigration matters. He is an associate with the Hammond & Associates law firm and works out of the firm's Cincinnati office. Chris has been an Associate of Hammond & Associates since September 1998, after completing his legal studies at the University of Cincinnati's College of Law. Prior to law school, Chris worked for three years for a mid-sized New York City Financial Consulting firm. He is a graduate of Villanova University, Villanova, Pennsylvania and Chaminade High School, Mineola, New York. Chris was raised in the Long Island suburban community of Oyster Bay. When not zealously representing his clients, Chris enjoys outdoor sports, listening to music, traveling and reading. Please contact Chris at email@example.com or by visiting his firm's website, www.hammondlawfirm.com.